Exhibit 10.1
AGREEMENT
This Agreement by and between Eastern Enterprises, a Massachusetts
business trust with its principal offices in Weston, Massachusetts ("Eastern"),
and X. Xxxxxx Xxxx (the "Executive"), is entered into as of the 22nd day of
July, 1998:
W I T N E S S E T H T H A T:
WHEREAS the Executive is an executive employee of Eastern;
WHEREAS, Eastern has previously entered into an Agreement, dated
November 27, 1991, with Executive (the "Employment Agreement"), under which
Eastern has agreed to pay Executive certain income and benefits in the event of
termination of Executive's employment; and
WHEREAS the Board of Trustees of Eastern (the "Board") has determined
that it is in the best interests of Eastern, its shareholders and the Executive
to assure continuity in the management of Eastern'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. Eastern 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 Eastern, 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 Eastern or its subsidiaries.
No purported termination of Executive shall be deemed a termination for
Cause unless the Board, by an affirmative vote of not less than
two-thirds of the entire membership of the Board at a meeting of the
Board, shall have made a determination that Cause exists nor unless, in
the case of Cause asserted under clause (a)(ii) above, the 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 Board. In the case of Cause asserted under clause (a)(ii) above,
the thirty (30) days' prior written notice must be given within 120
days following the Board first becoming aware of the occurrence of the
last event providing a basis or otherwise significantly contributing to
a determination of Cause.
(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;
provided, however, that there shall be excluded from this
clause (iv) any individual whose initial assumption of office
occurred as a result of an actual or threatened election
contest with respect to the election or removal of Trustees or
other actual or threatened solicitation of proxies or
consents, by or on behalf of a person other than the Board of
Trustees.
(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 Eastern's long term disability program.
(e) "Effective Date" shall mean the date specified in
Section 4(a) below.
(f) "Good Reason" means any of the following unless promptly,
fully and retroactively corrected 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 diminution in the nature or scope of 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
Eastern.
3. POSITION AND RESPONSIBILITIES. During the period of employment
hereunder, the Executive agrees to serve Eastern 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 date (the
"Effective Date") which precedes by six (6) months the date of a Change
of Control and shall continue for a period which ends on the last day
of the twenty-four (24) calendar month period which begins on the date
of such Change of Control.
(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 Eastern 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 to
Eastern.
5. COMPENSATION AND BENEFITS. During the Executive's employment
under this Agreement, Eastern shall pay, provide and make available the
following:
(a) Eastern 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 Eastern immediately prior to the
Effective Date.
(b) In addition to the salary payable under subsection (a)
above, 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, equity
compensation, and perquisites not less favorable, and on terms not less
favorable, to the Executive than the bonus opportunities, benefits,
equity compensation, 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. Eastern 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 Eastern 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 Eastern for Cause (but only if such termination is
accomplished in the manner specified in Section 2(a));
(b) by Eastern 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 Eastern 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 Eastern of
the Executive's employment under this Agreement shall take effect only after
thirty (30) days' prior written notice by Eastern to the Executive.
8. VESTING OF CERTAIN AWARDS AND BENEFITS. 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 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 been terminated under Section 7(b) or Section 7(c) above
after the Effective Date but before the Change of Control, all shares of
restricted stock held by the Executive immediately prior to termination of
employment shall be vested and all stock options held by the Executive
immediately prior to termination of employment (including replacement options,
if any, issued in substitution for such stock options in connection with the
Change of Control), whether or not otherwise exercisable, shall be exercisable
for a period ending not earlier than the later of (i) the date such options
would have been exercisable without regard to this Section 8, or (ii) thirty
days following the Change of Control, subject in each case to consummation of
the Change of Control; provided, that if stock options are not assumed (and no
replacement options are issued) in connection with the Change of Control, clause
(ii) shall not apply and Eastern shall provide the Executive the opportunity to
exercise all of the stock options held by the Executive immediately prior to
termination of employment (whether or not then exercisable) 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 Eastern
pursuant to Section 7(b) above, Eastern 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 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 three (3) times the Executive's 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; and
(iii) a lump sum cash amount equal to the product of
(A) the Executive's target benefit or benefits for the bonus
or incentive period or periods that include the date of
termination (under the annual bonus or incentive plan or plans
in which the Executive was participating at the time of
termination), times a (B) a fraction, the numerator of which
is the number of days elapsed in such bonus or incentive
period or periods prior to the date of termination, and the
denominator of which is three hundred sixty-five (365).
In addition, upon termination of employment Eastern 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 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 Eastern then in effect,
Eastern shall provide for substantially equivalent alternative coverage
and benefits for the Executive and the Executive's family. Nothing in
this paragraph shall be construed as requiring Eastern to pay severance
in addition to the payments and benefits otherwise provided for in this
Agreement.
10. CERTAIN TAX-RELATED PAYMENTS. Notwithstanding any other provision
of this Agreement, the cash payments described at Section 9(a)(i), (ii) and
(iii) hereof shall be reduced, but not below zero, to the extent (and only to
the extent) necessary to avoid having any such payment or portion thereof
treated as a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code.
11. SOURCE OF PAYMENTS. All payments provided for under this Agreement
shall be paid or provided from the general assets of Eastern and its
subsidiaries or affiliates (to the extent not provided by insurance). Eastern
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 Eastern's ability to establish or fund a
so-called "rabbi trust" or similar arrangement to help Eastern 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 Eastern's liabilities hereunder or otherwise adversely affect
the Executive.
12. LITIGATION EXPENSES. In the event of any litigation or other
proceeding between 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), Eastern
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 Massachusetts law to the contrary, in
no event shall the Executive be required to reimburse Eastern for any of the
costs and expenses relating to such litigation or other proceeding.
13. INCOME TAX WITHHOLDING. 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. AGREEMENT NOT TO COMPETE, ETC. The Executive agrees that during the
36-month period beginning on the date the Executive's employment with Eastern
and its subsidiaries is terminated during the term hereof pursuant to Section
7(b) or Section 7(c) above, he 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 1% or smaller interest in a publicly traded
entity) in a business which competes with any such business of Eastern or its
subsidiaries.
The Executive further agrees that, following any such termination of
his employment, 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 agrees that if, at any time, pursuant to action of any
court of competent jurisdiction, the operation of any part of this Section 14
shall be determined to be unlawful or otherwise unenforceable, then the coverage
of this Section 14 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.
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. This Agreement contains the entire
understanding between Eastern and the Executive with respect to the subject
matter hereof and supersedes any prior Change of Control or similar severance or
salary continuation agreement, except the Employment Agreement, between Eastern
and the Executive. References in Section 6 of the Employment Agreement to the
"Salary Continuation Agreement" shall be deemed to refer to this Agreement, it
being acknowledged by the parties that to the extent similar benefits are
provided for under this Agreement and the Employment Agreement, Section 6 of the
Employment Agreement shall be construed to provide, subject to the terms
thereof, for a choice of benefits and not for duplication of benefits.
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 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
hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term "Eastern", 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 under this
Agreement shall survive the termination for any reason of this Agreement
(whether such termination is by Eastern, by the Executive, upon the expiration
of this Agreement or otherwise).
19. NO MITIGATION OR OFFSET. Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to
Executive by Eastern under this Agreement.
20. 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 the Executive:
X. Xxxxxx Xxxx
00 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
or to such other address as either party shall have previously specified in
writing to the other pursuant to this Section 20.
21. 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.
22. BINDING AGREEMENT. This Agreement shall be binding upon and
shall inure to the benefit of the Executive and Eastern and their respective
successors and assigns.
23. MODIFICATION AND WAIVER.
(a) 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.
24. 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.
25. 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.
26. MISCELLANEOUS. 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 has caused this Agreement to be executed by
its officers thereunto duly authorized, and the Executive has signed this
Agreement, all as of the date first above written.
EASTERN ENTERPRISES
By: /s/ L. Xxxxxxx Xxx, Jr.
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By: /s/ X. Xxxxxx Ives
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X. Xxxxxx Xxxx
