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 Cheryl W. Grise, a resident of West Hartford, Connecticut
("Executive").
WHEREAS, Executive is currently employed as the Senior Vice President and
Chief Administrative Officer 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
P.O. Box 270
Hartford, CT 06141-0270
Attention: Vice President, Secretary and General Counsel
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Executive, to:
With a required copy to:
Shipman & Goodwin
One American Row
Hartford, CT 06103-2819
Attention: Brian Clemow, 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/Cheryl Grise /s/Bernard Fox
Executive 2/25/97
2/23/97