Officer Change of Control Agreement Xxxxxxxx X. Xxxx
AGREEMENT
This Agreement by and between Eastern Enterprises, a Massachusetts
business trust with its principal offices in Weston, Massachusetts ("Eastern"),
Midland Enterprises, Inc., a corporation with its principal offices in
Cincinnati, Ohio ("Midland") and Xxxxxxxx X. Xxxx (the "Executive"), is entered
into as of the 22nd day of September, 1999, and amends and supersedes in its
entirety the agreement between the parties dated November 16, 1998:
W I T N E S S E T H T H A T:
WHEREAS the Executive is an executive employee of Midland; and
WHEREAS the Board of Trustees of Eastern (the "Board") and the Board of
Directors of Midland (the "Midland Board") have determined that it is in the
best interests of Eastern, Midland, Eastern's shareholders and the Executive to
assure continuity in the management of Midland's administration and operations
by entering into an agreement to provide the Executive with certain assurances
pertaining to compensation and benefits in the event that a Change of Control,
as defined below, should be under consideration or should have occurred.
NOW, THEREFORE, it is hereby agreed by and between the parties hereto
as follows:
1. EMPLOYMENT. Midland agrees that from and after the Effective Date as
hereinafter defined it shall continue the Executive in its employ and the
Executive agrees that from and after the Effective Date he shall remain in the
employ of Midland, in each case for the period described in Section 4 hereof and
upon the other terms and conditions herein provided.
2. CERTAIN DEFINITIONS: For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(a) "Cause" shall mean, subject to the provisions of this
definition, (i) conviction of the Executive for (or a plea of nolo
contendere by the Executive with respect to) a felony, or (ii) an act
by the Executive of fraud or dishonesty which has resulted or is likely
to result in material economic damage to Midland, Eastern or Eastern's
subsidiaries. No purported termination of Executive shall be deemed a
termination for Cause unless the Midland Board shall have made a
determination that Cause exists nor unless, in the case of Cause
asserted under clause (a)(ii) above, the Midland Board shall have given
the Executive the opportunity, upon at least thirty (30) days' prior
written notice, to appear and be heard with counsel before the Midland
Board.
(b) "Change of Control" shall mean the occurrence of any of
the following after January 1, 1998:
(i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) or group of "persons" (as so defined), other than
Eastern, becomes a beneficial owner directly or indirectly of
securities representing twenty-five percent (25%) or more of
the combined voting power of the then outstanding voting
securities of Eastern; or
(ii) there is consummated a merger or consolidation
("merger") involving Eastern and immediately after such merger
the beneficial owners immediately prior to such merger of the
then outstanding voting securities of Eastern do not continue
to own beneficially at least sixty percent (60%) of the voting
securities of the entity or entities resulting from such
merger; or
(iii) there is consummated a sale, lease, exchange,
spin-off or other transfer (any of the foregoing, a
"transfer") of all or substantially all of the assets or
business of Eastern and its subsidiaries, other than any such
transfer resulting in beneficial ownership of not less than
sixty percent (60%) of the assets or business so transferred
or not less than sixty percent (60%) of the voting securities
of the entity or entities to which such assets were
transferred by the owners immediately prior to the transfer of
the then outstanding voting securities of Eastern; or
(iv) within any two-year period, individuals who at
the beginning of such period constituted the Board of Trustees
of Eastern cease for any reason to constitute a majority
thereof; provided, that any trustee who is not in office at
the beginning of such two-year period but whose election or
nomination for election was approved by a vote of at least
two-thirds of the trustees in office at the time of such
approval who were either trustees of Eastern at the beginning
of such period or who were elected to the Board of Trustees
pursuant to an election which was, or for which the nomination
for election was, previously so approved shall be deemed to
have been in office at the beginning of such two-year period;
or
(v) Eastern sells or otherwise disposes of all or
substantially all of its voting securities of Midland or
Midland sells or otherwise disposes of all or substantially
all of its assets, excluding in either case any transaction
resulting in beneficial ownership of not less than fifty
percent (50%) of the assets or business so transferred or not
less than fifty percent (50%) of the voting securities of the
entity or entities to which such assets were transferred by
the owners immediately prior to the transfer of the then
outstanding voting securities of Eastern.
(c) "Code" shall mean the federal Internal Revenue Code of
1986, as amended.
(d) "Disability" shall mean the Executive's demonstrated
inability, over a continuous period of at least twelve (12) months, to
perform the Executive's duties and responsibilities by reason of a
disabling injury or condition that would qualify the Executive for
benefits under the long term disability program maintained for
employees of Midland.
(e) "Effective Date" means the earlier of (i) the date on
which Eastern enters into a definitive agreement, the transactions
contemplated by which will, when consummated, constitute a Change of
Control, or (ii) the date which precedes the Change of Control by six
(6) months.
(f) "Good Reason" means any of the following unless promptly,
fully and retroactively corrected by Midland (or by Eastern, in the
case of any employee or executive benefit, benefit program, incentive
program, or perquisite maintained by Eastern) or unless waived in
writing by the Executive: (i) any reduction in the annual rate of base
salary payable to the Executive below the higher of the annual rate at
which base salary is then being paid to the Executive or the annual
rate at which base salary was being paid to the Executive immediately
prior to the Effective Date; (ii) the elimination of or any reduction
in the bonus opportunities made available to the Executive under any
bonus or incentive program; (iii) the elimination of or any reduction
in any other employee or executive benefit, benefit program or
perquisite then available to the Executive or the Executive's family or
that was available to the Executive or the Executive's family
immediately prior to the Effective Date, or any change in any such
employee or executive benefit, benefit program or perquisite that would
result in additional cost to the Executive or the Executive's family,
in each case except for changes in broad-based employee benefit
programs (that is, employee benefit programs available to non-officer
employees generally as well as officers) that have a similar effect on
both officer and non-officer participants generally in such programs;
(iv) any material change in the Executive's duties, functions or
responsibilities (including without limitation reporting lines); (v)
any action resulting in a relocation of the Executive's regular place
of employment to a location that is more than thirty-five (35) miles
from the place where the Executive was regularly employed immediately
prior thereto or immediately prior to the Effective Date; and (vi) any
other material breach of this Agreement by Midland or Eastern.
(g) "Protected Period" means the period beginning on the
Effective Date and ending on the date which follows the related Change
of Control by twenty-four (24) months.
3. POSITION AND RESPONSIBILITIES. During the period of employment
hereunder, the Executive agrees to serve Midland in an executive capacity,
subject to the terms of this Agreement.
4. TERM AND DUTIES.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the Effective Date
and shall continue for a period that ends on the last day of the
Protected Period.
(b) During the period of employment hereunder and except for
illness or incapacity and reasonable vacation periods, the Executive's
business time, attention, skill and efforts shall be exclusively
devoted to the business and affairs of Midland and its subsidiaries;
provided, however, that nothing in this Agreement shall preclude the
Executive from engaging in the following:
(i) serving as a director, trustee or committee
member in any company or organization,
(ii) delivering lectures and fulfilling speaking
engagements, and
(iii)engaging in charitable and community activities,
provided that such activities do not materially adversely affect or
interfere with the performance of the Executive's obligations under
this Agreement.
5. COMPENSATION AND BENEFITS. During the Executive's employment under
this Agreement, Midland (or, to the extent provided below, Eastern) shall pay,
provide and make available the following:
(a) Midland shall pay the Executive base salary at an annual
rate that is not less than the annual rate at which base salary was
being paid to the Executive by Midland immediately prior to the
Effective Date.
(b) In addition to the salary payable under subsection (a)
above, Midland and Eastern shall provide or make available to the
Executive, from and after the Effective Date and during the term of the
Executive's employment hereunder, bonus opportunities, benefits, and
perquisites not less favorable, and on terms not less favorable, to the
Executive than the bonus opportunities, benefits and perquisites
provided or made available and on the terms provided or made available
to the Executive immediately prior to the Effective Date.
6. BUSINESS EXPENSE. Midland shall pay or reimburse the Executive for
all reasonable travel or other expenses incurred in connection with the
performance of the Executive's duties under this Agreement in accordance with
such procedures as Midland may from time to time establish.
7. TERMINATION OF EMPLOYMENT. Notwithstanding any other provision of
this Agreement, the Executive's employment under this Agreement may be
terminated:
(a) by Midland for Cause (but only if such termination is
accomplished in the manner specified in Section 2(a));
(b) by Midland other than for Cause pursuant to Section 7(a)
and other than on account of Disability or death;
(c) by the Executive for Good Reason;
(d) by the Executive other than for Good Reason, Disability or
death; or
(e) by Midland or the Executive by reason of the Executive's
Disability or death.
Except in the case of termination by reason of the Executive's death or
termination for Cause pursuant to Section 7(a), any termination by Midland of
the Executive's employment under this Agreement shall take effect only after
thirty (30) days' prior written notice by Midland to the Executive.
8. VESTING OF CERTAIN AWARDS AND BENEFITS.1 In the event of a Change of
Control, the Executive shall be immediately vested in all shares of restricted
stock of Eastern then held by the Executive, and all stock options then held by
the Executive that were awarded under Eastern's 1982 Stock Option Plan or 1995
Stock Option Plan (or any successor plan or plans) and that were not then
exercisable shall become immediately exercisable. If the Executive's employment
under this Agreement shall have terminated or been terminated under Section 7(b)
or Section 7(c) above on or after the Effective Date but before the related
Change of Control, the immediately preceding sentence shall be applied by
substituting the words "held by the Executive immediately prior to termination
of employment" for the words "then held by the Executive". If the Executive's
employment under this Agreement shall have terminated or been terminated under
Section 7(b) or Section 7(c) above, all of the Executive's stock options
(including replacement options, if any, issued in substitution for such stock
options in connection with the Change in Control) held by the Executive
immediately prior to such termination shall be exercisable for a period that
ends not earlier than the earlier of (i) the date on which the option would have
expired or terminated had the Executive continued in employment, and (ii) the
date which follows the Change of Control by thirteen (13) months; provided, that
clause (ii) of this sentence shall not operate to extend the period of
exercisability for any stock option that is intended to be an "incentive stock
option" within the meaning of Section 422 of the Code; and further provided,
that if stock options are not assumed (and no replacement options are issued) in
connection with the Change of Control, Eastern shall provide the Executive the
opportunity to exercise all of the stock options then held by the Executive
(taking into account the provisions of this sentence) on the same basis as
options held by active employees that become exercisable in connection with the
Change of Control. The provisions of this Section 8 shall be in addition to, and
not in limitation of, any rights that Executive may otherwise have to the
vesting of benefits upon a Change of Control. Without limiting the foregoing,
this Agreement shall be treated as a "COC Agreement" for purposes of the Eastern
Enterprises Supplemental Executive Retirement Plan and the Eastern Enterprises
Supplemental Retirement Plan for Certain Officers, each as from time to time
amended.
9. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) In the event of any termination of the Executive's
employment during the term of this Agreement, if such termination is
(1) by the Executive pursuant to Section 7(c), above, or (2) by Midland
pursuant to Section 7(b) above, Midland shall pay to the Executive the
sum of the following amounts within 30 days of such termination
(provided, that if such termination of employment occurs after the
Effective Date but before the Change of Control, the Executive shall be
entitled to the payments described at (i), (ii) and (iii) below only
upon consummation of the Change of Control):
(i) a lump sum cash amount equal to the product of
three (3) times the annual rate at which the Executive was
being paid base salary immediately prior to such termination
or immediately prior to the Effective Date, if greater;
(ii) a lump sum cash amount equal to the product of
three (3) times the Executive's total target benefit or
benefits under the annual bonus or incentive plan or plans in
which the Executive was participating for the period including
the date of termination or times the Executive's total target
benefit or benefits under the annual bonus or incentive plan
or plans in which the Executive was participating for the
period including the Effective Date if higher; provided, that
for purposes of determining the Executive's target benefit for
any portion of an award opportunity as to which no target
amount is specified, (A) if the portion of the award
opportunity as to which no target benefit is specified is a
financial award opportunity, then the target benefit for such
portion shall be 66 2/3% of the maximum award opportunity for
such portion, and (B) if the portion of the award opportunity
as to which no target benefit is specified is a management
objective or "MBO" award opportunity, then the target benefit
for such portion shall be 75% of the maximum award opportunity
for such portion; and further provided, that the Executive's
total target benefit or benefits will equal the sum of the
separate portions of the award opportunity as hereinabove
determined; and
(iii) a lump sum cash amount equal to the product of
the Executive's total target benefit or benefits (as described
at paragraph (ii) above, but determined solely by reference to
the annual bonus or incentive plan or plans in which the
Executive was participating for the period including the date
of termination) times a fraction, the numerator of which is
the number of days elapsed in such bonus or incentive period
prior to the date of termination, and the denominator of which
is three hundred sixty-five (365).
In addition, upon termination of employment Midland shall promptly pay
to the Executive any salary, bonuses, or other payments earned by the
Executive but not yet paid as of the date of termination.
(b) For a period of thirty-six (36) months commencing with the
month in which a termination described in (a)(1) or (a)(2) above shall
have occurred, the Executive and the Executive's family shall continue
to be entitled to participate in Midland's or Eastern's medical,
dental, life-insurance, disability and other welfare benefit plans and
programs at a level of benefits at least as favorable to the Executive
and the Executive's family, and on terms at least as favorable to the
Executive and the Executive's family, as were available to the
Executive and the Executive's family immediately prior to termination
or immediately prior to the Effective Date (whichever is more favorable
to the Executive and the Executive's family). For purposes of any such
benefit that is based on the Executive's length of employment, the
Executive shall be deemed credited with three (3) additional years of
employment. For purposes of any such benefit that is based on the
Executive's average compensation, the average taken into account shall
not be less than the average that would be determined by assuming
continued base salary and bonus or incentive payments for a period of
three (3) years at the rates described at Section 9(a) above, and for
purposes of any such benefit that is based on the Executive's
compensation at termination of employment, there shall be taken into
account the higher of the Executive's compensation at termination or
the Executive's compensation immediately prior to the Effective Date.
To the extent the continuation of benefits described in this paragraph
cannot be accommodated under the plans or programs of Midland or
Eastern then in effect, Midland shall provide for substantially
equivalent alternative coverage and benefits for the Executive and the
Executive's family. Notwithstanding the foregoing, Midland shall not be
obligated to provide a benefit or coverage under the preceding
provisions of this paragraph to the extent an equivalent or better
benefit or coverage is available to the Executive or the Executive's
family, on a basis that is at least as favorable to the Executive and
the Executive's family, under a plan or program of another employer.
Immediately following the termination of the benefits provided under
this Section 9(b) whenever occurring (or at any earlier time subsequent
to the termination of employment giving rise to such benefits), Midland
shall provide or cause to be provided to the Executive and the
Executive's family retiree health, dental, life and other retiree
benefits, in each case not less favorable (and on terms not less
favorable) to the Executive and the Executive's family than those
available to eligible retirees and their families under the retiree
benefit program of similar type (for example, retiree medical benefits
or retiree life insurance) as in effect (i) immediately prior to the
date of the termination of the Executive's employment if immediately
prior to that date the benefits available under that program to
eligible retirees and their families were more favorable (and were made
available on terms that were more favorable) than the benefits and
terms, if any, available to eligible retirees and their families under
that program as in effect immediately prior to the Effective Date, or
(ii) in all other cases, the Effective Date; provided, that the
Executive and the Executive's family shall be eligible for retiree
benefits under this sentence only if the Executive would have been
eligible to participate in the retiree program of similar type (as in
effect immediately prior to the Effective Date or immediately prior to
the termination of the Executive's employment, whichever provided for
more liberal eligibility requirements) if (A) such program had
continued unchanged and the Executive had continued in employment
through the end of the benefits continuation period described in the
first sentence of this Section 9(b) (determined without regard to any
early termination of such period attributable to benefits made
available by a subsequent employer), and (B) the Executive had then
retired. For purposes of applying the immediately preceding sentence,
any minimum age requirement applicable to the Executive for
participation in a retiree benefit program of Eastern or its
subsidiaries shall be deemed satisfied if, as of the end of the
benefits continuation period described in the first sentence of this
Section 9(b) (determined without regard to any early termination of
such period attributable to benefits made available by a subsequent
employer), the Executive is or would have been at least age 52. Nothing
in this paragraph shall be construed as requiring Midland or Eastern to
pay severance in addition to the payments and benefits otherwise
provided for in this Agreement.
(c) If the Executive so requests in connection with a
termination described in (a)(1) or (a)(2) above, Midland will pay in
accordance with prior practice the costs of an out-placement service
used by the Executive as a result of such termination.
(d) Upon termination of the Executive's employment under this
Agreement for any reason, the Executive shall have the right to
purchase the automobile, if any, supplied to the Executive by Eastern
or its subsidiaries in connection with the Executive's employment, or
any automobile substituted therefor with the Executive's approval, at
its "blue book" value.
10. CERTAIN TAX-RELATED PAYMENTS.
(a) In the event it shall be determined that any "payment in
the nature of compensation" (as that term is used in Section 280G of
the Code) to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would be subject to the excise
tax imposed by Section 4999 of the Code or comparable state or local
tax or any interest or penalties with respect to such excise tax or
comparable state or local tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then, subject to the following sentence, the cash
payments described at Section 9(a)(i), (ii) and (iii) hereof (but
excluding, for the avoidance of doubt, any payments referred to in the
last sentence of Section 9(a)) shall be reduced, but not below zero, to
the extent (and only to the extent) necessary to avoid the imposition
of an Excise Tax. Notwithstanding the foregoing, if the preceding
sentence would result in a reduction of more than ten percent (10%) in
the Executive's total "parachute payments" (as that term is defined in
Section 280G(b)(2) of the Code), or if the reduction described in the
preceding sentence would not eliminate the Excise Tax, no reduction
shall be made in the payments or benefits due to the Executive under
this Agreement or otherwise and instead the Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment"). The Gross-Up
Payment shall be equal to the sum of the Excise Tax and all taxes
(including any interest or penalties imposed with respect to such
taxes) imposed upon the Gross-Up Payment.
(b) If the Executive determines that a Gross-Up Payment is
required, the Executive shall so notify Midland in writing, specifying
the amount of Gross-Up Payment required and details as to the
calculation thereof. Midland shall, within 30 days, either pay such
Gross-Up Payment (net of applicable wage withholding) to the Executive
or furnish an unqualified opinion from Independent Tax Counsel (as
defined below), addressed to the Executive and Midland, that there is
substantial authority (within the meaning of Section 6661 of the Code)
for the position that no Gross-Up Payment is required. "Independent Tax
Counsel" means a lawyer with expertise in the area of executive
compensation tax law, who shall be selected by the Executive and shall
be reasonably acceptable to Midland, and whose fees and disbursements
shall be paid by Midland.
(c) If the Internal Revenue Service or other tax authority
proposes in writing an adjustment to the income tax of the Executive
which would result in a Gross-Up Payment, the Executive shall promptly
notify Midland in writing and shall refrain for at least thirty days
after giving such notice, if so permitted by law, from paying any tax
(including interest, penalties and additions to tax) asserted to be
payable as a result of such proposed adjustment. Before the expiration
of such period, Midland shall either pay the Gross-Up Payment or
provide an opinion from Independent Tax Counsel to the Executive and
Midland as to whether it is more likely than not that the proposed
adjustment would be successfully challenged if the matter were to be
litigated. If the opinion provides that a challenge would be more
likely than not to be successful if the issue were litigated, and
Midland requests in writing that the Executive contest such proposed
adjustment, then the Executive shall contest the proposed adjustment
and shall consult in good faith with Midland with respect to the nature
of all action to be taken in furtherance of the contest of such
proposed adjustment; provided that the Executive, after such
consultation with Midland, shall determine in his sole discretion the
nature of all action to be taken to contest such proposed adjustment,
including (A) whether any such action shall initially be by way of
judicial or administrative proceedings, or both (B) whether any such
proposed adjustment shall be contested by resisting payment thereof or
by paying the same and seeking a refund thereof, and (C) if the
Executive shall undertake judicial action with respect to such proposed
adjustment, the court or other judicial body before which such action
shall be commenced and the court or other judicial body to which any
appeals should be taken. The Executive agrees to take appropriate
appeals of any judicial decision that would require Midland to pay a
Gross-Up Payment, provided Midland requests in writing that the
Executive do so and provides an opinion from Independent Tax Counsel to
the Executive and Midland that it is more likely than not that the
appeal would be successful. The Executive further agrees to settle,
compromise or otherwise terminate a contest with the Internal Revenue
Service or other tax authority with respect to all or a portion of the
proposed adjustment giving rise to the Gross-Up Payment, if requested
by Midland in writing to do so at any time, in which case the Executive
shall be entitled to receive from Midland the Gross-Up Payment. In no
event shall the Executive compromise or settle all or any portion of a
proposed adjustment which would result in a Gross-Up Payment without
the written consent of Midland, which consent shall not be unreasonably
withheld.
The Executive shall not be required to take or continue any action
pursuant to this Section 10 unless Midland acknowledges its liability
under this Agreement in the event that the Internal Revenue Service or
other tax authority prevails in the contest. Midland hereby agrees to
indemnify the Executive in a manner reasonably satisfactory to the
Executive for any fees, expenses, penalties, interest or additions to
tax which the Executive may incur as a result of contesting the
validity of any Excise Tax and to reimburse the Executive promptly upon
receipt of a written demand of the Executive for all costs and expenses
which the Executive may incur in connection with contesting such
proposed adjustment (including reasonable fees and disbursements of
Independent Tax Counsel).
If the Executive shall have contested any proposed adjustment as above
provided, and for so long as the Executive shall be required under the
terms of this Section 10(c) to continue such contest, Midland shall not
be required to pay a Gross-Up Payment until there occurs a Final
Determination (as defined below) of the liability of the Executive for
the tax and any interest, penalties and additions to tax asserted to be
payable as a result of such proposed adjustment. A "Final
Determination" shall mean (A) a decision, judgment, decree or other
order by any court of competent jurisdiction, which decision, judgment,
decree or other order has become final after all allowable appeals by
either party to the action have been exhausted, the time for filing
such appeal has expired or the Executive has no right under the terms
hereof to request an appeal, (B) a closing agreement entered into under
Section 7121 of the Code or any other settlement agreement entered into
in connection with an administrative or judicial proceeding and with
the consent of the Executive, or (C) the expiration of the time for
instituting a claim for refund, or if such a claim was filed, the
expiration of the time for instituting suit with respect thereto.
(d) In the event the Executive receives any refund from the
Internal Revenue Service or other tax authority on account of an
overpayment of Excise Tax, such amount, together with that part of any
Gross-Up Payment attributable to such amount, shall be promptly paid by
the Executive to Midland.
11. SOURCE OF PAYMENTS. Except as provided at Section 8 above, all
payments provided for under this Agreement shall be paid or provided from the
general assets of Midland and its subsidiaries or affiliates (to the extent not
provided by insurance). Midland shall not be required to establish a special or
separate fund or other segregation of assets to assure such payments. Nothing in
this Section, however, shall be construed as restricting Midland's ability to
establish or fund a so-called "rabbi trust" or similar arrangement to help
Midland meet its liabilities hereunder, provided that the establishment or
funding of such a trust or arrangement does not by its terms or by operation of
law limit or purport to limit Midland's liabilities hereunder or otherwise
adversely affect the Executive.
12. LITIGATION EXPENSES. In the event of any litigation or other
proceeding between Midland or Eastern and the Executive with respect to the
subject matter of this Agreement and the enforcement of rights asserted in good
faith hereunder, or, in the event of termination of employment pursuant to
Section 7(b) or Section 7(c) above, with respect to any other remuneration or
benefits with respect to the Executive (including, without limitation, payments
or benefits with respect to the Executive under any qualified or nonqualified
pension or retirement agreement, plan, policy, program or arrangement), Midland
shall reimburse the Executive for all costs and expenses relating to such
litigation or other proceeding, including reasonable attorneys fees and
expenses, promptly upon receipt of a written demand therefor and regardless of
whether such litigation results in any settlement or judgment or order in favor
of any party.
Notwithstanding any provision of Ohio law to the contrary, in no event
shall the Executive be required to reimburse Midland or Eastern for any of the
costs and expenses relating to such litigation or other proceeding.
13. INCOME TAX WITHHOLDING. Midland and Eastern may withhold from any
payments made under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.
14. CONFIDENTIAL INFORMATION. The Executive agrees that, following any
termination of his employment under this Agreement, he will continue to comply
with Eastern's policies and procedures regarding confidential information, as
that term is hereinafter defined, and will never directly or indirectly use or
disclose, except to the Executive's attorney or as required by judicial or
regulatory process or order, any confidential information as so defined. For
purposes of this paragraph, the term "confidential information" means any and
all information (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) (i) that the Executive has acquired in
connection with his employment with Eastern and its subsidiaries, (ii) that is
not generally known or available to others with whom Eastern or its subsidiaries
do, or plan to, compete or do business, and (iii) that pertains to the business
of, or belongs to, Eastern or its subsidiaries or a person described in clause
(ii).
The Executive acknowledges and agrees that, were he to breach the
provisions of this Section 14, the harm to Eastern and its subsidiaries would be
irreparable. The Executive therefore agrees that in the event of such a breach
or threatened breach, Eastern or its subsidiaries shall have the right to obtain
preliminary and permanent injunctive relief against any such breach without
having to post bond. Nothing herein shall prohibit Eastern or its subsidiaries
from seeking damages for a breach by the Executive of this Section 14, but
neither Eastern nor any other person shall withhold or offset any payments or
benefits due or owing to the Executive under the terms of this Agreement or
otherwise (including, without limitation, payments or benefits with respect to
the Executive under any qualified or nonqualified pension or retirement
agreement, plan, policy, program or arrangement), and all such payments and
benefits shall be promptly paid or provided to the Executive in accordance with
the terms of this Agreement (or such other agreement, plan, policy, program or
arrangement, as the case may be) without regard to any breach or alleged or
threatened breach by Executive of any provision of this Section 14.
15. ENTIRE UNDERSTANDING; OTHER SEVERANCE BENEFITS. If the severance
pay provisions of Section 5.1 and Section 5.3 of Eastern's Employee Salary and
Benefits Protection Plan as amended and restated September 1, 1999 (the "COC
Severance Plan") (as such provisions would have applied to the Executive had the
Executive been eligible to participate in the COC Severance Plan) would have
yielded a larger severance pay amount than that determined under paragraphs (i),
(ii) and (iii) of Section 9(a) of this Agreement, the Executive shall be
entitled under Section 9(a) hereof to such greater severance pay amount in lieu
of the formula amounts determined under Section 9(a)(i), (ii) and (iii);
provided, that such severance pay shall continue to be subject to the other
terms of this Agreement. If the benefits continuation provisions of Section 5.2
of the COC Severance Plan (as such provisions would have applied to the
Executive and the Executive's family had the Executive been eligible to
participate in the COC Severance Plan) would have provided for continuation of
benefits at least as good as those provided under this Agreement but for a
longer period of time, the period described in Section 9(b) of this Agreement
for the continuation of benefits shall be deemed modified to provide for such
longer period of benefits continuation. Subject to the foregoing, this Agreement
contains the entire understanding between Eastern, Midland and the Executive
with respect to the subject matter hereof and supersedes any prior Change of
Control or similar severance or salary continuation agreement between Midland or
Eastern (including any of Eastern's subsidiaries other than Midland) and the
Executive.
16. SEVERABILITY. If, for any reason, any one or more of the provisions
or part of a provision contained in this Agreement shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement not held so invalid, illegal or unenforceable, and each other
provision or part of a provision shall to the full extent consistent with law
continue in full force and effect.
17. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this Agreement
shall preclude Eastern or Midland from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another person that
assumes this Agreement and all obligations and undertakings of Eastern or
Midland, respectfully, hereunder. Upon such a consolidation, merger or transfer
of assets and assumption, involving Eastern or Midland, the terms "Eastern" and
"Midland", respectfully, as used herein shall mean such other person and this
Agreement shall continue in full force and effect.
18. SURVIVAL OF OBLIGATIONS. The obligations of Eastern and Midland
under this Agreement shall survive the termination for any reason of this
Agreement (whether such termination is by Eastern, by Midland, by the Executive,
upon the expiration of this Agreement or otherwise).
19. NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be given in writing and shall be deemed to
have been duly given if delivered or mailed, registered or certified, postage
prepaid with return receipt requested, as follows:
(a) To Eastern:
Eastern Enterprises
0 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Legal Department
(b) To Midland:
Midland Enterprises, Inc.
000 Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Attention: Legal Department (with a copy to Eastern)
(c) To the Executive:
[Address]
or to such other address as either party shall have previously specified in
writing to the other pursuant to this Section 19.
20. NO ATTACHMENT. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to
execution, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
21. BINDING AGREEMENT. This Agreement shall be binding upon (subject to
Section 25(a))and shall inure to the benefit of the Executive, Eastern and
Midland and their respective successors and assigns.
22. MODIFICATION AND WAIVER.
(a) Prior to the Effective Date this Agreement may be
modified, amended or terminated by the Board of Trustees of Eastern.
From and after the Effective Date this Agreement may not be modified,
amended or terminated except by an instrument in writing signed by the
parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement except by written
instrument signed by the party charged with such waiver or estoppel. No
such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any act other
than that specifically waived.
23. HEADINGS OF NO EFFECT. The paragraph headings contained in this
Agreement are included solely for convenience of reference and shall not in any
way affect the meaning or interpretation of any of the provisions of this
Agreement.
24. GOVERNING LAW. This Agreement and its validity, interpretation,
performance and enforcement shall be governed by the laws of the State of Ohio,
without giving effect to the choice of law provisions in effect in such State.
25. MISCELLANEOUS.
(a) Eastern shall be liable under this Agreement solely with
respect to its obligations under Sections 5, 8, 9 and 21 hereof.
(b) 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 State of The
Commonwealth of Massachusetts. The name "Eastern Enterprises" refers to
the trustees under said declaration 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 and Midland have caused this Agreement to
be executed by their respective officers thereunto duly authorized, and the
Executive has signed this Agreement, all as of the date first above written.
EASTERN ENTERPRISES
By: /s/ X. Xxxxxx Xxxx
MIDLAND ENTERPRISES, INC.
By: /s/ Xxxxx X. Xxxxxxx
/s/ Xxxxxxxx X. Xxxx
Xxxxxxxx X. Xxxx
--------
1 In the event of a Change of Control intended to be accounted for as a pooling
of interests, the following changes would be made to this Section 8 if similar
changes in Eastern's other Officer Change of Control Agreements were determined
(by the independent accounting firm serving as Eastern's independent auditors
prior to the Change of Control) to be required to preserve the availability of
such accounting treatment: (i) the term "Effective Date" as used in this Section
8 would mean the date that precedes the Change of Control by six months, and
(ii) the extended exercisability provisions of the third sentence of this
Section 8 shall not apply; however, options held by the Executive prior to
termination of employment under Section 7(b) or Section 7(c), if termination
occurs after the Effective Date but before the Change of Control, would remain
exercisable until thirty (30) days following the Change of Control (or, if
later, until they would have been exercisable without regard to the provisions
of this Section 8), subject to earlier expiration and an accelerated opportunity
to exercise if the options are not assumed (and no replacement options are
issued) in connection with the Change of Control.
