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Coc Agreement With J. Atwood Ives

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Officer Change of Control Agreement - J. Atwood Ives


AGREEMENT


This Agreement by and between Eastern Enterprises, a Massachusetts business trust with its principal offices in Weston, Massachusetts ("Eastern"), and J. Atwood Ives (the "Executive"), is entered into as of the 22nd day of September, 1999, and amends and supersedes in its entirety the agreement between the parties dated July 22, 1998.


W I T N E S S E T H T H A T:


WHEREAS the Executive is an executive employee of Eastern;


WHEREAS, Eastern has previously entered into an Agreement, dated November 27, 1991, with Executive (the "Employment Agreement"), under which Eastern has agreed to pay Executive certain income and benefits in the event of termination of Executive's employment; and


WHEREAS the Board of Trustees of Eastern (the "Board") has determined that it is in the best interests of Eastern, its shareholders and the Executive to assure continuity in the management of Eastern's administration and operations by entering into an agreement to provide the Executive with certain assurances pertaining to compensation and benefits in the event that a Change of Control, as defined below, should be under consideration or should have occurred.


NOW, THEREFORE, it is hereby agreed by and between the parties hereto as follows:


1. EMPLOYMENT. Eastern agrees that from and after the Effective Date as hereinafter defined it shall continue the Executive in its employ and the Executive agrees that from and after the Effective Date he shall remain in the employ of Eastern, in each case for the period described in Section 4 hereof and upon the other terms and conditions herein provided.


2. CERTAIN DEFINITIONS: For purposes of this Agreement, the following terms shall have the meanings set forth below:


(a) "Cause" shall mean, subject to the provisions of this
definition, (i) conviction of the Executive for (or a plea of nolo
contendere by the Executive with respect to) a felony, or (ii) an act
by the Executive of fraud or dishonesty which has resulted or is likely
to result in material economic damage to Eastern or its subsidiaries.


No purported termination of Executive shall be deemed a termination for
Cause unless the Board, by an affirmative vote of not less than
two-thirds of the entire membership of the Board at a meeting of the
Board, shall have made a determination that Cause exists nor unless, in
the case of Cause asserted under clause (a)(ii) above, the Board shall
have given the Executive the opportunity, upon at least thirty (30)
days' prior written notice, to appear and be heard with counsel before
the Board. In the case of Cause asserted under clause (a)(ii) above,
the thirty (30) days' prior written notice must be given within 120
days following the Board first becoming aware of the occurrence of the
last event providing a basis or otherwise significantly contributing to
a determination of Cause.


(b) "Change of Control" shall mean the occurrence of any of
the following after January 1, 1998:


(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;
provided, however, that there shall be excluded from this
clause (iv) any individual whose initial assumption of office
occurred as a result of an actual or threatened election
contest with respect to the election or removal of Trustees or
other actual or threatened solicitation of proxies or
consents, by or on behalf of a person other than the Board of
Trustees.


(c) "Code" shall mean the federal Internal Revenue Code of
1986, as amended.


(d) "Disability" shall mean the Executive's demonstrated
inability, over a continuous period of at least twelve (12) months, to
perform the Executive's duties and responsibilities by reason of a
disabling injury or condition that would qualify the Executive for
benefits under Eastern's long term disability program.


(e) "Effective Date" means the earlier of (i) the date on
which Eastern enters into a definitive agreement, the transactions
contemplated by which will, when consummated, constitute a Change of
Control, or (ii) the date which precedes the Change of Control by six
(6) months.


(f) "Good Reason" means any of the following unless promptly,
fully and retroactively corrected by Eastern or unless waived in
writing by the Executive: (i) any reduction in the annual rate of base
salary payable to the Executive below the higher of the annual rate at
which base salary is then being paid to the Executive or the annual
rate at which base salary was being paid to the Executive immediately
prior to the Effective Date; (ii) the elimination of or any reduction
in the bonus opportunities made available to the Executive under any
bonus or incentive program; (iii) the elimination of or any reduction
in any other employee or executive benefit, benefit program or
perquisite then available to the Executive or the Executive's family or
that was available to the Executive or the Executive's family
immediately prior to the Effective Date, or any change in any such
employee or executive benefit, benefit program or perquisite that would
result in additional cost to the Executive or the Executive's family,
in each case except for changes in broad-based employee benefit
programs (that is, employee benefit programs available to non-officer
employees generally as well as officers) that have a similar effect on
both officer and non-officer participants generally in such programs;
(iv) any material diminution in the nature or scope of Executive's
duties, functions or responsibilities (including without limitation
reporting lines); (v) any action resulting in a relocation of the
Executive's regular place of employment to a location that is more than
thirty-five (35) miles from the place where the Executive was regularly
employed immediately prior thereto or immediately prior to the
Effective Date; and (vi) any other material breach of this Agreement by
Eastern.


(g) "Protected Period means the period beginning on the
Effective Date and ending on the date which follows the related Change
of Control by twenty-four (24) months.


3. POSITION AND RESPONSIBILITIES. During the period of employment hereunder, the Executive agrees to serve Eastern in an executive capacity, subject to the terms of this Agreement.


4. TERM AND DUTIES.


(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the Effective Date
and shall continue for a period that ends on the last day of the
Protected Period.


(b) During the period of employment hereunder and except for
illness or incapacity and reasonable vacation periods, the Executive's
business time, attention, skill and efforts shall be exclusively
devoted to the business and affairs of Eastern and its subsidiaries;
provided, however, that nothing in this Agreement shall preclude the
Executive from engaging in the following:


(i) serving as a director, trustee or committee
member in any company or organization,


(ii) delivering lectures and fulfilling speaking
engagements, and


(iii)engaging in charitable and community activities,


provided that such activities do not materially adversely
affect or interfere with the performance of the Executive's
obligations to Eastern.


5. COMPENSATION AND BENEFITS. During the Executive's employment under this Agreement, Eastern shall pay, provide and make available the following:


(a) Eastern shall pay the Executive base salary at an annual
rate that is not less than the annual rate at which base salary was
being paid to the Executive by Eastern immediately prior to the
Effective Date.


(b) In addition to the salary payable under subsection (a)
above, Eastern shall provide or make available to the Executive, from
and after the Effective Date and during the term of the Executive's
employment hereunder, bonus opportunities, benefits, equity
compensation, and perquisites not less favorable, and on terms not
less favorable, to the Executive than the bonus opportunities,
benefits, equity compensation, and perquisites provided or made
available and on the terms provided or made available to the Executive
immediately prior to the Effective Date.


6. BUSINESS EXPENSE. Eastern shall pay or reimburse the Executive for all reasonable travel or other expenses incurred in connection with the performance of the Executive's duties under this Agreement in accordance with such procedures as Eastern may from time to time establish.


7. TERMINATION OF EMPLOYMENT. Notwithstanding any other provision of this Agreement, the Executive's employment under this Agreement may be terminated:


(a) by Eastern for Cause (but only if such termination is
accomplished in the manner specified in Section 2(a));


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