EXHIBIT 10.21
EASTERN ENTERPRISES
1996 NON-EMPLOYEE TRUSTEES' STOCK OPTION PLAN
1. Purpose. The purpose of this 1996 Non-Employee Trustees' Stock Option
Plan (the "Plan") is to advance the interests of Eastern Enterprises
("Eastern") by enhancing the ability of Eastern to attract and retain non-
employee trustees who are in a position to make significant contributions to
the success of Eastern and to reward those trustees for such contributions
through ownership of shares of beneficial interest ("Stock") of Eastern.
2. Administration. The Plan shall be administered by the Board of Trustees
(the "Board") of Eastern. The Board may delegate the administration of the
Plan to a committee, in which case all references to "the Board" hereunder,
other than in Section 10(d), shall refer to the committee. The Board shall
have authority, consistent with the Plan (a) to issue options granted in
accordance with the formula set forth in this Plan to Eligible Trustees (as
defined below); (b) to prescribe the form or forms of instruments evidencing
awards and any other instruments required under the Plan and to change such
forms from time to time; (c) to adopt, amend and rescind rules and regulations
for the administration of the Plan; and (d) to interpret the Plan and to
decide any questions and settle all controversies and disputes that may arise
in connection with the Plan. All decisions, determinations and interpretations
of the Board shall be binding on all parties concerned. Transactions under the
Plan are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under Section 16 of the Securities Exchange Act of 1934 (the
"Exchange Act"). To the extent any provision of the Plan or action by the
Board fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Board.
3. Effective Date and Term of Plan. The Plan shall become effective on the
date (the "Effective Date") on which the Plan is approved by the shareholders
of Eastern. No option shall be granted under the Plan after the day (the
"Final Date") which follows the fourth annual shareholders meeting after the
Effective Date, but options previously granted may extend beyond that date.
4. Shares Subject to the Plan.
(a) Number of Shares. Subject to adjustment as provided in Section 4(c),
the aggregate number of shares of Stock that may be delivered upon the
exercise of options granted under the Plan shall be 75,000. If any option
granted under the Plan terminates without having been exercised in full,
the number of shares of Stock as to which such option was not exercised
shall be available for future grants within the limits set forth in this
Section 4(a).
(b) Shares to be Delivered. Stock delivered under the Plan shall be
previously issued Stock acquired by Eastern or authorized but theretofore
unissued shares. No fractional shares shall be delivered under the Plan.
(c) Changes in Stock. In the event of a stock dividend, split-up or
combination of shares, recapitalization or other change in Eastern's
capital, after the Effective Date, the number and kind of shares or
securities of Eastern subject to options then outstanding or subsequently
granted under the Plan, the maximum number of shares or securities that may
be delivered under the Plan, the exercise price, and other relevant
provisions shall be appropriately adjusted by the Board, whose
determination shall be binding on all persons.
5. Eligibility of Trustees for Stock Options. Trustees eligible to receive
options under the Plan ("Eligible Trustees") shall be those trustees who are
not and have not been for five years employees of Eastern or of any subsidiary
of Eastern.
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6. Terms and Conditions of Options.
(a) Number of Options. Each individual who is an Eligible Trustee on the
day (the "meeting grant date") following any annual meeting of Eastern's
shareholders that occurs on or after the Effective Date and on or before
the Final Date shall automatically be granted on such meeting grant date an
option to purchase 1,100 shares of Stock, subject to adjustment as provided
in Section 4. In addition, each individual who becomes an Eligible Trustee
(other than by election at an annual meeting of Eastern's shareholders) on
a date (the "interim grant date") that falls between meeting grant dates
and prior to the Final Date shall automatically be granted on the interim
grant date an option for 550 shares of Stock, subject to adjustment as
provided in Section 4.
(b) Exercise Price. The per-share exercise price of each option shall be
100% of the fair market value per share of Stock on the date the option is
granted.
(c) Duration of Options. The latest date on which an option may be
exercised shall be the tenth anniversary of the date the option was
granted.
(d) Exercisability. Each option granted under the Plan shall become
exercisable as to one-half of the shares subject to the option on each of
the first and second anniversaries of the grant date.
Any exercise of an option must be in writing, signed by the proper person
and delivered or mailed to Eastern, accompanied by (1) any documents
required by the Board and (2) payment in full as provided below for the
number of shares for which the option is exercised.
(e) Payment for and Delivery of Stock. The exercise price of Stock
purchased on exercise of an option must be paid for as follows: (1) in cash
or by check (acceptable to Eastern in accordance with guidelines
established by the Board for this purpose), bank draft or money order
payable to the order of Eastern, (2) through the delivery of shares of
Stock that have been outstanding and held by the option holder for at least
six months and which have a fair market value on the last business day
preceding the date of exercise equal to the exercise price, or (3) by any
combination of the permissible forms of payment.
Eastern shall not be obligated to deliver any shares of Stock pursuant to
the exercise of any option (a) until, in the opinion of Eastern's counsel,
all applicable Federal and state laws and regulations have been complied
with, (b) in the event the outstanding Stock is at the time listed upon any
stock exchange, the shares to be delivered have been listed or authorized
to be added to the list upon official notice of issuance upon such exchange
and (c) all other legal matters in connection with the issuance and
delivery of shares have been approved by Eastern's counsel. Without
limiting the generality of the foregoing, Eastern may require from the
Eligible Trustee or other person exercising the option such investment
representation or such agreement, if any, as counsel for Eastern may
consider necessary in order to comply with the Securities Act of 1933 and
may require that the Eligible Trustee or such other person agree that any
sale of the shares will be made only on the New York Stock Exchange or in
such other manner as is permitted by the Board and that he or she will
notify Eastern when he or she makes any disposition of the shares whether
by sale, gift or otherwise. Eastern shall use its best efforts to effect
any compliance and listing, and the Eligible Trustee or other person
exercising the option shall take any action reasonably requested by Eastern
in such connection. An Eligible Trustee or other person entitled to
exercise an option shall have the rights of a shareholder only as to shares
actually acquired by him or her under the Plan.
If an option is exercised by any person other than the Eligible Trustee,
Eastern will be under no obligation to deliver Stock pursuant to such
exercise until Eastern is satisfied as to the authority of the person
exercising the option.
8. Termination of Options. If an Eligible Trustee ceases to be a trustee of
Eastern for any reason (including death) (a "termination"), all options
awarded to the Eligible Trustee under the Plan and then held by the Eligible
Trustee shall, to the extent such options were exercisable immediately prior
to termination, continue to be exercisable by the Eligible Trustee (or in the
event of the Eligible Trustee's death, by his or her executor or administrator
or the person or persons to whom the option is transferred
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by will or the applicable laws of descent and distribution) for a period of
one year following termination or until the tenth anniversary of the date of
grant if earlier; provided, that if termination is by reason of retirement
pursuant to an established retirement policy of the Board, all options held by
the retiring trustee shall become exercisable (to the extent not already
exercisable) immediately prior to retirement. Except as provided in the
preceding sentence, all options awarded to an Eligible Trustee and held at
time of termination shall promptly expire.
9. Certain Corporate Transactions. In the event of a consolidation or a
merger in which Eastern is not the surviving company, or in the event its
outstanding shares are converted into securities of another entity or
exchanged for other consideration, or in the event of the complete liquidation
of Eastern, all outstanding options shall thereupon terminate, but at least
twenty days prior to the effective date of any such consolidation or merger,
the Board shall either (a) make all outstanding options immediately
exercisable or (b) arrange to have the surviving company grant replacement
options to the Eligible Trustees.
10. General Provisions.
(a) Documentation of Options. Options will be evidenced by written
instruments prescribed by the Board from time to time. Such instruments may
be in the form of agreements, to be executed by both an Eligible Trustee
and Eastern, or certificates, letters or similar instruments, which need
not be executed by an Eligible Trustee but acceptance of which will
evidence agreement to the terms thereof.
(b) Nontransferability of Options. Options may not be transferred by an
Eligible Trustee otherwise than by will or the laws of descent and
distribution, and during the Eligible Trustee's lifetime shall be
exercisable only by the Eligible Trustee.
(c) Effect. Neither adoption of the Plan nor the grant of options to an
Eligible Trustee shall confer upon any person any right to continued status
as a trustee or affect Eastern's right to adopt other plans or arrangements
under which stock may be issued to trustees.
(d) Amendment; Termination. The Board may at any time terminate the Plan
as to any further grants of options. The Board may at any time or times
amend the Plan for any purpose which may at the time be permitted by law;
provided, that except to the extent expressly required or permitted by the
Plan, no such amendment will, without the approval of the shareholders of
Eastern, effectuate a change for which shareholder approval is required in
order for awards under the Plan to continue to qualify under Rule 16b-3
promulgated under Section 16 of the Exchange Act.
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