NEW ENGLAND ELECTRIC SYSTEM
DIRECTORS RETIREMENT PLAN
May 1, 1994
Amended December 11, 1998
New England Electric System
Directors Retirement Plan
TABLE OF CONTENTS
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Beneficial Owner. . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . 1
4. Committee.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. New England Electric System. . . . . . . . . . . . . . . . . . . . . 2
6. A Major Transaction. . . . . . . . . . . . . . . . . . . . . . . . . 2
7. Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
8. Person.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
9. Retainer.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10. Qualified Plan.. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
11. Quarter of Service.. . . . . . . . . . . . . . . . . . . . . . . . . 4
Plan Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1. Retirement Benefit. . . . . . . . . . . . . . . . . . . . . . . . . 5
2. Form of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Termination of Benefits. . . . . . . . . . . . . . . . . . . . . . . 5
4. No Death Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Administration and Claims. . . . . . . . . . . . . . . . . . . . . . . . . 5
Government Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Nonassignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Provisions of Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Vesting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Amendment or Discontinuance. . . . . . . . . . . . . . . . . . . . . . . . 7
Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
NEW ENGLAND ELECTRIC SYSTEM
DIRECTORS RETIREMENT PLAN
Definitions
When used in this Plan, the following words will have the meaning given below:
1. Beneficial Owner shall have the meaning defined in Rule 13d-3 under the
Exchange Act.
2. Board means the Board of Directors of New England Electric System.
3. 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 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.
4. Committee means the Compensation Committee of the Board.
5. 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.
6. 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 or any parent thereof immediately after such
merger or consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (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 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.
7. Participant means any non-employee director of the New England Electric
System.
8. 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.
9. Retainer means the annualized cash retainer paid for service on the
Board (excluding retainers for service on committees, retainers for
service as an officer of a Committee or the Board, any meeting fees or
expenses, and the value of shares granted under the New England Electric
System Director Share Plan) determined as of the quarter immediately
preceding the Participant's termination of service.
10. Qualified Plan means the New England Electric System Companies' Final
Average Pay Pension Plan I.
11. Quarter of Service means a calendar quarter for all or any portion of
which the Participant served as a member of the Board, excluding any
quarter during which the Participant was an employee of the New England
Electric System or any of its subsidiaries.
Plan Benefits
1. Retirement Benefit
A Participant shall be entitled to receive under this plan an annual
retirement benefit (payable on a quarterly basis) equal to (a) times
(b), where:
(a) is the Retainer and
(b) is: (i) 100%, if the Participant has 40 or more
Quarters of Service, or
(ii) 75%, if the Participant has 20 or more but less
than 40 Quarters of Service.
No retirement benefit shall be payable if the Participant has less than
20 Quarters of Service.
2. Form of Payment
Retirement benefits shall be paid in cash on the first business day of
each calendar quarter following the later of the Participant's
termination of service or age 60.
3. Termination of Benefits
Benefits shall cease at the Participant's death.
4. No Death Benefits
There are no death benefits hereunder nor any retirement benefits
payable to anyone other than the Participant.
Administration and Claims
The Committee shall have for this Plan the same powers, indemnities, and
duties, including, but not limited to, the procedures for denied claims, as
the benefits committee and the benefits appeal committee have for the
Qualified Plan.
Government Regulations
It is intended that this Plan will comply with all applicable laws and
governmental regulations, and the Company shall not be obligated to perform an
obligation hereunder in any case where, in the opinion of the Company's
counsel, such performance would result in violation of any law or regulation.
Nonassignment
To the fullest extent permitted by law, no benefit under the Plan, nor any
other interest hereunder of any Participant, may be assigned or alienated.
Provisions of Benefits
This Plan will be unfunded. Benefits will be paid from the operating revenues
of the Company. A Participant's rights to benefits under this Plan shall be
those of an unsecured, general creditor of the Company.
Vesting
A Participant's accrued benefits shall be 100% vested after twenty Quarters of
Service.
Change in Control
If a Participant's service on the Board is terminated following a Change in
Control or a Major Transaction, if he or she has less than 40 quarters, he or
she will receive enough additional quarters to equal 40.
Amendment or Discontinuance
The Committee may amend or discontinue the Plan at any time; provided that no
modification shall reduce a benefit which a Participant was eligible to
receive under the Plan if he or she had terminated service at the time of such
amendment or discontinuance.
Effective Date
This Amendment shall be effective December 11, 1998.
/s/ George M. Sage
_________________________________________
Chairman of the Compensation Committee