Exhibit 10.7
EASTERN ENTERPRISES
Supplemental Executive Retirement Plan
Amendment
Pursuant to Section 14 of the Eastern Enterprises Supplemental
Executive Retirement Plan (as amended, the "Plan"), the Plan is hereby amended
as follows, effective immediately:
1. Section 2(a) (definition of "Eastern") is amended to read
as follows: "The word "Eastern" will mean Eastern Enterprises and any
successor, including without limitation any successor to or acquiror of the
stock or assets of Eastern in a transaction constituting a Change of Control.'4
2. Section 2(m) (definition of "Change of Control") is amended
to read as follows:
"A Change of Control will be deemed to have occurred if, after January
1, 1998, any of the following occurs:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) or
group of "persons" (as so defined), other than Eastern,
becomes a beneficial owner directly or indirectly of
securities representing twenty-five percent (25%) or more of
the combined voting power of the then outstanding voting
securities of Eastern; or
(ii)there is consummated a merger or consolidation ("merger")
involving Eastern and immediately after such merger the
beneficial owners immediately prior to such merger of the then
outstanding voting securities of Eastern do not continue to
own beneficially at least sixty percent (60%) of the voting
securities of the entity or entities resulting from such
merger; or
(iii) there is consummated a sale, lease, exchange, spin- off
or other transfer (any of the foregoing, a "transfer") of all
or substantially all of the assets or business of Eastern and
its subsidiaries, other than any such transfer resulting in
beneficial ownership of not less than sixty percent (60%) of
the assets or business so transferred or not less than sixty
percent (60%) of the voting securities of the entity or
entities to which such assets were transferred by the owners
immediately prior to the transfer of the then outstanding
voting securities of Eastern; or
(iv) within any two-year period, individuals who at the
beginning of such period constituted the Board of Trustees of
Eastern cease for any reason to constitute a majority thereof;
provided, that any trustee who is not in office at the
beginning of such two-year period but whose election or
nomination for election was approved by a vote of at least
two-thirds of the trustees in office at the time of such
approval who were either trustees of Eastern at the beginning
of such period or who were elected to the Board of Trustees
pursuant to an election which was, or for which the nomination
for election was, previously so approved shall be deemed to
have been in office at the beginning of such two-year period;
or
(v) in the case of an Eligible Officer employed by Boston Gas
Company, Eastern sells or otherwise disposes of all or
substantially all of its stock of Boston Gas Company or Boston
Gas Company sells or otherwise disposes of all or
substantially all of its assets, excluding in either case any
transaction resulting in beneficial ownership of not less than
fifty percent (50%) of the assets or business so transferred
or not less than fifty percent (50%) of the voting securities
of the entity or entities to which such assets were
transferred by the owners immediately prior to the transfer of
the then outstanding voting securities of Eastern; or
(vi) in the case of an Eligible Officer employed by Midland
Enterprises Inc., Eastern sells or otherwise disposes of all
or substantially all of its stock of Midland Enterprises Inc.
or Midland Enterprises Inc. sells or otherwise disposes of all
or substantially all of its assets, excluding in either case
any transaction resulting in beneficial ownership of not less
than fifty percent (50%) of the assets or business so
transferred or not less than fifty percent (50%) of the voting
securities of the entity or entities to which such assets were
transferred by the owners immediately prior to the transfer of
the then outstanding voting securities of Eastern."
3. A new subsection 2(n) is added to read as follows:
"(n) The words "COC Agreement" mean an agreement between an Officer
and Eastern or one or more subsidiaries of Eastern providing
for severance pay or other benefits to the Officer in the
event of a Change of Control or similar change in the control
of Eastern and its subsidiaries or upon termination of the
Officer's employment in connection with or during a specified
period that includes such Change of Control or similar
change."
4. Section 4 is amended by adding at the end the following text:
"An Officer who, at any time during the period commencing six
months before and ending two years after a Change of Control,
satisfies the requirements of (i), (ii) and (iii) of this Section
4 will also be an Eligible Officer covered by the Plan, whether or
not he has attained age fifty-five (55), if the employment of such
Officer with Eastern and its subsidiaries terminates under
circumstances which at the time or upon a subsequent Change of
Control entitle such officer to a severance payment or payments
under a COC Agreement (but if the employment of such Officer so
terminates, he shall be deemed to have been an Eligible Officer
from the beginning of the period commencing six months before and
ending two years after the Change of Control)."
5. Section 5(a)(i) is amended by adding the words "or Section 5(c)
below" after the words "in Section 5(a)(ii) below" in the first sentence.
6. Section 5(a)(ii) is amended by deleting the first word
("Every") and inserting in its place the words: "Subject to Section 5(c)
below, every".
7. Section 5(b)(i) is amended by adding the words "or Section
5(c) below" after the words "in Section 5(b)(ii) below" in the first sentence.
8. Section 5(b)(ii) is amended by deleting the first word
("Every") and inserting in its place the words: "Subject to Section 5(c)
below, every".
9. Sections 5(c) and 5(d) are redesignated Sections 5(d) and 5(e),
respectively, and a new Section 5(c) is added immediately following Section
5(b)(ii), to read in its entirety as follows:
"(c) Benefits Following a Change of Control. Every Eligible Officer
whose employment by Eastern and its subsidiaries terminates
(other than by death) under circumstances which at the time or
upon a subsequent Change of Control entitle him to a severance
payment or payments under a COG Agreement will be eligible to
receive an annual amount determined under this paragraph (c).
The annual amount determined under this paragraph (c) is the
product of
(i) the Eligible Officer's average annual
Compensation for those five (5) calendar years,
selected from among the last ten (10) calendar
years of his Executive Service, in
which his aggregate Compensation was highest;
provided, that the computation of such
Eligible Officer's average annual Compensation
for purposes of this paragraph (i)
shall include the period by reference to which the
severance payment or payments under
the COG Agreement are determined (for example,
three years in the case of a severance
payment equal to three years of compensation) and
the amount of such severance payment
or payments, if the inclusion of such factors in
the computation would result in a
higher amount of average annual Compensation
than would result from a determination
under this paragraph (i) without regard to such
factors; and
(ii) a percentage determined according to the following
table:
Non-Calendar
Years of Executive Service Percentage
Less than 10 None
10 35
11 36.5
12 38
13 39.5
14 41
15 42.5
16 44
17 45.5
18 47
19 48.5
20 or more 50
In determining "non-calendar years of Executive
Service" for purposes of this paragraph (c)(ii), the
rules described in Section 5(a)(ii) shall apply
except that an Eligible Officer described in this
subsection (c) shall be credited with a number of
additional non-calendar years of Executive Service
equal to the number of years with respect to which
the severance payment or payments under his COG
Agreement are determined (for example, three years
in the case of a severance payment equal to three
years of compensation); and
(iii) in the case of an Eligible Officer whose age at
commencement of benefits is less than sixty (60), a
percentage determined according to the following
table:
Age at
at Commencement
of Benefit Percentage
59 95
58 90
57 85
56 80
55 75"
10. Section 5(d), as hereinabove redesignated, is amended to
read in its entirety as follows:
"Death Benefits. If an Eligible Officer dies while serving (or deemed
to be serving under Section 6 below) as an Eligible Officer, or after
termination of employment in accordance with Section 5(e)(i), (ii),
(iii) or (iv) but before commencement of benefits, and leaves a
surviving spouse, the spouse, if he or she survives to the date
benefits commence, will be eligible to receive an annual amount equal
to the amount, if any, the Eligible Officer would have been entitled
to receive under (a),(b) or (c) above, whichever is applicable, had
his employment terminated in accordance with Section 5(e)(i), (ii),
(iii) or (iv) on the earlier of the day before the Eligible Officer's
death or the date of actual termination of employment."
11. Section 5(e), as hereinabove redesignated, is amended by deleting
the words "upon or after his attaining age fifty-five (55), but" and the comma
after the word "(65)" in the first sentence thereof; by replacing the period at
the end of clause (iii) with the words "; or"; and by adding immediately after
clause (iii) as so amended and before the sentence which begins "No benefit with
respect. . ."the following new clause (iv):
"(iv) in the case of an Eligible Officer described at Section 5(c)
above, the Eligible Officer's employment terminates under
circumstances which at the time or upon a subsequent Change
of Control entitle him to a severance payment or payments
under a COC Agreement."
12. Section 7 is amended by deleting the reference to "Section 5(c)"
and replacing it with a reference to "Section 5(d)" . 13. Section 9 is amended
by deleting the words "Section 5(a) or Section 5(b) above" in the second line
and replacing them with the words "Section 5(a), Section 5(b) or Section 5(c)
above".
13. Section 9 is amended by deleting the words "Section 5(a) or Section
5(b) above" in the second line and replacing them with the words "Section 5(a),
Section 5(b) or Section 5(c) above".
14. The paragraph of Section 9 that begins "If an Eligible Officer dies
while employed . . ."is amended by adding the words "or after termination of
employment in accordance with Section 5(e)(i), (ii), (iii) or (iv) but before
commencement of benefits," after the words "Eligible Officer," in the second
line and by deleting the words "Section 5(c)" and replacing them with the words
"Section 5(d)".
15. Section 10 as in effect prior to the amendments described herein is
amended by deleting the words "Section 5(c)" each time they appear and replacing
them with the words "Section 5(d)"; by deleting the words "Eligible Officer
retired with the written permission of the Compensation Committee on the day
before his death" and replacing them with the words "Eligible Officer's
employment terminated in accordance with Section 5(e)(i), (ii), (iii) or (iv);
and by adding the following proviso immediately before the period at the end of
the section; "; provided, that in the case of an Eligible Officer described in
Section 5(c), benefits shall not commence prior to the first day of the month
next following the date the Eligible Officer attains or would have attained age
55".
16. Section 11 is amended by adding the following sentence at
the end thereof: "The provisions of this Section 11 shall not apply in the
case of an Eligible Officer receiving benefits pursuant to Section 5(c)."
17. The second subparagraph of Section 12 (begins:
"Notwithstanding the foregoing ...") is amended to read as follows:
"Notwithstanding the foregoing, Eastern in its sole discretion may
establish a so-called "rabbi" trust or similar trust, whether or not
conforming to Rev. Proc. 92-64, or may avail itself of any such trust
which it has previously established, to provide for the payment of
benefits hereunder, subject to such terms as the Board of Trustees may
determine (a "trust"). In the event Eastern established a trust in
respect of the Plan or causes a pre-existing trust to cover the Plan,
and at the time of a Change of Control such trust (i) has not been
terminated or revoked and (ii) is not "fully funded" (as hereinafter
defined), Eastern shall promptly deposit in such trust cash sufficient
to cause the trust to be "fully funded" as of the date of the deposit.
For purposes of this subparagraph, any such trust shall be deemed
"fully funded" as of any date if, as of that date, the fair market
value of the assets held in trust is not less than (1) the aggregate
present value as of that date of all benefits then in pay status under
the Plan (including benefits not yet commenced but in respect of
Eligible Officers whose employment has terminated in accordance with
Section 5(e)(i), (ii), (iii) or (iv)) plus (2) the aggregate present
value as of that date of all benefits that would be payable under the
Plan if all other persons who are (or, but for not yet having attained
age 55, would be) Eligible OfficErs were deemed to have terminated
employment on that date in accordance with Section 5(e)(i), (ii),
(iii) or (iv) plus (3) the aggregate present value as of that date of
all benefits payable (as determined under rules similar to the rules
described in (1) and (2)) under all other defined-benefit type plans
and arrangements provided for through the trust, plus (4) the
aggregate of the account balances, determined as of such date, under
all individual-account type plans and arrangements provided for
through the trust. In applying clauses (1), (2) and (3) of the
previous sentence, present value shall be determined by using the
interest and mortality assumptions used in determining lump sum
present values under the qualified defined benefit pension plan
maintained by Eastern, of if no such qualified plan is then maintained
by Eastern, by applying the assumptions used prior to the Change of
Control in determining Eastern's pension expense under FAS 87 or any
successor pronouncement with respect to such plan or arrangement."
18. Section 14 is amended to provide as follows:
"Termination: Amendment: Other. Eastern reserves the right at any time
by action of its Board of Trustees to terminate the Plan or to amend
its provisions in any way, except that following the date which
precedes by six months a Change of Control no such amendment or
termination shall reduce the amount of Eastern's obligations under
Section 12 or extend the period within which Eastern may satisfy such
obligations. In addition, the Plan will automatically terminate if at
any time (and as of the date that) the Retirement Plan is terminated.
Notwithstanding the foregoing, no termination or amendment of the Plan
(a "Plan Change") will reduce the benefit payable under the Plan to
any person with respect to an Eligible Officer whose employment with
Eastern and its subsidiaries was terminated prior to such Plan Change,
nor shall any Plan Change reduce the benefit, if any, to be paid with
respect to a person who is (or, but for not yet having attained age
55, would be) an Eligible Officer on the date of such Plan Change
below the amount which such person would have received if his
employment had terminated in accordance with Section 5(e)(i), (ii),
(iii) or (iv) on the day before such Plan Change; provided, however,
that benefits otherwise payable hereunder with respect to an
individual may be reduced or otherwise modified by separate agreement
between Eastern and such individual."
IN WITNESS WHEREOF, Eastern Enterprises has caused this instrument of
amendment to be executed by its duly authorized officer as of the 22nd day of
July, 1998.
EASTERN ENTERPRISES
By: /s/ J. Atwood Ives
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As approved by the Board of Trustees of Eastern Enterprises on July 22, 1998.