Exhibit 10.2
AGREEMENT
AGREEMENT made as of the 1st day of September 1998, by and
between Eastern Enterprises ("Eastern") and Xxxx X. Xxxxxx ("Executive"):
WITNESSETH
WHEREAS Executive is President and Chief Operating Officer of Eastern;
and
WHEREAS Eastern is simultaneously entering into a Change of Control
Agreement dated as of September 1, 1998 with Executive (the "Change of Control
Agreement"), under which Eastern has agreed to pay Executive certain income and
benefits in the event of termination of Executive's employment following a
change of control; and
WHEREAS Eastern and Executive believe it to be in their mutual interest
that Executive should be assured of certain additional salary and benefit
amounts following termination of his employment, whether in the context of a
change of control or otherwise, all as hereinafter more fully set forth;
NOW, THEREFORE, in consideration of these presents and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Eastern and Executive agree as follows.
1. Definitions. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings set forth in
Appendix A.
2. Salary Continuation. For a period of 24 months following a Qualified
Termination of Employment, Eastern will continue to pay to Executive bi-weekly
an amount equal to the excess of (i) Executive's bi-weekly salary (less legally
required and voluntarily authorized deductions) at the rate in effect
immediately prior to such termination, over (ii) any disability payments
(expressed as a bi-weekly amount) paid to Executive for such period under a plan
or program of Eastern. If Executive is awarded disability payments retroactively
for any period for which he has already received salary continuation payments
under the preceding sentence, he shall reimburse Eastern for the excess of the
salary continuation payments so received over the amount he would have received
had such disability payments been paid in bi-weekly installments over such
period. If Executive should die before the completion of any salary continuation
payments under this paragraph, the remaining installments shall be paid to
Executive's spouse or, if he is not survived by his spouse, for the benefit of
his Dependents, if any; provided, that such remaining installments shall be
determined without the offset described in (ii) above except to the extent
disability payments under a plan or program of Eastern continue to be paid to
Executive's surviving spouse or Dependents, as the case may be. Payments for the
benefit of any Dependent who is incompetent or a minor may be made to his or her
legal representative or custodian. In no event shall payments under this
paragraph 2 continue beyond the first day of the first month coinciding with or
next following Executive's attainment of age 65.
3. Certain Welfare Benefits. During the 24-month period described in
paragraph 2, Eastern will continue to provide Executive and his family coverage
under Eastern's health (medical/dental), disability, and life insurance (or
other death benefit) programs, on the same terms (including cost sharing) and at
the same levels of coverage as apply to other senior executive employees of
Eastern. To the extent such continued coverage cannot be offered under the terms
of Eastern's plans or programs, Eastern will attempt to accomplish the same
result through alternative arrangements. It is expressly understood and agreed
that the benefits of each of the plans shall be subject to such conditions and
limitations as are set forth in the applicable plan, policy, or contract of
insurance, and that any disputes concerning eligibility for or payment of
benefits under any such plan, policy or contract shall be settled in accordance
with its terms.
4. Pension Benefits. For purposes of determining any benefit under
Eastern's SERP, if Executive should suffer any Qualified Termination of
Employment before he reaches the age of 55, he shall nonetheless be deemed to be
an Eligible Officer, as defined in SERP, and entitled to receive a benefit
thereunder upon reaching age 55. For purposes of SERP, any Qualified Termination
of Employment shall be deemed to have been approved by the Compensation
Committee.
5. No Duplication of Benefits. Salary-continuation benefits provided
under paragraph 2 above shall be subject to reduction for severance or
severance-type benefits provided under any other plan of Eastern or its
affiliates. Payments under paragraph 2 for the period beginning 18 months after
the date of the Qualified Termination of Employment shall also be reduced by the
amount of any remuneration earned by Executive from other employment (including
self-employment) during that period. Benefits provided under paragraphs 3 and 7
shall be provided only to the extent substantially comparable benefits are not
available (on substantially comparable terms) to the Executive and his family.
The provisions of this paragraph shall be construed liberally to avoid the
duplication of benefits.
6. Inconsistency with Change of Control Agreement. Subject to the
following sentence, in the event Executive's employment with Eastern should
terminate under circumstances entitling him (at the time or upon a subsequent
Change of Control, as that term is defined in the Change of Control Agreement)
to benefits under the Change of Control Agreement, no salary continuation or
other benefits shall be provided to Executive under this Agreement nor shall the
other terms and provisions of this Agreement apply, and instead the terms and
provisions of the Change of Control Agreement shall control. If at the time of
termination of Executive's employment with Eastern a Change of Control (as
defined in the Change of Control Agreement) has not yet occurred, Executive
shall be entitled to the salary continuation and benefits described in this
Agreement provided such termination is a Qualified Termination of Employment;
provided, that if, by reason of a subsequent Change of Control, Executive
becomes entitled to remuneration or benefits under the Change of Control
Agreement with respect to such termination of employment, amounts payable and
benefits provided to Executive under the Change of Control Agreement shall be
equitably reduced to the extent necessary to reflect amounts or benefits
previously paid or provided to him under this Agreement.
7. Company Vehicle. During the 24-month period described in paragraph
2, Executive will have the continued use of the company-provided vehicle used by
Executive at the time of his termination of employment. During such period,
Eastern will provide insurance coverage for such vehicle but Executive will be
responsible, at his own expense, for all normal costs of operation and
maintenance. At the end of such period, Eastern will afford Executive the
opportunity to purchase said vehicle at its "blue book" value, determined on the
basis of the most recently issued list of such values.
8. Agreement Not to Compete or to Disclose Confidential Information.
Executive agrees that during the period of 24 months following a Qualified
Termination of Employment, Executive will not, within the states in which
Eastern operates its business or in which any of Eastern's subsidiaries operates
its business, engage, either as a principal, employee, partner, consultant or
investor (other than through a less-than-l% interest in a corporation) in a
business which competes with any such business of Eastern or its subsidiaries.
Executive agrees that if, at any time, pursuant to action of any court of
competent jurisdiction, the operation of any part of this paragraph shall be
determined to be unlawful or otherwise unenforceable, then the coverage of this
paragraph shall be deemed to be restricted as to duration, geographical scope or
otherwise, to the extent, but only to the extent, necessary to make this
paragraph lawful and enforceable in the particular jurisdiction in which such
determination is made.
Executive agrees that, following termination of employment, he will
continue to comply with Eastern's policies and procedures regarding Confidential
Information and will never, directly or indirectly, use or disclose any
Confidential Information.
9. Reduction for Certain Parachute Payments. Payments hereunder shall
be made without regard to whether the deductibility of such payments (or any
other payments to or for the benefit of Executive) would be limited or precluded
by Internal Revenue Code Section 280G and without regard to whether such
payments (or any other payments) would subject Executive to the federal excise
tax under Internal Revenue Code Section 4999 on certain "excess parachute
payments"; provided, that if the total of all payments to or for the benefit of
Executive, after reduction for all federal taxes (including the tax described in
Internal Revenue Code Section 4999, if applicable) with respect to such payments
("Executive's total after-tax payments"), would be increased by the limitation
or elimination of any payments under this Agreement, amounts so payable shall be
reduced to the extent, but only to the extent, necessary to maximize Executive's
total after-tax payments. The determination as to whether and to what extent
payments hereunder are required to be reduced in accordance with the preceding
sentence shall be made at Eastern's expense by its regular outside accountants.
In the event of any underpayment or overpayment hereunder, as determined by such
accountants, the amount of such underpayment or overpayment shall forthwith be
paid to Executive or refunded to Eastern, as the case may be, with interest at a
rate equal to 120% of the federal rate provided for in Section 7872 (f) (2) of
the Internal Revenue Code.
10. Agreement Binding on Successors. This Agreement shall be binding
on Eastern, its successors and assigns.
11. Amendment. This Agreement may be amended only by an instrument in
writing executed by both parties hereto.
12. Governing Law; Miscellaneous.
(a) The laws of the Commonwealth of Massachusetts
shall govern the construction and administration
of this Agreement.
(b) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or unenforceability of any
other provision of this Agreement.
(c) Executive shall not be obligated to seek other employment
in mitigation of amounts payable or arrangements made under any
provision of this Agreement.
Reference is hereby made to the declaration of trust establishing
Eastern Enterprises dated July 18, 1929, as amended, a copy of which is on file
in the office of the Secretary of the Commonwealth of Massachusetts. The name,
"Eastern Enterprises" refers to the trustees under said declaration of trust as
trustees and not personally, and no trustee, shareholder, officer or agent of
Eastern Enterprises shall be held to any personal liability in connection with
the affairs of said Eastern Enterprises, but the trust estate only is liable.
IN WITNESS WHEREOF, Eastern Enterprises has caused this Agreement to be
executed by its duly authorized officer, and Executive has hereunto set his
hand, as of the date first above written.
EASTERN ENTERPRISES
By: /s/ X. Xxxxxx Xxxx
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/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Appendix A Definitions
1. "Cause" means fraud, misappropriation, embezzlement, or other
malfeasance, misfeasance or other act which in the opinion of the
Compensation Committee casts such discredit on Executive or Eastern as
to justify termination of Executive's employment without the payment
or provision of benefits hereunder.
2. "Confidential Information" means any and all information not generally
known to others with whom Eastern, its subsidiaries and affiliates,
do, or plan to, compete or do business (including without limitation
information related to the development and implementation of business
strategy, financial and operating forecasts, business policies and
practices, and all other information related to the future conduct of
business) and also includes comparable information that Eastern, its
subsidiaries and affiliates, receive or have received, belonging to
others who do business with them.
3. "Dependent" means, in respect of periods after Executive's death,
any dependent child of Executive who is under the age of
nineteen (19) or, if a full-time student, under the age of
twenty-three (23).
4. "Good Reason" means:
(a) The removal of Executive from the position of President and
Chief Operating Officer of Eastern; the assignment to him of
duties inconsistent with his positions, duties,
responsibilities, reporting requirements and status within
Eastern as President and Chief Operating Officer; or any
other action by Eastern which results in a diminishment of
his position, authority, duties, responsibilities, reporting
requirements, or status, other than an insubstantial and
inadvertent action that is remedied by Eastern promptly after
receipt of notice thereof; or
(b) Any diminishment by Eastern in Executive's cash compensation
opportunities, other than in connection with a change
affecting executive officers of Eastern generally; or
(c) Any relocation of Executive by more than 50 miles.
5. "Compensation Committee" means the Compensation Committee of the Board
of Trustees of Eastern Enterprises.
6. "Qualified Termination of Employment" means a termination of
Executive's employment with Eastern either (a) by Eastern other than
for Cause (in which event the burden of proving the existence of Cause
would be on Eastern), or (b) by Executive for Good Reason.
7. "SERP" means Eastern's Supplemental Executive Retirement Plan as from
time to time in effect, or any successor plan.
