EXHIBIT 10.7
EASTERN ENTERPRISES
DEFERRED COMPENSATION PLAN FOR TRUSTEES
1. Purpose
The purpose of this plan (the "Plan") is to assist members of
the Board of Trustees of
Eastern Enterprises ("Eastern") who are not employees of Eastern
in making more
satisfactory provision for their income following their retirement
from the Board. To
accomplish this purpose, the Plan establishes arrangements under
which certain cash amounts
payable by Eastern to such members may be deferred until after the
retirement of such
members from the Board of Trustees. In addition, the Plan gives
such Trustees the option to
have all or a portion of their deferred payments credited to Share
Units, as hereinafter
provided.
2. Administration
The Plan will be administered by the Treasurer of Eastern.
3. Deferral of Retainers and of Fees for Attendance at Meetings
Each member of the Board of Trustees of Eastern who is not an
employee of Eastern
will have the right to defer receipt of payments on account of all
cash retainers and fees for
attendance at meetings ("meeting fees") to which he or she may be
entitled for any calendar
year as a member of the Board of Trustees, including those to
which he or she is entitled as
a member of any Committee of the Board of Trustees or as Chairman
of any such
Committee. In order to exercise his or her right to defer receipt
of such cash payments for
any calendar year, the member must make an election in accordance
with the provisions of
paragraph 4 below. Such election must also set forth the method
by which the deferred
amounts will be paid, subject to the provisions of paragraph 6
below.
Any election to defer receipt of payments on account of
retainers and meeting fees
payable in cash will apply to all such payments for the calendar
year to which the election
relates.
4. Election to Defer
a. Except as provided in 4.b and 4.c below, any member of
the Board of
Trustees who wishes to defer receipt of payments on
account of retainers or
meeting fees payable in cash for any calendar year must
make an irrevocable
election on a form satisfactory to the Treasurer prior
to the beginning of the
calendar year in which the amounts would be paid if no
such election were
made.
b. In the case of payments on account of retainers or
meeting fees for 1980, the
election must be made prior to the 1980 annual meeting
of shareholders of
Eastern and must be on a form satisfactory to the
Treasurer. Any such
election will apply to all such amounts which would be
paid during 1980 after
the date of such election if no such election were made.
c. In the case of the first calendar year in which an
individual becomes a member
of the Board of Trustees, or becomes entitled to
retainers and meeting fees,
the election must be made prior to the date on which
such individual becomes
a member of the Board of Trustees or becomes so
entitled. Such election will
apply to all such amounts which would be paid in cash
during such year if no
such election were made.
5. Cash Accounts; Share Unit Accounts
a. Each member who elects to defer under the Plan receipt
of payments for a
calendar year after 1992 shall, on the form referred to
in paragraph 4. hereof,
make an irrevocable election to credit each such
deferred payment entirely to
his or her Cash Account or entirely to his or her Share
Unit Account, or to
have a fixed percentage of each such deferred payment
credited to his or her
Share Unit Account and the balance to his or her Cash
Account. For members
who participated in the Plan for any year prior to 1993,
the accounts to which
their deferred payments for such year(s) have been
credited are their Cash
Accounts. Each such member shall have the right to make
a one-time
irrevocable election, on or prior to December 31, 1992,
to transfer from his or
her Cash Account to his or her Share Unit Account all or
a portion of amounts
deferred from years prior to 1993.
b. If a member has a balance in his or her Cash Account,
then amounts will be
credited to such Cash Account as of the end of each
calendar year based upon
the average balance therein during such year (including
any prior interest
credits) and upon a rate, as determined by the Treasurer
of Eastern, equal to
the prime rate* of interest charged by The First <F1>
National Bank of Boston as of
the first day of such year or upon a rate based on such
other indices as the
Treasurer of Eastern in his or her sole discretion from
time to time selects.
Such credits will be made as long as there is any amount
credited to such Cash
Account.
[FN]
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<F1> * Amended on January 27, 1994 to increase rate to prime rate plus
one percent.
c. If a member elects to have all or a portion of his or
her deferred payments for
any year after 1992 credited to his or her Share Unit
Account, a number of
whole and fractional Share Units shall be credited to
such Account, as of the
date when each deferred payment or portion thereof would
have been payable,
equal to the amount of such deferred payment or portion
thereof divided by the
Fair Market Value of a share of Common Stock, $1.00 par
value, of Eastern
("Common Stock") on such date. If a member elects
pursuant to paragraph
5.a. to transfer from his or her Cash Account to his or
her Share Unit Account
an amount deferred from any year(s) prior to 1993, a
number of whole and
fractional Share Units shall be credited to such Share
Unit Account on January
4, 1993, equal to such transferred amount divided by the
Fair Market Value of
a share of Common Stock on such date. In addition, on
the date of payment
of each cash dividend declared on the Common Stock,
there shall be credited
to each Share Unit Account with Share Units therein on
such date a number of
additional Share Units, such number to be determined by
dividing the dollar
amount of dividends that would be payable on the number
of shares of
Common Stock represented by the Share Units in such
Account on the record
date for such dividend, by the Fair Market Value of a
share of Common Stock
on the payment date of such dividend. The number of
Share Units in each
Share Unit Account shall be appropriately adjusted by
the Treasurer of Eastern
in the event of any stock dividend or split,
recapitalization, merger in which
Eastern is the surviving entity, combination or exchange
of shares or similar
corporate change affecting the number or type of shares
of Eastern stock
outstanding. For purposes of this Plan, the "Fair
Market Value" of a share of
Common Stock on any day shall be the average of the high
and low prices of
the Common Stock as published in the New York Stock
Exchange Composite
Transactions listing for such day (or, if the New York
Stock Exchange is not
open for trading on such day, the last previous day on
which such trading
occurred); provided that, in the event that such prices
for the Common Stock
shall not be so published, the Fair Market Value of the
Common Stock shall
be reasonably determined by the Treasurer of Eastern.
d. Commencing six months and one day following the date on
which a member
ceases to be a member of the Board of Trustees, such
former member may
elect to make annual transfers of all or a portion of
amounts in his or her Cash
Account to his or her Share Unit Account, and vice
versa. Each such transfer
shall be effected on the first business day of January
of the year following the
year in which the transfer election is made. In the
event of such a transfer to
a Share Unit Account, such Account shall be credited
with Share Units based
on the Fair Market Value of the Common Stock on the date
of transfer. In the
event of such a transfer from a Share Unit Account, the
Share Units in such
account shall be converted to cash based on the Fair
Market Value of the
Common Stock on the date of transfer. On the date of
any payment from a
Share Unit Account pursuant to paragraph 6.a., 6.b. or
6.c. hereof, the
number of whole and fractional Share Units required to
make such payment
shall be converted to cash based on the Fair Market
Value of the Common
Stock on such date. Payments from Share Unit Accounts
shall be made in
cash only, and members, former members and beneficiaries
shall in no event
have any right to receive Share Units or shares of
Common Stock under the
Plan. In the event that any installment payment under
paragraph 6.a., 6.b. or
6.c. is to be made from both a member's or former
member's Share Unit
Account and Cash Account, an amount shall be paid from
each Account in
proportion to the value of such Account on the payment
date.
6. Payment of Amounts Deferred
a. Amounts in a member's Cash Account and/or Share Unit
Account will be paid
in cash only, in either of the following ways, as
elected by the member prior
to the beginning of the first calendar year in which he
or she defers receipt of
payments under this Plan:
(i) in a lump sum, with adjustments as referred to in
paragraph 6.b below,
on the first business day in January of the year
following the year in which the
member ceases to be a member of the Board of Trustees;
or
(ii) in a number of consecutive annual installments as
elected by the
member, not to exceed 10, beginning in the calendar year
following the
calendar year in which the member ceases to be a member
of the Board of
Trustees, the installment in each year to be paid on the
first business day of
January in such year, and each installment to equal an
amount determined by
dividing (x) the total amount in the member's Cash
Account and Share Unit
Account on the payment date (valuing the Share Unit
Account based on the
Fair Market Value of the Common Stock on such date), by
(y) the number of
annual installments elected by the member that remain
unpaid (including the
installment to be paid on such date).
Except as provided in paragraph 6.b below, once filed
with the Treasurer, a
member's election under this paragraph 6 as to the
method by which deferred
amounts will be paid to him or her will be irrevocable.
b. If a member or former member of the Board of Trustees,
or any beneficiary of
the member after the member's death, incurs a severe
financial hardship, the
Treasurer, in his or her sole discretion, may revise the
schedule for payments
from his or her Cash Account (including the making of
immediate payments)
to the extent reasonably necessary to eliminate the
severe financial hardship;
provided that no revision shall be made with respect to
the schedule for
payments from the member's or former member's Share Unit
Account. Any
such severe financial hardship must have been caused by
an accident, illness,
or event beyond the control of the member, former
member, or beneficiary.
c. If at the time of death of a member or former member of
the Board of
Trustees, there is any balance in his or her individual
Cash Account and/or
Share Unit Account under the Plan, Eastern will pay such
balance (as adjusted
under paragraph 6.b above) in cash only to the
beneficiary or beneficiaries
designated by the member on a form satisfactory to the
Treasurer. At the
member's election, such payment will be made in a lump
sum on the first
business day of January of the year following the year
of the member's death
or in a number of consecutive annual installments as
elected by the member,
not to exceed 10, beginning in the calendar year
following the year of the
member's death, each annual installment to be paid on
the first business day of
January in such year, and the amount of each installment
to be calculated in
the manner provided in paragraph 6.a above. The member
may at any time
change his or her designation of beneficiary or
beneficiaries and the schedule
for payments to such beneficiary or beneficiaries with
respect to amounts in
his or her Cash Account by filing an additional form
with the Treasurer. The
member may at any time change his or her designation of
beneficiary or
beneficiaries with respect to amounts in his or her
Share Unit Account by
filing an additional form with the Treasurer. However,
the member's election
as to the schedule for payments to his or her
beneficiary or beneficiaries from
a Share Unit Account must be made prior to the beginning
of the first calendar
year in which he or she defers receipt of payments into
a Share Unit Account
under the Plan, and shall be irrevocable thereafter
until six months and one
day following the date on which such member ceases to be
a member of the
Board of Trustees, after which time such former member
may at any time
change the schedule for payments to such beneficiary or
beneficiaries with
respect to amounts in his or her Share Unit Account.
7. Payments Under the Plan
Eastern will comply with any requirements which may be
established by law with
respect to payments under the Plan, including the filing of any
notices and the withholding of
any taxes which may be required.
8. Rights of Members and Other Persons
Any rights accruing to any member of the Board of Trustees of
Eastern or other
person under the Plan will be solely those of an unsecured general
creditor of Eastern. Such
rights may not be assigned or otherwise transferred by such member
or person and will not
be subject to be taken by creditors of such member or person by
any process whatsoever,
and any attempt to cause such interest to be so subjected will not
be recognized, except to
such extent as may be required by law.
9. Modification and Termination of the Plan
The Plan may be amended or terminated by the Board of
Trustees of Eastern at any
time, in whole or in part, such amendment or termination to become
effective on the date
specified by the Board of Trustees.
10. Effective Date of the Plan
The Plan is effective as of April 1, 1980.
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As Amended by the Board of Trustees January 27, 1994