DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made as of October 1, 1997, by and between
ENERGYNORTH, INC. ("ENI") a New Hampshire corporation with a
principal place of business in Manchester, New Hampshire, and
Xxxxxxx X. Xxxxxx of Manchester, New Hampshire ("Employee").
W I T N E S S E T H
WHEREAS, Employee is employed by ENI in an executive
position and performs valuable services to ENI in such position;
and
WHEREAS, Employee possesses great ability in the gas
distribution business, an intimate knowledge of ENI, its
operating methods, personnel and goals; and
WHEREAS, ENI desires further to compensate Employee for past
services, to secure Employee's future services, to secure
Employee's commitment to furnish advisory services to ENI
following Employee's termination of employment by ENI and to
compensate Employee therefor;
NOW, THEREFORE, ENI and Employee mutually agree as follows:
1. ENI agrees to continue to employ Employee and Employee
agrees to continue to serve ENI devoting Employee's normal
working time to the interests and activities of ENI in the
capacity of Vice President, or such other capacity as the Board
of Directors of ENI from time to time may assign for the period
agreed between Employee and ENI.
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2. During the term of Employee's employment, Employee
shall devote substantially all of Employee's time, attention,
skill and efforts to the performance of Employee's duties for
ENI.
3. ENI shall pay Employee during the term of Employee's
employment such salary as the Board of Directors shall from time
to time determine, together with the deferred compensation
payable as provided in paragraph 4 below.
4. (a) ENI, on the last day of each month,
commencing as of January 1998, shall credit to a book reserve
(the "Deferred Compensation Account" or the "Account") in
Employee's name established for this purpose, the amount stated
on the Deferred Compensation Election Form; the amounts credited
under this Section 4(a) shall continue to be credited monthly
during the continuance of the Employee's employment hereunder.
In addition, EnergyNorth, Inc.
shall credit to the account a percentage or an
amount of any cash incentive award paid to
Employee pursuant to the EnergyNorth, Inc. Key
Employee Performance and Equity Incentive Plan
earned in connection with the 1998 Plan Year and
subsequent Plan Years.
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a. ENI shall credit to the Deferred Compensation
Account at the end of each month during which any balance
remains in the Account, whether before or after payments
from the Account have commenced, an amount which shall
be the equivalent of interest on the amounts credited to
the Account throughout the previous month computed at
the thirty-year U.S. treasury bond yield as of the last
day of each calendar quarter, plus 400 basis points,
adjusted quarterly; provided, however, the rate shall not
be less than nine percent (9%) or greater than sixteen
percent (16%).
(b) In addition, ENI shall pay to Employee, monthly
over the same period as specified in Section 6 below, an
additional amount of money equal to the monthly increase in the
qualified pension plan benefits to which Employee would then have
been entitled had the amount that was credited to the Deferred
Compensation Account under Section 4(a) above been paid to
Employee and had it qualified as "earnings" as defined in ENI's
qualified pension plan. Such additional payment shall be payable
only to the extent that such
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deferred compensation hereunder does not qualify as
"earnings" under ENI's qualified pension plan and
shall be payable only to the extent Employee would otherwise have
received greater pension benefits from ENI's qualified pension
plan. Such payments shall commence at the same time as the other
payments hereunder. The amount due shall be computed actuarially
using the same assumptions as used in the qualified pension plan.
(c) ENI is not required to fund this Agreement in any way,
but if it chooses to set aside funds for the Account, any such
funds may be kept in cash, or invested in mutual funds, stocks,
bonds, securities, or any other assets as may be selected by the
Board of Directors, in its discretion, and also may be utilized
by ENI from time to time for any other purpose. Title to and
beneficial ownership of any funds, whether cash or investments,
which ENI may earmark to pay the contingent deferred compensation
obligation hereunder, at all times shall remain in ENI, and the
Employee and Employee's designated beneficiary shall not have any
property interest whatsoever in any such funds or in any specific
assets of ENI.
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5. Employee may change the amounts of Employee's salary to
be deferred under Section 4(a) above for the ensuing calendar
year by filing in writing with the Board of Directors of ENI not
less than thirty (30) days prior to the end of the prior calendar
year, the amount of Employee's salary not yet earned or paid that
is to be deferred and credited to Employee's Deferred
Compensation Account. Employee may change the amounts of
Employee's Cash Incentive Award to be deferred under Section 4(a)
above for ensuing plan years by filing in writing with the Board
of Directors of ENI not less than thirty (30) days prior to the
end of that Plan year, the percentage or amount of Employee's
cash incentive award not yet paid that is to be deferred and
credited to the Employee's Deferred Compensation Account.
6. The benefits to be paid as deferred compensation are as
follows:
(a) If the Employee's employment hereunder is
terminated on or after the Employee shall have reached the age of
65, ENI shall pay to Employee in 15 annual installments the
amount in Employee's Deferred Compensation Account as of such
date together with the interest added pursuant to Section 4(b).
The Account shall be valued as of the date the first payment is
to be made, one fifteenth (1/15th) of that amount shall be paid
in the first year and that same amount shall be paid
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in the succeeding fourteen (14) years. In addition, in each
of the succeeding fourteen (14) years, any interest
credited to the Account with respect to the previous
year shall be paid with each annual payment. If the Employee
should die on or after Employee's 65th birthday
and before the 15 annual payments are made, the
unpaid balance will continue to be paid in installments
for the unexpired portion of such 15 year period to Employee's
designated beneficiary in the same amount as set forth above.
(b) If the Employee's employment by ENI is terminated for
any reason other than death and disability but before the
Employee shall have reached the age of 65, no payments shall be
made until the Employee shall have reached the age of 65 at which
time payments shall be made in the same manner and to the same
extent as set forth in Section 6(a) above. Notwithstanding the
foregoing, if prior to reaching age 65 the Employee should die,
or if prior to reaching age 65 Employee should become disabled,
then payments shall be made in the same manner and to the same
extent as set forth in Section 6(c), below.
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(c) If the Employee's employment is terminated because of
disability or death before the Employee has reached the age of 65
and while in the employ of ENI, then ENI, during Employee's
disability, shall make annual payments not to exceed fifteen (15)
to the Employee or, in the event of Employee's death, make
fifteen (15) annual payments to Employee's designated
beneficiary, all in the same manner and to the same extent as
provided herein.
(d) If both the Employee and Employee's designated
beneficiary should die before a total of fifteen (15) annual
payments are made by ENI, then the remaining amount in the
Deferred Compensation Account shall be determined as of the date
of the death of the designated beneficiary and shall be paid,
with interest accrued to the date of payment, as promptly as
possible in one lump sum to the Employee's estate.
(e) The designated beneficiary (which may include alternate
beneficiaries) referred to in this paragraph may be designated or
changed by the Employee (without the consent of any prior
beneficiary) on a form provided by ENI and delivered by Employee
to ENI before Employee's
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death. If no such beneficiary shall have been
designated, or if no designated beneficiary shall
survive the Employee, the installment payments payable under this
paragraph shall be payable to the Employee's estate.
(f) For purposes of Section 6(c) above, disability is
defined as provided in any long-term disability plan of ENI
covering Employee, or, if none, as defined under the EnergyNorth
Inc. Retirement Plan for Salaried Employees.
(g) The installment payments to be made to the Employee
under Sections 6(a) and 6(c) above shall commence on the first
day of the month next following the date of the termination of
Employee's employment, and the installment payments to be made to
the Employee under Section 6(b) above shall commence on the first
day of the month next following the date on which Employee shall
have reached the age of 65. The installment payments to be made
to the designated beneficiary under the provisions of this
Section 6 shall commence on a date to be selected by ENI but
within six months from the date of death of the Employee.
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(h) Notwithstanding anything herein contained to the
contrary, the Board shall have the right, with the written
consent of Employee, to vary the manner and time of making the
installment distributions provided in this paragraph and may make
such distributions in lump sums or over a shorter period of time
than 15 years as it may find appropriate, but not over a longer
period of time than fifteen (15) years or less frequently then
once per year.
(i) The Board may, in its sole discretion, permit a
withdrawal of funds from a Participant's Account to meet a severe
financial hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or of a
dependent of the Participant, loss of the Participant's property
due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
the Participant (an "Unforeseen Emergency") at such time and
under such circumstances as deemed by the Board to be an
Unforeseen Emergency. Distribution of funds from the
Participant's Account shall be in an amount sufficient only to
meet the Unforeseen Emergency
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presented by the Participant to the Board, and under
no circumstances may a participant's withdrawal of funds
exceed the amount required to satisfy the Unforeseen
Emergency.
7. Employee is accorded the right by this Agreement to
defer receipt of compensation and earnings that, but for the
Employee's election, would be paid currently. The right to
receive payment of the amounts accrued shall vest absolutely and
become nonforfeitable on the crediting of such amount at the end
of each month. The obligation of ENI to make the payments shall
not be excused by any breach of this Agreement or of any other
agreement between Employee and ENI.
8. Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be
construed to create a trust of any kind, or a fiduciary
relationship between ENI and the Employee, Employee's designated
beneficiary or any other person. Any funds that may be invested
under the provision of this Agreement shall continue for all
purposes to be part of the general funds of ENI and no person
other than ENI shall by virtue of the provisions of this
Agreement have any interest in such funds. To the extent that
any person acquires a right to receive payments from ENI under
this Agreement, such right shall be no greater than the right of
any unsecured general creditor of ENI.
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9. The right of the Employee or any other person to the
payment of deferred compensation or other benefits under this
Agreement shall not be assigned, transferred, pledged or
encumbered except by will or by the laws of descent and
distribution.
10. If the Board shall find that any person to whom any
payment is payable under this Agreement is unable to care for his
or her affairs because of illness or accident, or is a minor, any
payment due (unless a prior claim therefore shall have been made
by a duly appointed guardian, committee or other legal
representative) may be paid to the spouse, a child, a parent, or
a brother or sister, or to any person deemed by the Board to have
incurred expense for such person otherwise entitled to payment,
in such manner and proportions as the Board may determine. Any
such payment shall be a complete discharge of the liabilities of
ENI under this Agreement.
11. Nothing contained herein shall be construed as
conferring upon the Employee the right to continue in the employ
of ENI other than as stated in Section 1; provided, however, this
Agreement shall be construed to be consistent with an employment
agreement entered into between Employee and ENI.
12. Any deferred compensation payable under this Agreement
shall be deemed salary or other compensation to the Employee for
the purpose of computing benefits to which the Employee may be
entitled under any pension plan, life insurance plan, or other
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arrangement of ENI for the benefit of its employees, to the
extent allowable under the Internal Revenue Code or other
applicable laws and regulations, and the other plans and
arrangements; provided, however, the payments under Section 4(c)
shall be made only to the extent the deferred compensation may
not be deemed salary or "earnings" or other compensation under
the qualified pension plan.
13. This Deferred Compensation Agreement constitutes the
entire agreement between the Employee and ENI with respect to its
subject matter and supercedes all previous agreements with
respect to such subject matter.
14. This Agreement shall be binding upon and inure to the
benefit of ENI, its successors and assigns, and Employee and
Employee's heirs, executors, administrators and legal
representatives.
IN WITNESS WHEREOF, ENI has caused this Agreement to be
executed and its seal to be affixed hereto by its agent thereunto
duly authorized, and Employee has signed this Agreement, all as
of the day and year first above written.
/s/ Xxxxxxxx X. Xxxx /s/ Xxxxxxx X. Xxxxxx
Witness Xxxxxxx X. Xxxxxx
ENERGYNORTH, INC.
/s/ Xxxxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxxxx
Witness President & Chief Executive Officer
