Officer Change of Control Agreement - Xxxxxx X Xxxxxxx
AGREEMENT
This Agreement by and between Eastern Enterprises, a Massachusetts
business trust with its principal offices in Weston, Massachusetts ("Eastern"),
Boston Gas Company, a corporation with its principal offices in Boston,
Massachusetts ("Boston Gas") and Xxxxxx X. Xxxxxxx (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 July 22, 1998:
W I T N E S S T H A T:
WHEREAS the Executive is an executive employee of Boston Gas; and
WHEREAS the Board of Trustees of Eastern (the "Board") and the Board
of Directors of Boston Gas (the "Boston Gas Board") have determined that it is
in the best interests of Eastern, Boston Gas, Eastern's shareholders and the
Executive to assure continuity in the management of Boston Gas'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. Boston Gas 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 Boston Gas, 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 Boston Gas, Eastern
or Eastern's subsidiaries. No purported termination of Executive
shall be deemed a termination for Cause unless the Boston Gas Board
shall have made a determination that Cause exists nor unless, in the
case of Cause asserted under clause (a)(ii) above, the Boston Gas
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 Boston Gas Board.
(b) "Change of Control" shall mean the occurrence of any of
the following after January 1, 1998:
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(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, spinoff 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 Boston Gas or
Boston Gas 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
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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 Boston Gas.
(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 Boston Gas (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 Boston Gas 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 Boston Gas in an executive
capacity, subject to the terms of this Agreement.
4. TERM AND DUTIES.
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(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 Boston Gas 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, Boston Gas (or, to the extent provided below, Eastern)
shall pay, provide and make available the following:
(a) Boston Gas 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 Boston Gas immediately
prior to the Effective Date.
(b) In addition to the salary payable under subsection (a)
above, Boston Gas 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. Boston Gas 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 Boston Gas 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:
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(a) by Boston Gas for Cause (but only if such termination is
accomplished in the manner specified in Section 2(a));
(b) by Boston Gas 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 Boston Gas 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 Boston Gas of
the Executive's employment under this Agreement shall take effect only after
thirty (30) days' prior written notice by Boston Gas 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
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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.
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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
Boston Gas pursuant to Section 7(b) above, Boston Gas 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 two (2) 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 two (2) times the total target benefit or benefits under
the Executive's 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 662/3% 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
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(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 Boston Gas 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 twenty-four (24) 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 Boston Gas'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 two (2) 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 two
(2) 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 Boston Gas or Eastern then in effect, Boston
Gas shall provide for substantially equivalent alternative
coverage and benefits for the Executive and the Executive's
family. Notwithstanding the foregoing, Boston Gas 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), Boston Gas shall
provide or cause to be provided to the Executive and the
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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 Boston Gas 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,
Boston Gas 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.
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(a) In the event it shall be determined that any
"payment in the nature of compensation" (as that term is
used in Section 2806 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 Boston
Gas in writing, specifying the amount of Gross Up Payment
required and details as to the calculation thereof. Boston
Gas 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 Boston
Gas, 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 Boston Gas,
and whose fees and disbursements shall be paid by Boston
Gas.
(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 Boston Gas 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, Boston
Gas shall either pay the Gross-Up Payment or provide an
opinion from Independent Tax Counsel to the Executive and
Boston Gas as to whether it
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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 Boston Gas 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 Boston Gas 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 Boston Gas, 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 Boston Gas to pay a Gross-Up Payment,
provided Boston Gas requests in writing that the Executive
do so and provides an opinion from Independent Tax Counsel
to the Executive and Boston Gas 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 Boston Gas in writing to do so at any time, in
which case the Executive shall be entitled to receive from
Boston Gas 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 Boston Gas, 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 Boston Gas
acknowledges its liability under this Agreement in the
event that the Internal Revenue Service or other tax
authority prevails in the contest. Boston Gas 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, Boston Gas 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 Boston Gas.
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 Boston Gas and its subsidiaries or affiliates (to the extent
not provided by insurance). Boston Gas 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 Boston Gas's
ability to establish or fund a so-called "rabbi trust" or similar arrangement to
help Boston Gas 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 Boston Gas's liabilities hereunder or otherwise
adversely affect the Executive.
12. LITIGATION EXPENSES. In the event of any litigation or other
proceeding between Boston Gas 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), Boston
Gas 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.
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Notwithstanding any provision of Massachusetts law to the contrary,
in no event shall the Executive be required to reimburse Boston Gas or Eastern
for any of the costs and expenses relating to such litigation or other
proceeding.
13. INCOME TAX WITHHOLDING. Boston Gas 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
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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, Boston Gas 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 Boston Gas or Eastern
(including any of Eastern's subsidiaries other than Boston Gas) 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 Boston Gas 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 Boston Gas, respectfully, hereunder. Upon such a consolidation,
merger or transfer of assets and assumption, involving Eastern or Boston Gas,
the terms "Eastern" and "Boston Gas", 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 Boston
Gas under this Agreement shall survive the termination for any reason of this
Agreement (whether such termination is by Eastern, by Boston Gas, 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
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Attention: Legal Department
(b) To Boston Gas:
Boston Gas Company
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Legal Department (with a copy to Eastern)
(c) To the Executive:
Xxxxxx X. Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, #0X
Xxxxxx, XX 00000
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 Boston Gas 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.
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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
Commonwealth of Massachusetts, 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 Boston Gas 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:
-----------------------------
BOSTON GAS COMPANY
By:
-----------------------------
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Xxxxxx X. Xxxxxxx
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