Exhibit 10.31
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of October 1, 2003,
by and between Northeast Utilities Service Company, a Connecticut corporation
("NUSCO"), with its principal office in Berlin, Connecticut, and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, a resident of Glastonbury, Connecticut ("Executive").
WHEREAS, Executive is currently employed as Senior Vice President, Secretary
and General Counsel of Northeast Utilities ("NU") and holds senior executive
positions with certain of the subsidiaries of NU (NU and the Affiliates,
as such term is defined in Section 6.1(a), of NU being referred to collectively
herein as 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 October 1, 2003 (the "Effective Date") and shall
continue until September 30, 2004, 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 September 30, 2004 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 NUSCO's Board of Directors (the "Board") or the Board
of Trustees (the "Trustees") of 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,
NUSCO shall pay Executive a base salary ("Base Salary"), commencing on the
Effective Date, at the annual rate then being paid to Executive by NUSCO,
payable in installments at such times as NUSCO 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. Executive's annual Base Salary
shall not be reduced below $300,000 without Executive's written consent.
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 NUSCO 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. 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 50% and 100%,
respectively, of Executive's Base Salary, except that the Trustees may change
these "target opportunity" and "maximum opportunity" percentages as part of a
general revision of executive compensation which also applies to other senior
level executives of the Company. 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 Trustees' reasonable discretion, not
later than such payments are made to the Company's senior level executives
generally.
1.8. Long-Term Incentive Compensation. 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 150% and 300%, respectively of Executive's
Base Salary, except that the Trustees may change these "target opportunity" and
"maximum opportunity" percentages as part of a general revision of executive
compensation which also applies to other senior level executives of the
Company. Executive's long-term incentive compensation, either in shares of NU,
restricted stock units, options or cash, as applicable from time to time, shall
be paid to Executive, subject to the Trustees' 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 NUSCO 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.
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 regulated business or enterprise in which the Company is engaged
("Competitive Company"). 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 state
in which the Company, in the aggregate, generates 25% or more of its revenues
in the fiscal year of NU in which Executive's termination of employment occurs.
Further, for the purposes of this Section, "Competitive Company" shall mean
Consolidated Edison, Inc., Energy East Corporation, Hydro-Quebec, KeySpan
Energy, National Grid USA, NSTAR, or The United Illuminating Company, their
assigns or successors, or any other company which in the future engages in
competition with the regulated business of the Company in the Service Area.
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,"
efined 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, except with the prior written consent of the Trustees, 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.
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
NUSCO 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 NUSCO 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.
5. Termination. The Employment Term shall terminate upon the occurrence
of any one of the following events:
5.1. Disability. NUSCO 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
NUSCO shall continue to pay Executive's Base Salary until NUSCO 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, NUSCO 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. NUSCO 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) NUSCO 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 NUSCO informs
Executive that the Agreement will not be renewed after September 30, 2004 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 provisions of Section 5.4(a) (other than the last
sentence), 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(b) 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(b) below, which
shall not constitute a "severance benefit" to Executive for purposes of Target
Benefit under the Supplemental Plan; and
(vi) Under the Supplemental Plan, Executive shall be entitled to receive
Target Benefit and a Make-Whole Benefit commencing on the first day of any
month following Executive's Termination, whether or not Executive has then
satisfied the requirements for early, normal or deferred retirement under, or
is then entitled to receive a vested benefit under, the Company's Retirement
Plan, using the Termination Date as the "date of retirement" contemplated by
Section IV(b) of the Supplemental Plan; 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 the Target Benefit and the Make-Whole
Benefit and 24 months shall be added to Executive's age for purposes of
determining the reduction in such Benefits, if any, to reflect early
commencement, utilizing the early commencement factor for Executive's age and
years of service, each as so modified, set forth in the Company's Retirement
Plan as in effect on the Termination Date or, if there is no such factor for
Executive's age as so modified as of the Termination Date, a full actuarial
reduction for Executive's age as so modified, as determined by the enrolled
actuary for the Retirement Plan; and
(vii) All stock option grants, 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, and had
satisfied all time requirements as to exercise, including the right of
exercise, where appropriate, within 36 months after the removal or non-renewal.
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, for a calendar year, Executive's
annualized Base Salary as would be reported for federal income tax purposes on
Form W-2 for such calendar year, together with any and all salary reduction
authorized amounts under any of the Company's benefit plans or programs for
such calendar year, and all short-term incentive compensation at the target
level to be paid to Executive in all employee capacities with the Company
attributable to such calendar year and taxable in the following calendar year.
"Base Compensation" shall be the higher of (i) Base Compensation for the
calendar year in which occurs the Change of Control or, if no Change of Control
occurs, the calendar year in which occurs the involuntary termination; or
(ii) Base Compensation for the full calendar year immediately prior thereto.
"Base Compensation" shall not include the value of any stock options,
performance units, or other elements of Long-Term Incentive Compensation or
any exercise thereunder.
(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 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 common shares of NU (the
"Outstanding Common Shares") 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 Trustees") 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 Trustees, provided that any individual
becoming a trustee subsequent to the beginning of such period whose election
or nomination for election by NU's shareholders was approved by a vote of at
least a majority of the trustees then comprising the Incumbent Trustees shall
be considered as though such individual were a member of the Incumbent
Trustees, 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 Shares and Voting Securities
immediately prior to such Business Combination do not, following consummation
of all transactions intended to constitute part of such Business Combination,
beneficially own, directly or indirectly, more than 50% 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 Shares 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 consummation of all transactions intended to constitute part of such
sale or disposition, more than 50% 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 Shares and Voting Securities
immediately prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding Common Shares 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 September 30, 2004 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 during the period beginning on the earlier of (a) approval by the
shareholders of NU of a Change of Control or (b) consummation of a Change of
Control and, in either case, ending on the second anniversary of the
consummation of the transaction that constitutes the Change of Control (or if
such period started on shareholder approval and after such shareholder
approval the Trustees abandon the transaction, on the date the Trustees
abandoned the transaction) 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 as in effect immediately prior to the Change of Control, 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 such approval or consummation; provided, that the
imposition on Executive following a Change of Control of a limitation of
Executive's scope of authority such that Executive's responsibilities relate
primarily to a company or companies whose common equity is not publicly held
shall be considered a "significant reduction by the Company of the authority,
duties or responsibilities of Executive" for the purposes hereof.
Notwithstanding the foregoing, for purposes of this definition:
(i) a Termination of Employment which occurs prior to consummation of a Change
of Control shall not constitute a Termination upon a Change of Control, as
determined above, unless it is specifically approved by the Trustees in their
sole discretion; and (ii) a Termination initiated by Executive prior to
consummation of a Change of Control shall not constitute a Termination upon a
Change of Control if the failure, reduction, assignment or transfer is
determined by the Trustees to be unrelated to the impending 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,
"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, whether or not
Executive has then satisfied the requirements for early, normal or deferred
retirement under, or is then entitled to receive a vested benefit under the
Company's Retirement Plan or has attained age 60, using the Termination Date
as the "date of retirement" contemplated by Section IV(b) of the Supplemental
Plan. There shall be an actuarial reduction in the event the Target Benefit
and Make-Whole Benefit commence prior to age 65, if at the Termination Date
Executive has not yet attained age 52, or if at the Termination Date
Executive's attained age and service for retirement benefit calculations do not
total at least 85 years. 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 4% for each year younger than 55, unless actuarial reduction
factors more favorable to Executive are adopted in the Retirement Plan, in
hich case those factors shall apply. 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 age and 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 benefits, but not cost-sharing, under
the Company's retiree health plan. For the purpose of determining such
eligibility, a Termination upon a Change of Control shall be considered to be
an involuntary termination.
(c) Unless the Compensation Committee of the Northeast Utilities Board
of Trustees comprises the same members as those on the Committee immediately
before the Change of Control and determines otherwise, (i) all stock option
grants previously granted to Executive, to the extent not already vested prior
to such occurrence, shall be fully vested and immediately exercisable
as if Executive had satisfied all requirements as to exercise, including the
right of exercise, where appropriate, within 36 months of such occurrence 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 value of a share of
tock on the day the option is exercised shall be deemed to be the closing price
on the day such Voting Securities cease trading; and (ii) if NU is not the
surviving corporation (or survives only as a subsidiary of another corporation),
those portions of any such options that have not been exercised shall be
assumed by, or replaced with comparable options or rights by, the surviving
corporation. Notwithstanding the foregoing, such Committee (if composed of the
same members as those on the Committee immediately before the Change of
Control) may require Executive to surrender the remainder of any or all such
options, in each case in exchange for a payment by the Company, in cash or
common shares as determined by the Committee, in an amount equal to the amount
by which the then fair market value of the common shares subject to such option
exceeds the exercise price per share of such option, or, after giving
Executive an opportunity to exercise such option, terminate the option at such
time as the Committee deems appropriate.
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 immediatelyprior 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 willful 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
ither 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
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Assistant Corporate Secretary
If to Executive, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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 he 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 NUSCO;
provided, however, that NUSCO 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 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 NUSCO shall be dissolved or
for any other reason shall fail to pay and satisfy the obligations, each
individual such entity 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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Date: 10/15/03
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXECUTIVE: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Date: October 17, 2003