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Exhibit
10.3
UNITIL
CORPORATION
SEVERANCE
AGREEMENT
THIS AGREEMENT, dated this xx
day of xxxxx, xxxx, made effective as of the date on which a Change
in Control (as defined in paragraph 2) occurs, by and among Unitil
Corporation (“Unitil”), a New Hampshire corporation,
Unitil Service Corp., a New Hampshire corporation and a
wholly-owned subsidiary of Unitil (“Subsidiary”)
(Unitil and Subsidiary are herein referred to collectively as the
“Company”) and xxxxxxxxx (the
“Employee”).
W I T N E S S E T
H T H A T:
WHEREAS, the Employee is an
employee of the Company and an integral part of its management who
participates in the decision making process relative to short and
long-term planning and policy for the Company; and
WHEREAS, the Board of
Directors of Unitil, determined that it would be in the best
interests of Unitil, its shareholders and the Employee to assure
continuity in the management of the Company’s administration
and operations in the event of a Change in Control by entering into
an employment agreement to retain the services of the Employee, and
the Board of Directors of the Subsidiary made the same
determination; and
WHEREAS, the Company and the
Employee previously entered into a severance agreement dated the xx
day of xxxxxx, 200x (the “Prior Agreement”) and the
Company and the Employee desire to amend and restate the Prior
Agreement; and
WHEREAS, the Company and the
Employee agree that this Agreement shall amend and supersede the
terms and conditions of the Prior Agreement.
NOW, THEREFORE, it is hereby
agreed by and between the parties hereto as follows:
1. Employment . The
Company agrees to continue the Employee in its employ and the
Employee agrees to remain in the employ of the Company for the
period stated in paragraph 4 hereof and upon the terms and
conditions herein provided.
2. Change in Control .
The term “Change in Control” shall mean the occurrence
of any of the following:
(a) Unitil receives a report
on Schedule 13D filed with the Securities and Exchange Commission
pursuant to Section 13(d) of the Securities Exchange Act of
1934, as amended (hereinafter referred to as the “Exchange
Act”), disclosing that any person, group, corporation or
other entity is the beneficial owner, directly or indirectly, of
twenty-five (25%) percent or more of the outstanding common
stock of Unitil;
(b) any person (as such term
is defined in Section 13(d) of the Exchange Act), group,
corporation or other entity other than Unitil or a wholly-owned
subsidiary of Unitil, purchases shares pursuant to a tender offer
or exchange offer to acquire any common stock of Unitil (or
securities convertible into common stock) for cash, securities or
any other consideration, provided that after consummation of the
offer, the person, group, corporation or other entity in question
is the beneficial owner (as such term is defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of twenty-five
(25%) percent or more of the outstanding common stock of
Unitil (calculated as provided in paragraph (d) of Rule 13d-3
under the Exchange Act in the case of rights to acquire common
stock);
(c) the stockholders of
Unitil approve (i) any consolidation or merger of Unitil in
which Unitil is not the continuing or surviving corporation or
pursuant to which shares of common stock of Unitil would be
converted into cash, securities or other property (except where
Unitil shareholders before such transaction will be the owners of
more than seventy-five (75%) percent of all classes of voting
stock of the surviving entity), or (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of
Unitil; or
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(d) there shall have been a
change in a majority of the members of the Board of Directors of
Unitil within a twenty-five (25) month period unless the
election or nomination for election by the Unitil stockholders of
each new director was approved by the vote of two-thirds of the
directors then still in office who were in office at the beginning
of the twenty-five (25) month period.
Should the Change in Control
be stockholder approval under paragraph 2(c) and if the Board of
Directors of Unitil determines the approved transaction will not be
completed and is abandoned prior to any termination of the
Employee’s employment, a Change in Control shall no longer be
in effect and the provisions of this Agreement shall continue in
the effect as if a Change in Control had not occurred.
3. Position and
Responsibilities . During the period of employment hereunder,
the Employee agrees to serve the Company in an executive capacity.
Such service shall involve duties and responsibilities at least
equal in importance and scope to those of the Employee’s
position immediately prior to the effective date of this Agreement,
as the Board of Directors, the Chairman of the Board of Directors
or chief executive officer or any other executive officer of the
Company to whom the Employee reports may from time to time
determine. During said period, the Employee also agrees to serve,
if elected, as an officer and/or director of any subsidiary or
affiliate of the Company.
4. Term and Duties
.
(a) The period of the
Employee’s employment under this Agreement shall be deemed to
have commenced as of the effective date of this Agreement and shall
continue for a period of twenty-four (24) full calendar months
thereafter.
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(b) During the period of
employment hereunder and except for illness or incapacity and
reasonable vacation periods, the Employee’s business time,
attention, skill and efforts shall be exclusively devoted to the
business and affairs of the Company; provided, however, that
nothing in this Agreement shall preclude the Employee from devoting
time during reasonable periods required for
(i) serving as a director or
member of a committee of any company or organization involving no
conflict of interest with the Company or any of its subsidiaries or
affiliates,
(ii) delivering lectures and
fulfilling speaking engagements, and
(iii) engaging in charitable
and community activities, provided that such activities do not
materially affect or interfere with the performance of the
Employee’s obligations to the Company.
5. Compensation
.
(a) For all services rendered
by the Employee in any capacity during employment under this
Agreement, including services as an executive, officer, director,
or member of any committee of the Company or of any subsidiary or
affiliate of the Company, the Company shall pay the Employee a
fixed salary at an annual rate not less than the annual rate of
salary being paid to Employee immediately prior to the effective
date of this Agreement. Such salary shall be subject to such
periodic percentage increases after the effective date of this
Agreement as the Company pays generally to the Company’s
senior management employees from time to time, and shall be payable
in accordance with the customary payroll practices of the Company.
Such periodic increases in salary, once granted, shall not be
subject to revocation.
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(b) In addition to the salary
payable under subsection (a), above, the Company shall provide to
the Employee a bonus opportunity not less than the bonus
opportunity in effect for the year in which the effective date of
this Agreement occurs and in any event shall pay to the Employee
annual bonuses in an amount at least equal to the amount of the
last payment to the Employee under any short-term incentive
performance program of the Company or any subsidiary of the Company
in effect during the twelve (12) month period prior to the
effective date of this Agreement. Nothing in this subsection
(b) shall be deemed to require the Company to (i) have or
continue an incentive performance program in effect prior to the
effective date of this Agreement or (ii) award to the Employee
any bonuses under such program prior to the effective date of this
Agreement.
(c) Nothing in this Agreement
shall preclude or affect any rights or benefits that may now or
hereafter be provided for the Employee or of which the Employee may
be or become eligible under any bonus or other form of compensation
or employee benefit plan now existing or that may hereafter be
adopted or awarded by the Company. Specifically, the Employee
shall:
(i) participate in the Unitil
Corporation Retirement Plan and any related excess benefit or
supplemental retirement program (hereinafter referred to
collectively as the “Retirement Program”);
(ii) participate in any
savings or thrift plan maintained by the Company;
(iii) participate in any
stock option, stock appreciation right, equity incentive or
deferred compensation plan maintained by the Company;
(iv) participate in the
Company’s death benefit plans;
(v) participate in the
Company’s disability benefit plans;
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(vi) participate in the
Company’s medical, dental and health and welfare plans;
and
(vii) participate in
equivalent successor plans of the Company for which senior
management employees are eligible;
provided, however, that nothing in this
Agreement shall preclude the Company from amending or terminating
any such plan or program, on the condition that such amendment or
termination is applicable to all of the Company’s senior
management employees generally. For purposes of the foregoing, any
plan or program maintained by any subsidiary of the Company which
is made available to the senior management of the Company and its
subsidiaries taken as a whole, shall be deemed to be a plan or
program maintained by the Company.
6. Business Expenses .
The Company shall pay or reimburse the Employee for all reasonable
travel or other expenses incurred in connection with the
performance of the Employee’s duties under this Agreement in
accordance with such procedures as the Company may from time to
time establish.
7. Additional Benefits
. Nothing in this Agreement shall affect the Employee’s
eligibility to participate in all group health, dental,
hospitalization, life, travel or accident or other insurance plans
or programs and all other perquisites, fringe benefit or retirement
plans or additional compensation, including termination pay
programs, which the Company or any subsidiary of the Company may
hereafter, in their sole and absolute discretion, elect to make
available to the senior management employees of the Company
generally, and the Employee shall be eligible to receive, during
the period of employment under this Agreement, all benefits and
emoluments for which key employees are eligible under every such
plan, program, perquisite or arrangement to the extent permissible
under the general terms and provisions thereof.
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8. Termination of
Employment . Notwithstanding any other provision of this
Agreement, the Employee’s employment under this Agreement may
be terminated for any of the following reasons:
(a) By the Company for Cause.
For purposes of this Agreement, the term “Cause” shall
mean the occurrence of any of the following events: (i) the
Employee’s conviction for the commission of a felony or
(ii) the Employee’s fraud or dishonesty which has
resulted or is likely to result in material economic damage to the
Company or any of its subsidiaries, as determined in good faith by
the Directors of the Company at a meeting of the Board of Directors
at which the Employee is provided an opportunity to be
heard;
(b) By the Employee for Good
Reason. For purposes of this Agreement, the term “Good
Reason” shall mean the occurrence of any of the following
events unless the Employee specifically agrees in writing that such
event or condition shall not constitute Good Reason: (i) a
material diminution in the Employee’s base compensation;
(ii) a material diminution in the Employee’s authority,
duties or responsibilities; (iii) material diminution in the
authority, duties, or responsibilities of the supervisor to whom
the Employee is required to report, including, if the Employee
reports directly to the Board of Directors of Unitil, a requirement
that the Employee report to a corporate officer or employee instead
of reporting directly to the Board of Directors of Unitil;
(iv) a material diminution in the budget over which the
Employee retains authority; (v) a material change in the
geographic location at which the Employee must perform services,
which the Company has determined to include a change in the
Employee’s principal place of employment by the Company from
the location of the Company’s principal place of business
immediately prior to the date this Agreement becomes effective to a
location more than fifty (50) miles from such principal place
of business; or (vi) any other action or inaction that
constitutes a material breach by the Company of the
Agreement;
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provided, however, no event specified in
this paragraph 8(b) shall constitute Good Reason unless the
Employee has given written notice to the Company, specifying the
event relied upon for such termination within ninety (90) days
after the occurrence of such event and the Company has not remedied
such within thirty (30) days of receipt of such
notice;
(c) By the Company upon the
Disability of the Employee. For purposes of this Agreement, the
term “Disability” is defined as the inability of the
Employee to engage in his regular occupation for twelve
(12) consecutive months and the inability thereafter to engage
in any occupation in which the Employee could reasonable expect to
engage giving due consideration to Employee’s education,
training and experience. The Employee must be under the regular
medical care of a physician in connection with treatment for
Disability;
(d) By the Employee without
Good Reason; or
(e) By the Company for any
reason other than Cause or the Employee’s
Disability.
For purposes of this Agreement, the
Employee’s employment shall be deemed to have terminated
automatically as of the date of the Employee’s
death.
9. Payments Upon
Termination of Employment .
(a) In the event of any
termination of the Employee’s employment hereunder
(i) by the Employee for Good Reason or (ii) by the
Company for any reason other than Cause or the Employee’s
Disability, then, as soon as practicable (but not more than sixty
(60) days) after any such termination the Company shall pay to
the Employee the following amounts, and shall provide the Employee
and the dependents, beneficiaries and estate of the Employee with
the following, as liquidated damages or severance pay, or
both:
(i) a lump sum cash payment
equal to the present value of twenty-four (24) monthly salary
payments, assuming for this purpose that (1) each monthly
salary payment
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would have been equal to
one-twelfth (1/12 th ) of the Employee’s annual salary in effect at the
time of employment termination (disregarding any reductions in
annual salary that were not approved by the Employee) and
(2) such monthly salary payments would have been made on each
of the twenty-four (24) monthly anniversaries of the date the
Employee’s employment terminated;
(ii) a lump sum cash payment
equal to the present value of two (2) annual bonus payments,
assuming for this purpose that (1) each such annual bonus
payment would have been equal to the Employee’s target annual
bonus for the year in which employment termination occurs
(disregarding any reductions in such target annual bonus that were
made in the year of employment termination and that were not
approved by the Employee) and (2) the first annual bonus would
have been paid on the last business day of the first February
following the date of employment termination and the second annual
bonus would have been paid on the last business day of the second
February following the date of employment termination;
(iii) A lump sum cash amount
equal to the present value of the excess of (1) the aggregate
benefit that would have been paid under the Retirement Program
described in paragraph 5(c)(i), above, as in effect on the date of
this Agreement, if the Employee had continued to be employed and to
be entitled to service credit for eligibility and benefit purposes
during the twenty-four (24) month period immediately following
such termination, over (2) the aggregate benefit actually
payable under the Retirement Program and any successor retirement
program of the
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