EXHIBIT (10)(m)
NEW ENGLAND ELECTRIC COMPANIES'
DEFERRED COMPENSATION PLAN
Executed June 15-18, 1979
Amended October 12, 1982
Amended July 31, 1984
Amended May 13, 1985
Amended December 8, 1986
Amended November 24, 1992
Amended January 1, 1995
TABLE OF CONTENTS
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Page
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I. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . .1
II. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . .1
2.01 Account Balance. . . . . . . . . . . . . . . . . . .1
2.02 Actuarial Value. . . . . . . . . . . . . . . . . . .2
2.03 Beneficial Owner . . . . . . . . . . . . . . . . . .2
2.04 Beneficiary. . . . . . . . . . . . . . . . . . . . .2
2.05 Benefits Committee . . . . . . . . . . . . . . . . .2
2.06 Board. . . . . . . . . . . . . . . . . . . . . . . .2
2.07 Change in Control. . . . . . . . . . . . . . . . . .2
2.08 Compensation . . . . . . . . . . . . . . . . . . . .3
2.09 Compensation Committee . . . . . . . . . . . . . . .4
2.10 Deferred Compensation. . . . . . . . . . . . . . . .4
2.11 Deferred Compensation Account. . . . . . . . . . . .4
2.12 Deferral Plan. . . . . . . . . . . . . . . . . . . .4
2.13 Deferral Period. . . . . . . . . . . . . . . . . . .4
2.14 Deferral Unit. . . . . . . . . . . . . . . . . . . .5
2.15 Employer . . . . . . . . . . . . . . . . . . . . . .5
2.16 Employer Outlay. . . . . . . . . . . . . . . . . . .5
2.17 Executive Officers . . . . . . . . . . . . . . . . .6
2.18 Incentive Compensation . . . . . . . . . . . . . . .6
2.19 Incentive Plan . . . . . . . . . . . . . . . . . . .6
2.20 Insurance Eligible Account . . . . . . . . . . . . .6
2.21 Interest . . . . . . . . . . . . . . . . . . . . . .6
2.22 A Major Transaction. . . . . . . . . . . . . . . . .6
2.23 New England Electric System. . . . . . . . . . . . .8
2.24 Option I Deferral. . . . . . . . . . . . . . . . . .8
2.25 Option II Deferral . . . . . . . . . . . . . . . . .8
2.26 Participant. . . . . . . . . . . . . . . . . . . . .8
2.27 Person . . . . . . . . . . . . . . . . . . . . . . .9
2.28 Plan Year. . . . . . . . . . . . . . . . . . . . . .9
2.29 Occupation . . . . . . . . . . . . . . . . . . . . .9
2.30 Qualified Plan . . . . . . . . . . . . . . . . . . .9
2.31 Retirement . . . . . . . . . . . . . . . . . . . . 10
2.32 Subsidiary . . . . . . . . . . . . . . . . . . . . 10
2.33 Termination of Service . . . . . . . . . . . . . . 10
2.34 Totally Disabled . . . . . . . . . . . . . . . . . 11
2.35 Waiting Period . . . . . . . . . . . . . . . . . . 11
III. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . 11
3.01 Benefits Committee . . . . . . . . . . . . . . . . 11
3.02 Liability for Acts . . . . . . . . . . . . . . . . 11
3.03 Minors, Etc. . . . . . . . . . . . . . . . . . . . 12
3.04 Proof. . . . . . . . . . . . . . . . . . . . . . . 12
3.05 Denied Claims. . . . . . . . . . . . . . . . . . . 12
3.06 Participant List . . . . . . . . . . . . . . . . . 14
TABLE OF CONTENTS
(continued)
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IV. OPERATION OF THE PLAN . . . . . . . . . . . . . . . . . . 14
4.01 Deferral Election. . . . . . . . . . . . . . . . . 14
4.02 Time of Election . . . . . . . . . . . . . . . . . 15
4.03 Deferred Compensation Accounts . . . . . . . . . . 16
A. Interest Credited. . . . . . . . . . . . . 16
B. Deferral Units . . . . . . . . . . . . . . 17
C. No Further Deferral Units. . . . . . . . . 18
4.04 Cancellation of Deferral Units . . . . . . . . . . 19
4.05 Account Balance Benefits . . . . . . . . . . . . . 19
A. Normal Form. . . . . . . . . . . . . . . . 20
B. Death Benefit. . . . . . . . . . . . . . . 20
C. Inactive Accounts. . . . . . . . . . . . . 20
D. Acceleration of Payments . . . . . . . . . 20
4.06 Deferral Unit Benefits . . . . . . . . . . . . . . 21
A. Death Benefit. . . . . . . . . . . . . . . 21
B. Disability . . . . . . . . . . . . . . . . 23
C. Retirement Income. . . . . . . . . . . . . 23
D. Split-Dollar Option. . . . . . . . . . . . 24
E. Conversion . . . . . . . . . . . . . . . . 26
F. Limitations on Benefits. . . . . . . . . . 26
G. Lump Sum Payments. . . . . . . . . . . . . 27
4.07 Hardship Payments. . . . . . . . . . . . . . . . . 27
4.08 No Segregation of Assets . . . . . . . . . . . . . 28
4.09 Dissolution or Merger of Employer. . . . . . . . . 28
4.10 Failure of Payments. . . . . . . . . . . . . . . . 29
4.11 Participant Cooperation. . . . . . . . . . . . . . 30
V. AMENDMENT OR TERMINATION. . . . . . . . . . . . . . . . . 30
5.01 Right to Amend or Terminate. . . . . . . . . . . . 30
5.02 Annual Report. . . . . . . . . . . . . . . . . . . 31
VI. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . 31
6.01 Nonalienation of Benefits. . . . . . . . . . . . . 31
6.02 No Implied Rights. . . . . . . . . . . . . . . . . 32
6.03 Effectuation of Interest . . . . . . . . . . . . . 32
6.04 Copy of Plan . . . . . . . . . . . . . . . . . . . 32
6.05 Headings . . . . . . . . . . . . . . . . . . . . . 32
6.06 Gender and Number. . . . . . . . . . . . . . . . . 33
6.07 Separability . . . . . . . . . . . . . . . . . . . 33
6.08 Applicability. . . . . . . . . . . . . . . . . . . 33
6.09 Governing Law. . . . . . . . . . . . . . . . . . . 33
6.10 Effective Date . . . . . . . . . . . . . . . . . . 33
SIGNATURE
NEW ENGLAND ELECTRIC COMPANIES'
DEFERRED COMPENSATION PLAN
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I. PURPOSE
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The purpose of the Deferral Plan (the Plan) is to enable
executives to better plan the timing of receipt of income by
deferring cash compensation, in accordance with federal tax
statutes. The Plan was first executed in June of 1979, and has
been amended on several occasions since..
II. DEFINITIONS
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2.01 Account Balance means the amount deferred by the
Participant and Interest thereon, all as provided in Subsection
4.03(A), less any payments or reductions made in accordance with
Sections 4.04 and 4.07.
2.02 Actuarial Value will be established using the most
recent assumptions established by the Benefits Committee for the
Qualified Plan.
2.03 Beneficial Owner shall have the meaning defined in
Rule 13d-3 under the Securities Exchange Act of 1934.
2.04 Beneficiary means any person designated in writing by
a Participant (which designation may be changed from time to
time) to receive benefits under the Plan payable upon death of
the Participant. Unless otherwise designated, the Beneficiary
will be the beneficiary under the Qualified Plan.
2.05 Benefits Committee means the Benefits Committee
established in accordance with the Qualified Plan.
2.06 Board means the Board of Directors of New England
Electric System.
2.07 Change in Control occurs when the conditions set
forth in either of the following paragraphs shall have been
satisfied:
(a) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of New England
Electric System (not including in the securities
beneficially owned by such Person any securities
acquired directly from New England Electric System or
its affiliates) representing 20% or more of the
combined voting power of New England Electric
System's then outstanding securities; or
(b) during any period of not more than two consecutive
years after January 1, 1995, individuals who at the
beginning of such period constitute the Board and any
new director (other than a director designated by a
Person who has entered into an agreement with New
England Electric System to effect a transaction
described in clause (i) of this paragraph) whose
election by the Board or nomination for election by
New England Electric System's shareholders was
approved or recommended by a vote of at least two-
thirds of the directors then still in office who
either were directors at the beginning of the period
or whose election or nomination for election was
previously so approved or recommended, cease for any
reason to constitute a majority of the Board.
2.08 Compensation means
(a) the monthly base pay (including any amount deferred
hereunder) of a Participant,
(b) any Incentive Compensation,
(c) any bonuses established for those officers of New
England Electric System who would have been eligible
to participate in the Incentive Plan if they had not
been required to provide advice in connection with
the administration thereof, and
(d) any other bonuses specifically designated by the
Employer at the time of the award as being deferred
under the terms of this Plan.
2.09 Compensation Committee means the Compensation
Committee of the Board.
2.10 Deferred Compensation means the Compensation of a
Participant deferred in accordance with the terms of this Plan.
2.11 Deferred Compensation Account means the special
memorandum account established for a Participant on the books of
his Employer pursuant to Section 4.03.
2.12 Deferral Plan means the provisions of New England
Electric Companies' Deferred Compensation Plan as in effect prior
to May 3, 1985.
2.13 Deferral Period means a four consecutive year period
over which a Participant has elected to defer a minimum of $5,000
under Deferral Option II, commencing with the date on which the
related Deferral Unit was established.
2.14 Deferral Unit means an investment unit established as
provided in Subsection 4.03(B).
2.15 Employer is the company within the New England
Electric System holding company system which pays the base pay or
director's fees of the Participant.
2.16 Employer Outlay with respect to a Deferral Unit is
equal to the result of (a) plus (b) plus (c) less (d) below, all
accumulated at 6% per annum:
(a) the first four premiums on the related insurance
policy multiplied by the Employers' tax rate at the
time of payment;
(b) interest paid by the Employer on policy loans,
multiplied by one minus the Employers' marginal tax
rate at the time of payment, less borrowings from the
policy, if any, made to reimburse the Employer
therefor;
(c) benefits paid under the Plan to the Participant by
the Employer, multiplied by one minus the Employers'
marginal tax rate at the time of payment, less
borrowings from the policy, if any, made to reimburse
the Employer therefor;
(d) any other amounts borrowed by the Employer from the
policy except amounts borrowed to pay premiums.
2.17 Executive Officers means the Chairman, any Vice
Chairman, the President, any Vice President, the Treasurer, and
the Secretary of the New England Electric System.
2.18 Incentive Compensation means awards made under the
Incentive Plan.
2.19 Incentive Plan means the New England Electric
Companies Incentive Compensation Plan.
2.20 Insurance Eligible Account means the Deferred
Compensation Account of an individual who is qualified for life
insurance on the date of establishment of the Deferral Unit in
question.
2.21 Interest means the factor described in Subsection
4.03(A).
2.22 A Major Transaction shall be deemed to have occurred
if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(a) the shareholders of New England Electric System
approve a merger or consolidation with any
corporation or business trust, other than (i) a
merger or consolidation which would result in the
individuals who prior to such merger or consolidation
constitute the Board constituting at least two-thirds
of the board of directors of New England Electric
System or the surviving or succeeding entity
immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement
a recapitalization (or similar trasaction) in which
no Person acquires more than 20% of the combined
voting power of New England Electric System's then
outstanding securities;
(b) the shareholders of New England Electric System
approve a plan of complete liquidation thereof; or
(c) the shareholder of New England Electric System
approve an agreement for the sale or disposition of
all or substantially all of New England Electric
System's assets, other than a sale or disposition
which would result in the individuals who prior to
such sale or disposition constitute the Board
constituting at least two-thirds of the board of
directors of the Person purchasing such assets
immediately after such sale or disposition.
2.23 New England Electric System means the trustee or
trustees for the time being (as trustee or trustees but not
personally) under an agreement and declaration of trust dated
January 2, 1926, as amended, which is hereby referred to, and a
copy of which as amended has been filed with the Secretary of The
Commonwealth of Massachusetts. Any agreement, obligation, or
liability made, entered into or incurred by or on behalf of New
England Electric System binds only its trust estate, and no
shareholder, director, trustee, officer, or agent thereof assumes
or shall be held to any liability therefor.
2.24 Option I Deferral means any deferral except one made
in accordance with Subsection 4.01(B). If a Participant is
combining an election under Subsection 4.01(A) with an election
under 4.01(B), the excess of the 4.01(A) deferral over the
4.01(B) deferral will be treated as an Option I Deferral.
2.25 Option II Deferral means a deferral made in
accordance with Subsection 4.01(B).
2.26 Participant means:
(a) Executive officers;
(b) other participants in the Incentive Plan; and
(c) other employees of the New England Electric companies
who are in a position to make significant
contributions to the longer term financial objectives
of the New England Electric System and whose
participation in this Plan is authorized by the
Compensation Committee.
2.27 Person shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; however, a Person shall not include (i)
New England Electric System or any subsidiary thereof, (ii) a
trustee or other fiduciary holding securities under an employee
benefit plan of New England Electric System or any subsidiary
thereof, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the shareholders of New England
Electric System in substantially the same proportions as their
ownership of shares of New England Electric System.
2.28 Plan Year means a calendar year.
2.29 Occupation means, during the first 24 months of total
disability, the Participant's occupation at the time the
disability began. After that period, Occupation means any
occupation for which the Participant is or becomes reasonably
fitted by education, training, or experience.
2.30 Qualified Plan means the New England Electric System
Companies' Final Average Pay Pension Plan I.
2.31 Retirement means the date on which a Participant
commences receiving retirement income payments under this Plan.
Such payment will normally commence on the first business day of
the month after which the Participant reaches age 70 1/2;
however, a Participant may, at any time on or after Termination
of Service, apply in writing to the Benefits Committee for
approval of an earlier commencement. The decision whether to
allow such earlier commencement shall be in the sole discretion
of the Benefits Committee.
Retirement under this Plan is not contingent upon retirement
under the Qualified Plan or any other plan maintained by the
Employer.
2.32 Subsidiary means a company five per centum or more of
whose outstanding voting securities are owned, controlled, or
held with power to vote, directly or indirectly, by New England
Electric System or any subsidiary thereof.
2.33 Termination of Service shall occur when the
Participant is neither (i) employed by a Subsidiary nor (ii) a
member of the board of directors of New England Electric System
or any Subsidiary.
2.34 Totally Disabled means the Participant is in a
condition that totally and continuously prevents him, for at
least 180 consecutive days, from engaging in an occupation for
compensation or profit.
2.35 Waiting Period means 180 days after the Participant
becomes Totally Disabled.
III. ADMINISTRATION
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3.01 Benefits Committee. This Plan shall be administered
by the Benefits Committee, and interpretations of the Plan by the
Benefits Committee shall be final and binding on all parties.
3.02 Liability for Acts. Neither the Compensation
Committee, the Benefits Committee, nor the Employers, nor the
members, officers, directors, agents, or employees of any of the
foregoing shall be liable for any error of omission or commission
unless such error results from its, his, or her own gross
negligence, willful misconduct, or lack of good faith; nor shall
any such party be liable for any act of gross negligence, willful
misconduct, or lack of good faith of any other such party.
3.03 Minors, Etc. If a minor, person declared
incompetent, or person incapable of handling the disposition of
his property is entitled to receive a benefit, make an
application, or make an election hereunder, the Benefits
Committee may direct that such benefits be paid to, or such
application or election be made by, the guardian, legal
representative, or person having the care and custody of such
minor, incompetent, or incapable person. Any payment made,
application allowed, or election implemented in accordance with
this Section shall completely discharge the Plan, the
Compensation Committee, and the Benefits Committee from all
liability with respect thereto.
3.04 Proof. The Benefits Committee may require proof of
the death, total disability, incompetency, minority, or
incapacity of any Participant or Beneficiary, and of the right of
a person to receive any benefit or make any application or
election.
3.05 Denied Claims. The procedures when a claim under
this Plan is denied are as follows:
(A) The Benefits Committee shall:
(i) notify the claimant within a reasonable time
of such denial, setting forth the specific
reasons therefor; and
(ii) afford the claimant a reasonable opportunity
for a review of the decision.
(B) The notice of such denial shall set forth, in
addition to the specific reasons for the denial, the following:
(i) identification of pertinent provisions of this
Plan;
(ii) such additional information as may be relevant
to denial of claim; and
(iii) an explanation of the claims review procedure;
and advice that the claimant may request an
opportunity to submit a statement of issues
and comments.
(C) Within sixty days following advice of denial of a
claim, upon request made by the claimant, the Benefits Committee
shall take appropriate steps to review its decision in light of
any further information or comments submitted by the claimant.
The Benefits Committee may hold a hearing at which the claimant
may present the basis of any claim for review.
(D) The Benefits Committee shall render a decision within
a reasonable time (not in excess of 120 days) after the
claimant's request for review and shall advise the claimant in
writing of its decision, specifying the reasons and identifying
the appropriate provisions of this Plan.
(E) The Benefits Committee shall report to the
Compensation Committee any denials of claims, requests for
review, and actions taken in response to such requests. The
Compensation Committee may review such denials and actions and
may affirm, modify, or reverse same.
3.06 Participant List. The Chief Executive Officer shall
be responsible for maintaining an up-to-date list of the
Participants with copies to Compensation Committee and Benefits
Committee members.
IV. OPERATION OF THE PLAN
4.01 Deferral Election. A Participant may elect to defer
compensation as follows:
(A) A Participant may elect to have his 2.05(a)
Compensation (excluding any increase thereof after
the commencement of the year) reduced by any
percentage - not exceeding 15 percent.(*)
(B) A Participant may elect to have his 2.05(a)
Compensation reduced by a fixed dollar amount of at
least $5,000 per Plan year for a period of four
consecutive years - not exceeding 15%.(*)
_____________________
(*) If Subsection 4.01(A) and 4.01(B) elections are
combined, the deferral shall be for the greater of the two
amounts, but not in excess of 15 percent of the Participant's
2.04(a) Compensation at the time the election is made.
(C) A Participant may elect to defer any percentage of
any increase, not yet then effective, in his 2.05(a)
Compensation over that for the preceding December.
(D) A Participant may elect to defer any percentage or
dollar amount of his Incentive Compensation.
(E) A Participant may elect to defer any percentage or
dollar amount of his 2.05(c) Compensation.
These elections are not exclusive and a Participant may
elect one, or any combination thereof.
4.02 Time of Election. Elections for deferrals under
Subsections 4.01(A), (B), and (C) shall be made prior to
commencement of the Plan Year in which the Compensation is to be
earned. Elections for deferrals under Subsections 4.01(D) and
(E) shall be made prior to the Plan Year, the performance in
which is rewarded by the Incentive Compensation or bonus. If any
individual becomes a Participant or qualifies for a new form of
bonus during a Plan Year, he may, at that time, elect prior to
receipt of the 2.05(a) Compensation or award of the 2.05(b) or
(c) bonus to defer Compensation received or earned in that or a
succeeding Plan Year.
An election once made shall be effective for each succeeding
year until a superseding election is made or until it is
cancelled. Option II Deferrals can not be superseded during the
related Deferral Period other than as provided in Sections 4.04
and 4.07. For Option II Deferrals, after completion of the
related Deferral Period, a new Deferral Period and a new Deferral
Unit will commence for the same fixed amount. Any superseding
election shall be effective for each Plan Year subsequent to the
year in which it was made.
4.03 Deferred Compensation Accounts. The Deferred
Compensation Account for each Participant shall continue to
reflect amounts deferred under the prior provisions of the
Incentive Plan and the Deferral Plan. The Deferred Compensation
Account for each Participant shall be credited with an amount of
Deferred Compensation as of the date the equivalent cash payment
would otherwise have been made.
A. Interest Credited. All Deferred Compensation
Accounts shall be increased by a factor (the Interest) as
follows: As of the last day of each Plan Year, the Employer
shall credit to each such Deferred Compensation Account interest
on the balance in such account computed with regard to the amount
of time during the Plan Year that such amount has been credited
to such account. The rate of interest shall be the twelve-month
average for the Plan Year of the monthly base rates on prime
corporate loans at the principal office of The First National
Bank of Boston in effect on the last day of each month.
B. Deferral Units. All Deferred Compensation Accounts
which are Insurance Eligible shall have Deferral Units credited
to them as follows: When, on the first day of January, April,
July, or October, the Account Balance is $17,500 or more
(exclusive of Option II Deferrals and prior Deferral Units) the
Employer shall designate a life insurance policy on the life of
the Participant that shall serve as a measure of the Employer's
obligation to pay deferred compensation to such Participant under
this Plan. For this purpose it shall be assumed that the entire
amount of the Account available on such date is applied toward
the premium required by such policy. The Employer may actually
purchase such policy but shall not be required to do so. If a
policy is purchased by the Employer neither the Participant whose
life is insured nor his Beneficiary shall own any interest
whatever in such policy. The Employer shall have the right,
without the Participant's consent, at any time and from time to
time, to obtain a loan against the policy from the issuer or to
effect a collateral assignment of its interest in the policy to
any other party. The Employer may not, however, obtain loans
against any policy for which a split-dollar option is in effect,
if such loans would cause the amount representing the interest of
the Participant to be reduced. Neither any failure, insolvency,
bankruptcy, nor liquidation of an insurance company whose policy
is used as a measure nor any failure of payment on, or failure,
insolvency, bankruptcy, or liquidation of the insurance company
issuing, any insurance purchased by the Employer shall excuse the
Employer or New England Electric System from its obligations
hereunder. References in this Plan to insurance policies, for
example, in Section 2.13, may be satisfied by calculations as to
the effect which hypothetical transactions in the designated
insurance policies would produce. For administrative convenience
the Employer may establish multiple Deferral Units - with
multiple insurance policies - for a Participant's deferrals under
the prior provisions of the Incentive Plan and the Deferral Plan.
Each Option II Deferral shall constitute a Deferral Unit.
The Employer shall designate a life insurance policy on the life
of the Participant, the annual premium to be equal to the fixed
amount committed for each year of the Deferral Period.
Each Deferral Unit will provide death benefits, retirement
income, and disability income as described in Section 4.06.
C. No Further Deferral Units. No Deferral Unit will be
established after October 2, 1986.
4.04 Cancellation of Deferral Units. Prior to Retirement,
a Participant who has Deferral Units may apply in writing to the
Benefits Committee for cancellation of some or all of his
Deferral Units. The decision to allow such cancellation shall be
in the sole discretion of the Benefits Committee. At Retirement
the Participant's Account Balance shall be reduced by the amount
of that portion of the Account Balance related to uncancelled
Deferral Units.
Any Option II Deferral Unit for which the Deferral Period
has not been completed at the Termination of Service will be
cancelled; however, the Participant will retain the related
portion of the Account Balance.
Any Option II Deferral Unit for which the Deferral Period
has not been completed at the time the Participant becomes
Totally Disabled and is no longer receiving 2.05(a) Compensation
shall be continued in force; however, if the Participant has
converted the disability benefits thereof in accordance with
Subsection 4.06(E), the benefits associated with said Unit will
be reduced to the same proportion as the related Compensation
deferred by the Participant bears to $20,000.
4.05 Account Balance Benefits. Payments of the portion of
the Account Balance not related to uncancelled Deferral Units
shall be as follows:
A. Normal Form. A Participant's full Account Balance
not related to uncancelled Deferral Units shall be paid to him in
a lump sum on Retirement; provided, however, the Account Balance
related to deferrals made after October 2, 1986, shall be paid in
ten annual payments commencing at Retirement.
A Participant may, at any time on or after Termination of
Service, apply in writing to the Benefits Committee for approval
of acceleration of this payment or any portion thereof. The
decision whether to allow such acceleration shall be in the sole
discretion of the Benefits Committee.
B. Death Benefit. Upon the death of a Participant any
portion of the Account Balance not related to uncancelled
Deferral Units shall be paid, as soon as practicable, in a lump
sum to the Participant's Beneficiary.
C. Inactive Accounts. A Participant's full Account
Balance not related to uncancelled Deferral Units shall be paid
to him in a lump sum as soon as practicable after January 2,
1987, if he does not have an effective deferral election, other
than for an Option II Deferral, on said date.
D. Acceleration of Payments. A Participant may, at any
time after either a Change in Control or a Major Transaction, and
when the Participant has had a Termination of Employment, either
before or after such event, require the acceleration of payments
under subsection 4.05(A).
4.06 Deferral Unit Benefits. Benefits for uncancelled
Deferral Units will be as follows:
A. Death Benefit. A death benefit, as described below,
will be paid to the Participant's Beneficiary.
If the Participant dies prior to Retirement, his Beneficiary
will be paid a lump sum equal to the greater of (i) the death
benefit of the insurance policy (net of loans) less the Employer
Outlay, divided by one minus the Employers' marginal tax rate at
the time of payment or (ii) that portion of the Account Balance
relating to the Deferral Unit.
If the Participant dies after Retirement, his Beneficiary
will be paid a lump sum equal to the death benefit of the
insurance policy (net of loans) less the Employer Outlay, divided
by one minus the Employers' tax rate at the time of payment.
B. Disability. A Participant who prior to age 60
becomes Totally Disabled for 180 days or more will be paid during
the continuation of such disability until Retirement or age 65,
whichever comes first, a monthly benefit commencing in the month
following the Waiting Period.
For an Option I Deferral Unit the monthly disability benefit
will be equal to 2.25% of the initial amount of the Deferral Unit
divided by one minus the Employer's marginal tax rate at the time
of payment.
For an Option II Deferral Unit the monthly disability
benefit will be equal to one-twelfth of the initial amount (first
deferral) of the Deferral Unit divided by one minus the
Employer's marginal tax rate at the time of payment.
C. Retirement Income. Annual payments will be made for
the lifetime of the Participant beginning on his Retirement. On
or before Retirement a Participant may elect for all of his
Deferral Units one of the following:
(i) a level annual retirement income payment; or
(ii) an annually increasing retirement income payment.
The Benefits Committee will, from time to time,
establish the rate of increase, if any, for such
payments, after consideration of the investment
performance of the insurance policy and the
Employers' then tax rate.
Under either election there will be a lump sum death benefit
to the Beneficiary. The respective combinations of the
retirement income election selected and the death benefit
provided under Subsection 4.06(A) shall produce actuarially
equivalent amounts.
The level retirement payment - and the initial payment for
an increasing retirement payment - will be based upon the initial
amount of the Deferral Unit with reference to an investment index
(not less than Interest). The Benefits Committee will determine
the investment index for each Deferral Unit when established.
The retirement income payments for a Deferral Unit may not
commence until at least 48 months after the establishment of that
Deferral Unit.
D. Split-Dollar Option. If in fact a life insurance
policy has been purchased on the life of a Participant, that
Participant may, in accordance with such procedures as may be
approved by the Chairman of the Benefits Committee, elect a
split-dollar option to be effective until Termination of Service.
The Employer shall endorse to the Participant the right under the
policy (until Termination of Service) to designate a beneficiary
for that portion of the policy equal to the death benefit of the
policy (net of loans) less the Employer Outlay reduced as
provided in Section 4.04, if applicable.
The Employer will promptly pay all premiums on the policy
when due. The Participant shall pay to the Employer, within
fifteen days prior to the date each premium is due, an amount
equal to the value, for Federal income tax purposes, of the
"economic benefit" of the life insurance protection he then
enjoys.
The Participant shall have the right to make an absolute
assignment of his entire interest, or any portion thereof, under
the policy at any time to any person or persons. Upon delivery
of a signed copy of such assignment to the Employer, all, or such
portion, of the rights, obligations, and duties of the
Participant under this Subsection 4.06(D) shall pass to and be
binding upon such assignee (including the right to make further
assignments) and the Participant shall have no further interest
whatsoever in the policy, or such portions.
In the event the Participant fails to pay to the Employer an
amount equal to the "economic benefit," the Participant's right
to designate a beneficiary for the policy shall terminate and the
obligations of the Employer under this subsection 4.06(D) shall
cease. The Participant will, however, have the same rights under
the Plan as he would have had had he not elected the split-dollar
option.
No other death benefits will be payable under the affected
Deferral Unit and the affected Deferral Unit is not subject to
cancellation in accordance with Section 4.04, until Termination
of Service.
E. Conversion. Prior to age 60, a Participant may,
consistent with such procedures as may be approved by the
Chairman of the Benefits Committee, waive the disability benefits
provided in Subsection 4.06(B) on a Deferral Unit by Deferral
Unit basis in return for an increase in the death benefits
provided in Subsection 4.06(A).
F. Limitations on Benefits. In the event of the
Participant's suicide during the first 24 months after the
establishment of a Deferral Unit or if the Participant makes any
material misstatement of information or nondisclosure of medical
history, the Benefits Committee may in its sole discretion cancel
the affected Deferral Unit; however, the Participant will retain
that portion of the Account Balance related thereto.
G. Lump Sum Payments. A Participant may, at any time
after either a Change in Control or a Major Transaction, and when
the Participant has had a Termination of Employment, either
before or after such event, elect to receive, in lieu of any
future benefits hereunder, a lump sum payment equal to the
Actuarial Value of the maximum value of said future benefits,
less 10%.
4.07 Hardship Payments. Prior to a Participant's
Termination of Service, the Benefits Committee shall have the
power and discretion to make a payment to such Participant from
his Deferred Compensation Account at any time if the Benefits
Committee determines that the Participant is suffering from a
serious financial emergency resulting from circumstances beyond
the Participant's control which would cause a hardship to the
Participant unless such payment was made. Payments will be made
first from any amounts not in Deferral Units, second from any
amounts in Option II Deferral Units for which the Deferral Period
is not yet complete, and third from other Deferral Units.
Benefits otherwise payable from a partially liquidated Deferral
Unit shall then be actuarially adjusted for the payment made. No
payments will be made on account of Deferral Units for which a
split-dollar option has been elected under Subsection 4.06(D).
Any such hardship payment will be in a lump sum and will not
exceed the lesser of (i) the amount necessary to satisfy the
hardship situation or (ii) the Account Balance.
4.08 No Segregation of Assets. The Employer shall not be
required to set aside or segregate any assets of any kind to meet
any obligations under this Plan. All obligations of the Employer
shall be reflected by bookkeeping entries only. The Participants
shall have no rights under this Plan to any specific assets of
the Employer and ownership of any insurance policies relating to
Deferral Units shall remain with the Employer. The rights of the
Participants under this Plan shall be those of a general,
unsecured creditor of the Employer. Except as provided in
Subsection 4.06(D) a Participant shall not have the right to
commute, sell, assign, transfer, or otherwise convey the right to
receive any payments under this Plan, which payments and the
right thereto shall be nonassignable and nontransferable, whether
voluntarily or involuntarily.
4.09 Dissolution or Merger of Employer. In the event of
dissolution, liquidation, or winding up of the business of the
Employer, whether voluntary or involuntary, the Account Balance
(exclusive of that portion associated with Deferral Units) shall
be paid, at the time of such event, in a lump sum to the
Participant and policies equivalent to Deferral Units shall be
purchased for and/or assigned to the Participant. In the event
of merger or consolidation of the Employer into another entity,
the Account Balance (exclusive of that portion associated with
Deferral Units) shall be paid, at the time of such event, in a
lump sum to the Participant and policies equivalent to those
relating to Deferral Units shall be purchased for and/or assigned
to the Participant unless the Compensation Committee determines
that the Participant's rights under the Plan continue after such
merger or consolidation.
4.10 Failure of Payments. Any provision of this Plan to
the contrary notwithstanding, if (i) an Employer shall fail to
make any payment to any Participant when due under this Plan or
(ii) any employer or company shall fail to make any payments to
any Participant due under either of the New England Electric
Companies' Executive Supplemental Retirement Plan or the New
England Electric System Companies Retirement Supplement Plan,
each Participant will be paid immediately as a lump sum his full
Account Balance (exclusive of that portion associated with
Deferral Units) and policies equivalent to those relating to
Deferral Units shall be purchased for and/or assigned to the
Participant. If any employer or company shall, in good faith,
contest a claim by a participant under this Plan or any of the
other above-listed plans, the failure to make the contested
payment or payments shall not, for the purpose of this paragraph,
be a failure to make a payment.
If the Employer does not make the aforesaid payment or
assign the insurance policies, New England Electric System will
make the payment and/or purchase and assign equivalent insurance
policies for the account of the Employer.
4.11 Participant Cooperation. The Participant for whom a
Deferral Unit is or may be established is expected to cooperate
with the Employer by furnishing any and all information requested
by the Employer, taking such physical examinations as the
Employer may deem necessary, and taking such other actions as may
be requested by the Employer. If a Participant declines to
cooperate, he shall have no right thereafter to defer any
Compensation hereunder.
V. AMENDMENT OR TERMINATION
------------------------
5.01 Right to Amend or Terminate. The Compensation
Committee may amend or terminate this Plan at any time; provided,
however, that no such action shall affect any right or obligation
with respect to any Compensation previously earned; provided,
further, that, if the Compensation Committee, in its sole
discretion, determines that (a) changes in Federal income tax
statutes, rules, or regulations, (b) changes in the Federal tax
rate paid by the Employers, or (c) the application or potential
application to the Plan of Section 406 of Title I of the Employee
Retirement Income Security Act of 1974 make it advisable,
existing Deferral Units may be modified or canceled; and provided
further, no amendment or discontinuance in any manner adverse to
a Participant with respect to benefit formula or optional form of
payment may be made for three years following a Change in Control
or a Major Transaction. No such modification or cancellation
shall affect any Participant's Account Balance. No such
modification may reduce the then established retirement income or
death benefit of a Participant who has had a Termination of
Service, but it may reduce or eliminate any subsequent increases
in either or both.
5.02 Annual Report. The Chairman of the Benefits
Committee shall annually prepare a report to the Compensation
Committee of any changes in Federal income tax statutes, rules,
or regulations and the Federal income tax rate paid by the
Employers insofar as they may impact the operation of this Plan.
VI. GENERAL PROVISIONS
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6.01 Nonalienation of Benefits. To the fullest extent
permitted by law, no benefit under this Plan, nor any other
interest hereunder of any Participant or Beneficiary, may be
assigned or alienated.
6.02 No Implied Rights. Neither this Plan nor the making
of payments or purchases of insurance by an Employer shall be
construed to create any obligation upon an Employer to continue
the Plan or to continue purchases of insurance or to give any
present or future employee any right to continued employment.
6.03 Effectuation of Interest. In the event it should
become impossible for the Employers, the Compensation Committee,
or the Benefits Committee to perform any act required by the
Plan, the Employers, the Compensation Committee, or the Benefits
Committee may perform such other act as it in good faith
determines will most nearly carry out the intent and purpose of
the Plan.
6.04 Copy of Plan. An executed copy of the Plan shall be
available for inspection by Participants or other persons
entitled to benefits under the Plan at reasonable times at the
Personnel Offices of the Employers.
6.05 Headings. The headings of articles and sections of
the Plan are for convenience of reference only.
6.06 Gender and Number. Unless the context requires
otherwise, the singular shall include the plural; the masculine
gender shall include the feminine; and such words as "herein",
"hereinafter", "hereof", and "hereunder" shall refer to this
instrument as a whole and not merely to the subdivision in which
such words appear.
6.07 Separability. If any term or provision of this Plan,
as presently in effect or as amended from time to time, or the
application thereof to any payments or circumstances, shall to
any extent be invalid or unenforceable, the remainder of this
Plan and the application of such term or provision to payments or
circumstances other than those as to which it is invalid or
unenforceable shall not be affected thereby, and each term or
provision of this Plan shall be valid and enforced to the fullest
extent permitted by law.
6.08 Applicability. All provisions of this Plan shall be
uniformly applicable to all Participants.
6.09 Governing Law. Except as otherwise required by law,
this Plan and all matters arising thereunder shall be governed by
the laws of The Commonwealth of Massachusetts.
6.10 Effective Date. This Amendment shall be effective
January 1, 1995.
Dated:
s/George M. Sage
__________________________________
Chairman
Pursuant to Vote of November 22,
1994, of the Compensation Committee