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
Amended October 24, 1995
Amended October 15, 1996
Amended November 26, 1996
TABLE OF CONTENTS
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Page
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I. PURPOSE; EXISTING BENEFITS . . . . . . . . . . . . .1
II. DEFINITIONS. . . . . . . . . . . . . . . . . . . . .1
2.01 Actuarial Value. . . . . . . . . . . . . . . . . . .1
2.02 Beneficial Owner . . . . . . . . . . . . . . . . . .2
2.03 Beneficiary. . . . . . . . . . . . . . . . . . . . .2
2.04 Benefits Committee . . . . . . . . . . . . . . . . .2
2.05 Board. . . . . . . . . . . . . . . . . . . . . . . .2
2.06 Cash Account . . . . . . . . . . . . . . . . . . . .2
2.07 Cash Account Balance . . . . . . . . . . . . . . . .3
2.08 Change in Control. . . . . . . . . . . . . . . . . .3
2.09 Chief Executive Officer. . . . . . . . . . . . . . .4
2.10 Compensation . . . . . . . . . . . . . . . . . . . .4
2.11 Compensation Committee . . . . . . . . . . . . . . .5
2.12 Deferral Agreement . . . . . . . . . . . . . . . . .5
2.13 Deferred Compensation. . . . . . . . . . . . . . . .5
2.14 Deferred Compensation Account. . . . . . . . . . . .5
2.15 Deferral Match . . . . . . . . . . . . . . . . . . .5
2.16 Deferral Unit. . . . . . . . . . . . . . . . . . . .5
2.17 Disability . . . . . . . . . . . . . . . . . . . . .5
2.18 Dividend . . . . . . . . . . . . . . . . . . . . . .6
2.19 Dividend Reinvestment Plan . . . . . . . . . . . . .6
2.20 Election Period. . . . . . . . . . . . . . . . . . .6
2.21 Employer . . . . . . . . . . . . . . . . . . . . . .6
2.22 Incentive Plans. . . . . . . . . . . . . . . . . . .7
2.23 Incentive Shares . . . . . . . . . . . . . . . . . .7
2.24 Incentive Thrift Plan. . . . . . . . . . . . . . . .7
2.25 Interest . . . . . . . . . . . . . . . . . . . . . .7
2.26 A Major Transaction. . . . . . . . . . . . . . . . .7
2.27 New England Electric System. . . . . . . . . . . . .9
2.28 Other Plans. . . . . . . . . . . . . . . . . . . . .9
2.29 Participant. . . . . . . . . . . . . . . . . . . . 10
2.30 Performance Shares . . . . . . . . . . . . . . . . 10
2.31 Performance Share Plan . . . . . . . . . . . . . . 10
2.32 Person . . . . . . . . . . . . . . . . . . . . . . 10
2.33 Plan Year. . . . . . . . . . . . . . . . . . . . . 11
2.34 Qualified Plan . . . . . . . . . . . . . . . . . . 11
2.35 Related Plan Year. . . . . . . . . . . . . . . . . 11
2.36 Shares . . . . . . . . . . . . . . . . . . . . . . 11
2.37 Share Account. . . . . . . . . . . . . . . . . . . 11
2.38 Share Account Balance. . . . . . . . . . . . . . . 11
2.39 Share Price. . . . . . . . . . . . . . . . . . . . 12
2.40 Subsidiary . . . . . . . . . . . . . . . . . . . . 13
2.41 Termination of Service . . . . . . . . . . . . . . 13
2.42 Vested . . . . . . . . . . . . . . . . . . . . . . 13
III. ADMINISTRATION . . . . . . . . . . . . . . . . . . 14
3.01 Benefits Committee . . . . . . . . . . . . . . . . 14
3.02 Liability for Acts . . . . . . . . . . . . . . . . 14
3.03 Minors, Etc. . . . . . . . . . . . . . . . . . . . 14
3.04 Proof. . . . . . . . . . . . . . . . . . . . . . . 15
3.05 Denied Claims. . . . . . . . . . . . . . . . . . . 15
3.06 Participant List . . . . . . . . . . . . . . . . . 17
IV. OPERATION OF THE PLAN . . . . . . . . . . . . . . . . 17
4.01 Deferral Election. . . . . . . . . . . . . . . . . 17
(A) Form of Election . . . . . . . . . . . . . . 17
(B) Time of Election . . . . . . . . . . . . . . 18
4.02 Deferral Match . . . . . . . . . . . . . . . . . 19
4.03 Deferred Compensation Accounts . . . . . . . . . 20
(A) Cash Account . . . . . . . . . . . . . . . . 20
(B) Share Account. . . . . . . . . . . . . . . . 21
4.04 Payment of Balances. . . . . . . . . . . . . . . 22
(A) Election of Time of Payment. . . . . . . . . 22
(B) Payments After Ten Years . . . . . . . . . . 22
(C) Payments at Retirement . . . . . . . . . . . 22
(D) Payments Upon Termination of Service.. . . . 23
(E) Hardship Payments. . . . . . . . . . . . . . 23
(F) Dissolution of Employer; A Major
Transaction; Change in Control . . . . . . . 24
(G) Death or Disability. . . . . . . . . . . . . 25
(H) Form of Payments . . . . . . . . . . . . . . 25
(I) Distributed Shares.. . . . . . . . . . . . . 26
(J) Taxes. . . . . . . . . . . . . . . . . . . . 28
4.05 No Segregation of Assets . . . . . . . . . . . . 28
4.06 Failure of Payments. . . . . . . . . . . . . . . 29
V. AMENDMENT OR TERMINATION. . . . . . . . . . . . . . . . 30
5.01 Right to Amend or Terminate. . . . . . . . . . . 30
VI. GENERAL PROVISIONS . . . . . . . . . . . . . . . 31
6.01 Nonalienation of Benefits. . . . . . . . . . . . 31
6.02 No Implied Rights. . . . . . . . . . . . . . . . 31
6.03 Effectuation of Interest . . . . . . . . . . . . 31
6.05 Headings . . . . . . . . . . . . . . . . . . . . 32
6.06 Gender and Number. . . . . . . . . . . . . . . . 32
6.07 Separability . . . . . . . . . . . . . . . . . . 32
6.08 Applicability. . . . . . . . . . . . . . . . . . 33
6.09 Governing Law. . . . . . . . . . . . . . . . . . 33
6.10 Effective Date . . . . . . . . . . . . . . . . . 33
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . 33
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . 34
NEW ENGLAND ELECTRIC COMPANIES'
DEFERRED COMPENSATION PLAN
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I. PURPOSE; EXISTING BENEFITS
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The purpose of the Deferral Plan (the Plan) is to enable
executives to better plan the timing of their receipt of income
by deferring cash compensation and bonus shares, in accordance
with federal tax statutes. The Plan was first executed in June
of 1979, and has been amended on several occasions since.
The Plan is being further amended effective as of
October 24, 1995, in order to reflect changes in executive
benefit plans and to permit additional participations.
Deferrals made under previous versions of the Plan are to
receive benefits and are controlled by the terms of such
versions, except that subsection 4.04(F) will be controlling in
the event of a Change in Control or Major Transaction. Any
deferral elections in effect shall continue through December
31, 1995.
II. DEFINITIONS
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2.01 Actuarial Value will be established using the most
recent assumptions established by the Benefits Committee for
the Qualified Plan.
2.02 Beneficial Owner shall have the meaning defined in
Rule 13d-3 under the Securities Exchange Act of 1934.
2.03 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 Participant's Group Life
Insurance enrollment and insurance provided, in whole or in
part, by the Employer. If there is no designated Beneficiary
alive when the Participant dies, the benefit shall be paid to
the estate of the Participant.
2.04 Benefits Committee means the Benefits Committee
established in accordance with the Qualified Plan.
2.05 Board means the Board of Directors of the New
England Electric System.
2.06 Cash Account means the account established for
Participants in accordance with subsection 4.03(A).
2.07 Cash Account Balance means the amount deferred by
the Participant in his or her Cash Account and Interest
thereon, all as provided in subsection 4.03(A), less any
payments or reductions made in accordance with Sections 4.04
and 4.06.
2.08 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 (a) of this Section) 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.
2.09 Chief Executive Officer means the Chief Executive
Officer of the New England Electric System.
2.10 Compensation means
(a) the monthly base pay (including any amount deferred
hereunder) of a Participant,
(b) any Incentive Compensation,
(c) any Incentive and Performance Shares, 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.
2.11 Compensation Committee means the Compensation
Committee of the Board.
2.12 Deferral Agreement means the share deferral
agreement, if any, made by the Participant and the Company in
December 1994.
2.13 Deferred Compensation means the Compensation of a
Participant deferred in accordance with the terms of this Plan.
2.14 Deferred Compensation Account means the special
memorandum account(s) established for a Participant on the
books of his Employer pursuant to Section 4.03.
2.15 Deferral Match means the amount contributed by the
Employer pursuant to Section 4.02.
2.16 Deferral Unit means an insurance related investment
unit established under prior provisions of the Plan.
2.17 Disability means a physical or mental condition of
the Participant which, based on satisfactory medical evidence,
is believed to be permanent and to render the Participant unfit
to perform duties for an Employer.
2.18 Dividend has the meaning set out in subsection
4.03(B).
2.19 Dividend Reinvestment Plan means the New England
Electric System Dividend Reinvestment and Common Share Purchase
Plan, as amended from time to time.
2.20 Election Period is the 365-day period following:
(a) the mailing of the notice to the Participant of his
or her eligibility to make an election due to a
Change of Control or a Major Transaction, or
(b) Termination of Service, as applicable.
2.21 Employer is the company within the New England
Electric System holding company system which pays the base pay
or fees of the Participant.
2.22 Incentive Plans means:
(a) New England Electric Companies' Senior Incentive
Compensation Plan,
(b) New England Electric Companies' Incentive
Compensation Plan I,
(c) New England Electric Companies' Incentive
Compensation Plan II, and
(d) New England Electric Companies' Incentive
Compensation Plan III,
as they may be amended from time to time.
2.23 Incentive Shares mean annual incentive share awards
under the New England Electric Companies' Incentive Share Plan,
as it may be amended from time to time.
2.24 Incentive Thrift Plan means The New England
Electric System Companies Incentive Thrift Plan as amended from
time to time.
2.25 Interest means the factor described in Subsection
4.03(A).
2.26 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 transaction) 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 shareholders 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.
2.27 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.
2.28 Other Plans means the New England Electric
Companies' Executive Supplemental Retirement Plan, the New
England Electric System Companies Retirement Supplement Plan,
the New England Electric System Directors Deferred Compensation
Plan, New England Electric Companies' Senior Incentive
Compensation Plan, New England Electric Companies' Incentive
Compensation Plan I, New England Electric Companies' Incentive
Compensation Plan II, New England Electric Companies' Incentive
Compensation Plan III, or New England Electric Companies Long-
term Performance Share Award Plan.
2.29 Participant means a Participant in one of the
Incentive Plans.
2.30 Performance Shares means the potential share grants
awarded under the Performance Share Plan.
2.31 Performance Share Plan means the New England
Electric Companies Long-term Performance Share Award Plan.
2.32 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.
2.33 Plan Year means a calendar year.
2.34 Qualified Plan means the New England Electric
System Companies' Final Average Pay Pension Plan I.
2.35 Related Plan Year means, for deferrals under
subsection 4.01(A)(i), the Plan Year in which the Compensation
was earned; for deferrals under subsection 4.01(A)(ii) or
(iii), the Plan Year for which performance is awarded by the
Incentive Compensation or Incentive Shares; and for deferrals
under subsection 4.01(A)(iv), the last year of the Performance
Cycle.
2.36 Shares means common shares of New England Electric
System. After a merger, consolidation, or other similar
restructuring of New England Electric System, Shares shall mean
the common shares of the new entity.
2.37 Share Account means the account established for
Participants in accordance with subsection 4.03(B).
2.38 Share Account Balance means the amount deferred by
the Participant in his or her Share Account and Dividends
thereon, all as provided in subsection 4.03(B), less any
payments or reductions made in accordance with Sections 4.04
and 4.06.
2.39 Share Price for purchases shall be determined using
as a proxy the price of Shares being acquired by the New
England Electric System Dividend Reinvestment Plan during the
time period when the Shares for this Plan would be acquired
were this Plan a participant in that plan. The Share Price for
Shares being liquidated shall be determined by using the price
actually received by the Rabbi Trust on a sale of Shares
related hereto or by using as a proxy the price received for
those Shares sold by the Dividend Reinvestment Plan next
following the date of determination.
For a Change in Control or Major Transaction, the cash
value of Shares will be established using the highest average
of the high and low prices on the New York Stock Exchange
Composite Transaction as reported in the Wall Street Journal
for any five consecutive trading days in the 60 days preceding
the Change in Control or Major Transaction. If there is no
trading in the Shares on the New York Stock Exchange for a
substantial amount of time during the five-day period, or if
publication by The Wall Street Journal of reports of Share
transactions for any day in the five-day period does not take
place or is subject to reporting error, the value of Shares
shall be determined by the Benefits Committee on the basis of
such market quotations or other method as the Benefits
Committee shall deem appropriate.
2.40 Subsidiary means a company five per centum or more
of whose outstanding voting securities or partnership or
membership interests are owned, controlled, or held with power
to vote, directly or indirectly, by New England Electric System
or any subsidiary thereof.
2.41 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.
2.42 Vested - a Participant will be Vested under the
Qualified Plan when they satisfy the requirements for 100%
vesting in their accrued benefits under that plan.
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 or her 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, the Benefits Committee, the Employers,
and New England Electric System from all liability with respect
thereto.
3.04 Proof. The Benefits Committee may require proof of
the death, 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
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4.01 Deferral Election.
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(A) Form of Election. For elections made after
September 1, 1995, a Participant may elect to defer
Compensation as follows:
(i) A Participant may elect to have his or her
2.09(a) Compensation reduced by any
percentage - not exceeding 15 percent.
(ii) A Participant may elect to defer any whole
percentage of his or her Incentive
Compensation.
(iii) A Participant may elect to defer all of his
or her Incentive Shares.
(iv) A Participant may elect to defer all of his
or her Performance Shares.
The amount of deferrals under (i) and (ii) may be reduced by
the amount of the Participant's salary reduction contribution
under the Incentive Thrift Plan. These elections are not
exclusive and a Participant may elect one, or any combination
thereof.
(B) Time of Election. Except as provided in this
section, elections for deferrals under subsection 4.01(A)(i)
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(A)(ii) or (iii) shall be made prior to the
Plan Year, the performance in which is rewarded by the
Incentive Compensation or Incentive Shares; elections for
deferrals under subsection 4.01(A)(iv) shall be made prior to
commencement of the third year of the performance cycle as
defined in the Performance Share Plan.
If any individual becomes a Participant or qualifies for a
new form of bonus during a Plan Year, he or she may, at that
time, elect prior to receipt of the related 2.10(a)
Compensation, award of Incentive Compensation or Incentive
Shares, or allocation of Performance Shares 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. Any superseding election shall be effective
for each Plan Year subsequent to the year in which it was made.
Each Participant qualifying for participation on
December 11, 1995, may elect, prior to December 31, 1995, to
make a 4.01(A)(ii) or (iii) deferral with respect to bonuses
rewarding performance in 1995.
4.02 Deferral Match. The Employer shall add to a
Participant's Share Account an amount equal to the difference
between the employer contributions actually made on behalf of
the Participant under the Incentive Thrift Plan and the amount
that would have been made had the Participant's compensation
under that plan not been restricted under Section 4.01(a)(17)
of the Internal Revenue Code. Deferred Match contributions
will be made at such time or times as the monies would
otherwise have been paid as employer contributions under the
Thrift Plan.
4.03 Deferred Compensation Accounts. Deferrals shall be
allocated to either a Cash Account or a Share Account.
Deferral Match contributions shall be allocated to the
Participant's Share Account. Other deferrals shall be
allocated to the account selected by the Participant at the
time he or she makes an election for the related deferral.
Cash or Share values are to be determined by the Share Price on
the date the cash or Shares would otherwise have been paid to
the Participant. Once a deferral is allocated to the Cash or
Share Account, it may not be reallocated. The Deferred
Compensation Accounts for each Participant shall continue to
reflect amounts deferred under the prior provisions of the
Incentive Plans and any Deferral Agreement.
(A) Cash Account. The Cash 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, Incentive Shares awarded, or
Performance Shares first allocated to the Participant
(converting Shares to Cash at the Share Price on said date).
All Cash 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 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) Share Account. The Share 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 (at the Share Price on the next
investment date), Incentive Shares awarded, or Performance
Shares finally awarded to the Participant. Upon each
declaration of cash dividends on Shares, the Participant's
Share Account shall be increased by the number of Shares
equivalent to the dividend declared on a Share (the Dividend)
multiplied by the number of Shares credited to the
Participant's Share Account on the date of record calculated as
if the Shares in the Account had participated in the Dividend
Reinvestment Plan.
4.04 Payment of Balances.
(A) Election of Time of Payment. At the time of
electing to defer Compensation, in accordance with subsection
4.01(A), the Participant shall also elect whether to receive
payment after ten years or upon Termination of Service on or
after the date when the Participant could first commence
receiving benefits under the Qualified Plan.
(B) Payments After Ten Years. If the Participant has
elected payment after ten years, the full related Cash and
Share Account Balances shall be paid as soon as practicable
after the close of the tenth anniversary of the close of the
Related Plan Year.
(C) Payments at Retirement. If the Participant has
elected payment on the date when the Participant could first
commence receiving benefits under the Qualified Plan, the
Participant's full Cash and Share Account Balances shall be
paid in ten annual payments commencing at such date.
(D) Payments Upon Termination of Service.
Regardless of the payment election previously made
by the Participant, the full Cash and Share Account balances of
a Participant who is not Vested under the Qualified Plan shall
be paid as soon as practicable after a Termination of Service.
Regardless of the payment election previously made by the
Participant, within the Election Period following Termination
of Service, a Participant who is Vested in the Qualified Plan
may elect to receive as soon as practical payment of his full
Cash and Share Account balances, less 10%.
(E) Hardship Payments. Prior to a Participant's
Termination of Service (or completion of a subsection 4.04(C)
payment stream, if applicable), the Benefits Committee shall
have the power and discretion to make a payment to such
Participant from his or her 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 the Cash
Account, to the extent not in Deferral Units, secondly from the
Share Account, and thirdly from Deferral Units. Benefits
otherwise payable from a partially liquidated Deferral Unit
shall then be actuarially adjusted, using the most recent
assumptions established by the Benefits Committee for the
Qualified Plan, for the payment made. No payments will be made
on account of Deferral Units for which a split-dollar option
has been elected under prior provisions of the Plan.
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 balance of the Participant's
Deferred Compensation Accounts.
(F) Dissolution of Employer; A Major Transaction;
Change in Control. In the event of dissolution, liquidation,
or winding up of the business of the Employer or the New
England Electric System, whether voluntary or involuntary, the
Participant shall receive, at the time of such event, a lump
sum payment equal to the balance in his Cash and Share Accounts
and the Actuarial Value of the maximum value of future benefits
from Deferral Units, unless the New England Electric System has
assumed all the rights, duties, and obligations of the Employer
hereunder.
In the event of a Major Transaction or a Change in
Control, any Participant, whether terminated or active, may
elect at any time during the Election Period to receive, in
lieu of any future benefits hereunder, a lump sum payment equal
to the balance of his Cash and Share Accounts and the Actuarial
Value of the maximum value of future benefits from Deferral
Units, all less 10%. The Employer of each Participant at the
time (or at termination, if applicable) shall, as soon as
practicable after a Major Transaction or a Change in Control
advise the Participant of his rights under this paragraph.
(G) Death or Disability. In the event of the
Participant's death, the full Cash and Share Account Balances
shall be distributed to the Beneficiary as soon as practicable.
At the request of the Participant following his
Disability, the full Cash and Share Account Balances shall be
distributed to the Participant as soon as practicable.
(H) Form of Payments. Except as provided herein, any
distribution from a Cash Account will be in cash. Any
distribution from a Share Account will be in the form of
Shares; however, the Participant may elect, before the 30th day
preceding the tenth anniversary or Termination of Service, as
the case may be, to receive cash in lieu of Shares for any
percentage up to 100% of said distribution.
All distributions on account of Hardship, death,
Disability, dissolution, Change in Control, Major Transaction,
or Failure of Payments shall be in cash.
(I) Distributed Shares. The date of determination for
the Share Price of Shares distributed or converted hereunder
shall be:
(i) for payments under 4.04(B), December 31 of
the concluding year;
(ii) for payments under 4.04(C) and the first
paragraph of 4.04(D), the last day of the
month prior to the payment date;
(iii) for payments under 4.04(E), the last
trading date of the month prior to the
month in which the Benefits Committee
authorizes the distribution;
(iv) for payments under the first paragraph of
4.04(F), the last trading date of the month
preceding the triggering event;
(v) for payments under the second paragraph of
4.04(F), the highest average of the high
and low prices on the New York Stock
Exchange Composite Transaction as reported
in the Wall Street Journal for any five
consecutive trading days in the 60 days
preceding the Change in Control or Major
Transaction (if there is no trading in the
Shares on the New York Stock Exchange for a
substantial amount of time during the five-
day period, or if publication by The Wall
Street Journal of reports of Share
transactions for any day in the five-day
period does not take place or is subject to
reporting error, the value of Shares shall
be determined by the Benefits Committee on
the basis of such market quotations or
other method as the Benefits Committee
shall deem appropriate);
(vi) for payments under 4.04(G), the last day of
the month following the triggering event;
(vii) for elections made during an election
period other than under the second
paragraph of 4.04(F), the last day of the
month following filing of the election with
the Company; and
(viii) for payments made under 4.06, the last day
of the month preceding the triggering
event.
Shares to be distributed shall be purchased on the open
market, unless an officer of the New England Electric System
determines otherwise; provided, however, if the Employer has
placed an appropriate number of Shares in the Rabbi Trust for
the benefit of the Participant, the Employer may satisfy the
requirement by distribution of said Shares.
(J) Taxes. If a distribution is to be made solely in
Shares, the Employer may withhold from such distribution an
amount equal to its withholding obligations under state and
Federal tax laws.
4.05 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 (including any Shares purchased
by the Employer to reflect its obligation hereunder) and
ownership of any insurance policies relating to Deferral Units
shall remain with the Employer. The rights of a Participant
under this Plan shall be those of a general, unsecured creditor
of the Employer.
4.06 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 any of the Other Plans, each
Participant will be paid immediately a lump sum payment equal
to the balance of his Cash and Share Accounts (and the
Actuarial Value of the maximum value of future benefits from
Deferral Units). If any employer or company shall fail to make
a payment as provided in (i) or (ii) due to inadvertence or a
good faith delay to permit processing and shall immediately
upon discovery of such failure or delay make such payment in
full, the original failure to make the payment or payments
shall not, for the purposes of this paragraph, be a failure to
make a payment. 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.
Subject to any necessary regulatory approvals, if the
Employer does not make the aforesaid payment, New England
Electric System will make the payment.
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
Cash or Share 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.
VI. GENERAL PROVISIONS
------------------
6.01 Nonalienation of Benefits. Except as provided in
the split-dollar option under prior provisions of the Plan, 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.
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 New England Electric System, the
Employers, the Compensation Committee, or the Benefits
Committee to perform any act required by the Plan, New England
Electric System, 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
October 24, 1995.
Dated: February 24, 1997
s/George M. Sage
SIGNATURE ______________________________
Chairman
Pursuant to Vote of October 24,
1995, of the Compensation
Committee
APPENDIX A
ADDITIONAL DEFERRALS
1. By vote of the Compensation Committee of October 15,
1996, certain individuals were granted special performance
bonuses of share grants, said bonuses to be deferred to the
individual's Share Account under the Plan and subject to all
the benefits and limitations of the Plan, except that the
provision for payments after ten years will not apply.
2. By vote of the NEES Board of Directors on November
26, 1996, John W. Rowe was granted a special performance bonus
of 6,000 shares, said bonus to be deferred to his Share Account
under the Plan and subject to all the benefits and limitations
of the Plan, except that the Share Account balance relating to
the 6,000 shares shall no longer be deferred but shall be paid
as soon as practical after a Termination of Service.