Exhibit 10.44
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of February
25, 1997, by and between Northeast Utilities Service Company, a Connecticut
corporation (the "Company"), with its principal office in Berlin,
Connecticut, and Xxxxxx X. Wax, a resident of West Hartford, Connecticut
("Executive").
WHEREAS, Executive is currently employed as the Senior Vice President,
Secretary and General Counsel of the Company and both parties desire to enter
into an agreement to reflect Executive's contribution to the Company's
business in Executive's executive capacities and to provide for Executive's
continued employment by the Company, upon the terms and conditions set forth
herein:
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment. The Company hereby agrees to continue the employment
of Executive, and Executive hereby accepts such employment and agrees to
perform Executive's duties and responsibilities, in accordance with the
terms, conditions and provisions hereinafter set forth.
1.1. Employment Term. The term of Executive's employment under this
Agreement shall commence as of the date hereof (the "Effective Date") and
shall continue until December 31, 1998, unless sooner terminated in
accordance with Section 5 or Section 6 hereof, and shall automatically renew
for periods of one year unless one party gives written notice to the other,
at least six months prior to December 31, 1998 or at least six months prior
to the end of any one-year renewal period, that the Agreement shall not be
further extended. The period commencing as of the Effective Date and ending
on the date on which the term of Executive's employment under the Agreement
shall terminate is hereinafter referred to as the "Employment Term".
1.2. Duties and Responsibilities. Executive shall serve in such senior
positions as directed by the Company's Board of Directors (the "Board") or
the Board of Trustees (the "Trustees") of Northeast Utilities ("NU") that
provide Executive with duties and compensation that are substantially
equivalent to Executive's current position in terms of duties and
responsibilities. During the Employment Term, Executive shall perform all
duties and accept all responsibilities incident to such positions as may be
assigned to Executive by the Board.
1.3. Extent of Service. During the Employment Term, Executive agrees to
use Executive's best efforts to carry out Executive's duties and
responsibilities under Section 1.2 hereof and, consistent with the other
provisions of this Agreement, to devote substantially all Executive's
business time, attention and energy thereto. Except as provided in Section 3
hereof, the foregoing shall not be construed as preventing Executive from
making minority investments in other businesses or enterprises provided that
Executive agrees not to become engaged in any other business activity which,
in the reasonable judgment of the Board, is likely to interfere with
Executive's ability to discharge Executive's duties and responsibilities to
the Company.
1.4. Base Salary. For all the services rendered by Executive hereunder,
the Company shall pay Executive a base salary ("Base Salary"), commencing on
the Effective Date, at the annual rate then being paid to Executive by the
Company, payable in installments at such times as the Company customarily
pays its other senior level executives (but in any event no less often than
monthly). Executive's Base Salary shall be reviewed annually for appropriate
adjustment (but shall not be reduced below that in effect on the Effective
Date without Executive's written consent) by the Trustees pursuant to its
normal performance review policies for senior level executives.
1.5. Retirement and Benefit Coverages. During the Employment Term,
Executive shall be entitled to participate in all (a) employee pension and
retirement plans and programs ("Retirement Plans") and (b) welfare benefit
plans and programs ("Benefit Coverages"), in each case made available to the
Company's senior level executives as a group or to its employees generally,
as such Retirement Plans or Benefit Coverages may be in effect from time to
time, including, without limitation, the Company's Supplemental Executive
Retirement Plan for Officers (the "Supplemental Plan"), both as to the
Make-Whole Benefit and the Target Benefit.
1.6. Reimbursement of Expenses; Vacation. Executive shall be provided
with reimbursement of expenses related to Executive's employment by the
Company on a basis no less favorable than that which may be authorized from
time to time for senior level executives as a group, and shall be entitled to
vacation and holidays in accordance with the Company's normal personnel
policies for senior level executives.
1.7. Short-Term Incentive Compensation. If the Employment Term has not
previously terminated, beginning on January 1, 1999, Executive shall be
entitled to participate in any short-term incentive compensation programs
established by the Company for its senior level executives generally
depending upon achievement of certain annual individual or business
performance objectives specified and approved by the Trustees (or a Committee
thereof) in its sole discretion; provided, however, that Executive's "target
opportunity" and "maximum opportunity" under any such program shall be at
least at the same level as in effect for Executive on January 1, 1996.
Executive's short-term incentive compensation, either in shares of NU or
cash, as applicable from time to time, shall be paid to Executive, subject
to the Board's or the Trustee's reasonable discretion, not later than such
payments are made to the Company's senior level executives generally.
1.8. Long-Term Incentive Compensation. On and after the Effective Date
and until December 31, 1998, Executive shall participate in the NU Stock
Price Recovery Plan, in accordance with the terms adopted by the Trustees and
NU's Organization, Compensation and Board Affairs Committee on December 21,
1996. If the Employment Term has not previously terminated, beginning on
January 1, 1999, Executive shall also be entitled to participate in any
long-term incentive compensation programs established by the Company for its
senior level executives generally depending upon achievement of certain
business performance objectives specified and approved by the Trustees (or a
Committee thereof) in its sole discretion; provided, however, that
Executive's "target opportunity" and "maximum opportunity" under any such
program shall be at least at the same level as in effect for Executive on
January 1, 1996. Executive's long-term incentive compensation, either in
shares of NU or cash, as applicable from time to time, shall be paid to
Executive, subject to the Board's or the Trustee's reasonable discretion, not
later than such payments are made to the Company's senior level executives
generally.
2. Confidential Information. Executive recognizes and acknowledges
that by reason of Executive's employment by and service to the Company
before, during and, if applicable, after the Employment Term Executive has
had and will continue to have access to certain confidential and proprietary
information relating to the business of the Company, which may include, but
is not limited to, trade secrets, trade "know-how", customer information,
supplier information, cost and pricing information, marketing and sales
techniques, strategies and programs, computer programs and software and
financial information (collectively referred to as "Confidential
Information"). Executive acknowledges that such Confidential Information is
a valuable and unique asset of the Company and Executive covenants that
Executive will not, unless expressly authorized in writing by the Board, at
any time during the course of Executive's employment use any Confidential
Information or divulge or disclose any Confidential Information to any
person, firm or corporation except in connection with the performance of
Executive's duties for the Company and in a manner consistent with the
Company's policies regarding Confidential Information. Executive also
covenants that at any time after the termination of such employment, directly
or indirectly, Executive will not use any Confidential Information or divulge
or disclose any Confidential Information to any person, firm or corporation,
unless such information is in the public domain through no fault of Executive
or except when required to do so by a court of law, by any governmental
agency having supervisory authority over the business of the Company or by
any administrative or legislative body (including a committee thereof) with
apparent jurisdiction to order Executive to divulge, disclose or make
accessible such information, in which case Executive will inform the Company
in writing promptly of such required disclosure, but in any event at least
two business days prior to disclosure. All written Confidential Information
(including, without limitation, in any computer or other electronic format)
which comes into Executive's possession during the course of Executive's
employment shall remain the property of the Company. Except as required in
the performance of Executive's duties for the Company, or unless expressly
authorized in writing by the Board, Executive shall not remove any written
Confidential Information from the Company's premises, except in connection
with the performance of Executive's duties for the Company and in a manner
consistent with the Company's policies regarding Confidential Information.
Upon termination of Executive's employment, Executive agrees immediately to
return to the Company all written Confidential Information in Executive's
possession. For the purposes of this Section 2, the term "Company" shall be
deemed to include NU and the Affiliates, as defined in Section 6.1(a), of NU
and the Company.
3. Non-Competition; Non-Solicitation.
(a) During Executive's employment by the Company and for a period
of two years after Executive's termination of employment for any reason,
within the Company's "service area," as defined below, Executive will not,
except with the prior written consent of the Board, directly or indirectly,
own, manage, operate, join, control, finance or participate in the ownership,
management, operation, control or financing of, or be connected as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise with, or use or permit Executive's name to be used in
connection with, any business or enterprise which is engaged in any business
that is competitive with any business or enterprise in which the Company is
engaged. For the purposes of this Section, "service area" shall mean the
geographic area within the states of Connecticut, Maine, Massachusetts, New
Hampshire, Rhode Island, and Vermont, or any other geographic area in which,
at the time of Executive's termination of employment from the Company, the
Company is doing business. Executive acknowledges that the listed service
area is the area in which the Company presently does business.
(b) The foregoing restrictions shall not be construed to prohibit
the ownership by Executive of less than five percent (5%) of any class of
securities of any corporation which is engaged in any of the foregoing
businesses having a class of securities registered pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), provided that such ownership
represents a passive investment and that neither Executive nor any group of
persons including Executive in any way, either directly or indirectly,
manages or exercises control of any such corporation, guarantees any of its
financial obligations, otherwise takes any part in its business, other than
exercising Executive's rights as a shareholder, or seeks to do any of the
foregoing.
(c) Executive further covenants and agrees that during Executive's
employment by the Company and for the period of two years thereafter,
Executive will not, directly or indirectly, (i) solicit, divert, take away,
or attempt to solicit, divert or take away, any of the Company's "Principal
Customers," defined for the purposes hereof to include any customer of the
Company, from which $100,000 or more of annual gross revenues are derived at
such time, or (ii) encourage any Principal Customer to reduce its patronage
of the Company.
(d) Executive further covenants and agrees that during Executive's
employment by the Company and for the period of two years thereafter,
Executive will not, directly or indirectly, solicit or hire, or encourage the
solicitation or hiring of, any person who was a managerial or higher level
employee of the Company at any time during the term of Executive's employment
by the Company by any employer other than the Company for any position as an
employee, independent contractor, consultant or otherwise. The foregoing
covenant of Executive shall not apply to any person after 12 months have
elapsed subsequent to the date on which such person's employment by the
Company has terminated.
(e) Nothing in this Section 3 shall be construed to prohibit
Executive, if Executive is a lawyer, from being connected as a partner,
principal, shareholder, associate, counsel or otherwise with another lawyer
or a law firm which performs services for clients engaged in any business or
enterprise that is competitive with any business or enterprise in which the
Company is engaged, provided that Executive is not personally involved,
directly or indirectly, in performing services for any such clients during
the period specified in Section 3(a) and provided further that such lawyer or
law firm takes reasonable precautions to screen Executive from participating
for the period specified in Section 3(a) in the representation of any such
clients. The parties agree that any such personal performance of services by
Executive for any such clients during such period would create an
unreasonable risk of violation by Executive of the provisions of Section 2 of
this Agreement, and Executive agrees (and the Company may elect) to notify in
writing any lawyer or law firm with which Executive may be connected during
the period specified in Section 3(a) of Executive's Agreement as set forth
herein. The parties further agree that, in addition to the nondisclosure
obligations of Section 2 of this Agreement, Executive remains subject to all
ethical obligations relating to confidentiality of information to the extent
that Executive acted as a lawyer for the Company, but Executive's knowledge
of such confidential information shall not be imputed to such other lawyer or
law firm with which Executive subsequently may become connected. Executive
agrees to notify the Company in writing in advance of the precautions to be
taken by such lawyer or law firm to screen Executive from any representation
of such competing client of such lawyer or law firm.
(f) For the purposes of this Section 3, the term "Company" shall
be deemed to include NU and the Affiliates, as defined in Section 6.1(a), of
NU and the Company.
4. Equitable Relief.
(a) Executive acknowledges and agrees that the restrictions
contained in Sections 2 and 3 are reasonable and necessary to protect and
preserve the legitimate interests, properties, goodwill and business of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by
the Company should Executive breach any of the provisions of those Sections.
Executive represents and acknowledges that (i) Executive has been advised by
the Company to consult Executive's own legal counsel in respect of this
Agreement, and (ii) that Executive has had full opportunity, prior to
execution of this Agreement, to review thoroughly this Agreement with
Executive's counsel.
(b) Executive further acknowledges and agrees that a breach of any
of the restrictions in Sections 2 and 3 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits
and other benefits arising from any violation of Sections 2 or 3 hereof,
which rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event that any of the
provisions of Sections 2 or 3 hereof should ever be adjudicated to exceed the
time, geographic, service, or other limitations permitted by applicable law
in any jurisdiction, it is the intention of the parties that the provision
shall be amended to the extent of the maximum time, geographic, service, or
other limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication
and that the provision otherwise be enforced to the maximum extent permitted
by law.
(c) If Executive breaches any of Executive's obligations under
Sections 2 or 3 hereof, and such breach constitutes "Cause," as defined in
Section 5.3 hereof, or would constitute Cause if it had occurred during the
Employment Term, the Company shall thereafter have no Target Benefit
obligation pursuant to the Supplemental Plan, but shall remain obligated for
the Make-Whole Benefit under the Supplemental Plan, but only to the extent
not modified by the terms of this Agreement, and compensation and other
benefits provided in any plans, policies or practices then applicable to
Executive in accordance with the terms thereof.
(d) Executive irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Sections 2 or 3 hereof,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may
be brought in the United States District Court for the District of
Connecticut, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Hartford, Connecticut,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Executive
may have to the laying of venue of any such suit, action or proceeding in any
such court. Executive also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers in a manner
permitted by the notice provisions of Section 10 hereof.
(e) Executive agrees that for a period of five years following the
termination of Executive's employment by the Company Executive will provide,
and that at all times after the date hereof the Company may similarly
provide, a copy of Sections 2 and 3 hereof to any business or enterprise (i)
which Executive may directly or indirectly own, manage, operate, finance,
join, control or participate in the ownership, management, operation,
financing, or control of, or (ii) with which Executive may be connected as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise, or in connection with which Executive may use or
permit Executive's name to be used; provided, however, that this provision
shall not apply in respect of Section 3 hereof after expiration of the time
periods set forth therein.
(f) For the purposes of this Section 4, the term "Company" shall
be deemed to include NU and the Affiliates, as defined in Section 6.1(a), of
NU and the Company.
5. Termination. The Employment Term shall terminate upon the
occurrence of any one of the following events:
5.1. Disability. The Company may terminate the Employment Term if
Executive is unable substantially to perform Executive's duties and
responsibilities hereunder to the full extent required by the Board by reason
of illness, injury or incapacity for six consecutive months, or for more than
six months in the aggregate during any period of twelve calendar months;
provided, however, that the Company shall continue to pay Executive's Base
Salary until the Company acts to terminate the Employment Term. In addition,
Executive shall be entitled to receive (i) any amounts earned, accrued or
owing but not yet paid under Section 1 above and (ii) any other benefits in
accordance with the terms of any applicable plans and programs of the
Company. Otherwise, the Company shall have no further liability or
obligation to Executive for compensation under this Agreement. Executive
agrees, in the event of a dispute under this Section 5.1, to submit to a
physical examination by a licensed physician selected by the Board.
5.2. Death. The Employment Term shall terminate in the event of
Executive's death. In such event, the Company shall pay to Executive's
executors, legal representatives or administrators, as applicable, an amount
equal to the installment of Executive's Base Salary set forth in Section 1.4
hereof for the month in which Executive dies. In addition, Executive's
estate shall be entitled to receive (i) any other amounts earned, accrued or
owing but not yet paid under Section 1 above and (ii) any other benefits in
accordance with the terms of any applicable plans and programs of the
Company. Otherwise, the Company shall have no further liability or
obligation under this Agreement to Executive's executors, legal
representatives, administrators, heirs or assigns or any other person
claiming under or through Executive.
5.3. Cause. The Company may terminate the Employment Term, at any time,
for "cause" upon written notice, in which event all payments under this
Agreement shall cease, except for Base Salary to the extent already accrued,
and no Target Benefit shall be due under the Supplemental Plan, but Executive
shall remain entitled to the Make-Whole Benefit under the Supplemental Plan,
but only to the extent not modified by the terms of this Agreement, and any
other benefits in accordance with the terms of any applicable plans and
programs of the Company. For purposes of this Agreement, Executive's
employment may be terminated for "cause" if (i) Executive is convicted of a
felony, (ii) in the reasonable determination of the Board, Executive has (x)
committed an act of fraud, embezzlement, or theft in connection with
Executive's duties in the course of Executive's employment with the Company,
(y) caused intentional, wrongful damage to the property of the Company or
intentionally and wrongfully disclosed Confidential Information, or (z)
engaged in gross misconduct or gross negligence in the course of Executive's
employment with the Company or (iii) Executive materially breached
Executive's obligations under this Agreement and shall not have remedied such
breach within 30 days after receiving written notice from the Board
specifying the details thereof. For purposes of this Agreement, an act or
omission on the part of Executive shall be deemed "intentional" only if it
was not due primarily to an error in judgment or negligence and was done by
Executive not in good faith and without reasonable belief that the act or
omission was in the best interest of the Company.
5.4. Termination Without Cause and Non-Renewal.
(a) The Company may remove Executive, at any time, without cause
from the position in which Executive is employed hereunder (in which case the
Employment Term shall be deemed to have ended) upon not less than 60 days'
prior written notice to Executive; provided, however, that, in the event that
such notice is given, Executive shall be under no obligation to render any
additional services to the Company and, subject to the provisions of Section
3 hereof, shall be allowed to seek other employment. Upon any such removal
or if the Company informs Executive that the Agreement will not be renewed
after December 31, 1998 or at the end of any subsequent renewal period,
Executive shall be entitled to receive, as liquidated damages for the failure
of the Company to continue to employ Executive, only the amount due to
Executive under the Company's then current severance pay plan for employees.
No other payments or benefits shall be due under this Agreement to Executive,
but Executive shall be entitled to any other benefits in accordance with the
terms of any applicable plans and programs of the Company. Notwithstanding
anything in this Agreement to the contrary, on or after Executive attains age
65, no action by the Company shall be treated as a removal from employment or
non-renewal if on the effective date of such action Executive satisfies all
of the requirements for the executive or high policy-making exception to
applicable provisions of state and federal age discrimination legislation.
(b) Notwithstanding the foregoing, in the event that Executive
executes a written release upon such removal or non-renewal, substantially in
the form attached hereto as Annex 1, (the "Release"), of any and all claims
against the Company and all related parties with respect to all matters
arising out of Executive's employment by the Company (other than any
entitlements under the terms of this Agreement or under any other plans or
programs of the Company in which Executive participated and under which
Executive has accrued a benefit), or the termination thereof, Executive shall
be entitled to receive, in lieu of the payment described in subsection (a)
hereof, which Executive agrees to waive,
(i) as liquidated damages for the failure of the Company to
continue to employ Executive, a single cash payment, within 30 days after the
effective date of the removal or non-renewal, equal to Executive's Base
Compensation, as defined in Section 6.1(a) below, which shall not constitute
a "severance benefit" to Executive for purposes of the Target Benefit under
the Supplemental Plan;
(ii) for a period of two years following the end of the
Employment Term, Executive and Executive's spouse and dependents shall be
eligible for a continuation of those Benefit Coverages, as in effect at the
time of such termination or removal, and as the same may be changed from time
to time, as if Executive had been continued in employment during said period
or to receive cash in lieu of such benefits or premiums, as applicable, where
such Benefit Coverages may not be continued (or where such continuation would
adversely affect the tax status of the plan pursuant to which the Benefit
Coverage is provided) under applicable law or regulations;
(iii) any other amounts earned, accrued or owing but not yet
paid under Section 1 above;
(iv) any other benefits in accordance with the terms of any
applicable plans and programs of the Company and a payment equal to any
unused vacation;
(v) as additional consideration for the non-competition and
non-solicitation covenant contained in Section 3, a single cash payment,
within 30 days after the effective date of the removal or non-renewal, equal
to Executive's Base Compensation, as defined in Section 6.1(a) below, which
shall not constitute a "severance benefit" to Executive for purposes of the
Target Benefit under the Supplemental Plan;
(vi) Executive's years of service with the Company through the
24th month following the Termination Date shall be taken into account in
determining the amount of, and eligibility for, the Target Benefit and
Make-Whole Benefit under the Supplemental Plan and 24 months shall be added
to Executive's age for purposes of determining Executive's eligibility for
both such Benefits and the actuarial reduction under the Plan; and
(vii) All stock appreciation rights and restricted stock
units granted to Executive under NU's Stock Price Recovery Plan or stock
options or restricted shares previously granted to Executive, to the extent
not already vested prior to the removal or non-renewal, shall be fully vested
and exercisable or paid as if Executive had remained actively employed by the
Company, including the right of exercise, where appropriate, within 36 months
after the removal or non-renewal; provided, however, that the stock
appreciation rights and restricted stock units shall be paid on a pro rata
basis for the number of completed months in the applicable period for any
such stock appreciation rights or restricted stock units during which
Executive was employed by the Company.
5.5. Voluntary Termination. Executive may voluntarily terminate the
Employment Term upon 30 days' prior written notice for any reason. In such
event, after the effective date of such termination, no further payments
shall be due under this Agreement except that Executive shall be entitled to
any benefits due in accordance with the terms of any applicable plan and
programs of the Company.
6. Payments Upon a Change in Control.
6.1. Definitions. For all purposes of this Section 6, the following
terms shall have the meanings specified in this Section 6.1 unless the
context otherwise clearly requires:
(a) "Affiliate" shall mean an "affiliate" as defined in Rule 12b-2
of the General Rules and Regulations under the Exchange Act.
(b) "Base Compensation" shall mean Executive's annualized Base
Salary and all short-term incentive compensation at the target level for
Executive (but in no event less than the target level for Executive in effect
on January 1, 1996), specified under programs established by the Company for
its senior level executives generally, received by Executive in all
capacities with the Company, as would be reported for federal income tax
purposes on Form W-2, together with any and all salary reduction authorized
amounts under any of the Company's benefit plans or programs, for the most
recent full calendar year immediately preceding the calendar year in which
occurs Executive's Termination Date or preceding the Change of Control, if
higher. "Base Compensation" shall not include the value of any stock
appreciation rights or restricted stock units granted to Executive under NU's
Stock Price Recovery Plan.
(c) "Change of Control" shall mean the happening of any of the
following:
(i) When any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than
the Company, its Affiliates, or any Company or NU employee benefit plan
(including any trustee of such plan acting as trustee), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of NU representing more than 20% of the
combined voting power of either (i) the then outstanding shares of common
stock of NU (the "Outstanding Common Stock") or (ii) the then outstanding
voting securities of NU entitled to vote generally in the election of
directors (the "Voting Securities"); or
(ii) Individuals who, as of the beginning of any twenty-four month
period, constitute the Trustees (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Trustees or cease to be able to
exercise the powers of the majority of the Board, provided that any
individual becoming a trustee subsequent to the beginning of such period
whose election or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the trustees then comprising the
Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Trustees of NU
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act); or
(iii) Consummation by NU of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Common Stock and Voting
Securities immediately prior to such Business Combination do not, following
such Business Combination, beneficially own, directly or indirectly, more
than 75% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation, business trust or other entity resulting from or being the
surviving entity in such Business Combination in substantially the same
proportion as their ownership immediately prior to such Business Combination
of the Outstanding Common Stock and Voting Securities, as the case may be; or
(iv) Consummation of a complete liquidation or dissolution of NU
or sale or other disposition of all or substantially all of the assets of NU
other than to a corporation, business trust or other entity with respect to
which, following such sale or disposition, more than 75% of, respectively,
the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Common Stock and Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Common Stock and Voting Securities, as the case may be,
immediately prior to such sale or disposition.
(d) "Termination Date" shall mean the date of receipt of a Notice
of Termination of this Agreement or any later date specified therein.
(e) "Termination of Employment" shall mean the termination of
Executive's actual employment relationship with the Company, including a
failure to renew the Agreement after December 31, 1998 or at the end of any
subsequent renewal period, in either case occasioned by the Company's action.
(f) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company for any reason other than
Executive's (w) disability, as described in Section 5.1 hereof, (x) death,
(y) retirement on or after attaining age 65, or (z) "cause," as defined in
Section 5.3 hereof, or (ii) initiated by Executive (A) upon any failure of
the Company materially to comply with and satisfy any of the terms of this
Agreement, including any significant reduction by the Company of the
authority, duties or responsibilities of Executive, any reduction of
Executive's compensation or benefits due hereunder, or the assignment to
Executive of duties which are materially inconsistent with the duties of
Executive's position as defined in Section 1.2 above, or (B) if Executive is
transferred, without Executive's written consent, to a location that is more
than 50 miles from Executive's principal place of business immediately
preceding the Change of Control.
6.2. Notice of Termination. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto
given in accordance with Section 10 hereof. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) briefly
summarizes the facts and circumstances deemed to provide a basis for a
Termination of Employment and the applicable provision hereof, and (iii) if
the Termination Date is other than the date of receipt of such notice,
specifies the Termination Date (which date shall not be more than 15 days
after the giving of such notice).
6.3. Payments upon Termination. Subject to the provisions of Sections
6.6 and 6.7 hereof, in the event of Executive's Termination upon a Change of
Control, the Company agrees (a) in the event Executive executes the Release
required by Section 5.4(b), to pay to Executive, in a single cash payment,
within thirty days after the Termination Date, two multiplied by Executive's
Base Compensation and, in addition, all amounts, benefits and Benefit
Coverages described in Section 5.4(b)(ii), (iii), (iv) and (v), provided that
in (ii) Benefit Coverages shall continue for three years instead of two, or
(b) in the event Executive fails or refuses to execute the Release required
by Section 5.4(b), to pay to Executive, in a single cash payment, within
thirty days after the Termination Date, the amount due under Section 5.4(a)
above and, in addition, all other amounts and benefits described in Section
5.4(a).
6.4. Other Payments, Supplemental Plan, Stock Option and Stock Grants,
etc. Subject to the provisions of Sections 6.6 and 6.7 hereof, in the event
of Executive's Termination upon a Change of Control, and the execution of the
Release required by Section 5.4(b):
(a) Under the Supplemental Plan, Executive shall be entitled to a
Target Benefit and a Make-Whole Benefit commencing as provided below with an
actuarial reduction in the event the Target Benefit and Make-Whole Benefit
commence prior to age 65 (age 60 if Executive has attained age 60 and
completed at least 30 years of service at the Termination Date), whether or
not Executive is then age 60 and notwithstanding the Plan's requirement that
a participant retire on or after age 60 and be entitled to a vested benefit
under the Company's Retirement Plan. The actuarial reduction shall be 2% for
each year younger than age 65 to age 60, if applicable, 3% for each year
younger than age 60 to age 55 and a full actuarial reduction, as determined
by the enrolled actuary for the Retirement Plan, for each year younger than
55. Executive's years of service with the Company through the 36th month
following the Termination Date shall be taken into account in determining the
amount of the Target Benefit and Make-Whole Benefit and 36 months shall be
added to Executive's age for purposes of determining Executive's eligibility
for both such Benefits and the actuarial reduction under the Plan as modified
herein. Executive shall determine the form of payment in which the Target
Benefit and Make-Whole Benefit shall be paid, in accordance with the terms of
the Supplemental Plan or may elect to receive a single sum payment equal to
the then actuarial present value (computed using the 1983 GAM (50%/Male/50%/
Female) Mortality Table and at an interest rate equal to the discount rate
used in the Retirement Plan's previous year's FASB 87 accounting) of the
amount of the Target Benefit and Make-Whole Benefit as determined in
accordance with the first three sentences of this subsection (a). Payment
shall commence or be made within 30 days after the Termination Date or on any
date thereafter, as specified by Executive in a written election. Such
election may be made at any time and amended at any time but any election or
amendment, other than one made within 30 days of the Effective Date, shall be
ineffective if made within six months prior to the Termination Date. In the
absence of any election or determination provided for herein, the terms of
the Supplemental Plan shall govern the form and time of payment.
(b) Executive's years of service with the Company through the 36th
month following the Termination Date shall be taken into account in
determining Executive's eligibility for, but not amount of cost sharing
under, the Company's retiree health plan and, in addition, 36 months shall be
added to Executive's age for this purpose.
(c) On Executive's Termination Date, all stock appreciation rights
and restricted stock units granted to Executive under NU's Stock Price
Recovery Plan or stock options or restricted shares previously granted to
Executive, to the extent not already vested prior to the Termination Date,
shall be fully vested and exercisable or paid as if Executive had remained
actively employed by the Company, including the right of exercise, where
appropriate, within 36 months after the Termination Date and, if the Change
of Control results in the Voting Securities of NU ceasing to be traded on a
national securities exchange or though the national market system of the
National Association of Securities Dealers Inc., the price at which the
rights or units may be exercised shall be the average of the closing prices
for the five trading days preceding the day such Voting Securities cease
trading.
6.5. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future participation in or rights under
any benefit, bonus, incentive or other plan or program provided by the
Company and for which Executive may qualify; provided, however, that if
Executive becomes entitled to and receives all of the payments provided for
in this Agreement, Executive hereby waives Executive's right to receive
payments under any severance plan or similar program applicable to all
employees of the Company.
6.6. Certain Increase in Payments.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Payment"), would constitute an "excess parachute payment"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), Executive shall be paid an additional amount (the
"Gross-Up Payment") such that the net amount retained by Executive after
deduction of any excise tax imposed under Section 4999 of the Code, and any
federal, state and local income and employment tax and excise tax imposed
upon the Gross-Up Payment shall be equal to the Payment. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to
pay federal income tax and employment taxes at the highest marginal rate of
federal income and employment taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Executive's
residence on the Termination Date, net of the maximum reduction in federal
income taxes that may be obtained from the deduction of such state and local
taxes.
(b) All determinations to be made under this Section 6 shall be
made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to the Company and
Executive within 10 days of the Termination Date. Any such determination by
the Accounting Firm shall be binding upon the Company and Executive. Within
five days after the Accounting Firm's determination, the Company shall pay
(or cause to be paid) or distribute (or cause to be distributed) to or for
the benefit of Executive such amounts as are then due to Executive under this
Agreement.
(c) In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of the Payment or Gross-Up
Payment, a change is finally determined to be required in the amount of taxes
paid by Executive, appropriate adjustments shall be made under this Agreement
such that the net amount which is payable to Executive after taking into
account the provisions of Section 4999 of the Code shall reflect the intent
of the parties as expressed in subsection (a) above, in the manner determined
by the Accounting Firm.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above
shall be borne solely by the Company. The Company agrees to indemnify and
hold harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses
resulting from the gross negligence or wilful misconduct of the Accounting
Firm.
6.7 Changes to Sections 6.3 and 6.4. The payments, benefits and other
compensation provided under Sections 6.3 and 6.4 may be revised, in the sole
discretion of the Board, after the expiration of two years following written
notice to Executive of the Board's intention to do so and the changes to be
made; provided, however, that no revision may be made that would reduce the
payments, benefits and other compensation below those provided under Section
5.4 in the event Executive's employment is terminated without cause or this
Agreement is not renewed; and provided, further, that no such notice may be
given and no such revision may become effective following a Change of
Control. Notice under this Section 6.7 shall not constitute a non-renewal or
removal of Executive, nor shall any such actual revision be grounds for a
determination that this Agreement is not being renewed or that Executive has
been removed, for purposes of Section 5.4.
7. Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive's employment
to the extent necessary to the intended preservation of such rights and
obligations.
8. Mitigation. Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that Executive may obtain.
9. Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
the City of Hartford, Connecticut in accordance with National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association, before a panel of three arbitrators, two of whom shall be
selected by the Company and Executive, respectively, and the third of whom
shall be selected by the other two arbitrators. Any award entered by the
arbitrators shall be final, binding and nonappealable (except as provided in
Section 52-418 of the Connecticut General Statutes) and judgment may be
entered thereon by either party in accordance with applicable law in any
court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrators shall have no authority to modify
any provision of this Agreement or to award a remedy for a dispute involving
this Agreement other than a benefit specifically provided under or by virtue
of the Agreement. If Executive prevails on any material issue which is the
subject of such arbitration or lawsuit, the Company shall be responsible for
all of the fees of the American Arbitration Association and the arbitrators
and any expenses relating to the conduct of the arbitration (including the
Company's and Executive's reasonable attorneys' fees and expenses).
Otherwise, each party shall be responsible for its own expenses relating to
the conduct of the arbitration (including reasonable attorneys' fees and
expenses) and shall share the fees of the American Arbitration Association.
10. Notices. All notices and other communications required or
permitted under this Agreement or necessary or convenient in connection
herewith shall be in writing and shall be deemed to have been given when hand
delivered or mailed by registered or certified mail, as follows (provided
that notice of change of address shall be deemed given only when received):
If to the Company, to:
Northeast Utilities Service Company
X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
Attention: Vice President, Secretary and General Counsel
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxxxxx, Esquire
If to Executive, to:
Xxxxxx X. Wax
00 Xxxxxxxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
With a required copy to:
Xxxxxxx & Xxxxxxx
Xxx Xxxxxxxx Xxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxx, Esquire
or to such other names or addresses as the Company or Executive, as the case
may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this Section.
11. Contents of Agreement; Amendment and Assignment.
(a) This Agreement sets forth the entire understanding between the
parties hereto with respect to the subject matter hereof and cannot be
changed, modified, extended or terminated except upon written amendment
approved by the Board and executed on its behalf by a duly authorized officer
and by Executive.
(b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and
assigns of the parties hereto, except that the duties and responsibilities of
Executive under this Agreement are of a personal nature and shall not be
assignable or delegatable in whole or in part by Executive. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the extent the Company would be required
to perform if no such succession had taken place.
12. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect any other provision or application of this Agreement which can be
given effect without the invalid or unenforceable provision or application
and shall not invalidate or render unenforceable such provision or
application in any other jurisdiction. If any provision is held void,
invalid or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
13. Remedies Cumulative; No Waiver. No remedy conferred upon a party
by this Agreement is intended to be exclusive of any other remedy, and each
and every such remedy shall be cumulative and shall be in addition to any
other remedy given under this Agreement or now or hereafter existing at law
or in equity. No delay or omission by a party in exercising any right,
remedy or power under this Agreement or existing at law or in equity shall be
construed as a waiver thereof, and any such right, remedy or power may be
exercised by such party from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.
14. Beneficiaries/References. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary
or beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
Executive's incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive's beneficiary, estate or
other legal representative.
15. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the
other counterparts.
16. Withholding. The Company may withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Executive
shall bear all expense of, and be solely responsible for, all federal, state
and local taxes due with respect to any payment received under this
Agreement.
17. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Connecticut without giving effect to any
conflict of laws provisions.
18. Adoption by Affiliates; Obligations. The obligations under this
Agreement shall, in the first instance, be paid and satisfied by the Company;
provided, however, that the Company will use its best efforts to cause NU and
each entity in which NU (or its successors or assigns) now or hereafter
holds, directly or indirectly, more than a 50 percent voting interest and
that has at least fifty (50) employees on its direct payroll (an "Employer")
to approve and adopt this Agreement and, by such approval and adoption, to be
bound by the terms hereof as though a signatory hereto. If the Company shall
be dissolved or for any other reason shall fail to pay and satisfy the
obligations, each individual Employer shall thereafter shall be jointly and
severally liable to pay and satisfy the obligations to Executive.
19. Establishment of Trust. The Company may establish an irrevocable
trust fund pursuant to a trust agreement to hold assets to satisfy any of its
obligations under this Agreement. Funding of such trust fund shall be
subject to the Board's discretion, as set forth in the agreement pursuant to
which the fund will be established.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
NORTHEAST UTILITIES
SERVICE COMPANY
/s/Xxxxxx X. Wax 2/25/97 By:/s/Xxxxxxx X. Xxx 2/25/97
Executive
