AMENDED AND RESTATED DEFERRED
COMPENSATION AGREEMENT
THIS AGREEMENT is made as of the 8th day of November, 1996
and amends and restates effective as of the date of execution
hereof, the Deferred Compensation Agreement dated as of the 17th
day of January, 1989 and amended as of the 24th day of March, 1992,
and the 21st day of October, 1993 by and between THE SOUTHERN
CONNECTICUT GAS COMPANY, a Connecticut corporation with a
principal place of business at 855 Main Street, Bridgeport, Connecticut
06604 ("Southern"), and CONNECTICUT ENERGY CORPORATION, a Connecticut
corporation with a principal place of business at 885 Main Street,
Bridgeport, Connecticut 06604 (the "Corporation") and J.R. CRESPO,
of 560 Hulls Highway, Southport, Connecticut 06490 (the "Executive").
WHEREAS, the Corporation has employed the Executive as the
President and Chief Executive Officer of its wholly owned
subsidiary, Southern, since January 17, 1989, as President and
Chief Executive Officer of the Corporation since April 18, 1989,
and as Chairman of the Board of Directors of Southern and the
Corporation since April 24, 1990; and
WHEREAS, to induce the Executive to remain in its employment,
the Corporation deems it appropriate to give certain further
assurances with respect to compensation to be deferred and become
payable upon the termination of the Executive's employment with the
Corporation;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions.
The following terms when used herein with initial capital
letters shall, unless the context clearly requires to the contrary,
have the meanings assigned to them below:
(a) "Annual Compensation" means annual base pay in effect at
the time in question plus incentive compensation in the amount most
recently previously received by the Executive.
(b) "Cause", for purposes of the Employment Agreement dated
March 24, 1992 among the Executive, the Corporation and Southern,
Means the Executive's gross negligence, willful misconduct or
conviction of a felony, which negligence, misconduct or conviction
has a demonstrable and material adverse affect upon the Corporation
or Southern, provided that the Corporation or Southern shall have
given the Executive written notice of the alleged negligence or
misconduct and the Executive shall have failed to cure such
negligence or misconduct within 30 days after his receipt of such
notice. The Executive shall be deemed to have been terminated for
Cause effective upon the effective date stated in a written notice
of such termination delivered by the Corporation or Southern to the
Executive and accompanied by the resolution duly adopted by the
affirmative vote of not less than 2/3 of the entire membership of
the Board of Directors of the Corporation or Southern at a meeting
of said Board (after reasonable notice to the Executive and an
opportunity for the Executive, with his counsel present, to be
heard before the Board) finding that, in the good faith opinion of
the Board of Directors of the Corporation or Southern, the
Executive was guilty of conduct constituting Cause hereunder and
setting forth in reasonable detail the facts and circumstances
claimed to provide the basis for the Executive's termination,
provided that the effective date shall not be less than 30 days
from the date such notice is given.
(c) "Change in Control" of the Corporation shall be deemed to
have occurred if:
(i) Any Person is or becomes an Acquiring Person;
(ii) Less than 2/3 of the total membership of the Board
of Directors of the Corporation shall be Continuing Directors; or
(iii) The shareholders of the Corporation shall approve a merger or
consolidation of the Corporation or a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
In connection with the preceding definition of "Change in Control", the
capitalized terms therein are defined as follows:
(iv) "Acquiring Person" means any Person who is or becomes a
"beneficial owner" (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of
securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding
voting securities, unless such person has filed Schedule 13G and
all Required amendments thereto with respect to its holdings and
continues to hold such securities for investment in a manner
qualifying such Person to utilize Schedule 13G for reporting of
ownership.
(v) "Affiliate" and "Associate" shall have the respective meaning
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect as of the date
hereof.
(vi) "Continuing Directors" means any member of the Board of
Directors of the Corporation who was a member of said Board
prior to the date hereof and any successor of a Continuing
Director while such successor is a member of the Board of
Directors of the Corporation who is not an Acquiring Person or
an Affiliate or Associate of an Acquiring Person and who is
recommended or elected to succeed the Continuing Director by
a majority of the Continuing Directors.
(vii) "Person" shall have the meaning assigned to it in Section 13(d)
and 14(d) of the Exchange Act.
(d) "Disability" means the Executive's permanent disability as evidenced
by the Executive's inability by reason or physical or mental
impairment or illness to fulfill his obligation hereunder for the
reasonably foreseeable future, as determined by the Board of Directors
of Southern and the Company after considering all relevant medical
evidence.
(e) "Final Average Annual Pay" means the total base pay plus incentive
compensation paid to the Executive in those 60 consecutive months out
of the 120 months (or such shorter period as shall have elapsed since
the Executive's date of hire) immediately preceding a Termination of
Employment in which the Executive's pay and compensation was the
highest, divided by five (or the lesser number of years, to the nearest
1/12th, since the Executive's date of hire).
(f) "Good Reason", for purposes of the Employment Agreement dated
March 24, 1992 among the Executive, the Corporation and Southern,
means:
(i) An adverse change in the Executive's status, duties
or responsibilities as an Executive of the Corporation or
Southern;
(ii) Failure of the Corporation or Southern to pay or provide the
Executive in a timely fashion the salary or benefits to which
he is entitled under any Employment Agreement between the
Corporation or Southern and the Executive then in effect or
under any benefit plans or policies in which the Executive was
then participating (including, without limitation, any
incentive, bonus, stock option, restricted stock, health,
accident, disability, life insurance, thrift, vacation pay,
deferred compensation and retirement plans or policies);
(iii) The reduction of the Executive's salary (except in connection
with a uniform and general reduction of salaried employee's
compensation effected by the Corporation or Southern);
(iv) The taking of any action by the Corporation or Southern
(including the elimination of a plan without providing
substitutes therefore, the reduction of the Executive's
awards thereunder or failure to continue the Executive's
participation therein) that would substantially diminish
the aggregate projected value of the Executive's awards or
benefits under the Corporation's or Southern's benefit plans
or policies described in Section 1(f)(ii) in which the
Executive was then participating; provided, however, that
the Board of Directors may determine at any time to
discontinue Southern's Management Incentive Compensation
Plan for years beginning January 1, 1990 and thereafter. The
Executive further acknowledges that awards under such Plan
may vary from year to year and that, under the terms of such
Plan, no awards or reduced awards may be made in any
particular year.
(v) A failure by the Corporation or Southern to obtain from any
successors the assent to this Agreement contemplated by
Section 12 hereof; or
(vi) The relocation of the principal office at which the
Executive is to perform his services on behalf of the
Corporation or Southern to a location outside the State of
Connecticut or a substantial increase in the Executive's
business travel obligations.
Any circumstances described in this Section 1(f) shall constitute
Good Reason even if such circumstances would not constitute a
breach by the Corporation or Southern of the terms of the
Employment Agreement among the Corporation, Southern and the
Executive then in effect. The Executive shall be deemed to have
terminated his employment for Good Reason effective upon the
effective date stated in a written notice of such termination given
by him to the Corporation and Southern setting forth in reasonable
detail the facts and circumstances claimed to provide the basis for
termination, provided that the effective date may not precede, nor
be more than 60 days from, the date such notice is given. The
Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
(g) "Qualifying Surviving Spouse" means the Executive's widow to
whom he has been married for more than one year at the
time of benefit payment commencement pursuant to this
Agreement.
(h) "SCG Pension Plan Benefit" means the benefit payable
to the Executive pursuant to the provisions of the SCG Pension
Plan.
"SCG Pension Plan" collectively means The Southern Connecticut Gas
Company Pension Plan for Salaried Employees, as amended from time to
time, and The Southern Connecticut Gas Company Benefit Equalization
Plan, as amended from time to time.
2. Term of Agreement.
The term of this Agreement shall be coterminous with the term of the
Executive's Employment Agreement with the Corporation and Southern
entered into March 24, 1992 and, unless this Amended and Restated
Agreement is expressly amended or rescinded, upon any extension or renewal
of the Executive's employment by the Corporation and Southern, the term
hereof shall continue during the Executive's continued employment by the
Corporation and Southern.
3. Compensation upon Termination of Employment.
The Executive shall be entitled to receive compensation ("Deferred
Compensation") following the termination of his employment with the
Corporation and Southern unless such termination shall be by reason of the
Executive's death. (The phrase "Termination of Employment" is hereinafter
used to describe a termination of employment other than death.) The annual
Deferred Compensation payable in equal monthly installments of 1/12 of the
annual amount for the Executive's life, commencing on the first day of the
month following the Termination of Employment, shall be the percentage of
the Executive's Final Average Annual Pay specified below for the Executive's
Age at Termination (augmented, if appropriate, by 5 years, as provided in
subparagraph (b) below)(subject to the Executive's right to elect an actuarial
equivalent form of benefit as provided in subparagraph (a) (ii) below) reduced
by the SCG Pension Plan Benefit the Executive is entitled to receive at the
earliest permissible commencement date of such benefits. The Executive is
not required to elect commencement of his SCG Pension Benefits prior to his
attainment of age 65, even though Deferred Compensation becomes payable
pursuant to this Agreement at an earlier age, but the Deferred Compensation
payable pursuant hereto shall be reduced without regard to the Executive's
actual receipt of such benefits. Prior to the earliest permissible
commencement date of SCG Pension Plan Benefits, the Deferred
Compensation payable hereunder shall not be reduced.
(a) In the event of a Termination of Employment for reasons
other than the Executive's disability or Change in Control:
(i) the following amount is payable:
Annual Deferred Compensation Amount
Age at Payable as a Percentage of
Termination Final Average Annual Pay
----------- ------------------------
62 or later 65%
61 63%
60 60%
59 58%
58 56%
57 55%
56 53%
55 50%
54 44%
53 38%
The percentages will be interpolated for termination at other than
the Executive's birthday.
(ii) In lieu of the applicable payments for the life of
the Executive specified in the preceding paragraph (i), the
Executive may elect to have the Deferred Compensation paid as an
actuarial equivalent payment to the Executive with a percentage
(not less than 50% nor more than 100%) of such amount payable to
the Executive's Qualifying Surviving Spouse for her life;
provided, however, that the Executive may so elect without
Southern's prior written consent only if the Executive's SCG
Retirement Benefit is also payable in the form of a joint and
survivor annuity providing payment of a similar percentage of
the Executive's benefit to his Qualifying Surviving Spouse.
Actuarial equivalence shall be determined on the same basis as
the SCG Pension Plan.
(b) In the event of a Change of Control, the Executive shall be entitled to
the Deferred Compensation described in paragraph (a) but the amount
shall be determined based upon his actual age at termination plus five
(5) years.
(c) If the Executive's employment is terminated by reason of the
Executive's Disability, the Executive shall be entitled to
receive a benefit from the date of such Disability to the Executive's
65th birthday in an amount equal to 60% of the Executive's Annual
Compensation at the time of his termination by reason of Disability,
which disability benefit shall be reduced by SCG Pension Plan and
social security benefits (if any) paid to the Executive by reason of
the Executive's Disability. Upon attainment of age 65, the Executive
shall be entitled to annual Deferred Compensation as provided in
paragraph 3(a)(i) for termination after age 62, commencing on the
first day of the month following his 65th birthday, based on his
Final Average Annual Pay at the time of this Termination of Employment
by reason of Disability.
4. Life Insurance and Death Benefits.
If the Executive is insurable at standard rates at the time such coverage
is sought, and provided that the premium cost is deductible by Southern and
payment thereof does not jeopardize either the deductibility of premiums paid
by Southern for life insurance on other employees or the exclusion of the cost
thereof from the taxable income of such other employees, Southern will obtain
and pay the premiums on guaranteed renewable term life insurance on the
Executive during his continued employment by Southern in an amount equal to
the difference between coverage provided under Southern's group life
insurance for salaried employees and 2 1/2 times the Executive's Annual
Compensation from time to time in effect. Southern shall not, however, be
obligated hereunder to increase the Executive's coverage more frequently than
once in any 12 consecutive month period. The Executive may designate the
beneficiary of such insurance in his discretion. If the Executive is not
insurable at standard rates upon commencement of employment, no coverage need
be provided under this Section 4. If the Executive becomes uninsurable at
standards rates after coverage is effected under this Section 4, only coverage
obtained prior to the Executive's uninsurability (including renewal, extension
or coverage increase privileges included in such coverage) need be provided by
Southern. Southern may require the Executive to bear the cost of any such
renewal, extension, or coverage increase privilege in excess of standard rates.
The Executive shall be responsible for the payment of personal income taxes
imposed upon him by reason of his receipt of the coverage provided pursuant
to this Section 4.
5. Vesting.
The interest of the Executive in any benefit accrued hereunder
shall be fully vested and nonforfeitable at all times.
6. Funding and Trust Accounts.
(a) Neither the Corporation nor Southern shall be required to fund or
otherwise segregate assets for the payment of Deferred
Compensation under this Agreement. Notwithstanding the foregoing,
however, as soon as practicable after October 21, 1993,
Southern shall establish a trust fund (or amend an existing trust
fund) (the "Trust"). Southern shall calculate the amount of
Deferred Compensation expected to be payable under this
agreement. Each year thereafter, Southern shall contribute an
amount that it determines to be sufficient to actuarially fund
the Deferred Compensation expected to be paid under this
Agreement. Southern shall update its calculation of the
expected Deferred Compensation and review such funding levels
once a year as of January 1 and, if needed to maintain the
funding on a sound actuarial basis, increase or decrease the
level of such funding.
(b) The Trust shall be a "rabbi trust" and shall be embodied in a
trust agreement with an institutional trustee (the "Trustee").
Deferred Compensation shall be paid from the funds in the
"rabbi trust" by the Trustee to the extent not paid by Southern.
The Trustee shall establish an account (an "Account") for this
Agreement which shall be credited annually with the contributions
to be made pursuant to preceding paragraph and with earnings
attributable thereto, including realized and unrealized
investment gains and losses. The establishment of the Account is
solely for accounting and funding purposes and shall not
otherwise restrict the use of the funds in the Trust.
7. Notices.
Any notices required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been given when delivered, or when
mailed, if mailed by registered or certified mail, return receipt requested, to
the respective addresses of the parties set forth above, or to such other
address as any party hereto shall designate to the other party in writing
pursuant to the terms of this Section 7.
8. Severability.
The provisions of this Agreement are severable, and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of any other provision.
9. Governing Law.
This Amended and Restated Agreement shall be governed by and
interpreted in accordance with the substantive of laws of the State of
Connecticut.
10. Supersedure.
This Amended and Restated Agreement shall cancel and supersede all prior
agreements relating to the payment of deferred compensation between the
Executive and the Corporation and Southern, except the Employment
Agreement executed as of the 24th day of March, 1992.
11. Waiver of Breach.
The waiver by a party of a breach of any provision of this Amended and
Restated Agreement shall not operate or be construed as a waiver of any prior
or subsequent breach by any of the parties hereto.
12. Binding Agreement.
This Amended and Restated Agreement shall inure to the benefit of and be
enforceable by the Executive, his heirs, executors, administrators, successors
and assigns. This Amended and Restated Agreement shall be binding upon the
Corporation, Southern and their successors and assigns. The Corporation and
Southern shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Corporation and Southern expressly to assume
and agree to perform this Amended and Restated Agreement in accordance
with its terms. The Corporation and Southern shall obtain such assumption and
agreement prior to the effectiveness of any succession.
13. Arbitration.
If the Executive so elects, any dispute or controversy arising under or
in connection with this Amended and Restated Agreement shall be settled
exclusively by arbitration in the city nearest to the Executive's principal
residence which has an office of the American Arbitration Association, by one
arbitrator in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. The Corporation and Southern hereby waive their right to
contest the personal jurisdiction or venue of any court, federal or state, in an
action brought to enforce this Agreement or any award of an arbitrator
hereunder which action is brought in the jurisdiction in which such
arbitration could have been conducted pursuant to this provision.
14. Executive's Expenses.
The Corporation and Southern, or the successor of either of such
companies, shall pay or reimburse the Executive (or, if appropriate, his
Qualified Surviving Spouse) for all costs, including reasonable attorney's fees
and expenses of litigation and arbitration, incurred by the Executive (or his
Qualified Surviving Spouse) in successfully contesting or disputing any action
taken by the Corporation and Southern, or the successor of either of such
companies, purportedly pursuant to this Amended and Restated Agreement or
in successfully seeking to obtain or enforce any right or benefit provided by
this Amended and Restated Agreement.
15. Counterparts.
This Amended and Restated Agreement may be executed in one or more
counterparts; each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amended
and Restated Agreement to be executed as of the day and year first above
written.
CONNECTICUT ENERGY CORPORATION
By______________________________________
Henry Chauncey, Jr., duly authorized
Chairman, Nominating and Salary
Committee
THE SOUTHERN CONNECTICUT GAS COMPANY
By______________________________________
Henry Chauncey, Jr., duly authorized
Chairman, Nominating and Salary
Committee
EXECUTIVE
By______________________________________
J. R. Crespo