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Exhibit 10.1
WAIVER AND EMPLOYMENT AGREEMENT
This agreement entered into as of September 21, 2000, among
Commonwealth Energy System and certain of its subsidiaries,
namely Commonwealth Gas Company, COM/Energy Services Company,
Commonwealth Electric Company and Advanced Energy Systems, Inc.
(each and any of them as the case may be hereinafter referred to
as the "Company"), Xxxxxxx X. XxXxxxxxxx (the "Employee") and
NSTAR.
WHEREAS, pursuant to an Amended and Restated Agreement and
Plan of Merger dated December 4, 1998, as amended and restated
May 4, 1999, the Company combined with BEC Energy and its
subsidiaries to become part of a holding company system under
NSTAR;
WHEREAS, in connection with the consummation of the
combination, NSTAR has established compensation and benefit
programs for certain officers of NSTAR and its subsidiaries (the
"NSTAR Group") which provide for an integrated program of cash
compensation, non-cash incentive compensation, pension and other
retirement and welfare benefits (the "NSTAR Benefits Program");
WHEREAS, Employee is a party to a Change in Control
Agreement with the Company dated December 5, 1998 (the "CES
Change in Control Agreement") and a Split Dollar Supplemental
Pension Agreement with the Company dated June 1, 1994 (the "CES
Supplemental Pension Agreement");
WHEREAS, NSTAR, the Company and Employee wish to transition
Employee from the Company benefit program to the NSTAR Benefits
Program, including without limitation, the NSTAR Change in
Control Agreement and the NSTAR Supplemental Employee Retirement
Plan, and as a condition to Employee's participation in, or
continued participation in, the said NSTAR Benefits Program,
NSTAR, the Company and Employee have agreed to terminate or amend
certain agreements that constituted part of the Company benefit
program, including without limitation, the CES Change in Control
Agreement and the CES Supplemental Pension Agreement.
NOW, THEREFORE, in consideration of NSTAR making available
to Employee the NSTAR Benefits Program and Employee's
participation, or continued participation, in the NSTAR Benefits
Program, and for other good and valuable consideration, receipt
of which is hereby acknowledged by the parties, NSTAR, the
Company and Employee hereby agree as follows:
1. Employee, for himself, his heirs, executors,
administrators, personal representatives and assigns hereby
agrees to the termination of the CES Change in Control Agreement
and the CES Supplemental Pension Agreement and irrevocably waives
and forfeits any and all retirement, life insurance, death or
other benefits or coverage (whether vested or unvested, payable
or contingent) under said CES Change in Control Agreement and CES
Supplemental Pension Agreement or under any life insurance policy
or policies issued in connection with the CES Supplemental
Pension Agreement, all effective as of the date of this
agreement. Employee also agrees never to make any claim for
benefits or coverage under said CES Change in Control Agreement
and CES Supplemental Pension Agreement and life insurance policy
or policies issued in connection with the CES Supplemental
Pension Agreement, and in the event any such claim is made by any
person, to defend and indemnify the Company and NSTAR therefrom.
2. NSTAR agrees that in the event of the Employee's
termination of employment from the NSTAR Group on or after the
date of this agreement and prior to September 1, 2002 (the
"covered period") for any reason other than death or for Cause,
Employee shall be entitled to receive under this agreement a lump
sum payment equal to the excess, if any, of (i) the amount of
Termination Benefit set forth in the following SCHEDULE over (ii)
the total value of benefits paid or payable to Employee, if any,
on account of a payment event which occurs during the covered
period, under the NSTAR Change in Control Agreement with Employee
dated September 21, 2000.
SCHEDULE
Date of Termination of Employment Termination Benefit
On or After the date of this agreement and $ 1,959,269
Prior to July 1, 2000
After June 30, 2000 and prior to October 1, 2000 $ 1,815,550
After September 30, 2000 and prior to
January 1, 2001 $ 1,671,831
After December 31, 2000 and prior to
April 1, 2001 $ 1,528,113
After March 31, 2001 and prior to July 1, 2001 $ 1,384,394
After June 30, 2001 and prior to October 1, 2001 $ 1,240,675
After September 30, 2001 and prior to
January 1, 2002 $ 1,096,956
After December 31, 2001 and prior to
April 1, 2002 $ 953,238
After March 31, 2002 and prior to July 1, 2002 $ 809,519
After June 30, 2002 and prior to August 31, 2002 $ 665,800
After September 1, 2002 $ 0
If any payment received by Employee under this paragraph 2
(but determined without regard to any additional payments
required under this sentence) would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any interest or penalties are incurred
by the Employee under this paragraph 2 with respect to such
excise tax, NSTAR will pay to Employee under this paragraph 2 an
additional amount in cash (the "Additional Amount") equal to the
amount necessary to cause the payments received by Employee under
this paragraph 2, including such Additional Amount (net of all
federal, state and local income taxes and all taxes payable as a
result of the application of Sections 280G and 4999 of the Code
and including any interest and penalties with respect to such
taxes) to be equal to the aggregate payments Employee would have
received under this paragraph 2, excluding such Additional Amount
(net of all federal, state and local income taxes) as if Sections
280G and 4999 of the Code (and any successor provisions thereto)
had not been enacted into law.
Following the termination of Employee's employment from the
NSTAR Group, Employee may submit to the Company a written opinion
(the "Opinion") of a nationally recognized accounting firm,
employment consulting firm, or law firm selected by Employee
setting forth a statement and a calculation of the Additional
Amount. The determination of such firm concerning the extent of
the Additional Amount (which determination need not be free from
doubt), shall be final and binding on both Employee and NSTAR.
NSTAR will pay to Employee the Additional Amount not later than
10 days after such firm has rendered the Opinion. NSTAR agrees
to pay the fees and expenses of such firm in preparing and
rendering the Opinion.
If, following the payment to Employee of the Additional
Amount, Employee's liability for the excise tax imposed by
Section 4999 of the Code on the payments and benefits received by
Employee is finally determined (at such time as the Internal
Revenue Service is unable to make any further adjustment to the
amount of such liability) to be less than the amount thereof set
forth in the Opinion, Employee shall reimburse NSTAR, without
interest, in an amount equal to the amount by which the
Additional Amount should be reduced to reflect such decrease in
the actual excise tax liability. The calculation of such
reimbursement shall be made by a nationally recognized accounting
firm, an employment consulting firm, or a law firm selected by
Employee, whose determination shall be binding on Employee and
NSTAR and whose fees and expenses therefor shall be paid by
NSTAR.
3. NSTAR agrees that upon Employee's termination of
employment from the NSTAR Group on or after the date of this
agreement for any reason other than death or for Cause, Employee
shall be entitled to receive a lump sum payment under this
agreement equal to the excess, if any, of (i) $494,535, which
represents the actuarial equivalent lump sum present value of the
retirement benefit which the Employee had accrued on September 1,
1999 under the Pension Plan for Employees of Commonwealth Energy
System and Subsidiary Companies, the Excess Benefit portion of
the Executive Salary Continuation and Excess Benefit Plan for
Employees of Commonwealth Energy System and Subsidiary Companies
and the CES Supplemental Pension Agreement over (ii) the
actuarial equivalent lump sum present value of the retirement
benefit the Employee is entitled to receive upon such termination
of employment under the NSTAR Pension Plan, the NSTAR Excess
Benefit Plan and the NSTAR Supplemental Executive Retirement
Plan. The amount of such lump sum payment shall be calculated by
NSTAR's Pension Plan actuary using reasonable actuarial
assumptions and such determination shall be conclusive and
binding on the Company, NSTAR and the Employee.
4. Employee acknowledges and agrees that this agreement
does not constitute a contract of employment for a specified term
nor does it in any way restrict the right of the Company or NSTAR
or Employee to terminate Employee's employment. Employee also
acknowledges and agrees that this agreement does not obligate
NSTAR to continue the NSTAR Benefits Program, which may be
amended or terminated at any time in accordance with the
applicable provisions of the NSTAR Benefits Program.
5. Any right to any payment Employee may have under this
agreement shall be that of a general unsecured creditor of NSTAR.
6. Employee's interest under this agreement will not be
alienable by Employee by assignment or any other method.
7. This agreement may be amended by written agreement
between the parties hereto.
8. This agreement will be governed and construed in
accordance with the laws of the Commonwealth of Massachusetts to
the extent such laws are not preempted by federal law.
9. Any dispute under, or relating to, this agreement shall
be referred to binding arbitration in Boston, Massachusetts,
under the rules of the American Arbitration Association before a
panel of three impartial arbitrators selected under such rules,
which panel shall consist of (1) an actuary, (2) an employee
benefit consultant, and (3) an attorney, all of whom shall have
substantial professional experience with nonqualified executive
deferred compensation arrangements.
10. This agreement sets forth the entire agreement of the
parties and supersedes all prior and contemporaneous agreements,
communications and understandings, written or oral, with respect
to the subject matter hereof.
For purposes of this agreement, the term "Cause" means only:
(a) commission of a felony or gross neglect of duty by the
Employee which is intended to result in substantial personal
enrichment of the Employee at the expense of NSTAR, (b)
conviction of a crime involving moral turpitude, or (c) willful
failure by the Employee of his duties to NSTAR which failure is
deliberate on the Employee's part, results in material injury to
NSTAR, and continues for more than 30 days after written notice
given to the Employee pursuant to a two-thirds vote of all of the
members of the NSTAR Board of Trustees at a meeting called and
held for such purpose (after reasonable notice to Employee) and
at which meeting the Employee and his counsel were given an
opportunity to be heard, such vote to set forth in reasonable
detail the nature of the failure. For purposes of this
definition of Cause, no act or omission shall be considered to
have been "willful" unless it was not in good faith and the
Employee had knowledge at the time that the act or omission was
not in the best interest of NSTAR. Any act, or failure to act,
based on authority given pursuant to a resolution duly adopted by
the NSTAR Board of Trustees or upon the instructions of the Chief
Executive Officer or another senior officer of NSTAR or based on
the advice of counsel of NSTAR shall be conclusively presumed to
be done, or omitted to be done, by the Employee in good faith and
in the best interest of NSTAR.
The name "NSTAR" under this agreement means the trustee or
trustees for the time being (as trustee or trustees but not
personally) under a Declaration of Trust dated April 20, 1999, as
amended from time to time, which is hereby referred to, and a
copy of which, as amended, has been filed with the Secretary of
the Commonwealth of The Commonwealth of Massachusetts. Any
obligation, agreement, or liability made, entered into, or
incurred by or on behalf of NSTAR binds only its trust estate,
and no shareholder, director, trustee, officer or agent thereof
assumes or shall be held to any liability therefore.
IN WITNESS WHEREOF, the parties have signed this agreement
as of the date indicated above.
THE COMPANY
/s/ X. X. Xxxxxx
X.X. Xxxxxx, President of Commonwealth
Energy System, Commonwealth Gas Company,
COM/Energy Services Company,
Commonwealth
Electric Company and Advanced Energy
Systems,
Inc.
NSTAR
/s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx, Senior Vice President,
Human Resources
/s/ Xxxxxxx X. XxXxxxxxxx
Xxxxxxx X. XxXxxxxxxx
