EXHIBIT 10.9
Amended as of February 24, 1994
Eastern Enterprises
Supplemental Executive Retirement Plan
1. Purpose. The purpose of this Plan is to provide key management
personnel of Eastern Enterprises and its subsidiaries with an appropriate
level of retirement income by supplementing the retirement benefits provided
under the Eastern Enterprises Headquarters Retirement Plan, the Boston Gas
Company Retirement Plan, and the Midland Enterprises Inc. Salaried Retirement
Plan, as applicable.
2. Definitions. For purposes of this Plan, the following terms will
have the following meanings:
(a) The word "Eastern" will mean Eastern Enterprises and any successor
to all or a major portion of its assets or business which assumes
the obligations of Eastern Enterprises under the Plan.
(b) The word "Plan" will mean the Eastern Enterprises Supplemental
Executive Retirement Plan set forth herein, together with all
amendments hereto.
(c) The words "Retirement Plan" will mean the Eastern Enterprises
Headquarters Retirement Plan, the Boston Gas Company Retirement
Plan, and the Midland Enterprises Inc. Salaried Retirement Plan,
as from time to time amended, as applicable.
(d) The words "Participating Subsidiary" will mean any Participating
Employer (as defined in the Retirement Plan), other than Eastern.
(e) The word "Compensation" will mean:
(i) except as otherwise provided in Section 2(e)(ii) below, with
respect to any Officer for any year, the salary paid by
Eastern or by a Participating Subsidiary to such Officer for
such year (calculated as of his Earnings Measurement Date,
as defined in the Retirement Plan) and fifty percent (50%)
of bonuses and incentive awards paid (whether in cash or
stock) by Eastern or by a Participating Subsidiary to such
Officer in such year; provided, that amounts deferred by
such Officer under Eastern's Deferred Compensation Plan for
Certain Management Employees shall be treated as paid in the
year they would have been payable but for such deferral;
further provided, that in determining for the purposes
hereof the amount of an incentive award paid (whether in
cash or stock) under Eastern's Executive Incentive
Compensation Plan (x) there shall be included only the
lesser of the amount paid or the target award amount
established in creating the incentive opportunity to earn
such award and (y) awards based on a fixed number of shares
of Eastern stock shall be valued at the price for Eastern
stock utilized in creating the incentive opportunity to earn
such award; and, further provided, that no amount will be
included with respect to stock options or stock appreciation
rights; and
(ii) with respect to any Officer first receiving benefits
hereunder on or after January 1, 1994, for any calendar
year, the salary paid by Eastern or by a Participating
Subsidiary to such Officer for such calendar year
(calculated as of his Earnings Measurement Date, as defined
in the Retirement Plan) and fifty percent (50%) of bonuses
and incentive awards (whether payable in cash or stock)
earned by such Officer with respect to such calendar year
under Eastern's Executive Incentive Compensation Plan or any
similar executive incentive plan adopted by Eastern after
January 1, 1994; provided, that amounts deferred by such
Officer under any deferred compensation and/or savings plan
maintained by Eastern or any Participating Subsidiary from
time to time shall be treated as paid in the calendar year
they would have been payable but for such deferral, and such
deferrals shall be disregarded for purposes of determining
amounts earned; further provided, that in determining for
purposes hereof the amount of an incentive award earned
(whether payable in cash or stock), (a) a bonus or award
that relates to a plan period of more than one calendar
year, when earned in accordance with such Plan at the end of
such period, shall be deemed to have been earned in equal
annual installments during such period, and (b) awards based
on a fixed number of shares of Eastern stock shall be valued
at the price for Eastern stock utilized in creating the
incentive opportunity to earn such award; and, further
provided, that no amounts will be included with respect to
stock options, stock appreciation rights or restricted stock
awards.
(f) The word "Officer" will mean any active employee of Eastern or a
Participating Subsidiary employed as a Chairman, a President, a
Vice President, a General Counsel, an Assistant Vice President, a
Treasurer, a Secretary, or a Controller. In addition to the
offices named in the preceding sentence, the Compensation
Committee may from time to time designate other offices of Eastern
or a Participating Subsidiary, the holders of which will be
Officers within the meaning of this Section 2(f).
(g) The words "Eligible Officer" will mean any Officer who satisfies
the eligibility requirements set forth in Section 4 of the Plan.
(h) The words "Executive Service" will mean the period of service
which an employee serves as an Officer, except that no service
after age sixty-five (65) will be counted as Executive Service.
(i) The words "Break in Service" will have the same meaning as in the
Retirement Plan.
(j) The words "Computation Period" will have the same meaning as in
the Retirement Plan.
(k) The words "Hour of Service" will have the same meaning as in the
Retirement Plan.
(l) The words "Social Security Benefit" will have the same meaning as
in the Retirement Plan.
(m) A "Change of Control" will be deemed to have occurred if
(i) after January 1, 1987 any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934), 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) within two years after the commencement of a tender offer or
exchange offer for the voting securities of Eastern (other
than by Eastern), or as a result of a merger, consolidation,
sale of assets or contested election of trustees or
directors, or any combination of the foregoing, the
individuals who were trustees of Eastern immediately prior
thereto shall cease to constitute a majority of the Board of
the Trustees of Eastern or of the board of trustees or
directors of its successor by merger, consolidation or sale
of assets.
Wherever used in the Plan, the masculine pronoun will include the
feminine.
3. Administration. The Plan will be administered by the Compensation
Committee of Eastern, which will have full power and authority to construe,
interpret and administer the Plan. Decisions of the Compensation Committee
will be final and binding on all persons. The Compensation Committee may, in
its discretion, adopt, amend and rescind rules and regulations, not
inconsistent with the Plan, relating to the administration thereof. In
individual cases, the Compensation Committee may also credit any Officer for
either eligibility or benefit-determination purposes, or both, with periods
of service in addition to those otherwise taken into account under the Plan,
whether or not such Officer has actually performed service for Eastern or its
subsidiaries in such periods.
4. Eligibility. All Officers fifty-five (55) years of age or older
who (i) are serving in those positions of responsibility that most greatly
influence Eastern's performance (such positions to be designated from time to
time by the Compensation Committee with reference to this Section 4); (ii)
have completed at least twenty-four (24) consecutive months of service in one
or more of the positions so designated by the Compensation Committee; and
(iii) are Members in the Retirement Plan (as defined therein) will be covered
by the Plan and will be eligible to receive benefits hereunder, subject to the
provisions of the Plan. The Compensation Committee may extend eligibility
under the Plan on an individual basis to other employees of Eastern or of its
subsidiaries; provided, however, that no individual (other than a spouse or
beneficiary of an Eligible Officer) who is not a Member in the Retirement Plan
will be eligible to receive benefits under the Plan.
5. Amount of Benefit. Subject to the offset described in Section 7
below, the actuarial adjustments described in Section 8 below and the off-sets
described in Section 9 below, the benefit provided under the Plan with respect
to any Eligible Officer will be determined as follows:
(a) Termination of Employment At or After Age 62.
(i) Except as otherwise provided in Section 5(a)(ii) below,
every Eligible Officer whose employment by Eastern and its
subsidiaries terminates (other than by death) upon or after
his attaining age sixty-two will be eligible to receive an
annual amount which is the product of (i) his average annual
Compensation for those five (5) years, selected from among
the last ten (10) years of his Executive Service, in which
his aggregate Compensation was highest, and (ii) a
percentage determined according to the following table:
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
For purposes of this Section 5(a)(i), a Computation Period
in which an Officer has one thousand (1,000) or more Hours
of Service as an Officer will be deemed to be a "year of
Executive Service," except that years of Executive Service
prior to any Break in Service will be disregarded to the
extent that Years of Vesting Service (within the meaning of
the Retirement Plan) prior to such Break in Service would be
disregarded for purposes of the Retirement Plan.
(ii) Every Eligible Officer whose employment by Eastern and its
subsidiaries terminates (other than by death) upon or after
his attaining age sixty-two (62) and who first receives
benefits hereunder on or after January 1, 1994 will be
eligible to receive an annual amount which is the product of
(i) his 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, 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
For purposes of this Section 5(a)(ii), a Computation Period
in which an Officer has one thousand (1,000) or more Hours
of Service as an Officer will be deemed to be a "non-
calendar year of Executive Service," and a calendar year in
which an Officer has one thousand (1,000) or more Hours of
Service as an Officer will be deemed to be a "calendar year
of Executive Service", except that if any Years of Vesting
Service (within the meaning of the Retirement Plan) prior to
any Break in Service with respect to such Officer would be
disregarded for purposes of the Retirement Plan, an
equivalent number of non-calendar years of Executive Service
and an equivalent number of calendar years of Executive
Service will be disregarded hereunder.
(b) Termination of Employment Before Age 62. Every Eligible Officer
whose employment by Eastern and its subsidiaries terminates (other
than by death) upon or after his attaining age fifty-five (55),
but before his attaining age sixty-two (62), will be eligible to
receive an annual amount equal to the amount calculated under
Section 5(a) above multiplied by a percentage determined according
to the following table:
Age at Commencement
of Benefit Percentage
61 95
60 90
59 85
58 80
57 75
56 70
55 65
(c) Death Benefits. If an Eligible Officer dies while serving (or
deemed to be serving under Section 6 below) as an Eligible Officer
and leaves a surviving spouse, the spouse 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) or (b)
above, whichever is applicable, had he retired with the prior
written permission of the Compensation Committee on the day before
his death.
(d) Conditions and Limitations. No officer whose employment
terminates upon or after his attaining age fifty-five (55), but
before his attaining age sixty-five (65), will be eligible for
benefits under the Plan unless:
(i) the Compensation Committee has given the Officer its prior
written permission (any Officer who dies shall be deemed to
have retired with the prior written permission of the
Compensation Committee); or
(ii) the Officer has given written notification to the
Compensation Committee at least six months in advance of the
termination; or
(iii) the Officer is terminated by Eastern, or a subsidiary of
Eastern, and such termination is not determined by the
Compensation Committee to be a discharge for cause which
casts such discredit on the Officer or Eastern, or a
division or subsidiary of Eastern, as to justify forfeiture
of any benefits under this Plan.
No benefit with respect to any Eligible Officer under the Plan
will exceed, after adjustment for the offset described in Section
7 below but before actuarial adjustment under Section 8 below and
before adjustment for the offsets described in Section 9 below, an
amount equal to three (3) times the greater of (i) $90,000 or (ii)
the maximum benefit that could be paid with respect to such
Eligible Officer under section 415(b)(1)(A) of the Internal
Revenue Code of 1986, as from time to time amended (the "Code"),
as adjusted pursuant to section 415(d) of the Code and as in
effect on the date of such Eligible Officer's termination of
employment.
Except as otherwise provided herein, an Officer's employment will
terminate for purposes of the Plan as of the date on which such Officer (i)
retires, resigns or is dismissed from service as an Officer; (ii) dies while
serving as an Officer; or (iii) departs from the service of Eastern and its
subsidiaries for any reason; provided, that an Officer will not be deemed to
have terminated his employment solely by reason of a duly approved leave of
absence. For purposes of this Section 5 only, the age at which an Officer's
employment terminates or his benefits commence will be calculated in all cases
as of such Officer's nearest birthday.
Notwithstanding any other provision of this Plan, an Eligible Officer's
surviving spouse shall not be entitled to any benefits hereunder unless such
spouse was the person to whom the Eligible Officer was married at the time
benefit payments commenced under this Plan (or at the time of the Eligible
Officer's death, if earlier).
6. Disability. For purposes of satisfying the length-of-service
requirements set forth in Section 4 and Section 5 above, an Officer who is
unable to work because of a disability for which he is eligible to receive
benefits under a long-term disability program sponsored by Eastern or by a
Participating Subsidiary will be deemed to continue to serve as an Officer
at the same salary he was receiving when forced to stop working by reason of
his disability, until such time as he returns to active employment or his
employment terminates.
7. Offset for Social Security payments. The annual benefit
calculated with respect to any Eligible Officer under Section 5 above shall be
reduced (but not below zero), before the adjustments described in Section 8
and Section 9 below, by a percentage of the Eligible Officer's Social Security
Benefit for any year in which such Eligible Officer is eligible to receive a
Social Security benefit (or, if the benefit hereunder becomes payable under
Section 5(c) by reason of the Eligible Officer's death, by a percentage of the
Social Security Benefit to which the Eligible Officer would have been
entitled, but only for those years in which such Eligible Officer, had he
lived, would have been eligible for Social Security benefits), as follows: for
Officers first receiving benefits hereunder prior to January 1, 1994, such
percentage shall be one hundred percent (100%); for Officers first receiving
benefits hereunder on or after January 1, 1994, such percentage shall be fifty
percent (50%).
8. Actuarial adjustment. For purposes of determining the benefit
provided under this Plan with respect to any Eligible Officer, the amount
calculated under Section 5 above with respect to such Eligible Officer, after
adjustment for the offset described in Section 7 above, will be actuarially
adjusted as necessary to reflect payment in the form specified in Section 10,
in the same manner and using the same actuarial assumptions as would apply in
determining how an accrued benefit of like amount payable (with the same
commencement date) under the Retirement Plan would be actuarially adjusted (if
at all) to reflect payment under the Retirement Plan in such specified form.
9. Offset for other benefits. The annual benefit calculated with
respect to any Eligible Officer under Section 5(a) or Section 5(b) above, as
adjusted for the offset described in Section 7 above and as further adjusted
actuarially under Section 8 above, will be reduced (but not below zero) by the
sum of the following amounts:
(a) the amount payable annually with respect to such Eligible Officer
(1) under the Retirement Plan, assuming commencement on the
commencement date hereunder and payment (i) if the Eligible
Officer is unmarried on such commencement date, in the form of a
single life annuity over the life of the Eligible Officer but with
sixty (60) monthly payments guaranteed, or (ii) in every other
case, in the form of a joint and survivor annuity under which
reduced payments will be made to the Eligible Officer for his
lifetime and, following his death, if his spouse survives him,
payments equal to one-half the amount payable to the Eligible
Officer during his lifetime will be paid to such surviving spouse
for the remainder of such spouse's lifetime, or (2) under any
other retirement plan to which Eastern or any of its subsidiaries
or affiliates has contributed (payments under any such other plan
to be determined, for purposes of this Section 9, as though
payable in the form described in (1)(i) or (1)(ii) above,
whichever is applicable); and
(b) the amount, if any, which the Compensation Committee reasonably
determines, in its sole discretion, to be the annual retirement
income or the equivalent thereof to which the Eligible Officer is
entitled by reason of any prior employment (including for this
purpose any service as a fiduciary or director), assuming the same
form of payment as the applicable benefit form under (a) above.
If an Eligible Officer dies while employed (or deemed to be employed
under Section 6 above) as an Eligible Officer, and leaves a surviving spouse,
the death benefit payable to his spouse each year under Section 5(c) above, as
adjusted for the offset described in Section 7 above and as further adjusted
actuarially pursuant to Section 8 above, will be reduced (but not below zero)
by the sum of the following amounts:
(aa) the death benefit provided the spouse each year under the
Retirement Plan, assuming commencement on the same commencement
date as hereunder, or under any other retirement plan to which
Eastern or any of its subsidiaries or affiliates has contributed
(payments under any such other plan to be determined, for purposes
of this Section 9, as though payable in the same form and
commencing at the same time as the death benefit hereunder); and
(bb) the amount, if any, which the Compensation Committee reasonably
determines, in its sole discretion, to be the annual income to
which the spouse of such Eligible Officer is entitled under any
plan, agreement or arrangement maintained by a prior employer of
such Eligible Officer (or in connection with any service of such
Eligible Officer as a fiduciary or director), assuming the same
form of payment and benefit commencement date as hereunder.
10. Form and Timing of Benefits for Eligible Officers. Benefits
provided to an Eligible Officer under the Plan upon the termination of his
employment will be payable (a) if the Eligible Officer is unmarried on the
commencement date of benefits hereunder, in the form of a single-life annuity
over the life of the Eligible Officer but with sixty (60) monthly payments
guaranteed, or (b) in every other case, in the form of a joint and survivor
annuity under which reduced payments will be made to the Eligible Officer for
his lifetime and, following his death, if his spouse survives him, payments
equal to one-half the amount payable to the Eligible Officer during his
lifetime will be paid to such surviving spouse for the remainder of such
spouse's lifetime. Benefits payable to a surviving spouse under Section 5(c)
above will be payable in the form of a single-life annuity over the life of
such surviving spouse. Solely for purposes of determining the amount payable
to a surviving spouse under Section 5(c), the benefit the deceased Eligible
Officer would have been entitled to receive had such Eligible Officer retired
with the written permission of the Compensation Committee on the day before
his death shall be assumed to have been payable in the form of a joint and
survivor annuity under which reduced payments are payable to the Eligible
Officer for his lifetime and, following his death, reduced payments in the
same amount are payable to the Eligible Officer's surviving spouse for the
remainder of such spouse's lifetime. Benefits provided hereunder will
commence as of the first day of the month next following the Eligible
Officer's termination of employment (or the Eligible Officer's death, in the
case of benefits described in Section 5(c)), irrespective of the form and
timing of benefit payments under the Retirement Plan.
11. No Vesting; Requirement of Non-Competition. Subject to the
provisions of Section 14 below, nothing in this Plan will be construed as
vesting in any person rights to any benefits hereunder. If at any time the
Compensation Committee determines that a person receiving benefits hereunder
is competing, directly or indirectly, with the business of Eastern, it may
discontinue the payment of such benefits to such person. For purposes of this
paragraph, the phrase "competing, directly or indirectly, with the business of
Eastern" will be deemed to include (without limiting the generality of the
same) engaging or being interested, directly or indirectly, as owner,
director, officer, employee, partner, through stock ownership (other than
ownership of less than two (2%) percent of the outstanding stock of any
publicly owned company), investment of capital, lending of money or property,
rendering of services or otherwise, either alone or in association with
others, in the operation of any type of business or enterprise in any way
competitive with the business of Eastern or of any of its subsidiaries.
Notwithstanding the foregoing, the Compensation Committee may waive or modify
its right to discontinue payments to any person by written agreement with such
person.
12. Limitation of Rights; Special Provision in the Event of Change in
Control. Nothing in this Plan will be construed to create a trust or to
obligate Eastern or any other person to segregate a fund, purchase an
insurance contract, or in any other way currently to fund the future payment
of any benefits hereunder, nor will anything herein be construed to give any
employee or any other person rights to any specific assets of Eastern or of
any other person.
Notwithstanding the foregoing, Eastern in its sole discretion may
establish a trust of which it is treated as the owner under Subpart E of
Subchapter J, Chapter 1 of the Code to provide for the payment of benefits
hereunder, subject to the claims of general creditors in the event of
insolvency and subject to such other terms and conditions as Eastern may deem
necessary or advisable to ensure that benefits are not includable, by reason
of the Trust, in the income of trust beneficiaries prior to actual
distribution and that the existence of the trust does not cause the Plan or
any other arrangement to be considered funded for purposes of Title I of the
Employee Retirement Income Security Act of 1974, as amended (a "grantor
trust"). In the event Eastern establishes a grantor trust in respect of 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 grantor trust cash sufficient to cause
the trust to be "fully funded" as of the date of the deposit. For purposes of
this paragraph, the aforesaid grantor 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 the aggregate present value as of that date of (1) all
benefits then in pay status under the Plan (including benefits not yet
commenced but in respect of Eligible Officers who have retired, died or
otherwise terminated employment under circumstances entitling them to benefits
hereunder) plus (2) all benefits that would be payable under the Plan if all
other Eligible Officers were deemed to have retired with the prior written
permission of the Compensation Committee on that date plus (3) all benefits
payable (as determined under rules similar to the rules described in (1) and
(2)) under all other plans and arrangements, to the extent provided for
through the grantor trust. In applying the preceding sentence, present value
shall be determined by using the interest and mortality assumptions used in
determining lump sum present values under the Retirement Plan.
13. Rights Non-Assignable. No employee or beneficiary or any other
person will have any right to assign or otherwise to alienate the right to
receive payments under the Plan, in whole or in part.
14. Amendment. 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 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 amendment") 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 amendment, nor shall any Plan amendment reduce the benefit
to be paid with respect to a person who is an Eligible Officer on the date of
such Plan amendment below the amount which such Eligible Officer would have
received if his employment had terminated with the prior written permission of
the Compensation Committee on the day before such Plan amendment.