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Exhibit
10.5
NSTAR
Amended and Restated
Change in Control Agreement
AGREEMENT, made as of the 15
th day November, 2007, by and between Thomas J. May
(“Executive”) and NSTAR (the
“Company”).
WITNESSETH
WHEREAS, the Board of
Trustees of the Company (the “Board”) has determined
that it is in the best interests of the Company and its
shareholders for the Company to agree to provide benefits under the
circumstances described below to the Executive and other executives
who are responsible for the policy-making functions of the Company
and/or one or more of its subsidiaries and the overall viability of
the business of the Company and its subsidiaries; and
WHEREAS, the Board recognizes
that the possibility of a Change in Control of the Company is
unsettling to such executives and desires to make arrangements at
this time to help assure their continuing dedication to their
duties to the Company and its shareholders, notwithstanding any
attempts by outside parties to gain control of the Company;
and
WHEREAS, the Board believes
it important, should the Company receive proposals from outside
parties, to enable such executives, without being distracted by the
uncertainties of their own employment situation, to perform their
regular duties, and where appropriate to assess such proposals and
advise the Board as to the best interests of the Company and its
shareholders and to take such other action regarding such proposals
as the Board determines to be appropriate; and
WHEREAS, the Board also
desires to demonstrate to the executives that the Company is
concerned with their welfare and intends to provide that loyal
executives are treated fairly;
WHEREAS, the Board wishes to
assure that executives of the Company receive fair and competitive
severance benefits and receive fair severance should any of their
employment with the Company or its subsidiaries terminate in
specified circumstances following a Change in Control of the
Company and to assure executives of other benefits upon a Change in
Control;
WHEREAS, the parties
previously entered into a Change in Control Agreement dated
February 15, 2007; and
WHEREAS, the parties now wish
to amend and restate such Agreement, effective January 1,
2008, to conform with Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) and the
regulations thereunder;
NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained
herein, the parties hereto agree as follows:
1. In the event that any
individual, corporation, partnership, company, or other entity
(“Person”), which term shall include a
“group” (within the meaning of section 13(d) of the
Securities Exchange Act of 1934 (the “Act”)), begins a
tender or exchange offer, circulates a proxy to the Company’s
shareholders, or takes other steps to effect a “Change in
Control” (as defined in Exhibit A attached hereto and made a
part hereof), the Executive agrees not to voluntarily leave the
employ of the Company and will render the services contemplated in
the recitals to this Agreement until such Person has terminated the
efforts to effect a Change in Control or until a Change in Control
has occurred.
2. If, within 24 months
following a Change in Control (the “Post Change in Control
Period”) the Executive separates from service with the
Company or one of the Company’s subsidiaries because the
Company terminates the Executive’s employment for any reason
other than for “Cause” or “Disability” (as
defined in paragraph 4 below), or as a result of the
Executive’s death, or because the Executive terminates such
employment for Good Reason (as defined in paragraph 5
below):
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(a) |
the Company
will pay to the Executive a lump sum cash payment equal to the sum
of (i) the Executive’s annual base salary (“Annual
Base Salary”) through the date of such separation from
service to the extent not theretofore paid, (ii) a prorated
portion of the target award payable under the Company’s
Executive Annual Incentive Compensation Plan, or any comparable or
successor plan (the “Annual Plan”) determined by
calculating the product of (A) the target bonus award payable
for the fiscal year in which the date of termination occurs under
the Annual Plan, times (B) a fraction, the numerator of which
is the number of days in the current fiscal year through the date
of termination of employment, and the denominator of which is 365,
(iii) a prorated portion of the target award payable under any
long-term performance or incentive plan (the “Long-Term
Plan”) for the performance period ending on the last day of
the fiscal year during which the date of separation from service
occurs determined by calculating the product of (A) the target
award payable for such performance period and (B) a fraction,
the numerator of which is the number of days in the current
performance period through the date of termination, and the
denominator of which is the actual number of days in the
performance period (provided that if any awards are expressed in
shares of common stock rather than cash, the Company will pay the
cash equivalent of such awards based on the closing price per share
as reported in the Wall Street Journal (Eastern Edition) New York
Stock Exchange Composite Transactions determined
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on the date prior to the
date of the Change in Control or the average per share price for
the 10 trading days preceding the date of the Change in Control
(whichever is higher)) and (iv) any compensation for the
fiscal year in which the date of separation from service occurs
previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid. The portion of such
payment which does not exceed the lesser of two times the
Executive’s annualized compensation or two times the Code
section 401(a)(17) limit and is therefore exempt from Code section
409A (the “409A Threshold”) will be paid within 30 days
of the Executive’s separation from service. Any amount in
excess of the 409A Threshold (taking into account any other
separation pay paid to the Executive) will be paid on the first day
of the seventh month after the Executive’s separation from
service; and
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(b) |
any stock, stock option or cash awards granted to the Executive
by the Company that would have become vested upon continued
employment by the Executive shall immediately vest in full
notwithstanding any provision to the contrary of such grant and
shall remain exercisable until the earlier of the fifth anniversary
of such termination and the latest date on which such grant could
have been exercised; and |
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(c) |
the Company will pay to the Executive a lump sum cash payment
equal to three times: (A) the amount of the Executive’s
Annual Base Salary at the rate in effect immediately prior to the
date of separation from service or at the rate in effect
immediately prior to the Change in Control, whichever is higher,
and (B) the amount of the actual bonus paid to the Executive
under the Annual Plan for the most recently completed fiscal year
ended before the Change in Control, or the target bonus payable
under the Annual Plan for the fiscal year during which the
separation from service occurs, whichever is higher. The portion of
such payment which does not exceed the 409A Threshold (taking into
account any other separation pay paid to the Executive) will be
paid to the Executive within 30 days of the Executive’s
separation from service and the remainder (if any) will be paid on
the first day of the seventh month after such separation from
service; and |
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(d) |
the Company
will pay to the Executive on the first day of the seventh month
after such separation from service a lump-sum cash payment equal to
the full balance standing to the Executive’s credit with the
Company under any and all deferred compensation plans or
arrangements and the lump-sum actuarial equivalent of the
Executive’s accrued benefit under any supplemental retirement
plan or arrangement (a “SERP”) in which the Executive
participates (the sum of the amounts described in subsections
(a) and (d) shall be hereinafter referred to as
the
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“Accrued
Obligations”), which payments shall be in lieu of any amounts
otherwise payable to the Executive under any such plans;
and
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(e) |
the Company will pay to the Executive on the first day of the
seventh month after such separation from service, an amount equal
to the excess of (i) the lump sum actuarial equivalent of the
accrued benefit under (a) the Company’s qualified
defined benefit pension plan (the “Pension Plan”)
(utilizing actuarial assumptions no less favorable to the Executive
than those in effect under the Pension Plan immediately prior to
the date of the Change in Control), and (b) any SERP which the
Executive would receive if the Executive’s employment
continued for three years after the date of separation from service
assuming for these purposes that all accrued benefits are fully
vested, and further assuming that the Executive’s annual
compensation for purposes of determining benefits under the Pension
Plan and SERP (“Covered Compensation”) in each of the
three years is at least equal to the higher of the
Executive’s annual rate of Covered Compensation for the most
recently completed fiscal year ending prior to the date of the
Change in Control or the year in which the Change in Control
occurs, over (ii) the lump sum actuarial equivalent of the
Executive’s actual accrued benefit (paid or payable), if any,
under the Pension Plan and the SERP (including SERP payments made
under subparagraph (d) above) as of the date of separation
from service; and |
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(f) |
the Executive, together with the Executive’s dependents,
will continue following such separation from service to participate
fully at the Company’s expense in all welfare benefit plans,
programs, practices and policies, including without limitation,
life, medical, disability, dental, accidental death and travel
insurance plans, maintained or sponsored by the Company immediately
prior to the Change in Control, or receive substantially the
equivalent coverage from the Company, until the longer of the third
anniversary of such separation from service or any longer period as
may be provided by the terms of the appropriate plan, program,
practice or policy, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided
plan, the medical and other welfare benefits described herein shall
be secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits) of the
Executive for any retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered
to have remained employed until three years after the date of
separation from service and to have retired on the last day of such
period; and |
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(g) |
to the extent not theretofore paid or provided for, the Company
shall, within 30 days of such termination of employment, pay or
provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive
under any plan, program, policy, practice, contract or agreement of
the Company (“Other Benefits”); and |
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(h) |
the Company will promptly reimburse the Executive for any and
all legal fees and expenses (including, without limitation,
stenographer fees, printing costs, etc.) incurred by the Executive
as a result of such termination of employment, including without
limitation all fees and expenses incurred to enforce the provisions
of this Agreement or contesting or disputing that the termination
of the Executive’s employment is for Cause or other than for
Good Reason (regardless of the outcome thereof); provided, however,
that (i) in no event shall any amount of reimbursement be paid
to the Executive for expenses incurred after the fifth year after
the year in which such termination from employment occurs;
(ii) the reimbursement shall be paid by the fifteenth day of
the third month following the year in which such legal fee or
expense was incurred; and (iii) this right to reimbursement is
not subject to liquidation or exchange for another
benefit. |
Notwithstanding anything
herein to the contrary, to the extent that any payment or benefit
provided for herein is required to be paid or vested at any earlier
date under the terms of any plan, agreement or arrangement, such
plan, agreement or arrangement shall control.
3. Death, Disability,
Cause, Other Than For Good Reason .
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(a) |
Death . If the Executive separates from service during
the Post Change in Control Period by reason of the
Executive’s death, this Agreement shall terminate without
further obligations to the Executive’s legal representatives
under this Agreement, other than for payment of Accrued Obligations
and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive’s estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of
death. |
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(b) |
Disability . If the Executive separates from service
during the Post Change in Control Period by reason of the
Executive’s Disability, this Agreement shall terminate
without further obligations to the Executive other than for payment
of Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the date of separation from
service. For purposes of this Agreement, “Disability”
shall mean the absence of the Executive from the Executive’s
duties with the
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Company on a full-time
basis for 180 consecutive business days as a result of incapacity
due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s
legal representative. If the Company determines in good faith that
the Disability of the Executive has occurred during the Post Change
in Control Period, it may give the Executive written notice of its
intention to terminate the Executive’s employment. In such
event, the Executive’s separation from service with the
Company shall be effective on the 30th day after receipt of such
notice by the Executive, provided that, within the 30 days of such
receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties.
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(c) |
Cause . If the Executive separates from service because
the Company terminates the Executive’s employment for Cause
(as defined in Section 4 below) during the Post Change in
Control Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay the
Executive (A) the Executive’s Annual Base Salary through
the date of termination, (B) the amount of any compensation
previously deferred by the Executive, and (C) Other Benefits,
in each case to the extent theretofore unpaid. If the Executive
voluntarily separates from service during the Post Change in
Control Period, excluding a termination of employment for Good
Reason, this Agreement shall terminate without further obligations
to the Executive other than for Accrued Obligations and the timely
payment or provisions of Other Benefits. |
In either case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the date of the separation from
service.
4. “Cause” means
only: (a) commission of a felony or gross neglect of duty by
the Executive which is intended to result in substantial personal
enrichment of the Executive at the expense of the Company,
(b) conviction of a crime involving moral turpitude, or
(c) willful failure by the Executive of the Executive’s
duties to the Company which failure is deliberate on the
Executive’s part, results in material injury to the Company,
and continues for more than 30 days after written notice given to
the Executive pursuant to a two-thirds vote of all of the members
of the Board at a meeting called and held for such purpose (after
reasonable notice to the Executive) and at which meeting the
Executive and the Executive’s counsel were given an
opportunity to be heard, such vote to set forth in reasonable
detail the nature of the failure. For purposes of this definition
of Cause, no act or omission shall be considered to have been
“willful” unless it
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