Exhibit 10.1

 

PENNICHUCK

 

25 Manchester Street

P.O. Box 1947

Merrimack, NH 03054-1947

(603) 882-5191

FAX (603) 913-2305

 

February 3, 2005

www.pennichuck.com      

Personal & Confidential

 

Mr. Charles Staab

45 Cathedral Circle

Nashua, NH 03063

 

RE:   Early Retirement and General Release Agreement

 

Dear Chuck:

 

      This letter agreement states and confirms the conditions concerning your
early retirement from employment with Pennichuck Corporation ("Pennichuck").
Specifically, we agree as follows:

 

      1.    You retired from employment with Pennichuck effective as of January
31, 2005 (hereinafter the "Separation Date"). On such date, you also resigned as
Treasurer and Chief Financial Officer of Pennichuck and all of its subsidiaries.
On or before February 3, 2005, you will be paid your regular salary earned up
through the Separation Date, and you will be paid accrued and unused vacation
time, minus all appropriate withholdings and authorized deductions, in the gross
amount of $9,216.00, which is equal to four (4) weeks of vacation pay.

 

      2.    If you sign this Agreement, Pennichuck will provide you severance
pay in the total amount of One Hundred Ten Thousand Five Hundred Ninety-Two
Dollars ($110,592.00), which is equivalent to forty-eight (48) weeks of your
current salary, minus all appropriate state and federal withholdings and any
qualified contributions that you designate to your account in the Savings Plan
for Employees of Pennichuck Corporation, which contributions will be made in
accordance with the terms of the Savings Plan. The severance will be paid in a
lump sum on or before the 3rd day following the 7-day revocation period
described in Paragraph 8(b) below.

 

      3.    You are eligible for coverage under Pennichuck's Early Retirement
Medical Benefit Policy, subject to the following conditions:

   

      (a)   Pennichuck will pay, on your behalf, the cost of the monthly premium
for individual plan coverage under Pennichuck's group health plan that
Pennichuck

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provides for eligible early retirees, and once you reach age 65 and become
eligible for Medicare, the cost of the monthly premium for individual Medicomp
coverage up to the "Maximum Allowable Benefit" as that term is defined in
Pennichuck's Early Retirement Medical Benefit Policy, as amended from time to
time (the "Early Retirement Benefit"). The Early Retirement Benefit will be
equivalent to the monthly premium Pennichuck's early retirees pay for individual
group health coverage under Pennichuck's group health plan for early retirees,
as such premium is adjusted from time to time. Pennichuck will pay the Early
Retirement Benefit to the insurance carrier on a monthly basis until the
earliest of the following: (i) you become ineligible under Pennichuck's Early
Retirement Medical Benefit Policy for whatever reason; or (ii) Pennichuck ceases
to offer group health coverage to early retirees. However, if Pennichuck ceases
to offer group health coverage to early retirees within twelve months from the
Separation Date, then you may elect to continue such coverage under the federal
law commonly referred to as "COBRA," and Pennichuck will pay the cost of
premiums for COBRA continuation coverage for the remaining portion of the twelve
months subsequent to the Separation Date.

     

      (b)   The Early Retirement Benefit and your participation in Pennichuck's
Early Retirement Medical Benefit Plan are intended to be in lieu of your rights
under COBRA.

   

      4.    Your family's coverage under Pennichuck group medical and dental
insurance plans and your coverage under the group dental plan cease on the
Separation Date unless you and your family elect to continue such coverages
under COBRA, at their own expense. COBRA continuation notices explaining your
rights and an election forms will be provided to you and your family. If you and
your family elect COBRA and if you sign this Agreement, Pennichuck will pay the
cost of premiums for COBRA continuation coverage for you (as to the dental plan)
and your eligible family members (as to both the medical and dental plans) for
the 12-month period immediately following the Separation Date. Any premiums for
COBRA continuation coverage thereafter will be at your own or their expense.
Pennichuck's obligation to pay for COBRA continuation coverage under this
paragraph will cease earlier if you or your family members become ineligible for
COBRA continuation coverage for any reason.

 

      5.    Other than as provided herein, your coverage or participation under
all other Pennichuck employee benefit plans ceases as of the Separation Date.
Any rights for conversion by you to individual coverages or entitlement to
benefits or distributions, if any, will be governed by the terms of such plans.
Required notices explaining your options under such plans will be sent to your
home.

 

      6.    If you sign this Agreement, Pennichuck will provide you with an
outplacement services program through the firm Right Management Consulting
during the 6-month period immediately following the Separation Date. The terms
of such program are described in a summary that has already been provided to
you.

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      7.    The Board of Directors for Pennichuck will allow you to exercise any
outstanding vested stock options which you may have pursuant to the terms of
Pennichuck's Stock Option Plan, provided you do so within 90 days following the
Separation Date.

 

      8.    As a material inducement to Pennichuck to enter into this Agreement,
and in consideration for the payments and benefits described herein, including
but not limited to the payments and benefits described in paragraphs 2, 3, 4,
and 6, you hereby:

   

      (a)   irrevocably and unconditionally release, acquit and forever
discharge Pennichuck and each of Pennichuck's divisions, subsidiaries,
affiliates, successors, assigns, agents, directors, officers, employees and
former employees (collectively "Releasees"), from any and all causes of action,
suits and/or claims for damages of any type arising or which may have existed on
or before the date you sign this letter agreement, known or unknown, suspected
or not suspected. This release includes, but is not limited to (i) rights under
federal or state laws prohibiting discrimination in employment on the basis of
age, sex, religion, color, national origin, marital status, race, disability,
veteran status, sexual orientation, or any other legally protected status; (ii)
any and all claims growing out of any written or oral agreements or laws
restricting Pennichuck right to terminate your employment or requiring that
Pennichuck provide you prior notice of termination; (iii) any written or oral
agreements entitling you to payment of any other benefit including but not
limited to bonuses, commissions, paid leave, or any other payments; and (iv) any
claims for personal injuries, mental anguish, emotional distress, wrongful
discharge, defamation, and attorneys fees. You further agree never to institute
against the Releasees any lawsuit or claim with respect to any cause of action
or claim of any kind arising or which may have existed on or before the present
date. This release is not intended to waive any rights or claims which you are
expressly prohibited by applicable law from waiving. The consideration herein is
not to be deemed an admission on the part of the Releasees of any liability or
wrongdoing whatsoever.

     

      (b)   You acknowledge that the paragraph above includes a GENERAL RELEASE
of your rights, including but not limited to those rights under the Federal Age
Discrimination in Employment Act, and that you give such general release
knowingly and voluntarily. You have the right to consult with an attorney prior
to signing this letter agreement. Pennichuck will provide you up to twenty-one
(21) calendar days from receipt of this letter agreement for you to consider its
terms. While not required to do so, you may sign this letter agreement anytime
prior to the end of the 21 days. You also have the right to revoke the terms of
this letter agreement within (7) days following the date you sign it. Once this
7-day revocation period has passed without such revocation having occurred, this
letter agreement becomes final and binding.

     

      (c)   You agree to refrain from making any disparaging or derogatory
comments about Pennichuck or any of the other Releasees; except that this
provision is

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not intended to impair your rights to provide information that is otherwise
protected under federal and state statutes, including but not limited to the
Sarbanes-Oxley Act of 2002.

   

      9.    You further agree not to discuss or disclose the terms of this
letter agreement to any person other than your attorney, accountant, immediate
family or as otherwise required by law, including but not limited to the
Sarbanes-Oxley Act. You further agree that any disclosure to your attorney,
accountant or immediate family will only be made after such individuals
acknowledge that they understand and agree to maintain the confidentiality of
this agreement and its terms.

 

      10.   You agree that you will not retain any materials, documents, or
other records belonging to Pennichuck. In addition, you agree to promptly return
any and all Pennichuck property, equipment, files, and other property whether
confidential or not, and to disclose any and all computer passwords and other
access codes. Notwithstanding the foregoing, you will be allowed to keep the
Apple PowerBook G4 laptop computer, Sony Clie PDA, and Samsung cell phone
provided to you by Pennichuck, provided that you remove from such equipment any
confidential or proprietary information of Pennichuck. The cell phone billing
will be changed over to you on January 31, 2005.

 

      11.   You agree not to disclose to anyone, or use for your benefit or gain
at any time, any confidential or proprietary information of Pennichuck, except
that this provision is not intended to impair your rights to provide information
that is otherwise protected under federal and state statutes, including but not
limited to the Sarbanes-Oxley Act of 2002. For purposes of this Agreement, the
phrase "confidential or proprietary information" includes, but is not limited
to, all information relating to the present or planned business of Pennichuck
which has not been released publicly by authorized representatives of
Pennichuck, including but not limited to all trade secrets, all methods of
production or procedures used in the provision of public water service,
financial information, rate information, contract terms, business plans,
prospects or opportunities which have been discussed or considered by management
of Pennichuck, or any other business information whatsoever of Pennichuck which
is not otherwise available to the public. You shall keep confidential and not
disclose to anyone, or use for your benefit or gain at any time, any and all
such confidential or proprietary information.

 

      12.      During the 12-month period immediately following the Separation
Date, you agree to cooperate and make yourself available for discussions and
meetings with representatives of Pennichuck on a reasonable basis for up to a
total of 160 hours in order to provide Pennichuck with services relating to tax,
regulatory, financing, transitional or related issues as requested by
Pennichuck. Pennichuck will pay you for such time at the rate of $57.60 per hour
or $460.80 per day. Such compensation will be paid to you on an independent
contractor basis, and you agree to be responsible for all taxes incurred in
connection with such compensation, including but not limited to all applicable
income taxes and self-employment taxes.

<PAGE>

      13.   During the 12-month period immediately following the Separation
Date, in the event Pennichuck requires your testimony or cooperation as a
witness in the future for any legal or regulatory proceeding involving
Pennichuck or any of its officers and directors, you agree to cooperate with
Pennichuck and its attorneys and make yourself available without the need of a
subpoena. Pennichuck agrees to compensate you at a rate of $100 per hour plus
reasonable out-of-pocket expenses incurred as a result. Such compensation will
be paid to you on an independent contractor basis, and you agree to be
responsible for all taxes incurred in connection with such compensation,
including but not limited to all applicable income taxes and self-employment
taxes.

 

      14.   You have completely read this letter agreement and you fully
understand and voluntarily accept the terms of this letter agreement without
reservation. You acknowledge that, other than the payments and benefits
described in this letter agreement, you have been paid all salary, wages,
bonuses, vacation pay, and other compensation earned by you and due to you by
virtue of your employment with Pennichuck.

 

      15.   This Agreement sets forth the entire agreement between the parties
hereto, and supercedes any and all prior agreements or understandings between
the parties hereto pertaining to the subject matter hereof.

 

      16.   This Agreement may not be modified, or altered or changed except
upon written consent of both parties.

 

      17.   The rights and obligations of the parties hereunder shall be
governed by the laws of the State of New Hampshire.

 

      Other than as stated herein, no promise or inducement has been offered to
you in consideration of your acceptance and agreement to the terms of this
letter agreement. In the event that the contents of this letter agreement
conform to your understanding of our agreement, please sign this letter
agreement in the space indicated below and return it to me at your earliest
convenience.

   

Sincerely,

     

PENNICHUCK WATER WORKS, INC.

     

By:  /s/ Donald L. Correll

 

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            Donald L. Correll

 

            Chief Executive Officer

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I HAVE READ THE ABOVE LETTER AGREEMENT, AND I KNOWINGLY AND VOLUNTARILY ACCEPT
AND AGREE TO ITS TERMS.

 

/s/ Charles J. Staab

 

February 14, 2005

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Charles J. Staab

 

(Date)

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