Document:

Exhibit

                                                

                                            

Exhibit 10.1

SOTHEBY’S NEVADA, INC.
1334 York Avenue
New York, New York 10021

SOTHEBY’S
SECOND AMENDED AND RESTATED
EXECUTIVE SEVERANCE BENEFITS PLAN

Effective July 26, 2017

                                                

                                            

TABLE OF CONTENTS
Page
		
	ARTICLE ONE
	FOREWORD        1

		
	1.01
	Purpose of the Plan    1

		
	1.02
	Plan Status    1

		
	ARTICLE TWO
	DEFINITIONS    1

		
	2.01
	Accounting Firm    1

		
	2.02
	Administrator    1

		
	2.03
	Base Salary    1

		
	2.04
	Bonus Plan    1

		
	2.05
	Board    2

		
	2.06
	Cause    2

		
	2.07
	Change in Control    2

		
	2.08
	Chief Executive Officer    3

		
	2.09
	Chief Human Resources Officer    3

		
	2.10
	CIC Qualifying Termination    3

		
	2.11
	Code    3

		
	2.12
	Corporation    3

		
	2.13
	Director    3

		
	2.14
	Disability    3

		
	2.15
	Effective Date    3

		
	2.16
	Employer    4

		
	2.17
	ERISA    4

		
	2.18
	Exchange Act    4

		
	2.19
	Excise Tax    4

		
	2.20
	Exempt Person    4

		
	2.21
	Non-CIC Qualifying Termination    4

		
	2.22
	Notification Letter    4

		
	2.23
	Notice of Termination    4

		
	2.24
	Participant    5

		
	2.25
	Payment    5

		
	2.26
	Person    5

		
	2.27
	Plan    5

		
	2.28
	Qualifying Termination    5

		
	2.29
	Release    5

		
	2.30
	Release Consideration Period    5

		
	2.31
	Release Revocation Period    5

		
	2.32
	Restrictive Covenants    5

		
	2.33
	Section 409A    9

		
	2.34
	Separation from Service    9

		
	2.35
	Severance Benefits    9

		
	2.36
	Subsidiary    9

		
	2.37
	Target Bonus     9

		
	ARTICLE THREE
	ELIGIBILITY AND PARTICIPATION    9

		
	3.01
	Eligibility on the Effective Date    9

		
	3.02
	Future Eligibility    10

		
	3.03
	Exclusive Benefits    10

		
	3.04
	End of Participation    10

                                                

                                            

		
	ARTICLE FOUR
	SEVERANCE BENEFITS    10

		
	4.01
	Release Requirement    10

		
	4.02
	Non-CIC Qualifying Termination    11

		
	4.03
	CIC Qualifying Termination    12

		
	4.04
	409A    13

		
	4.05
	Enforcement Costs    15

		
	4.06
	280G    15

		
	ARTICLE FIVE
	AMENDMENT AND TERMINATION    16

		
	ARTICLE SIX
	MISCELLANEOUS    17

		
	6.01
	Participant Rights    17

		
	6.02
	Administrator Authority    17

		
	6.03
	Claims and Appeals Procedure    18

		
	6.04
	Reliance on Tables and Reports    21

		
	6.05
	Expenses    21

		
	6.06
	Disputes    21

		
	6.07
	Successors    22

		
	6.08
	Construction    23

		
	6.09
	References to Other Plans and Programs    23

		
	6.10
	Notices    23

		
	6.11
	Service of Legal Process    23

		
	6.12
	Plan Year    23

		
	6.13
	No Duty to Mitigate    23

		
	6.14
	Withholding of Taxes    23

		
	6.15
	Governing Law    23

		
	6.16
	Validity/Severability    24

		
	6.17
	Miscellaneous    24

		
	6.18
	Source of Payments    24

		
	6.19
	Survival of Provisions    24

Appendix    25

Exhibit    26

                                                

                                            

ARTICLE 1
FOREWORD
1.01    Purpose of the Plan.  The Corporation considers it essential to the best interests of its shareholders – (i) to foster the continued employment of key management personnel in a competitive market; (ii) to provide appropriate protection that facilitates acting in the interest of shareholders in the event of a possible or actual change in control of the Corporation; (iii) to align the Corporation’s severance arrangements with current market practice (in benefits provided and circumstances covered) under a consistent framework; and (iv) to protect the Corporation’s confidential information, trade secrets and relationships with clients.  Accordingly, pursuant to the terms of this Plan, effective February 24, 2016, the Corporation will provide Severance Benefits to an eligible employee in the event of a Qualifying Termination of the eligible employee’s employment.  This Second Amendment and Restatement of the Plan is effective July __, 2017, and applies to terminations of employment occurring on and after that date.  No benefits will be provided pursuant to this Plan except upon the occurrence of a Qualifying Termination.  The meaning of capitalized terms used throughout the Plan is determined under Article Two, except as they are otherwise defined in the Plan. Severance benefits are subject to “clawback” to the extent required by applicable laws or listing requirements, and no provision of this Plan shall exempt any severance benefits from “clawback”.  
1.02    Plan Status.  The Plan is intended to be a top hat plan for a select group of management or highly compensated executives for purposes of ERISA, so that it is subject only to the administration and enforcement provisions of ERISA.  
ARTICLE 2
DEFINITIONS
Where the following words and phrases appear in this Plan with initial capital letters, they shall have the meaning set forth below, unless a different meaning is plainly required by the context.
2.01    “Accounting Firm” means a nationally recognized accounting firm, or actuarial, benefits or compensation consulting firm, in each case with experience in performing calculations regarding the applicability of Code Section 280G and of the tax imposed by Code Section 4999, as selected by the Corporation prior to a Change of Control.
2.02    “Administrator”  means the Compensation Committee of the Board.  In connection with Participants who are subordinate to the Chief Executive Officer, the Chief Executive Officer has authority to act on behalf of the Administrator.  
2.03    “Base Salary” means, with respect to a Participant, the Participant’s annual base salary in effect on the date of the Participant’s Qualifying Termination.
2.04    “Bonus Plan” means, with respect to a Participant, the Corporation’s annual incentive plan in which the Participant participates at the time of the Participant’s Qualifying Termination (but only considering the cash portion of awards under the annual incentive plan). 

1

                                                

                                            

2.05    “Board” means the Board of Directors of the Corporation.
2.06    “Cause” means the following circumstances with respect to a Participant that lead to the Participant’s Separation from Service:
(a)    conviction of, or entering into a plea of either guilty or nolo contendere to, any felony;
(b)    fraud, misappropriation or embezzlement with respect to the  Employer, or any other act in connection with the performance of an Employee’s duties which is materially injurious to the Company;
(c)    refusal to follow the reasonable and lawful directions of the Board or the Participant’s supervisor; 
(d)    substantial failure to perform the Participant’s duties for the Employer, after the Administrator delivers written demand for substantial performance to the Participant, which demand specifically identifies the manner in which the Administrator believes that the Participant has failed to substantially perform the Participant’s duties and either (i) determines that the failure is not capable of adequate cure, or (ii) provides the Participant with a reasonable period of time to cure such failure (and the Participant does not cure the failure within the period);
(e)    engaging in an act of willful misconduct or gross negligence in connection with the Employer’s business;
(f)    material breach of the Restrictive Covenants; or
(g)    breach of a material Corporation policy or the Corporation’s Code of Business Conduct which reasonably would be expected to result in a material liability to, or have a material adverse effect on the business or financial condition of, the Corporation or the Employer. 
2.07    “Change in Control” means the occurrence of any of the following events:
(a)    any Person, other than an Exempt Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, over a period of 12 consecutive months, of securities of the Corporation representing 50% or more of the combined voting power of the Corporation’s then-outstanding securities; 
(b)    the consummation of a merger, consolidation or combination that results in the Corporation’s voting securities representing less than 50% of the combined voting power of the securities of the Corporation or of the surviving entity outstanding immediately after such merger, consolidation or combination; 
(c)    the individuals who constitute the Board (the “Incumbent Board”) cease for any reason within any period of 12 consecutive months to constitute at least a majority of the members of the Board; provided, however, that any individual becoming a director whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of at least a majority of the directors then comprising the 

2

                                                

                                            

Incumbent Board shall be considered as though the individual were a member of the Incumbent Board; or
(d)    the sale or disposition by the Corporation of all or substantially all the Corporation’s assets, other than a sale or disposition to an Exempt Person or a sale or disposition to an entity of which at least 50% of the voting power is represented by voting securities of the Corporation.
In all cases, a “Change in Control” shall occur pursuant to any of clauses (a) – (d) above only if the event also constitutes a change in the effective ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Treasury Regulation section 1.409A-3(i)(5).  
2.08    “Chief Executive Officer” means the Chief Executive Officer of the Corporation.
2.09    “Chief Human Resources Officer” means the Executive Vice President, Human Resources and Administration or, in the absence of such an officer, the Chief Executive Officer.
2.10    “CIC Qualifying Termination” means, with respect to a Participant, the Participant’s Separation from Service initiated by the Employer other than for Cause during the time period commencing on the effective date of a Change in Control and continuing until the earlier of (i) the 24-month anniversary of such date, or (ii) the date of the Participant’s Separation from Service by reason of Disability or the Participant’s death.  In addition, if the Employer initiates the Participant’s Separation from Service without Cause during the six-month period ending on the effective date of a Change in Control (A) at the request of a third party that has taken steps reasonably calculated or intended to effect a Change in Control, or (B) otherwise in connection with or anticipation of a Change in Control, then the Participant shall be deemed to incur a CIC Qualifying Termination on the effective date of the Change in Control.
2.11    “Code” means the Internal Revenue Code of 1986, as amended and the proposed, temporary and final regulations promulgated thereunder. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.
2.12    “Corporation” means Sotheby’s, a Delaware corporation, or its successor or assignee (or both, or more than one of each or both).
2.13    “Director” means a member of the Board of Directors of the Corporation.
2.14    “Disability” shall mean, with respect to a Participant, the date on which the insurer or administrator under the Employer’s program of long-term disability insurance determines that the Participant is eligible to commence benefits under such insurance.
2.15    “Effective Date” means the date this Plan was initially effective, i.e., February 24, 2016.
2.16    “Employer” means the Corporation and each Subsidiary. 
2.17    “ERISA”  means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.  Reference to any section or subsection 

3

                                                

                                            

of ERISA includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.
2.18     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder.  Reference to any section or subsection of the Exchange Act includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.
2.19    “Excise Tax” shall mean, collectively, (i) the tax imposed by Code Section 4999 by reason of being “contingent on a change in ownership or control” of the Corporation, within the meaning of Code Section 280G, and (ii) any similar tax imposed by state or local law, and (iii) any interest or penalties with respect to any tax described in clause (i) or (ii).
2.20    “Exempt Person” means an employee benefit plan of the Employer or a trustee or other administrator or fiduciary holding securities under an employee benefit plan of the Employer.
2.21    “Non-CIC Qualifying Termination” means, with respect to a Participant, the Participant’s Separation from Service initiated by the Employer other than for Cause in the absence of a Change in Control or outside of the time periods specified in Section 2.10 above with respect to a Change in Control; however, in the case of senior executives who are not officers within the meaning of Section 16 of the Exchange Act the Chief Executive Officer may also specify (by executing a written document) that a “good reason” Separation from Service during these periods shall qualify as a Non-CIC Qualifying Termination for one or more such senior executives, and in this case, “good reason” shall be determined in accordance with the terms of the written document that is executed by the Chief Executive Officer and applicable to such senior officer.  
2.22    “Notification Letter” means a letter notifying an executive of his or her eligibility for participation in the Plan that meets the requirements of the following sentence. An offer-of-employment or promotion letter or other letter from the Employer shall constitute a “Notification Letter” if it requires that the executive sign and return the letter – (i) to accept participation in the Plan as a condition of the executive’s employment; (ii) to agree to the Restrictive Covenants; (iii) to provide the Employer’s designated representative with thirty (30) days’ advance written notice of any resignation; and (iv) if there is any pre-existing right to severance benefits (or similar benefits) from the Employer or another Group Company, to waive all such benefits in favor of benefits under this Plan.    
2.23    “Notice of Termination” means a written notice of termination of employment for Cause or Disability given by the Employer to a Participant in the manner specified in Section 6.10, which states the specific termination provision in the Plan relied upon for the termination, sets forth in reasonable detail the facts and circumstances claimed to provide the basis for termination under the provision so indicated, and specifies the Participant’s date of termination.
2.24    “Participant”  means each individual who has become a Participant pursuant to Section 3.01 or Section 3.02, and who has not ceased to be a Participant under Section 3.04.
2.25    “Payment” means any payment or benefit in the nature of compensation (within the meaning of Code Section 280G(b)(2)) received or to be received by a Participant or for the 

4

                                                

                                            

benefit of a Participant, whether payable under the terms of this Plan or any other plan, arrangement or agreement with the Employer or an affiliate of the Employer.
2.26    “Person” means any “person” or “group” as those terms are used in Sections 13(d) and 14(d) of the Exchange Act.
2.27    “Plan” means this Sotheby’s Executive Severance Benefits Plan, as it may be amended from time to time, or any successor plan, program or arrangement thereto.
2.28    “Qualifying Termination” means either a CIC Qualifying Termination or a Non-CIC Qualifying Termination. 
2.29    “Release” means an agreement in which the Participant releases claims in connection with a termination of the Participant’s employment with the Employer and re-affirms the Participant’s obligation to observe the terms of the Restrictive Covenants.  The specific terms of the Release for a Participant shall be based upon the form of release used by the Employer at the time of the termination of employment, but with final terms determined by the Employer in accordance with its discretion on a case-by-case basis.
2.30    “Release Consideration Period” means the period of time specified by the Release, not to exceed forty-five (45) days, during which the affected Participant is permitted to consider whether or not to sign the Release.
2.31    “Release Revocation Period” means the period of time specified by the Release, not to exceed seven (7) days (or such longer period as may be required by applicable law), during which the Participant is permitted to revoke the signed Release.
2.32    “Restrictive Covenants” means, with respect to a Participant, the following covenants, and as also set forth in the Exhibit attached to this Plan (or in the case of executives who are not officers within the meaning of Section 16 of the Exchange Act, such alternative covenants as are authorized by the Chief Executive Officer and included in a written agreement that is validly executed on behalf of the Corporation):
(a)    Protection of Confidential Information. The Participant agrees that during the course of employment with the Group Companies (as defined below), the Participant has and will come into contact with and learn various forms of confidential information and trade secrets, which are the property of one or more Group Companies (as defined below).  The Participant agrees that the Participant shall not either during the period of his or her employment or at any time thereafter use or disclose to any person or entity, other than to the Corporation or another employing Group Company, or as authorized by the Corporation, any “confidential information” as defined in the confidentiality agreement entered into between the Participant and the Corporation (“Confidential Information”) belonging to one or more Group Companies, and that during the Participant’s employment the Participant will continue to comply with all policies and agreements related to maintaining the confidentiality of the Confidential Information, including but not limited to the Sotheby’s Confidentiality Agreement, which is incorporated herein by reference.  “Group Companies” means the group of companies that includes the Corporation and all holding companies and subsidiaries of the Corporation (and their predecessor and successor entities). Any member of this group may be referred to individually as a “Group Company”. The Participant agrees that the 

5

                                                

                                            

covenants and agreements given by the Participant in this subsection (a) and in each of subsections (b), (c) (d) and (e), as qualified by the final paragraph of this Section 2.32 (together, the “Covenants”) are given in favor of the Corporation both for itself and as trustee for each Group Company, and that acting in that capacity, the Corporation shall be entitled to enforce the benefit of those clauses for any Group Company.
(b)    Non-Compete Period. The Participant acknowledges and agrees that the Corporation is engaged in a highly competitive business and that by virtue of the Participant’s position and responsibilities with a Group Company and the Participant’s access to Confidential Information, engaging in any business which is directly competitive with any Group Company during the Participant’s employment with the Group Companies and during the Restricted Period (as defined below) will cause the Corporation great and irreparable harm.  Accordingly, during the Participant’s employment with the Group Companies and for eighteen (18) months following the termination of the Participant’s employment with the Group Companies (the “Restricted Period”), the Participant agrees that the Participant will not, directly or indirectly, whether on the Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, consult for, become employed by, engaged by or otherwise provide services to, or solicit or accept any funds, loans or other consideration from (i) Christie’s, Bonhams, Poly Auctions, China Guardian or Phillips or any affiliate or successor of such entities in competition with any Group Company, or (ii) any other business concern that is (or intends to be) in competition with any Restricted Business (including a business formed or acquired (in any part) during the Restriction Period).  In the Covenants, “Restricted Business” means services of the same type as, similar to or competitive with services supplied by a Group Company at the date of the termination of the Participant’s employment. None of the restrictions in this clause shall prevent the Participant from holding a passive investment by way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognized stock exchange, provided the Participant is not actively involved in the management, strategy development or operational execution of the company. 
(c)    Non-Solicitation of Clients. The Participant acknowledges and agrees that solely by reason of employment by the Group Companies, the Participant has and will come into contact with a significant number of the Group Companies’ clients and customers, and their prospective clients and customers, and will have access to Confidential Information regarding their clients and customers, prospective clients and customers and related information.   During the Participant’s employment with the Group Companies and during the Restricted Period, the Participant agrees that the Participant will not, directly or indirectly or whether on the Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, solicit or entice away or in any manner attempt to persuade any current client or customer, or prospective client or customer, of any Group Company to discontinue or diminish his, her or its relationship or prospective relationship with any Group Company, or otherwise provide business to any person, corporation, partnership or other business entity of any kind other than a Group Company. 

6

                                                

                                            

(d)    No Hire or Solicitation of Employees.  The Participant acknowledges and agrees that solely as a result of employment with the Group Companies, and in light of the broad responsibilities of such employment which include working with other employees of the Group Companies, the Participant has and will come into contact with and acquire Confidential Information regarding their respective employees, and will develop relationships with those employees.  Accordingly, during the Participant’s employment with the Group Companies and during the Restricted Period, the Participant agrees that the Participant will not directly or indirectly, whether on the Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, hire or solicit, recruit, induce, entice, influence, or encourage any Restricted Person to leave any Group Company  or become hired by another person, company or entity.  In the Covenants, “Restricted Person” means any employee of any Group Company, or any person who has left the employment of the Group Companies within the six (6) months preceding the termination of the Participant’s employment.
(e)    Non-Disparagement. Participant acknowledges and agrees that Participant will not, either during the period of his or her employment or at any time thereafter, disparage (or induce or encourage others to disparage) a Group Company or any of its present directors or executive officers with respect to any events relating directly or indirectly to Participant's employment with the Group Companies including, without limitation, criticizing the Group Company’s business strategy.  For the purposes of this Plan and the Release, the term "disparage" means any comments or statements which would adversely affect in any manner the business reputation or relationships of Participant or a Group Company and/or any of its past or present directors, officers, agents, trustees, subsidiaries or affiliates, administrators, attorneys or employees known to Participant, as the case may be.  
(f)    Remedies.  The Participant also acknowledges and agrees that the Corporation’s remedies at law for a breach of any of the Covenants would be inadequate and, in recognition of this fact, the Participant agrees that, in the event of such a breach, in addition to any remedies at law, the Corporation shall be entitled to obtain (i) equitable relief in the form of specific performance, temporary or permanent injunction or any other equitable remedy which may then be available, and the Participant hereby consents to the issuance thereof forthwith and without bond by any court of competent jurisdiction as set forth herein; and (ii) recovery of all reasonable sums and costs, including attorneys’ fees, incurred by the Corporation to defend or enforce the Covenants.
(g)    Waiver.  The Corporation reserves the right to waive all or any part of the terms and conditions of the Covenants under appropriate circumstances, in its sole discretion.  Any such waiver must be in writing and signed by the Chief Executive Officer.  No waiver by the Corporation of any breach of the Covenants shall be a waiver of any preceding or succeeding breach.  No waiver by the Corporation of any right under the Covenants shall be construed as a waiver of any other right.  The Corporation shall not be required to give notice to enforce strict adherence to all terms of the Covenants.
(h)    Miscellaneous.  The Participant agrees that the restrictions in the Covenants are reasonable and necessary for the protection of the Corporation’s 

7

                                                

                                            

legitimate interests.  If at any time there is a final determination in arbitration or temporary or preliminary determination in court pursuant to Section 6.06(f) that the time period, geographic scope, or any other restriction contained in the Covenants is unenforceable against the Participant, the provisions of the Covenants shall not be deemed void but shall be deemed amended to apply as to such maximum time period, geographic scope and to such other maximum extent as the arbitrator may determine or indicate to be enforceable. In the event any provision in the Covenants should be held by an arbitrator or court to be invalid, illegal or unenforceable in any respect, neither party will be required to comply with such provision for so long as the provision is held to be invalid, illegal or unenforceable, but the validity, legality, and enforceability of the remaining provisions contained in the Covenants shall not in any way be affected or impaired by the illegality, invalidity or unenforceability of such provision.  The Covenants together with the Confidentiality Agreement and the Plan constitute a single, integrated written contract expressing the entire agreement of the parties hereto relative to the subject matter hereof and represents the complete understanding between the Corporation and the Participant concerning the subject matter of the Covenants, and no other promises or agreements concerning the subject matter of the Covenants shall be binding unless signed by the Corporation’s Chief Executive Officer or Chief Human Resources Officer and the Participant.  The Covenants supersede and terminate any and all prior agreements or understandings between the parties, whether oral or written, concerning the subject matter of the Covenants.
Nothing in subsection (a) or (e) of this Section 2.32 restricts or prohibits a Participant from initiating communications directly with, responding to any inquiries from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or from filing a claim or assisting with an investigation directly with a self-regulatory authority or a government agency or entity, including the U.S. Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General (collectively, the “Regulators”), or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation.  However, to the maximum extent permitted by law, Participant is waiving his or her right to receive any individual monetary relief from the Employer or any Group Company resulting from such claims or conduct, regardless of whether the Participant or another party has filed the claims, and in the event the Participant obtains such monetary relief the Employer will be entitled to an offset for the payments made pursuant to this Plan.  The prior sentence does not limit the Participant’s right to receive an award from any Regulator that provides awards for providing information relating to a potential violation of law.  The Participant does not need the prior authorization of the Employer or another Group Company to engage in conduct protected by this paragraph, and the Participant does not need to notify the Employer or another Group Company that the Participant has engaged in such conduct.  
2.33     “Section 409A” means Section 409A of the Code and the Department of Treasury and Internal Revenue Service guidance thereunder. 
2.34    “Separation from Service” means “separation from service” from the affiliated companies as described under Section 409A(a)(2)(A)(i). A Participant who is both an employee of the affiliated companies and a Director will not have a Separation from Service until he or she has a Separation from Service with respect to both his or her employment and his or her Board 

8

                                                

                                            

membership.  For this purpose, the term “affiliated companies” means the Employer and any affiliate with which any entity comprising the Employer is treated as a single employer under Code Section 414(b) or 414(c).
2.35    “Severance Benefits” means the severance pay and the other benefits payable to a Participant pursuant to Article Four of the Plan.
2.36    “Subsidiary” means any entity in which the Corporation, directly or indirectly, beneficially owns more than fifty percent (50%) of such entity’s equity interest by vote and value.
2.37    “Target Bonus” means, with respect to a Participant, the Participant’s target annual cash incentive under the Bonus Plan for the performance period containing the date of the Participant’s Qualifying Termination.
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.01    Eligibility on the Effective Date.  Eligibility for the Plan as of the Effective Date was determined by the Compensation Committee of the Board.  The titles of each Participant in the Plan as of the Effective Date and the contemplated commencement dates of his or her status as a Participant (but subject to the requirement to execute and timely return the executive’s applicable Notification Letter) were listed in an Appendix to the Plan as of the Effective Date.
3.02    Current Eligibility.  Subsequent to the Effective Date, this Section 3.02 governs the eligibility of executives who are not Participants pursuant to Section 3.01.  Under this Section 3.02, each executive who is a United States-based officer within the meaning of Section 16 of the Exchange Act and who is a direct report to the Chief Executive Officer shall be eligible for the Plan and shall become a Participant by executing and returning the Notification Letter sent to such executive.  In addition, the Compensation Committee of the Board may select for eligibility additional United States-based senior executives of the Corporation as Participants from time to time. The Chief Human Resources Officer or Chief Executive Officer will provide notice on behalf of the Administrator to each such executive of his or her selection for Plan participation by means of a Notification Letter and in the manner provided by Section 6.10.  Each such executive will become a Participant on the date the executive signs and properly returns the Notification Letter.  The Chief Human Resources Officer or Chief Executive Officer shall update the Appendix to this Plan on behalf of the Administrator as additional executives become eligible to participate from time to time (or to reflect the removal of executives as Participants in a manner consistent with the terms of the Plan).  
3.03    Exclusive Benefits.  Any Severance Benefits payable to a Participant under this Plan will be paid solely in lieu of, and not in addition to, any severance benefits payable under any offer letter, severance arrangement or other program or agreement on account of the Participant’s termination of employment with the Employer.  A Participant’s acceptance of participation in this Plan pursuant to Section 3.01 or 3.02 above shall constitute a waiver by such Participant of all other rights to severance benefits (or any similar separation benefits) that the Participant may have or claim with respect to the Employer (specifically including, but not limited to, the Sotheby’s, Inc. Severance Plan).   

9

                                                

                                            

3.04    End of Participation.  An individual shall cease to be a Participant on the date on which the individual ceases to be an employee of the Employer other than by a Qualifying Termination or, if earlier, on the date that the Participant accepts a position that is ineligible for the Plan (including a localized position outside of the United States).  Except as provided in this and the next sentence, the Compensation Committee of the Board may, by resolution, discontinue an individual’s status as a Participant; provided, however, that no such discontinuance shall become effective (i) during the one-year period following the date on which advance written notice of such discontinuance is provided to the affected Participant in the manner specified in Section 6.10, or (ii) during the period beginning on the effective date of a Change in Control and ending 24 months after the effective date of such Change in Control.  In the event that an individual incurs a Qualifying Termination while still a Participant, such individual shall remain a Participant until all compensation and benefits required to be provided to the Participant under the terms of the Plan on account of such Qualified Termination have been provided.
ARTICLE 4
SEVERANCE BENEFITS
4.01    Release Requirement.  A Participant will be eligible for the Severance Benefits described in Section 4.02 or 4.03 below, as applicable, subject to the Release requirement specified in this Section 4.01.  Within seven (7) days following the date of the Participant’s Separation from Service, the Corporation shall provide the Participant with a Release.  As a condition of receiving the Severance Benefits described in Section 4.02 or Section 4.03 below, as applicable, the Participant must execute and deliver the Release to the Corporation within the Release Consideration Period, the Release Revocation Period must expire without revocation of the Release by the Participant, and the Participant must comply with the Restrictive Covenants set forth in this Plan.  In the event the Participant breaches one or more of such Restrictive Covenants, the Participant will forfeit any such Severance Benefits that have not been paid or provided to the Participant and must repay to the Corporation the amount (or equivalent cash value) of any such Severance Benefits that have been paid to the Participant, and the Participant will be subject to legal action.
4.02    Non-CIC Qualifying Termination.  In the event that a Participant incurs a Non-CIC Qualifying Termination, the Corporation shall pay or provide to the Participant the following benefits, subject to the Release requirement specified in Section 4.01 above.
(a)    Severance Pay.  The Corporation shall pay to the Participant an amount equal to one and one-half (1.5) multiplied by the sum of (A) the Participant’s Base Salary, and (B) the Participant’s Target Bonus.  The amount payable under this Section 4.02(a) shall be paid to the Participant in equal installments as salary continuation, pursuant to the Corporation’s standard payroll practices for the payment of base salary to executives, commencing within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.04(g) and subject to the requirements of Section 4.04(f)) and continuing for eighteen (18) months after commencement.   
(b)    Pro-Rata Bonus for Year of Termination.  If, on account of the Participant’s Non-CIC Qualifying Termination, the Participant forfeits the Participant’s right to earn a 

10

                                                

                                            

payment under the Bonus Plan for the performance period containing the date of such Non-CIC Qualifying Termination, the Corporation shall pay to the Participant a lump sum cash payment equal to the amount of the annual cash incentive payment to which the Participant would have been entitled under the Bonus Plan for such performance period but for the Participant’s Non-CIC Qualifying Termination, determined on the basis of actual achievement of the performance goals applicable under such plan for such performance period (the “Actual Bonus”), multiplied by a fraction (i) the numerator of which equals the number of days in such performance period during which the Participant was employed by the Employer (rounded up to the next highest number of days in the case of a partial day of employment), and (ii) the denominator of which is the total number of days in such performance period.  This amount shall be paid to the Participant in a lump sum on the later of (x) the date on which the Actual Bonus would have been paid to the Participant under such plan but for the Participant’s termination of employment during such performance period, or (y) within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.04(f) and subject to the requirements of Section 4.04(e)).
(c)    COBRA Pay.  The Corporation shall pay to the Participant an amount equal to eighteen (18) times the monthly COBRA charge in effect on the date of the Participant’s Separation from Service for the type of Employer-provided group health plan coverage in effect for the Participant (e.g., employee only, family coverage) on the date of the Participant’s Separation from Service.  This amount shall be paid to the Participant in equal installments along with the scheduled severance benefit payments as salary continuation pursuant to the Corporation’s standard payroll practices for the payment of base salary commencing within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.04(g) and subject to the requirements of Section 4.04(f)).
(d)    Equity and Long-Term Incentives. Any equity or long-term compensation grant or award outstanding to the Participant shall be treated as specified by the terms of the applicable equity or long-term incentive compensation plan under which the grant or award was made and the applicable award agreement.
4.03    CIC Qualifying Termination.  In the event that a Participant incurs a CIC Qualifying Termination, the Corporation shall pay or provide to the Participant the following benefits, subject to the Release requirement specified in Section 4.01 above.
(a)    Severance Pay.  The Corporation shall pay to the Participant an amount equal to two (2) multiplied by the sum of (A) the Participant’s Base Salary, and (B) the Participant’s Target Bonus.  This amount shall be paid to the Participant in a lump sum within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Sections 4.04(e) and 4.04(g) and subject to the requirements of Section 4.04(f)).
(b)    Pro-Rata Target Bonus for Year of Termination.  The Corporation shall pay to the Participant a lump sum cash payment equal to the amount of the target annual cash incentive payment to which the Participant was entitled under the Bonus Plan for such performance period, multiplied by a fraction (i) the numerator of which equals the number of days in such performance period during which the Participant was employed 

11

                                                

                                            

by the Employer (rounded up to the next highest number of days in the case of a partial day of employment), and (ii) the denominator of which is the total number of days in such performance period.  This amount shall be paid to the Participant in a lump sum within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.04(f) and subject to the requirements of Section 4.04(e)).  
(c)    COBRA Pay.  The Corporation shall pay to the Participant an amount equal to eighteen (18) times the monthly COBRA charge in effect on the date of the Participant’s Separation from Service for the type of Employer-provided group health plan coverage in effect for the Participant (e.g., employee only, family coverage) on the date of the Participant’s Separation from Service.  This amount shall be paid to the Participant in a lump sum within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.04(g) and subject to the requirements of Section 4.04(f)). 
(d)    Equity and Long-Term Incentives. Any equity or long-term compensation grant or award outstanding to the Participant shall be treated as specified by the terms of the applicable equity or long-term incentive compensation plan under which the grant or award was made and the applicable award agreement.
(e)    Only Incremental Amounts Due.  If a Participant becomes entitled to benefits after already receiving benefits for a Qualifying Termination only the net additional benefits (if any) shall be provided.  In particular, it is possible that a Participant will incur a Non-CIC Qualifying Termination prior to the effective date of a Change in Control and become entitled to benefits pursuant to Section 4.02 on account of such termination of employment and that the termination of employment will subsequently become a CIC Qualifying Termination due to the occurrence of a Change in Control subsequent to the date of the employment termination.  In that event, the amounts and benefits to which the Participant will be entitled under this Section 4.03 upon the occurrence of the Change in Control will be the incremental amounts and benefits, if any, that exceed the comparable amounts and benefits to which the Participant became entitled under Section 4.02.  For example, since the COBRA benefit provided to a Participant under Section 4.03(b) is the same as the COBRA benefit provided to a Participant under Section 4.02(b), the Participant would receive only the COBRA subsidy provided under Section 4.02(b); no additional COBRA benefit would be provided to the Participant under Section 4.03(b). 
4.04    Section 409A.
(a)    To the extent necessary to ensure compliance with Section 409A, the provisions of this Section 4.04 shall govern in all cases over any contrary or conflicting provision in the Plan.  This Section 4.04 is an absolutely superseding provision of this Plan, meaning that it will apply notwithstanding other provisions of this Plan that permit or require payment at an earlier time.
(b)    It is the intent of the Corporation that this Plan comply with the requirements of Section 409A with respect to any nonqualified deferred compensation subject to Section 409A.   The Plan shall be interpreted and administered to maximize 

12

                                                

                                            

the exemptions from Section 409A and, to the extent the Plan provides for deferred compensation subject to Section 409A, to comply with Section 409A and to avoid the imposition of tax, interest and/or penalties upon any Participant under Section 409A.
(c)    The Corporation does not, however, assume any economic burdens associated with Section 409A. Although the Corporation intends to administer the Plan to prevent taxation under Section 409A, it does not represent or warrant that the Plan complies with any provision of federal, state, local, or non-United States law. The Corporation, the Subsidiaries, and their respective directors, officers, employees and advisers will not be liable to any Participant (or any other individual claiming a benefit through the Participant) for any tax, interest, or penalties the Participant may owe as a result of participation in the Plan.  Neither the Corporation nor the Subsidiaries or affiliates have any obligation to indemnify or otherwise protect any Participant from any obligation to pay taxes under Section 409A.  However, following the occurrence of a Change in Control, the Corporation shall exercise its good faith best efforts to minimize any adverse impact to a Participant with respect to the benefits payable to the Participant under this Plan (for example, by preserving the availability of the Section 409A short-term deferral exemption with respect to such benefits to the extent possible and by avoiding any forfeiture of a Participant’s benefits or any other non-payment of benefits due under this Plan). 
(d)    The right to a series of payments under the Plan will be treated as a right to a series of separate payments.  In particular, but not by way of limitation, each installment payment pursuant to Section 4.02(a) is a separate payment.  Each separate payment that is made within 2-1⁄2 months following the end of the year that contains the date of the Participant’s Separation from Service is intended to be exempt from Section 409A as a short-term deferral within the meaning of the final regulations under Section 409A.  Each separate payment that is made later than 2-1⁄2 months following the end of the year that contains the date of the Participant’s Separation from Service is intended to be exempt under the two-times exception of Treasury Reg. § 1.409A-1(b)(9)(iii), up to the limitation on the availability of that exception specified in the regulation and subject to the conditions on the applicability of that exemption.   Then, each separate payment that is made after the two-times exception ceases to be available shall be subject to delay, as necessary, in accordance with Section 4.04(f) below.
(e)    It is intended that each lump sum payment made pursuant to Section 4.02(b), 4.03(a), and 4.03(b) shall be exempt from Section 409A as a short-term deferral within the meaning of the final regulations under Section 409A. 
(a)    To the extent necessary to comply with Section 409A, in no event may a Participant, directly or indirectly, designate the taxable year of payment.  In particular, to the extent necessary to comply with Section 409A, because any payment to a Participant under this Plan is conditioned upon the Participant’s executing and not revoking a Release, if the designated payment period for such payment begins in one taxable year and ends in the next taxable year, the payment will be made in the later taxable year. 
(e)    To the extent necessary to comply with Section 409A, references in this Plan to “termination of employment” or “terminates employment” (and similar references) 

13

                                                

                                            

shall have the same meaning as Separation from Service, and no payment subject to Section 409A that is payable upon a termination of employment shall be paid unless and until (and not later than applicable in compliance with Section 409A) the Participant incurs a Separation from Service.  In addition, if the Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) at the time of his or her Separation from Service, any nonqualified deferred compensation subject to Section 409A that would otherwise have been payable on account of, and within the first six months following, the Participant’s Separation from Service, and not by reason of another event under Section 409A(a)(2)(A), will become payable on the first business day after six months following the date of the Participant’s Separation from Service or, if earlier, the date of the Participant’s death (or as otherwise dictated by the Participant’s election and the nonqualified deferred compensation plan in accordance with Section 409A, to the extent subject to 409A, or as necessary to avoid a material modification with respect to deferrals that are grandfathered and exempt from 409A).
(f)    To the extent that any reimbursement by the Employer to a Participant of eligible expenses under this Plan constitutes a “deferral of compensation” within the meaning of Section 409A (a “Reimbursement”) (i) the Participant must request the Reimbursement (with substantiation of the expense incurred) no later than 30 days following the date on which the Participant incurs the corresponding eligible expense; (ii) subject to any shorter time period provided in any expense reimbursement policy of the Employer or specifically provided otherwise in this Plan, the Employer shall make the Reimbursement to the Participant on or before the last day of the calendar year following the calendar year in which the Participant incurred the eligible expense; (iii) the Participant’s right to Reimbursement shall not be subject to liquidation or exchange for another benefit; (iv) the amount eligible for Reimbursement in one calendar year shall not affect the amount eligible for Reimbursement in any other calendar year; and (v) except as specifically provided otherwise in this Plan, the period during which the Participant may incur expenses that are eligible for Reimbursement is limited to five calendar years following the calendar year in which the Participant’s Separation from Service occurs. 
4.05    Enforcement Costs.  All expenses of a Participant incurred in enforcing the Participant’s rights and/or to recover the Participant’s benefits under this Article Four that are related to a CIC Qualifying Termination, including but not limited to, reasonable attorneys’ fees, court costs, arbitration costs, and other reasonable expenses shall be paid by the Corporation if the Participant prevails on any substantive issue in such proceeding.  The Corporation shall pay or reimburse the Participant for such fees, costs and expenses, promptly upon presentment of appropriate documentation, subject to Section 4.04(g).
4.06    Section 280G.
(a)    A Participant shall bear all expense of, and be solely responsible for, any Excise Tax; provided, however, that any Payment that would constitute a “parachute payment” within the meaning of Code Section 280G shall be reduced to the extent necessary so that no portion thereof shall be subject to the Excise Tax but only if, by reason of such reduction, the net after-tax benefit received by the Participant shall exceed the net after-tax benefit that would be received by the Participant if no such reduction was made.

14

                                                

                                            

(b)    The “net after-tax benefit” shall mean (i) the Payments which the Participant receives or is then entitled to receive from the Employer that would constitute “parachute payments” within the meaning of Code Section 280G, less (ii) the amount of all federal, state and local income and employment taxes payable by the Participant with respect to the foregoing calculated at the highest marginal income tax rate for each year in which the foregoing shall be paid to the Participant (based on the rate in effect for such year as set forth in the Code as in effect at the time of the first payment of the foregoing), less (iii) the amount of Excise Tax imposed with respect to the payments and benefits described in (b)(i) above.
(c)    All determinations under this Section 4.06 will be made by an Accounting Firm. The Accounting Firm shall be required, in part, to evaluate the extent to which payments are exempt from Section 280G as reasonable compensation for services rendered before or after the Change in Control.  All fees and expenses of the Accounting Firm shall be paid solely by the Corporation.  The Corporation will direct the Accounting Firm to submit any determination it makes under this Section 4.06 and detailed supporting calculations to both the Participant and the Corporation as soon as reasonably practicable following the Change of Control.
(d)    If the Accounting Firm determines that one or more reductions are required under this Section 4.06, such Payments shall be reduced in the order that would provide the Participant with the largest amount of after-tax proceeds (with such order, to the extent permitted by Code Section 280G and Section 409A designated by the Participant, or otherwise determined by the Accounting Firm) to the extent necessary so that no portion thereof shall be subject to the Excise Tax, and the Corporation shall pay such reduced amount to the Participant.  The Participant shall at any time have the unilateral right to forfeit any equity award in whole or in part.
(e)    As a result of the uncertainty in the application of Code Section 280G at the time that the Accounting Firm makes its determinations under this Section 4.06, it is possible that amounts will have been paid or distributed to the Participant that should not have been paid or distributed (collectively, the “overpayments”), or that additional amounts should be paid or distributed to the Participant (collectively, the “underpayments”).  If the Accounting Firm determines, based on either the assertion of a deficiency by the Internal Revenue Service against the Employer or the Participant, which assertion the Accounting Firm believes has a high probability of success or is otherwise based on controlling precedent or substantial authority, that an overpayment has been made, the Participant must repay the overpayment to the Corporation, without interest; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Participant to the Corporation unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Participant is subject to tax under Code Section 4999 or generate a refund of tax imposed under Code Section 4999.  If the Accounting Firm determines, based upon controlling precedent or substantial authority that an underpayment has occurred, the Accounting Firm will notify the Participant and the Corporation of that determination and the Corporation will promptly pay the amount of that underpayment to the Participant without interest.

15

                                                

                                            

(f)    The parties will provide the Accounting Firm access to and copies of any books, records, and documents in their possession as reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determinations and calculations contemplated by this Section 4.06.  For purposes of making the calculations required by this Section 4.06, the Accounting Firm may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999.
ARTICLE 5
AMENDMENT AND TERMINATION
Subject to the next sentence, the Compensation Committee of the Board in all respects (and the Administrator in all respects except Plan eligibility) shall have the right at any time and from time to time, by instrument in writing, to amend, modify, alter, or terminate the Plan in whole or in part.  Notwithstanding the foregoing or anything in this Plan to the contrary, the Compensation Committee of the Board and the Administrator may not amend, modify, alter or terminate this Plan so as to adversely affect payments or benefits then payable, or which could become payable, to a Participant under the Plan, except to the minimum extent required to comply with any applicable law, either (i) during the one-year period following the date on which advance written notice of such amendment, modification, alteration or termination is provided to the affected Participant in the manner specified in Section 6.10, or (ii) during the period beginning on the effective date of a Change in Control and ending 24 months after the effective date of such Change in Control.
ARTICLE 6
MISCELLANEOUS
6.01    Participant Rights.  Except to the extent required or provided for by mandatorily imposed law as in effect and applicable hereto from time to time, neither the establishment of the Plan, nor any modification thereof, nor the payment of any benefits, shall be construed as giving to any Participant or other person any legal or equitable right against the Employer, or any officer or employee thereof, or the Board or the Administrator, except as herein provided; nor shall any Participant have any legal right, title or interest in the assets of the Employer, except in the event and to the extent that benefits may actually be payable to him hereunder.  This Plan shall not constitute a contract of employment nor afford any individual any right to be retained or continued in the employ of the Employer or in any way limit the right of the Employer to discharge any of its employees, with or without cause.  Participants have no right to receive any payments or benefits that the Employer is prohibited by applicable law from making.
6.02    Administrator Authority.
(a)    The Administrator will administer the Plan and have the full authority and discretion necessary to accomplish that purpose, including, without limitation, the authority and discretion to:
(i)      resolve all questions relating to the eligibility of Participants;

16

                                                

                                            

(ii)      determine the amount of benefits, if any, payable to Participants under the Plan and determine the time and manner in which such benefits are to be paid;
(iii)      engage any administrative, legal, tax, actuarial, accounting, clerical, or other services it deems appropriate in administering the Plan;
(iv)      construe and interpret the Plan, supply omissions from, correct deficiencies in and resolve inconsistencies or ambiguities in the language of the Plan, resolve inconsistencies or ambiguities between the provisions of this document, and adopt rules for the administration of the Plan which are not inconsistent with the terms of the Plan document;
(v)      compile and maintain all records it determines to be necessary, appropriate or convenient in connection with the administration of the Plan; and
(vi)      resolve all questions of fact relating to any matter for which it has administrative responsibility.
(b)    The Administrator shall perform all of the duties and may exercise all of the powers and discretion that the Administrator deems necessary or appropriate for the proper administration of the Plan, including, but not limited to, delegation of any of its duties to one or more authorized officers. All references to the authority of the Administrator in this Plan shall be read to include the authority of any party to which the Administrator delegates such authority.
(c)    Any failure by the Administrator to apply any provisions of this Plan to any particular situation shall not represent a waiver of the Administrator’s authority to apply such provisions thereafter. Every interpretation, choice, determination or other exercise of any power or discretion given either expressly or by implication to the Administrator shall be final, conclusive and binding upon all parties having or claiming to have an interest under the Plan or otherwise directly or indirectly affected by such action, without restriction, however, on the right of the Administrator to reconsider and re-determine such action.
(d)    Any decision rendered by the Administrator and any review of such decision shall be limited to determining whether the decision was so arbitrary and capricious as to be an abuse of discretion. The Administrator may adopt such rules and procedures for the administration of the Plan as are consistent with the terms hereof.
6.03    Claims and Appeals Procedure.
(a)    With respect to any claim for benefits which are provided exclusively under this Plan, the claim and any related appeal shall be administered pursuant to subsections (b) through (k) below.  With respect to any claim for benefits which, under the terms of the Plan, are provided under another employee benefit plan or program maintained by an Employer, the Administrator shall determine any claim and any related appeal regarding an individual’s eligibility under the Plan pursuant to subsections (b) through (k) below but the administration of any other claim and any related appeal with 

17

                                                

                                            

respect to such benefits (including the amount of such benefits) shall be subject to the claims and appeals procedure specified in such other employee benefit plan or program.
(b)    A Participant or his duly authorized representative (the “claimant”) may make a claim for benefits under the Plan by filing a written claim with the Administrator.  Determinations of each such claim shall be made as described below; provided, however, that the claimant and the Administrator may agree to extended periods of time for making determinations beyond those periods described below.
(c)    The Administrator will notify a claimant of its decision regarding his claim within a reasonable period of time, but not later than ninety (90) days following the date on which the claim is filed, unless special circumstances require a longer period for processing of the claim and the claimant is notified in writing of the reasons for an extension of time prior to the end of the initial ninety (90) day period and the date by which the Administrator expects to make the final decision.  In no event will the Administrator be given an extension for processing the claim beyond one hundred eighty (180) days after the date on which the claim is first filed with the Administrator unless otherwise agreed in writing by the claimant and the Administrator.
(d)    If a claim is denied, the Administrator will notify the claimant of its decision in writing.  Such notification will be written in a manner calculated to be understood by the claimant and will contain the following information:  the specific reason(s) for the denial; a specific reference to the Plan provision(s) on which the denial is based; a description of additional information necessary for the claimant to perfect his claim, if any, and an explanation of why such material is necessary; and an explanation of the Plan’s claim review procedure and the applicable time limits under such procedure and a statement as to the claimant’s right to bring a civil action under ERISA after all of the Plan’s review procedures have been satisfied.
(e)    The claimant shall have sixty (60) days following receipt of the notice of denial to file a written request with the Administrator for a review of the denied claim.  The decision by the Administrator with respect to the review must be given within sixty (60) days after receipt of the request, unless special circumstances require an extension and the claimant is notified in writing of the reasons for an extension of time prior to the end of the initial sixty (60) day period and the date by which the Administrator expects to make the final decision.  In no event will the decision be delayed beyond one hundred twenty (120) days after receipt of the request for review unless otherwise agreed in writing by the claimant and the Administrator.
(f)    Every claimant will be provided a reasonable opportunity for a full and fair review of an adverse determination.  A full and fair review means the following:  the claimant will be given the opportunity to submit written comments, documents, records, etc. with regard to the claim, and the review will take into account all information submitted by the claimant, regardless of whether it was reviewed as part of the initial determination; and the claimant will be provided, upon request and free of charge, with copies of all documents and information relevant to the claim for benefits.
(g)    The Administrator will notify the claimant of its decision regarding an appeal of a denied claim in writing.  The decision will be written in a manner calculated 

18

                                                

                                            

to be understood by the claimant, and will include:  the specific reason(s) for the denial and adverse determination; a reference to the specific Plan provisions on which the denial is based; a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all information relevant to the claimant’s claim for benefits; and a statement regarding the claimant’s right to bring a civil action under ERISA.
(h)    If the Administrator fails to follow these procedures consistent with the requirements of ERISA with respect to any claim, the claimant will be deemed to have exhausted all administrative remedies under the Plan and will have the right to bring a civil action under ERISA Section 502(a).  This Article XII shall be interpreted such that the claims procedures applicable under the Plan conform to the claims review requirements of Part 5, Title I, of ERISA, and the applicable provisions set forth in Department of Labor regulation section 2560.503-1.
(i)    Before filing any claim or action, the employee, former employee, Participant, former Participant, or other individual, person, entity, representative, or group of one or more of the foregoing (collectively, a “Claimant”) must first fully exhaust all of the Claimant’s actual or potential rights under the claims procedures of this Section 6.03, including such rights as the Administrator may choose to provide in connection with novel claims or issues or in particular situations.  For purposes of the prior sentence, any Claimant that has any claim, issue or matter that implicates in whole or in part –
(i)      The interpretation of the Plan,
(ii)      The interpretation of any term or condition of the Plan,
(iii)      The interpretation of the Plan (or any of its terms or conditions) in light of applicable law,
(iv)      Whether the Plan or any term or condition under the Plan has been validly adopted or put into effect, or
(v)      Any claim, issue or matter deemed similar to any of the foregoing by the Administrator,
(or two or more of these) shall not be considered to have satisfied the exhaustion requirement of this Section 6.03(i) unless the Claimant first submits the claim, issue or matter to the Administrator to be processed pursuant to the claims procedures of Section 6.03 or to be otherwise considered by the Administrator, and regardless of whether claims, issues or matters that are not listed above are of greater significance or relevance.  The exhaustion requirement of this Section 6.03(i) shall apply even if the Administrator has not previously defined or established specific claims procedures that directly apply to the submission and consideration of such claim, issue or matter, and in which case the Administrator (upon notice of the claim, issue or matter) shall either promptly establish such claims procedures or shall apply (or act by analogy to) the claims procedures of Section 6.03 that apply to claims for benefits.  Upon review by any court or other tribunal, this exhaustion requirement is intended to be interpreted to require exhaustion in as many circumstances as possible (and any steps necessary to effect this intent should be taken).

19

                                                

                                            

(j)    Any claim or action that is filed in court against or with respect to the Plan, the Administrator or the Employer must be filed within the applicable time frame that relates to the claim or action, as follows:
(i)      Claims or actions for Severance Benefits must be filed within two (2) years of the later of the date the Participant received the Severance Pay Benefit or the date of the relevant employee’s Separation from Service.
(ii)      For all other claims or actions, the claim or action must be filed within two (2) years of the date when the Claimant knew or should have known of the actions or events that gave rise to the claim or action.
Any claim or action filed after the applicable time frame stated above will be void.
(k)    Any claim or action in connection with the Plan must be filed in the United States District Court for the Southern District of New York.
6.04    Reliance on Tables and Reports.  In administering the Plan, the Administrator is entitled to the extent permitted by law to rely conclusively upon all tables, valuations, certificates, opinions and reports which are furnished by accountants, legal counsel or other experts employed or engaged by the Administrator. The Administrator will be fully protected in respect of any action taken or suffered by the Administrator in good faith reliance upon all such tables, valuations, certificates, reports, opinions or other advice. The Administrator is also entitled to rely upon any data or information furnished by the Employer or by a Participant as to any information pertinent to any calculation or determination to be made under the provisions of the Plan, and, as a condition to payment of any benefit under the Plan the Administrator may request a Participant to furnish such information as it deems necessary or desirable in administering the Plan.
6.05    Expenses.  All Plan administration expenses shall be paid by the Corporation.
6.06    Disputes.  Any and all disputes and controversies arising under or in connection with this Policy, following exhaustion of administrative remedies, shall be exclusively resolved by expedited binding arbitration conducted by a single neutral arbitrator with substantial experience regarding ERISA (the “Arbitrator”) from the Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its successor, pursuant to the JAMS Employment Arbitration Rules and Procedures in effect at the time of the dispute (information available at www.JAMSadr.org), and with the Arbitrator selected as hereinafter provided, and subject to the following provisions of this Section 6.06 (the parties hereby agreeing that, in the event that there is a conflict between the provisions of the applicable rules of JAMS and the provisions of this Plan, the provisions of this Plan shall control).  
(a)    The Arbitrator shall be determined from a list of names of five impartial arbitrators each of whom shall be an attorney experienced in arbitration matters concerning executive employment disputes, supplied by JAMS, and chosen by the Participant and the Company by each in turn striking a name from the list until one name remains (with the Company being the first to strike a name). Such arbitration process shall take place in New York City (the Borough of Manhattan) in the state of New York.  Judgment may be entered on the award of the arbitrator in any court having proper jurisdiction.    

20

                                                

                                            

(b)    The arbitration shall be determined based solely on the record established for the appeal described in Section 6.03(f) and (g). The Arbitrator shall not have the power to add to nor modify any of the terms or conditions of this Plan. The Arbitrator’s decision shall not go beyond what is necessary for the interpretation and application of the provision(s) of this Plan in respect of the issue before the Arbitrator, based upon the appeal record. 
(c)    In any such arbitration, the arbitrator will issue a written award/opinion. The judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  The decision of the arbitrator shall be final and conclusive, and the parties waive the right to trial de novo or appeal.  The Company will pay the arbitrator’s and arbitration fees.  Subject to Section 4.05 in the case of a CIC Qualifying Termination, all other costs and expenses of arbitration (including fees and disbursements of counsel) shall be borne by the respective party incurring such costs and expenses, unless the arbitrator shall award costs and expenses to the prevailing party in such arbitration.
(d)    The arbitrator shall have the authority to award any remedy or relief (including equitable remedies and relief) that a court of competent jurisdiction could order or grant.
(e)    The Participant must bring any dispute in arbitration on an individual basis only, and not on a class, collective or representative basis and must waive the right to commence, be a party to, or be an actual or putative class member of any class, collective, or representative action arising out of or relating to the Program (“class action waiver”).  However, if this class action waiver is found to be unenforceable, then any claim on a class, collective, or representative basis shall be filed and adjudicated in a court of competent jurisdiction, and not in arbitration. 
(f)    Notwithstanding this arbitration procedure, the Administrator, the Corporation or a Participant may apply to any court sitting in the County, City and State of New York (i) to enforce this agreement to arbitrate, (ii) to seek injunctive relief so as to maintain the status quo or to enforce the Participant’s Restrictive Covenants until the arbitration award is rendered or the dispute is otherwise resolved, or (iii) to confirm any arbitration award.
6.07    Successors.
(a)    This Plan shall bind any successor of or to the Corporation, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Corporation would be obligated under this Plan if no succession had taken place. In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Plan, the Corporation shall require such successor expressly and unconditionally to assume and agree to perform the Corporation’s obligations under this Plan, in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.

21

                                                

                                            

(a)    The Plan shall inure to the benefit of and be binding upon and enforceable by the Corporation and the Participants and their personal and legal representatives, executors, administrators, successors, assigns, heirs, distributees, devisees and legatees.  If a Participant should die after receiving formal notification of employment termination and such notification states that the termination would qualify for benefits under this Plan, Plan benefits shall be paid to the Participant’s beneficiary who is designated by the Participant in a beneficiary designation form specific to this Plan, provided that the Participant’s estate signs a Release similar to the form to be signed by the Participant as a condition of payment of benefits upon the death of the Participant.
6.08    Construction.  In determining the meaning of the Plan, words imparting the masculine gender shall include the feminine and the singular shall include the plural, unless the context requires otherwise.  Unless otherwise stated, references to Sections are references to Sections of this Plan.  Whenever an example is provided or the text uses the term “including” followed by a specific item or items, or there is a passage having similar effect, such passages of the Policy shall be construed as if the phrase “without limitation” followed such example or term (or otherwise applied to such passage in a manner that avoids limits on its breadth of application).
6.09    References to Other Plans and Programs.  Each reference in the Plan to any plan, policy or program, the Plan or document of the Employer or affiliate of the Employer shall include any amendments or successor provisions thereto without the necessity of amending the Plan for such changes.
6.10    Notices.  Notices and all other communications contemplated by this Plan shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid or when sent by express U.S. mail or overnight delivery through a national delivery service (or an international delivery service in the case of an address outside the U.S.) with signature required.  Notice to the Corporation, the Board or the Administrator shall be directed to the attention of the Secretary of the Corporation at the address of the Corporation’s headquarters, and notice to a Participant shall be directed to the Participant as the most recent personal residence on file with the Corporation.
6.11    Service of Legal Process.  Service of legal process may be made upon the Administrator to the attention of to the attention of the Secretary of the Corporation at the address of the Corporation’s headquarters.
6.12    Plan Year.  The records of the Plan shall be maintained on the basis of the Corporation’s fiscal year.
6.13    No Duty to Mitigate.  The Participant shall not be required to mitigate the amount of any payment provided pursuant to this Plan, nor shall the amount of any such payment be reduced by any compensation that the Participant receives from any other source, except as provided in this Plan.

22

                                                

                                            

6.14    Withholding of Taxes.  The Employer may withhold from any amount payable or benefit provided under this Plan such Federal, state, local, foreign and other taxes as are required to be withheld pursuant to any applicable law or regulation.
6.15    Governing Law.  Except to the extent that the Plan may be subject to the provisions of ERISA, the Plan will be construed and enforced according to the laws of the State of New York, without giving effect to the conflict of laws principles thereof.
6.16    Validity/Severability.  If any provision of this Plan or the application of any provision to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Plan and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid or unenforceable will be reformed to the extent (and only to the extent) necessary to make it enforceable or valid. To the extent any provisions held to be invalid or unenforceable cannot be reformed, such provisions are to be stricken here from and the remainder of this Plan will be binding on the Parties and their successors and assigns as if such invalid or illegal provisions were never included in this Plan from the first instance.
6.17    Miscellaneous.  No waiver by a Participant or the Employer at any time of any breach by the other party of, or compliance with, any condition or provision of this Plan to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the time or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not expressly set forth in this Plan.
6.18    Source of Payments.  All payments provided under this Plan, other than payments made pursuant to any Employer employee benefit plan which provides otherwise, shall be paid in cash from the general funds of the Corporation, and no special or separate fund shall be required to be established, and no other segregation of assets required to be made, to assure payment.  To the extent that any person acquires a right to receive payments from the Corporation under this Plan, such right shall be no greater than the right of an unsecured creditor of the Corporation.
6.19    Survival of Provisions.  Notwithstanding any other provision of this Plan, the rights and obligations of the Corporation and the Participants under Article Four and Sections 6.03 and 6.06 through 6.19 will survive any termination or expiration of this Plan or the termination of the Participant’s employment for any reason whatsoever.

23

                                                

                                            

APPENDIX  
 
EXECUTIVE SEVERANCE PLAN PARTICIPANTS AS OF AUGUST 10, 2017

	
		
	EXECUTIVE’S TITLE ON 
AUGUST 10, 2017
	DATE ELIGIBLE TO PARTICIPATE

	Executive Vice President, 
Technology and Worldwide Operations
	February 24, 2016

	Executive Vice President, 
Global Compliance Counsel and Head of Government and Regulatory Affairs
	February 24, 2016

	Executive Vice President, 
Chief Administrative Officer
	February 24, 2016

	Executive Vice President, Chief Financial Officer
	March 28, 2016

	Executive Vice President, Worldwide
General Counsel
	May 6, 2016

	Executive Vice President, 
Worldwide Director of Communications
	May 6, 2016

	Managing Director, Europe (formerly Managing Director, SFS)
	June 20, 2016

	Executive Vice President, Head of Corporate Development and Strategy
	February 7, 2017

	Chairman, Fine Art Division and Global Business Head
	February 7, 2017

	Global Managing Director, 
Luxury & Lifestyle
	March 1, 2017

	Executive Vice President, Human Resources and Administration
	August 28, 2017

	Executive Vice President, Global Head of Business Development
	TBD

	Managing Director, SFS
	TBD

	Executive Vice President, Digital Development & Marketing
	January 1, 2018

	Executive Vice President, 
Chief Operating Officer
	January 21, 2021

24

                                                

                                            

Exhibit 
Executive Severance Plan - Restrictive Covenants
Protection of Confidential Information

Participant agrees that during the course of employment with the Group Companies (as defined below), Participant has and will come into contact with and learn various forms of confidential information and trade secrets, which are the property of one or more Group Companies).  Participant agrees that he/she shall not either during the period of his/her employment or at any time thereafter use or disclose to any person or entity, other than the Corporation or another employing Group Company, or as authorized by the Corporation, any “confidential information” as defined in the confidentiality agreement entered into between Participant and the Corporation (“Confidential Information”) belonging to one or more of the Group Companies, and that during Participant’s employment Participant will continue to comply with all policies and agreements related to maintaining the confidentiality of Confidential Information, including but not limited to the Sotheby’s Confidentiality Agreement, which is incorporated herein by reference.
“Group Companies” means the group of companies that includes the Corporation and all holding companies and subsidiaries of the Corporation (and their predecessor and successor entities). Any member of this group may be referred to individually as a “Group Company”.

Participant agrees that the covenants and agreements given by Participant under this heading and under each of the following headings, as qualified by the final paragraph of this Exhibit (together, the “Covenants”) are given in favor of the Corporation both for itself and as trustee for each Group Company, and that acting in that capacity, the Corporation shall be entitled to enforce the benefit of the Covenants for any Group Company.

Non-Compete Period

Participant acknowledges and agrees that the Corporation is engaged in a highly competitive business and that by virtue of Participant’s position and responsibilities with a Group Company and Participant’s access to Confidential Information, engaging in any business which is directly competitive with any Group Company during Participant’s employment with the Group Companies and during the Restricted Period (as defined below) will cause the Corporation great and irreparable harm.  Accordingly, during Participant’s employment with the Group Companies and for eighteen (18) months following the termination of Participant’s employment with the Group Companies (the “Restricted Period”), Participant agrees that Participant will not, directly or indirectly, whether on Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, consult for, become employed by, engaged by or otherwise provide services to, or solicit or accept any funds, loans or other consideration from (i) Christie’s, Bonhams, Poly Auctions, China Guardian or Phillips or any affiliate or successor of such entities in competition with any Group Company, or (ii) any other business concern that is (or intends to be) in competition with any Restricted Business including a business formed or acquired (in any part) during the Restricted Period. In the Covenants, “Restricted Business” means services of the same type as, similar to or competitive with services supplied by 

25

                                                

                                            

a Group Company at the date of the termination of Participant’s employment. None of the restrictions in this clause shall prevent Participant from holding a passive investment by way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognized stock exchange, provided Participant is not actively involved in the management, strategy development, or operational execution of the company.

Non-Solicitation of Clients
Participant acknowledges and agrees that solely by reason of employment by the Group Companies, Participant has and will come into contact with a significant number of the Group Companies’ clients and customers, and their prospective clients and customers, and will have access to Confidential Information regarding their clients and customers, prospective clients and customers and related information.  During Participant’s employment with the Group Companies and during the Restricted Period, Participant agrees that Participant will not, directly or indirectly or whether on Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, solicit or entice away or in any manner attempt to persuade any current client or customer, or prospective client or customer, of any Group Company to discontinue or diminish his, her or its relationship or prospective relationship with any Group Company, or otherwise provide business to any person, corporation, partnership or other business entity of any kind other than a Group Company. 

No Hire or Solicitation of Employees
Participant acknowledges and agrees that solely as a result of employment with the Group Companies, and in light of the broad responsibilities of such employment which include working with other employees of the Group Companies, Participant has and will come into contact with and acquire Confidential Information regarding their respective employees, and will develop relationships with those employees.  Accordingly, during Participant’s employment with Group Companies and during the Restricted Period, Participant agrees that Participant will not directly or indirectly, whether on Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, hire or solicit, recruit, induce, entice, influence, or encourage any Restricted Person to leave any Group Company  or become hired by another person, company or entity.  In the Covenants, “Restricted Person” means any employee of any Group Company, or any person who has left the employment of the Group Companies within the six (6) months preceding the termination of Participant’s employment.
Non-Disparagement
Participant acknowledges and agrees that Participant will not, either during the period of his or her employment or at any time thereafter, disparage (or induce or encourage others to disparage) a Group Company or any of its present directors or executive officers with respect to any events relating directly or indirectly to Participant's employment with Group Companies including, without limitation, criticizing the Group Company’s business strategy.  For the purposes of this Plan and the Release, the term "disparage" means any comments or statements which would adversely affect in any manner the business reputation or relationships of Participant or a Group Company and/or any of its past or present directors, officers, agents, trustees, subsidiaries or affiliates, administrators, attorneys or employees known to Participant, as the case may be. 

26

                                                

                                            

Remedies

Participant also acknowledges and agrees that the Corporation’s remedies at law for a breach of any of the Covenants would be inadequate and, in recognition of this fact, Participant agrees that, in the event of such a breach, in addition to any remedies at law, the Corporation shall be entitled to obtain (a) equitable relief in the form of specific performance, temporary or permanent injunction or any other equitable remedy which may then be available, and Participant hereby consents to the issuance thereof forthwith and without bond by any court of competent jurisdiction as set forth herein; and (b) recovery of all reasonable sums and costs, including attorneys’ fees, incurred by the Corporation to defend or enforce the Covenants.
Waiver
The Corporation reserves the right to waive all or any part of the terms and conditions of the Covenants under appropriate circumstances, in its sole discretion.  Any such waiver must be in writing and signed by the Chief Executive Officer.  No waiver by the Corporation of any breach of the Covenants shall be a waiver of any preceding or succeeding breach.  No waiver by the Corporation of any right under the Covenants shall be construed as a waiver of any other right.  The Corporation shall not be required to give notice to enforce strict adherence to all terms of the Covenants.
Miscellaneous
 Participant agrees that the restrictions in the Covenants are reasonable and necessary for the protection of the Corporation’s legitimate interests.  If at any time there is a final determination in arbitration or temporary or preliminary determination in court that the time period, geographic scope, or any other restriction contained in the Covenants is unenforceable against Participant, the provisions of the Covenants shall not be deemed void but shall be deemed amended to apply as to such maximum time period, geographic scope and to such other maximum extent as the arbitrator may determine or indicate to be enforceable.
In the event any provision in the Covenants should be held by an arbitrator or court to be invalid, illegal or unenforceable in any respect, neither party will be required to comply with such provision for so long as the provision is held to be invalid, illegal or unenforceable, but the validity, legality, and enforceability of the remaining provisions contained in the Covenants shall not in any way be affected or impaired by the illegality, invalidity or unenforceability of such provision.
The Covenants together with the Confidentiality Agreement and the Plan constitute a single, integrated written contract expressing the entire agreement of the parties hereto relative to the subject matter hereof and represents the complete understanding between the Corporation and Participant concerning the subject matter of the Covenants, and no other promises or agreements concerning the subject matter of the Covenants shall be binding unless signed by the Corporation’s Chief Executive Officer or Chief Human Resources Officer and Participant.  The Covenants supersede and terminate any and all prior agreements or understandings between the parties, whether oral or written, concerning the subject matter of the Covenants.
Protected Whistleblower Rights

27

                                                

                                            

Nothing above under the “Protection of Confidential Information” or “Non-Disparagement” headings restricts or prohibits a Participant from initiating communications directly with, responding to any inquiries from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or from filing a claim or assisting with an investigation directly with a self-regulatory authority or a government agency or entity, including the U.S. Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General (collectively, the “Regulators”), or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation.  However, to the maximum extent permitted by law, Participant is waiving his or her right to receive any individual monetary relief from any Group Company resulting from such claims or conduct, regardless of whether the Participant or another party has filed the claims, and in the event the Participant obtains such monetary relief the Corporation or applicable Group Company will be entitled to an offset for the payments made pursuant to this Plan.  The prior sentence does not limit the Participant’s right to receive an award from any Regulator that provides awards for providing information relating to a potential violation of law.  The Participant does not need the prior authorization of the Corporation or a Group Company to engage in conduct protected by this paragraph, and the Participant does not need to notify the Corporation or a Group Company that the Participant has engaged in such conduct. 
ACCEPTED AND AGREED TO:

Signed: __________________________________        Date: __________________
Print Name: _______________________________ 

28Converted by EDGARwiz

  EXHIBIT 10.1

 

 

 

 THIRTEENTH SUPPLEMENTAL INDENTURE
 

 

 from
 

 

 YANKEE GAS SERVICES COMPANY
 doing business as EVERSOURCE ENERGY
 

 

 to
 

 

 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
 

 

 TRUSTEE
 

 

 _________________________________
 

 

 Dated as of September 1, 2017
 

 

 Supplemental to Indenture of Mortgage
 and Deed of Trust from
 Yankee Gas Services Company to
 The Bank of New York Mellon Trust Company, N.A. (formerly known as
 The Bank of New York Trust Company, N.A., successor to 
 The Bank of New York, successor to
Fleet National Bank, formerly known as 
 The Connecticut National Bank), Trustee,
 dated as of July 1, 1989, as amended and restated as of January 1, 2014
 

 

 

 

 

  

 

 THIRTEENTH SUPPLEMENTAL INDENTURE
 

 THIRTEENTH SUPPLEMENTAL INDENTURE, dated as of September 1, 2017, between YANKEE GAS SERVICES COMPANY, a specially chartered Connecticut corporation, doing business as Eversource Energy (herein called the “Company”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking corporation, successor as trustee to The Bank of New York, as successor to Fleet National Bank (formerly known as The Connecticut National Bank), as Trustee (the “Trustee”) under the Indenture of Mortgage and Deed of Trust, dated as of July 1, 1989, as amended and restated as of January 1, 2014, including any and all indentures and instruments supplemental thereto, including, without limitation, this Thirteenth Supplemental Indenture, being herein called the “Indenture”);
 

 WHEREAS, pursuant to Sections 201, 301, 401, 1301(b) and 1301(f) of the Indenture, the Company desires to provide for the issuance of a new series of Securities which Securities will be secured by and entitled to the benefits of the Indenture, and to add to its covenants and agreements contained in the Indenture certain other covenants and agreements; and 
 

 WHEREAS, all acts and things necessary to make this Thirteenth Supplemental Indenture a valid, binding and legal instrument have been performed, and the issuance of the new series of Securities, subject to the terms of the Indenture, has been duly authorized by the Board of Directors of the Company and approved by the Connecticut Public Utilities Regulatory Authority (“PURA”), and the Company has requested and hereby requests the Trustee to enter into and join the Company in the execution and delivery of this Thirteenth Supplemental Indenture;
 

 NOW, THEREFORE, THIS THIRTEENTH SUPPLEMENTAL INDENTURE WITNESSETH, that, to secure the payment of the principal of (and premium, if any) and interest on the Outstanding Securities, including the new series of Securities hereunder issued, and the performance of the covenants therein and herein contained and to declare the terms and conditions on which all such Outstanding Securities are secured, and in consideration of the premises and of the purchase of the Securities by the Holders thereof, the Company by these presents does grant, bargain, sell, alien, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set over and confirm to the Trustee, all property, rights, privileges and franchises of the Company of every kind and description, real, personal or mixed, tangible and intangible, whether now owned or hereafter acquired by the Company, wherever located, and grants a security interest therein for the purposes herein expressed, except any Excepted Property which is expressly excepted from the lien hereof in the Indenture, and including, without limitation, all property, rights, privileges and franchises particularly described in the Indenture, and twelve Supplemental Indentures thereto dated respectively as of April 1, 1992, December 1, 1992, June 1, 1995, April 1, 1997, January 1, 1999, January 1, 2004, November 1, 2004, July 1, 2005, October 1, 2008, April 1, 2010, January 1, 2014 and September 1, 2015, and, in addition, all the property, rights, privileges and franchises particularly described in Schedule A annexed to this Thirteenth Supplemental Indenture, which are hereby made a part of, and deemed to be described herein, as fully as if set forth herein at length.
  
 

 

 

 TO HAVE AND TO HOLD all said property, rights, privileges and franchises of every kind and description, real, personal or mixed, hereby and hereafter (by supplemental indenture or otherwise) granted, bargained, sold, aliened, remised, released, conveyed, assigned, transferred, mortgaged, hypothecated, pledged, set over or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (said properties, rights, privileges and franchises, including any cash and securities hereafter deposited or required to be deposited with the Trustee (other than any such cash which is specifically stated herein not to be deemed part of the Mortgaged Property), being herein collectively called “Mortgaged Property”) unto the Trustee and its successors and assigns forever.
 

 SUBJECT, HOWEVER, to Permitted Liens (as defined in Section 101 of the Indenture).
 

 BUT IN TRUST, NEVERTHELESS, for the proportionate and equal benefit and security of the Holders from time to time of all the Outstanding Securities without any preference or priority of any such Security over any other such Security.
 

 UPON CONDITION that, until the happening of an Event of Default (as defined in Section 901 of the Indenture) and subject to the provisions of Article Sixteen of the Indenture, the Company shall be permitted to possess and use the Mortgaged Property, except cash, securities and other personal property deposited and pledged, or required to be deposited and pledged, with the Trustee, and to receive and use the rents, issues, profits, revenues and other income of the Mortgaged Property.
 

 AND IT IS HEREBY COVENANTED AND DECLARED that all the Series N Bonds are to be authenticated and delivered and the Mortgaged Property is to be held and applied by the Trustee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Company does hereby covenant and agree to and with the Trustee, for the equal and proportionate benefit of all Holders of the Securities as follows:  
  
 

 

 ARTICLE I
 

 DEFINITIONS AND RULES OF CONSTRUCTION
 

 Section 1.01. Terms from the Indenture.  All defined terms used in this Thirteenth Supplemental Indenture and not otherwise defined herein shall have the respective meanings ascribed to them in the Indenture.
 

 Section 1.02. References are to Thirteenth Supplemental Indenture.  Unless the context otherwise requires, all references herein to “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Thirteenth Supplemental Indenture, and the words “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Thirteenth Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision hereof or to the Indenture.
 - 2 -
 

 

 

 Section 1.03. Consent to Amendment and Restatement of Indenture.  Each holder of a Series N Bond, solely by virtue of its acquisition thereof, including as an owner of a book-entry interest therein, shall have and be deemed to have consented, without the need for any further action or consent by such holder, to the amendment and restatement of the Indenture in the form set forth in Exhibit B to the 11th Supplemental Indenture, dated as of January 1, 2014. 
 

 ARTICLE II
 

 SERIES N BONDS
 

 Section 2.01. Designation; Amount.  There is hereby created and shall be outstanding under and secured by the Indenture a series of Securities entitled “First Mortgage Bonds, 3.02% Series N, Due 2027” (herein called the “Series N Bonds” or “Bonds”), limited in aggregate principal amount at any one time outstanding to Seventy-Five Million Dollars ($75,000,000).  
 

 Section 2.02. Form of Series N Bonds.  The form of the Series N Bonds shall be substantially as set forth in Exhibit A hereto with such insertions, omissions, substitutions and variations as may be determined by the officers executing the same as evidenced by their execution thereof. 
 

 The Series N Bonds shall be issued as fully registered Securities in denominations of $500,000 or any amount in excess thereof which is an integral multiple of $250,000 (except as may be necessary to reflect any principal amount not evenly divisible by $250,000 remaining after any partial redemption), or in such other denominations as the Trustee may approve.  The Series N Bonds shall be numbered N-1 and consecutively upwards, or in any other manner deemed appropriate by the Company.  
 

 Section 2.03. Provisions of Series N Bonds; Interest Accrual.  The Series N Bonds shall mature on September 15, 2027, and shall bear interest, payable semiannually on the 15th day of March and September of each year, commencing March 15, 2018, at the rate of 3.02% per annum.  The interest on the Series N Bonds shall be payable without presentation of such Series N Bonds; and such interest to be paid only to or upon the written order of the registered Holders thereof of record at the applicable record date (as hereinafter defined).  The Series N Bonds shall be callable for redemption in whole or in part according to the terms and provisions herein in Article II.  
 

 Each Series N Bond authenticated in accordance with the terms of this Thirteenth Supplemental Indenture shall be dated as of September 11, 2017 and shall bear interest on the principal amount thereof from such date until the maturity date unless redeemed pursuant to Section 2.05.  Interest on the Series N Bonds shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and with respect to any such period less than a full month, on the basis of the actual number of days elapsed in such period.  
 

 The person in whose name any Series N Bond is registered at the close of business on any record date with respect to any interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding the  cancellation of  such  Series  N  Bond
 - 3 -
 

 

 upon any registration of transfer or exchange thereof subsequent to the record date and prior to such interest payment date, except that if and to the extent the Company shall default in the payment of the interest due on such interest payment date, then such defaulted interest shall be paid to the person in whose name such Series N Bond is registered on the Business Day immediately preceding the date of such payment.  The term “record date” as used in this Section with respect to any regular interest payment (i.e. March 15 or September 15) shall mean the March 1 or September 1, as the case may be, next preceding such interest payment date, or if such March 1 or September 1 shall be a legal holiday or a day on which banking institutions in the Borough of Manhattan, New York, New York are authorized by law to close, the next preceding day which shall not be a legal holiday or a day on which such institutions are so authorized to close. 
 

 Notwithstanding the otherwise applicable provisions of the Indenture, the principal and the redemption price of, and interest on, the Series N Bonds shall be payable by Federal funds bank wire transfer of immediately available funds so long as required by Section 5.1 of the Bond Purchase Agreements, each dated July 14, 2017, between the Company and the initial purchasers of the Series N Bonds (the “Bond Purchase Agreements”) or, in the event such section shall no longer be applicable, at the office or agency of the Company in New York, New York, in such coin or currency of the United States of America as at the time of payment is legal tender for public or private debts.
 

 Section 2.04. No Sinking Fund; No Mandatory Scheduled Redemptions Prior to Final Maturity.  The Series N Bonds shall not be subject to any sinking fund or mandatory scheduled redemption prior to final maturity.
 

 Section 2.05.   Optional Redemption.    The Series N Bonds are subject to redemption at the option of the Company, prior to maturity, as a whole at any time or in part from time to time, in accordance with the provisions of the Indenture, upon not less than thirty (30) days’ and not more than sixty (60) days’ prior notice (which notice may be made subject to the deposit of redemption moneys with the Trustee before the date fixed for redemption).  Such notice shall specify (a) the date of such redemption, (b) the principal amount of the Holder’s Bond to be redeemed on such date, (c) that a premium may be payable, (d) the estimated premium, calculated as of the day such notice is given and (e) the accrued interest applicable to such redemption.  Such notice of redemption shall also certify all facts, if any, which are conditions precedent to any such redemption and shall conform to the requirements in the Indenture.  Notice of redemption having been so given, the aggregate principal amount of the Series N Bonds specified in such notice, together with accrued interest thereon, and the premium, if any, payable with respect thereto shall become due and payable on the redemption date specified in such notice (unless the notice is made subject to the deposit of redemption moneys with the Trustee before the date fixed for redemption).  No later than two Business Days prior to the redemption date specified in such notice of optional redemption, the Company shall provide the Trustee and each Holder of a Series N Bond written notice of whether or not any premium is payable in connection with such redemption, the premium, if any, calculated as of the second Business Day prior the redemption date, and a reasonably detailed computation of the Make-Whole Amount (as defined in Section 2.06).  If the Company elects to redeem the Series N Bonds prior to the Par  Call  Date  (as defined  in Section  2.06), it  will  do  so  at  a  redemption price equal  to  the
 - 4 -
 

 

 principal amount of the Series N Bonds being prepaid plus accrued interest thereon to the date of such redemption together with a premium equal to the then applicable Make-Whole Amount.  If the Company elects to redeem the Series N Bonds on or after the Par Call Date, it will do so at a redemption price equal to one hundred percent (100%) of the principal amount of the Series N Bonds being redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date.  The redemption price will be calculated assuming a 360-day year consisting of twelve 30-day months.
 

 If the Company elects to redeem less than all of the Series N Bonds, the Trustee shall select on a pro rata basis the particular Series N Bonds, or portions of them, to be redeemed.  
 

 Notice of redemption shall be given to the Holder of the Series N Bonds.  On and after the date of redemption of the Series N Bonds (unless the Company defaults in the payment of the redemption price and interest accrued thereon to such date), interest on the Series N Bonds, or the portions of them so called for redemption, shall cease to accrue.  
 

 The Series N Bonds are not otherwise subject to redemption.  
 

 Section 2.06. Definitions Applicable to Redemption Provisions.  
 The “Make-Whole Amount,” as calculated by the Company, shall mean, with respect to any Series N Bond, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments through the Par Call Date with respect to the Called Principal of such Bond over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero.
 The “Called Principal” means, with respect to any Series N Bond, the principal of such Series N Bond that is to be prepaid or has become or is declared to be immediately due and payable pursuant to Section 2.05, as the context requires.
 The “Discounted Value” means, with respect to the Called Principal of any Bond, the amount obtained by discounting all Remaining Scheduled Payments through the Par Call Date with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.
 The “Par Call Date” means the date that is three months prior to the maturity date of the Series N Bonds.  
 The “Reinvestment Yield” means, with respect to the Called Principal of any Bond, 0.50% over the yield to maturity implied by the yield(s) reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1”  (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (“Reported”) having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there are no such U.S. Treasury securities
 - 5 -
 

 

 Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between the yields Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Bond.
 If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called Principal of any Series N Bond, 0.50% over the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Bond.
 The “Remaining Average Life” means, with respect to any Called Principal, the number of years obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment through the Par Call Date with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year composed of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment through the Par Call Date.
 The “Remaining Scheduled Payments” means, with respect to the Called Principal of any Bond, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the Bonds, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date.
 The “Settlement Date” means, with respect to the Called Principal of any Bond, the date on which such Called Principal is to be prepaid or has become or is declared to be immediately due and payable pursuant to Section 2.05, as the context requires.
 The principal amount, if any, of the Series N Bonds to be redeemed pursuant to this Section 2.05 shall be selected on a pro rata basis from all Series N Bonds Outstanding on the date of redemption.
 - 6 -
 

 

 The Series N Bonds shall not be redeemable at the option of the Company prior to their Stated Maturity other than as provided in Section 2.05.
 All calculations hereunder shall be the responsibility of the Company.  
 Section 2.07. Place of Payment.  The principal and the redemption price of, and the premium, if any, and the interest on, the Series N Bonds shall be payable at the corporate trust office of The Bank of New York Mellon Trust Company, N.A., in New York, New York.
 

 Section 2.08. Transfer and Exchange of Series N Bonds.  The Series N Bonds may be surrendered for registration of transfer as provided in Section 305 of the Indenture at the office or agency of the Company in the Borough of Manhattan, New York, New York, and may be surrendered at said office for exchange for a like aggregate principal amount of Series N Bonds of other authorized denominations.  Notwithstanding the provisions of Section 305 of the Indenture, no charge, except for taxes or other governmental charges, shall be made by the Company for any registration of transfer of Series N Bonds or for the exchange of Series N Bonds for Securities of other authorized denominations.  
 

 Section 2.09. Bond Purchase Agreements.  Reference is made to Sections 5 and 7 of the Bond Purchase Agreements for certain provisions governing the rights and obligations of the Company, the Trustee and the Holders of the Series N Bonds.  Such provisions are deemed to be incorporated in this Article II by reference as if set forth herein at length.
 

 Section 2.10. Restrictions on Transfer.  All Series N Bonds originally issued hereunder shall bear the following legend:
 

 THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).  THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF YANKEE GAS SERVICES COMPANY DOING BUSINESS AS EVERSOURCE ENERGY (THE “COMPANY”) AND PRIOR HOLDERS THAT THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT, IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE 1933 ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION IN ACCORDANCE WITH RULE 144 (IF AVAILABLE) UNDER THE 1933 ACT, (5) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT, SUBJECT TO THE RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE EFFECT  THAT  SUCH  TRANSFER  IS  EXEMPT  FROM  THE REGISTRATION  REQUIREMENTS  OF  THE 1933 ACT OR (6) PURSUANT
 - 7 -
 

 

 TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, SUBJECT (IN THE CASE OF CLAUSES (2), (3), (4) AND (5)) TO THE RECEIPT BY THE COMPANY OF A CERTIFICATION OF THE TRANSFEROR TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE 1933 ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY JURISDICTION OF THE UNITED STATES.  THE HOLDER OF THIS SECURITY WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO HEREIN.  
 

 All Series N Bonds issued upon transfer or exchange thereof shall bear such legend unless the Company shall have delivered to the Trustee an Opinion of Counsel which states that the Series N Bonds may be issued without such legend.  All Series N Bonds issued upon transfer or exchange of a Series N Bond or Series N Bonds which do not bear such legend shall be issued without such legend.  The Company may from time to time modify the foregoing restrictions on resale and other transfers, without the consent of but upon notice to the Holders, in order to reflect any amendment to Rule 144A under the Securities Act of 1933 or change in the interpretation thereof or practices thereunder.
 

 Section 2.11. Authentication and Delivery.  Upon the execution of this Thirteenth Supplemental Indenture, the Series N Bonds shall be executed by the Company and delivered to the Trustee for authentication, and thereupon the same shall be authenticated and delivered by the Trustee pursuant to and upon a Company Request.
 

 Section 2.12. Default.  Pursuant to the Indenture (and notwithstanding any provision of Section 901 thereof to the contrary), for purposes of determining whether an Event of Default exists with respect to the Series N Bonds, any default in payment (whether due as a scheduled installment of principal or interest, or at original maturity or earlier redemption or acceleration, or otherwise) with respect to Securities of any other series which constitutes an Event of Default with respect to the Securities of such series shall also constitute an Event of Default with respect to the Series N Bonds.
 

 ARTICLE III
 

 AMENDMENT OF INDENTURE
 

 Section 3.01.   Consent and Amendment to Section 1003 of the Indenture.    (a)   Each  holder of a Series N Bond, solely by virtue of its acquisition thereof, including as an owner of a book-entry interest therein, shall have and be deemed to have consented, without the need for any further action or consent by such holder, to the amendment of the Indenture by deleting “and” at the end of Section 1003(i), deleting the period at the end of Section 1003(j), adding “;” at the end of Section 1003(j), and adding the following clauses at the end of Section 1003 of the Indenture:
 - 8 -
 

 

 

 “(k)     in no event shall the Trustee be responsible or liable for special, indirect,  or consequential loss or damage of any kind whatsoever (including, but not limited to,   loss of profit) irrespective of whether the Trustee has been advised of the likelihood of   such loss or damage and regardless of the form of action; and
 

 (l)      in  no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services.”  
 

 (b)  The amendments contained in this Section 3.01 shall apply to and be effective with respect to the Series N Bonds from and after the issuance thereof.  The amendments contained in this Section 3.01 shall not become effective with respect to any other series of Securities until such series consents thereto or otherwise in accordance with Section 1302 of the Indenture. 
 

 Section 3.02. Consent and Amendment of the Indenture by Adding Section 117.   (a)   Each holder of a Series N Bond, solely by virtue of its acquisition thereof, including as an owner of a book-entry interest therein, shall have and be deemed to have consented, without the need for any further action or consent by such holder, to the amendment of the Indenture by adding the following Section 117:
 

 “SECTION 117 WAIVER OF JURY TRIAL.
 

 EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE, THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY.”
 

 (b)  The amendments contained in this Section 3.02 shall apply to and be effective with respect to the Series N Bonds from and after the issuance thereof.  The amendments contained in this Section 3.02 shall not become effective with respect to any other series of Securities until such series consents thereto or otherwise in accordance with Section 1302 of the Indenture. 
 

 ARTICLE IV
 

 MISCELLANEOUS PROVISIONS
 

 Section 4.01. Effectiveness and Ratification of Indenture.  The provisions of this Thirteenth Supplemental Indenture shall be effective from and after the execution hereof; and the Indenture, as hereby supplemented, shall remain in full force and effect.
 - 9 -
 

 

 

 Section 4.02. Titles.  The titles of the several Articles and Sections of this Thirteenth Supplemental Indenture shall not be deemed to be any part thereof, are inserted for convenience only and shall not affect any interpretation hereof.
 

 Section 4.03.  Acceptance of Trust; Not Responsible for Recitals, Etc.  The Trustee hereby accepts the trusts herein declared, provided, created or supplemented and agrees to perform the same upon the terms and conditions herein and in the Indenture, as heretofore supplemented, set forth and upon the following terms and conditions:
 

 The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Thirteenth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely.  In general, each and every term and condition contained in Article Ten of the Indenture shall apply to and form part of this Thirteenth Supplemental Indenture with the same force and effect as if the same were herein set forth in full with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this Thirteenth Supplemental Indenture.
 

 Section 4.04. Successors and Assigns.  All covenants, provisions, stipulations and agreements in this Thirteenth Supplemental Indenture contained are and shall be for the sole and exclusive benefit of the parties hereto, their successors and assigns, and (subject to the provisions of the Bond Purchase Agreements) of the Holders and registered owners from time to time of the Securities issued and outstanding under and secured by the Indenture (except that the provisions of Article II hereof are and shall be for the sole and exclusive benefit of the Holders of the Series N Bonds).
 

 Section 4.05.  Counterparts.   This Thirteenth Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
 

 Section 4.06. Governing Law.  The laws of the State of Connecticut shall govern this Thirteenth Supplemental Indenture and the Series N Bonds, except to the extent that the validity or perfection of the lien of the Indenture, or remedies thereunder, are governed by the laws of a jurisdiction other than the State of Connecticut; provided however that the rights and obligations of the Trustee shall be governed by the laws of the state in which the Corporate Trust Office is located.  
 

 

 [THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
 - 10 -
 

 

 

 

 

  IN WITNESS WHEREOF, the parties hereto have caused this Thirteenth Supplemental Indenture to be duly executed, sealed and attested as of the day and year first above written.
 

 YANKEE GAS SERVICES COMPANY
 doing business as EVERSOURCE ENERGY
 

 

 By: /S/ PHILIP J. LEMBO   
 Philip J. Lembo 
 Executive Vice President and 
 Chief Financial Officer 
 

 

 

 Executed, sealed and delivered by
 YANKEE GAS SERVICES COMPANY
 doing business as EVERSOURCE ENERGY
 in the presence of:
 

 

 /S/ MATTHEW J. BENSON

 

 

 /S/ FLORENCE J. IACONO

 

 

 

 

  

 

  

 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
 

 

 

 By: /S/ R. TARNAS          
 Name:  R. Tarnas
 Title:     Vice President
 

 

 Executed, sealed and delivered by
 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., 
 as Trustee, in the presence of:
 

 

 /S/ ROBERT W. HARDY

 

 

 /S/ EMILY GIGERICH      

 

 

 

 

 

 

 

 

 

 

  

 

  COMMONWEALTH OF MASSACHUSETTS       )
 )  ss.:  Westwood
 COUNTY OF NORFOLK                                         )
 

 On this  23rd day of      August     , 2017,  before  the undersigned officer, personally appeared Philip J. Lembo, who acknowledged himself to be the Executive Vice President and Chief Financial Officer of Yankee Gas Services Company, a Connecticut corporation, doing business as Eversource Energy, and that they, as such officers, being authorized so to do, executed the foregoing instrument for the purpose therein contained, by signing the name of the corporation by themselves as such officers, and as their free act and deed.
 

 IN WITNESS WHEREOF, I hereunto set my hand and official seal.
 

 /S/ DANA M. FENNELLY

 

 Notary Public
 My commission expires: December 14, 2023.
 (SEAL)
 

 

 

  

 

   
  
 STATE OF ILLINOIS  )
   )  ss.:  
 COUNTY OF COOK   )
 

 On this 6th day of September, 2017, before me Carrie M. Beecher, the undersigned, personally appeared R. Tarnas, who acknowledged himself to be a Vice President of The Bank of New York Mellon Trust Company, N.A., a national baking association, and that he, as such officer and being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the association by himself as such officer, and as his free act and deed.
 

 IN WITNESS WHEREOF, I hereunto set my hand.
 

 /S/ CARRIE M. BEECHER
 

 Notary Public State of Illinois
 My commission expires: 3-29-2021
  
 
  
 

 

 

 

 

 

  

 

 SCHEDULE A
  
 (Series N)
  
 

 ALL THE PROPERTY, RIGHTS, PRIVILEGES AND FRANCHISES AS SET FORTH IN THE FOLLOWING DESCRIPTIONS.
 

 

 

 

 

 

 EXHIBIT A
 

 [FORM OF FIRST MORTGAGE BOND, 3.02% SERIES N, DUE 2027]
 

 

 THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).  THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF YANKEE GAS SERVICES COMPANY DOING BUSINESS AS EVERSOURCE ENERGY (THE “COMPANY”) AND PRIOR HOLDERS THAT THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT, IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE 1933 ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION IN ACCORDANCE WITH RULE 144 (IF AVAILABLE) UNDER THE 1933 ACT, (5) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT, SUBJECT TO THE RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE EFFECT  THAT  SUCH  TRANSFER  IS  EXEMPT  FROM  THE REGISTRATION REQUIREMENTS OF THE 1933 ACT OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, SUBJECT (IN THE CASE OF CLAUSES (2), (3), (4) AND (5)) TO THE RECEIPT BY THE COMPANY OF A CERTIFICATION OF THE TRANSFEROR TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE 1933 ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY JURISDICTION OF THE UNITED STATES.  THE HOLDER OF THIS SECURITY WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO HEREIN.  
 

 

 

 

 

 

 Yankee Gas Services Company
 doing business as Eversource Energy
 First Mortgage Bonds,
 3.02% Series N, Due 2027
 

 CUSIP Number: 
 No. N - [      ]
 

 Principal Amount:  $[           ]
 

 Stated Maturity of Principal:  September 15, 2027
 

 Applicable Rate:   3.02%
 

 Interest Payment Dates:       March 15 and September 15, commencing March 15, 2018 and at
 the Stated Maturity of the principal
 

 

 Yankee Gas Services Company, doing business as Eversource Energy, a specially chartered Connecticut corporation (hereinafter called the “Company”, which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to [___________], or registered assigns, at the Stated Maturity set forth above, the Principal Amount set forth above (or so much thereof as shall not have been paid upon prior redemption) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) thereon from the date of issuance hereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for, on each Interest Payment Date set forth above in each year at the Applicable Rate set forth above.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in said Indenture, be paid to the Person in whose name this Bond (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the Regular Record Date for such interest, which shall be the 1st day of the calendar month next preceding such Interest Payment Date (or if such 1st day shall be a legal holiday or a day on which banking institutions in the Borough of Manhattan, New York, New York are authorized by law to close, the next preceding day which shall not be a legal holiday or a day on which such institutions are so authorized to close).  Any such interest not so punctually paid or duly provided for shall be paid to the Person in whose name this Bond is registered on the Business Day immediately preceding the date of such payment.  If all or any portion of the principal of, or the premium (if any) or interest on, this Bond shall not be paid when due, the amount not so paid shall bear interest at the lesser of (x) the highest rate allowed by applicable law or (y) the greater of (i) the Prime Rate (as defined in the Bond Purchase Agreements) or (ii) the Applicable Rate plus 1% per annum.
 

 The principal and the Redemption Price of, and the interest on, this Bond shall be payable at the principal corporate trust office of The Bank of New York Mellon Trust Company, N.A., in New York, New York.  All such payments shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
 

 

 

 This Series N Bond is one of a duly authorized issue of Bonds of the Company designated as its “First Mortgage Bonds” (herein called the “Bonds”), issued and to be issued in one or more series under, and all equally and ratably secured by, an Indenture of Mortgage and Deed of Trust, dated as of July 1, 1989, as amended and restated as of January 1, 2014 (herein, together with  twelve Supplemental Indentures thereto dated respectively as of April 1, 1992, December 1, 1992, June 1, 1995, April 1, 1997, January 1, 1999, January 1, 2004, November 1, 2004, July 1, 2005, October 1, 2008, April 1, 2010, January 1, 2014, September 1, 2015 and the Thirteenth Supplemental Indenture, dated as of September 1, 2017 (the “Thirteenth Supplemental Indenture”), called the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., (formerly known as The Bank of New York Trust Company, N.A.), as successor trustee to The Bank of New York, successor to Fleet National Bank (formerly known as The Connecticut National Bank), as Trustee (herein called the “Trustee,” which term includes any successor Trustee under the Indenture).  Reference is hereby made to the Indenture for a description of the properties thereby mortgaged, pledged and assigned, the nature and extent of the security, the respective rights thereunder of the Holders of the Bonds, the Trustee and the Company, and the terms upon which the Bonds are, and are to be, authenticated and delivered.  All capitalized terms used in this Bond which are not defined herein shall have the respective meanings ascribed thereto in the Indenture.  Reference is also made to the Bond Purchase Agreements, as defined in the Thirteenth Supplemental Indenture, for a further description of the respective rights of the Holders of the Series N Bonds, the Company and the Trustee, and the terms applicable to the Series N Bonds.
 As provided in the Indenture, the Bonds are issuable in series which may vary as in the Indenture provided or permitted.  This Series N Bond is one of the series specified in its title.
 The Series N Bonds are not subject to any sinking fund or mandatory scheduled redemption prior to final maturity.
 The Series N Bonds are subject to redemption at the option of the Company, prior to maturity, as a whole at any time or in part from time to time, in accordance with the provisions of the Indenture, upon not less than thirty (30) days’ and not more than sixty (60) days’ prior notice (which notice may be made subject to the deposit of redemption moneys with the Trustee before the date fixed for redemption).  Such notice shall specify (a) the date of such redemption, (b) the principal amount of the Holder’s Bond to be redeemed on such date, (c) that a premium may be payable, (d) the estimated premium, calculated as of the day such notice is given and (e) the accrued interest applicable to such redemption.  Such notice of redemption shall also certify all facts, if any, which are conditions precedent to any such redemption and shall conform to the requirements in the Indenture.  Notice of redemption having been so given, the aggregate principal amount of the Series N Bonds specified in such notice, together with accrued interest thereon, and the premium, if any, payable with respect thereto shall become due and payable on the redemption date specified in such notice (unless the notice is made subject to the deposit of redemption moneys with the Trustee before the date fixed for redemption).  No later than two Business Days prior to the redemption date specified in such notice of optional redemption, the Company shall provide the Trustee and each Holder of a Series N Bond written notice of whether or not any premium is payable in connection with such redemption, the premium, if any, calculated as of the second Business Day prior the redemption date, and a reasonably detailed computation of the Make-Whole Amount (as defined below).  If the Company elects to redeem the Series N Bonds prior to the Par 
 A-2

 

 

 

 Call Date (as defined below), it will do so at a redemption price equal to the principal amount of the Series N Bonds being prepaid plus accrued interest thereon to the date of such redemption together with a premium equal to the then applicable Make-Whole Amount.  If the Company elects to redeem the Series N Bonds on or after the Par Call Date, it will do so at a redemption price equal to one hundred percent (100%) of the principal amount of the Series N Bonds being redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date.  The redemption price will be calculated assuming a 360-day year consisting of twelve 30-day months.
 If the Company elects to redeem less than all of the Series N Bonds, the Trustee shall select on a pro rata basis the particular Series N Bonds, or portions of them, to be redeemed.  
 

 Notice of redemption shall be given to the Holder of the Series N Bonds.  On and after the Redemption Date (unless the Company defaults in the payment of the redemption price and interest accrued thereon to such date), interest on the Series N Bonds, or the portions of them so called for redemption, shall cease to accrue.  
 

 The Series N Bonds are not otherwise subject to redemption.  
 

 The “Make-Whole Amount,” as calculated by the Company, shall mean, with respect to any Series N Bond, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments through the Par Call Date with respect to the Called Principal of such Bond over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero.
 

 The “Called Principal” means, with respect to any Series N Bond, the principal of such Series N Bond that is to be prepaid or has become or is declared to be immediately due and payable pursuant to Section 2.05 of the Thirteenth Supplemental Indenture, as the context requires.
 

 The “Discounted Value” means, with respect to the Called Principal of any Bond, the amount obtained by discounting all Remaining Scheduled Payments through the Par Call Date with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.
 

 The “Par Call Date” means the date that is three months prior to the maturity date of the Series N Bonds.  
 

 The  “Reinvestment Yield”  means, with  respect  to  the Called  Principal of  any  Bond, 0.50% over the yield to maturity implied by the yield(s) reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1”  (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (“Reported”) having a maturity equal to the Remaining Average Life of such  Called  Principal as of such Settlement  Date. If there are  no such U.S. Treasury securities
  
 A-3
 

 

 

  
 Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between the yields Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Bond.
 

 If  such  yields  are  not  Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called Principal of any Series N Bond, 0.50% over the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Bond.
 

 The “Remaining Average Life” means, with respect  to  any  Called Principal, the number of years obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment through the Par Call Date with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year composed of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment through the Par Call Date.
 

 The “Remaining Scheduled Payments” means, with respect to the Called Principal of any Bond, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the Bonds, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date.
 The “Settlement Date” means, with respect to the Called Principal of any Bond, the date on which such Called Principal is to be prepaid or has become or is declared to be immediately due and payable pursuant to Section 2.05 of the Thirteenth Supplemental Indenture, as the context requires.
 A-4
 

 

 

 If an Event of Default, as defined in the Indenture, shall occur, the principal of the Series N Bonds may become or be declared due and payable in the manner and with the effect provided in the Indenture and the Bond Purchase Agreements.
 

 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of  the Company and  the  rights of the Holders of the Bonds under the Indenture at any time by the Company with the consent of the Holders of a majority in aggregate principal amount of the Bonds of all series at the time Outstanding affected by such modification.  The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of Bonds at the time Outstanding on behalf of the Holders of all the Bonds, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver agreed to as set forth above by the Holder of this Bond shall be conclusive and binding upon such Holder and upon all future Holders of this Bond and of any Bond issued upon the transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Bond.
 

 No reference herein  to  the Indenture and  no  provision of  this Bond or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Bond at the times, places and rates, and in the coin or currency, herein prescribed.
 

 The Bond is transferable by the registered Holder hereof in person or by attorney upon surrender hereof at the office or agency of the Company in the Borough of Manhattan, New York, New York, together with a written instrument of transfer in approved form, signed by the Holder, and a new Bond or Bonds of this series for a like principal amount in authorized denominations will be issued in exchange, all as provided in the Indenture.  Prior to due presentment for registration of transfer of this bond the Company and the Trustee may deem and treat the registered owner hereof as the absolute owner hereof, whether or not this bond be overdue, for the purpose of receiving payment and for all other purposes, and neither the Company nor the Trustee shall be affected by any notice to the contrary.  
 

 The Bond is exchangeable at the option of the registered Holder hereof upon surrender hereof, at the office or agency of the Company in the Borough of Manhattan, New York, New York, for an equal principal amount of Bonds of this series of other authorized denominations, in the manner and on the terms provided in the Indenture.   
 

 No service charge shall be made for any transfer or exchange hereinbefore referred to, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
 

 The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Bond is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
 A-5
 

 

 

  
      As set forth in the Supplemental Indenture establishing the terms and series of the bonds of this series, each holder of a Series N Bond, solely by virtue of its acquisition thereof, including as an owner of a book-entry interest therein, has and has been deemed to have consented, without the need for any further action or consent by such holder, to the amendment and restatement of the Indenture in the form set forth in Exhibit B to the 11th Supplemental Indenture dated as of January 1, 2014. 
 
 Unless the certificate of authentication hereon has been executed by the Trustee or Authenticating Agent by manual signature, this Bond shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
 
 
 A-6
 

  
 
 
 

 

 IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed under its corporate seal.
 
 
 Dated:                                                             YANKEE GAS SERVICES COMPANY 
 doing business as EVERSOURCE ENERGY
 

 

 

 By:                                                          
 Philip J. Lembo 
 Executive Vice President and 
 Chief Financial Officer  
 

 Attest:
 

 

                                                                 
 

 
  
  
  
  
  
  
  
  
  
  
 [Signature page for Yankee Gas Services Company, First Mortgage Bond, 3.02% Series N, Due 2027]
 A-7
 

 

 

 This is one of the Bonds of the series designated therein referred to in the within-mentioned Indenture.
 

 

 THE BANK OF NEW YORK MELLON 
 TRUST COMPANY, N.A., as Trustee
  
  
  
 Dated:                                               By:                                                    
  
 Authorized Officer
 

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 [Authentication page for Yankee Gas Services Company, First Mortgage Bond, 3.02% Series N, Due 2027]
 A-8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00276-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00276-of-00352.parquet"}]]