Exhibit 10(v)
NEW ENGLAND ELECTRIC SYSTEM COMPANIES
LIFE INSURANCE PROGRAM FOR EXECUTIVES I
FOR
[_______________________]
TABLE OF CONTENTS
Page
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Section 1. The Program.................................................. 1
Section 2. Prior Insurance Program...................................... 2
Section 3. Vesting and Forfeiture....................................... 2
Section 4. Life Insurance Policy........................................ 2
Section 5. Death Benefit................................................ 4
Section 6. Termination of Agreement..................................... 4
Section 7. Benefits Upon Termination of Employment During the
Executive's Lifetime......................................... 5
Section 8. Policy Premiums.............................................. 6
Section 9. Return of Premiums........................................... 7
Section 10. Withdrawals from Policy; Release of Assignment............... 7
Section 11. Liability and Limitation of Obligation....................... 7
Section 12. Named Fiduciary, Determination of Benefits, Claims Procedure
and Administration........................................... 8
Section 13. Notices...................................................... 10
Section 14. Binding Effect............................................... 11
Section 15. Governing Law................................................ 11
Section 16. Further Documentation........................................ 11
Section 17. Amendments and Transfers Within the New England Electric
System Companies............................................. 11
Section 18. Interpretation of Agreement.................................. 11
Section 19. No Implied Right to Employment............................... 12
COLLATERAL ASSIGNMENT
LIFE INSURANCE PROGRAM I
Agreement entered into as of the 1ST day of __________, between New England
Power Service Company, a Commonwealth of Massachusetts corporation (the
Company), and _______________ (the Executive).
Section 1. The Program
The program provides the Executive death benefits and post-retirement
ownership of the cash assets of the related policy. The program is designed with
a goal of three times the Executive's base pay (rounded up to the nearest even
whole thousand) at the time of death (the Target Benefit). During employment,
the first $50,000 of the coverage is to be provided by the Company's group term
life insurance policy.
For the purposes of this Agreement, "annual base pay" means the annualized
compensation being paid to the Executive on the day of determination (or, if
greater, the highest compensation paid to the Executive during any 12-month
period of employment), including compensation deferred under other plans but
excluding bonuses (such as NEES Goals and Incentive Compensation bonuses ) and
contributions made by the Company to or under any form of employee benefit
program and employer contributions under the New England Electric System
Companies Incentive Thrift Plan, and "final annual base pay" means the
Executive's annualized base pay on the last day of employment (or, if greater,
the highest compensation paid to the Executive during any 12-month period of
employment).
Section 2. Prior Insurance Program
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The Executive hereby waives the benefits under the Company's group
term-life insurance policy, and the New England Electric System Companies Life
Insurance Program for Executive II, to the extent that the benefit provided to
the Executive's beneficiaries, in accordance with Section 5, from the Policy (as
hereinafter defined) equals the Target Benefit. This waiver does not extend to
any optional benefits under the group term-life policy. To the extent that such
waiver is ineffective, the amount of the death benefit provided under the Policy
and otherwise payable hereunder to the beneficiary or beneficiaries designated
by the Executive shall be correspondingly reduced and the amount payable to the
Company shall be correspondingly increased.
Section 3. Vesting and Forfeiture
Subject to the provisions of Section 6, the Executive is 100% vested in his
benefits under this Program.
Section 4. Life Insurance Policy
One or more split-dollar life insurance policies listed in Exhibit A hereto
(the Policy) have been or will be purchased on the life of the Executive by the
Company. The issuer or issuers of the Policy are hereinafter referred to as the
Insurer. Purchase of insurance policies either now or at later dates may require
proof of insurability at that time.
To the extent that necessary insurance policies are not reasonably
available at a later date, benefits will be provided under the Company's group
term-life insurance policy so that the total death benefit to the Executive's
beneficiaries during his employment is three times base pay.
(a) Interest in the Policy
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The Executive shall be the sole owner of the Policy and may exercise all
ownership rights granted to the owner thereof by the terms of the Policy, except
as may otherwise be provided herein.
Except as otherwise provided herein, the Executive shall not sell, assign,
transfer, borrow against, surrender, or cancel the Policy, change the
beneficiary designation provision, or terminate the dividend election without
the express written consent of the Company.
(b) Collateral Assignment
To secure the right of the Company to the Excess Value and/or the Company's
Cost (both as hereafter defined), the Executive will, contemporaneously
herewith, assign the Policy to the Company as collateral, using a form
substantially similar to that attached hereto as Exhibit B. The collateral
assignment of the Policy to the Company hereunder shall not be terminated,
altered, or amended by the Executive, without the express written consent of the
Company.
(c) Assignment of Executive's Interest
The Executive shall have the right to make an absolute assignment of his
entire interest, or any portion thereof, in the Policy at any time to any person
or persons, subject to the collateral assignment of the policy to the Company
pursuant to subsection (b) hereof. Upon delivery of a signed copy of such
assignment to the Company, all, or such portion, of the rights, obligations, and
duties of the Executive thereunder (subject to the collateral assignment of the
Company) and hereunder shall pass to and be binding upon such assignee
(including the right to make further assignments) and the Executive shall have
no further interest whatsoever in the Policy, or such portions.
(d) Company's Cost
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For the purposes of this Agreement, the Company's Cost means the amount of
the premiums on the Policy paid by it hereunder, less any withdrawals by the
Company from the Policy in accordance with Section 10.
(e) Dividends
Any dividend declared on the Policy shall be applied to purchase paid-up
additional insurance on the life of the Executive. The dividend election
provisions of the Policy shall conform to the provisions hereof.
Section 5. Death Benefit
Upon the death of the Executive, the beneficiary or beneficiaries
designated by the Executive shall be paid directly, in the manner and in the
amount or amounts provided in the beneficiary designation provision of the
Policy, a death benefit equal to the smaller of (a) the death benefit payable
under the Policy or (b) the Target Benefit. After such payment to such
beneficiary, the balance, if any, of the Policy death benefit (the Excess Value)
shall be paid to the Company.
Section 6. Termination of Agreement
(a) This Agreement shall terminate during the Executive's lifetime, without
notice, upon the occurrence of any of the following events:
(i) total cessation of the Company's business;
(ii) bankruptcy, receivership, or dissolution of the Company;
(iii) termination for cause of the Executive's employment by the
Company or by any direct or indirect subsidiary of the New
England Electric System or
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(iv) payment of the Company's Cost by the Executive to the Company.
(b) After termination of this Agreement under this section 6, the Executive
will not be permitted to re-enroll in the program. Upon such termination, the
Company may immediately withdraw its Cost from the Policy. The Executive will
receive no life insurance coverage under the New England Electric System
companies' group life insurance plan.
Section 7. Benefits Upon Termination of Employment During the Executive's
Lifetime.
(a) For sixty days after the date of the termination of this Agreement
during the Executive's lifetime, the Executive shall have the option of
obtaining the release of the collateral assignment of the policy to the Company.
To obtain such release, the Executive shall repay to the Company Company's Cost.
Upon receipt of such amount, the Company shall release the collateral assignment
of the Policy.
(b) If the Executive has terminated employment but has not Retired from the
Company, the Company will continue to pay premiums on the Policy in accordance
with Section 8 until the earlier of (i) the Policy can be kept in force with no
future premiums due based upon the then current crediting of the Policy or (ii)
the tenth anniversary of the Policy. Thereafter, the Company may withdraw from
the Policy amounts equal to the Company's Costs. The Company may delay
withdrawal from the Policy in order to preserve the Policy's tax treatment.
Section 8. Policy Premiums
During the Executive's employment and as provided in subsection 7(a), the
Company shall promptly pay all premiums on the Policy when due until the Policy
can be kept in force with no future premiums due based upon the then current
crediting of the Policy.
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The Company shall bill the Executive for an annual contribution to the
policy premium, which contribution shall be equal to the value, for Federal
income tax purposes, of the "economic benefit" of the life insurance protection
the Executive then enjoys. The Executive shall transfer the contribution to the
Company within thirty days of the bill. The Company will reimburse the Executive
for such contribution and for the related federal and state taxes. This
reimbursement is not a part of the Company's Cost.
If the Executive fails to make such timely payment, the Company shall
report the "economic benefit" of the life insurance protection as taxable income
to the Executive for the period, and no additional reimbursement will be made to
the Executive until payment has been made.
Section 9. Return of Premiums
Notwithstanding any provision hereof to the contrary, in the event that,
for any reason whatsoever, no death benefit is payable under the Policy upon the
death of the Executive and in lieu thereof the Insurer refunds all or any part
of the premiums paid for the Policy, the Company and the Executive's beneficiary
or beneficiaries shall have the unqualified right to share such premiums based
on the respective cumulative contributions thereto.
Section 10. Withdrawals from Policy; Release of Assignment
While the Executive is employed, if no additional premiums are required to
be paid under a Policy to maintain the death benefit to the Executive's
beneficiaries, the Company may withdraw its Cost from that Policy at a time when
such withdrawal will not cause the Policy to be terminated or to lose its tax
treatment as life insurance.
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After the Company has withdrawn from the Policy amounts equal in full to
the Company's Cost (whether under section 6, 7, or 10), the Company will release
the collateral assignments of the Policy to the Executive.
Section 11. Liability and Limitation of Obligation
The Company and the Insurer believe the assumptions used to determine the
amount of insurance purchased are reasonable. However, the Executive recognizes
that the goals of the Agreement may not be realized and there is no guaranty
that the Target Benefit will actually be provided by the Policy and/or that
additional premiums may not be required to keep the Policy from lapsing or to
provide the Target Benefit. The Executive also recognizes that changes in the
Internal Revenue Code or rulings or regulations thereunder could increase his
tax liabilities or reduce his benefits.
The Company has no responsibility, liability, or obligation for the
benefits provided the Executive from the Policy.
The Company may, upon 30 days' written notice to the Executive, limit its
obligations hereunder to purchase, pay premiums on, or otherwise provide life
insurance policies beyond the total death benefit, including all riders then in
force, and all references herein to the annual base pay or final annual base pay
of the Executive shall mean annual base pay at the time of such written
notification.
The Insurer shall have no liability except as set forth in the Policy and
in any beneficiary designation and in any optional method of settlement election
filed with it. The Insurer shall not be bound to inquire into or take notice of
any of the covenants herein contained as to the Policy. In case of the
Executive's death, the Insurer shall be discharged from all liability on payment
of the proceeds in accordance with the Policy's provision, and any beneficiary
designation and any
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optional method of settlement election filed with it without regard to this
Agreement or any amendment thereof.
Section 12. Named Fiduciary, Determination of Benefits, Claims Procedure
and Administration
(a) The Company is hereby designated as the named fiduciary under this
Agreement. The named fiduciary shall have authority to control and manage the
operation and administration of this Agreement, and it shall be responsible for
establishing and carrying out a funding policy and method consistent with the
objectives of this Agreement.
(b) (i) Claim
A person who believes that he is being denied a benefit to which he is
entitled under this Agreement (the Claimant) may file a written request for such
benefit with the Company, setting forth his claim. The request must be addressed
to the President of the Company at its then principal place of business.
(ii) Claim Decision
Upon receipt of a claim, the Company shall advise the Claimant that a
reply will be forthcoming within ninety days and shall, in fact, deliver such
reply within such period. The Company may, however, extend the reply period for
an additional ninety days for reasonable cause.
If the claim is denied in whole or in part, the Company shall adopt a
written opinion, using language calculated to be understood by the Claimant,
setting forth: (a) the specific reason or reasons for such denial; (b) the
specific reference to pertinent provisions of this Agreement on which such
denial is based; (c) a description of any additional material or
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information necessary for the Claimant to perfect his claim and an explanation
why such material or such information is necessary; (d) appropriate information
as to the steps to be taken if the Claimant wishes to submit the claim for
review; and (e) the time limits for requesting a review under subsection (iii)
and for review under subsection (iv) hereof.
(iii) Request for Review
Within sixty days after the receipt by the Claimant of the written
opinion described above, the Claimant may request in writing that the Benefits
Appeal Committee (as defined in the Final Average Pay Pension Plan I) review the
determination of the Company. Such request must be addressed to the Secretary of
the Committee, at its then principal place of business. The Claimant or his duly
authorized representative may, but need not, review the pertinent documents and
submit issues and comments in writing for consideration by the Committee. If the
Claimant does not request a review of the Company's determination by the
Committee within such sixty day period, he shall be barred and estopped from
challenging the Company's determination.
(iv) Review of Decision
Within sixty days after the Secretary's receipt of a request for
review, the Committee will review the Company's determination. After considering
all materials presented by the Claimant, the Committee will render an opinion,
setting forth the specific reasons for the decision and containing specific
references to the pertinent provisions of this Agreement on which the decision
is based. If special circumstances require that the sixty day time period be
extended, the Secretary will so notify the Claimant and the Committee will
render the decision as soon as possible, but no later than one hundred twenty
days after receipt of the request for review.
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Section 13. Notices
Any notice, consent, or demand required or permitted to be given under the
provisions of this Agreement shall be in writing, and shall be signed by the
party giving or making the same. If such notice, consent, or demand is mailed to
a party hereto, it shall be sent to United States certified mail, postage
prepaid, addressed to such party's last known address as shown on the records of
the Company. The date of such mailing shall be deemed the date of notice,
consent, or demand.
Section 14. Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns, and the Executive, and the Executive's
successors, assigns, heirs, executors, administrators, and beneficiaries.
Section 15. Governing Law
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts.
Section 16. Further Documentation
The parties hereto agree to execute any documents which may be necessary or
proper in the carrying out of the purpose and intent of this Agreement.
Section 17. Amendments and Transfers Within the New England Electric System
Companies
This Agreement may be amended or altered in any of its provisions, and such
changes shall become effective when reduced to writing and signed by the parties
hereto.
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The Company may, without any consent of the Insurer or the Executive,
assign or reassign all of its rights and obligations hereunder to such other
direct or indirect subsidiary of the New England Electric System by which the
Executive may from time to time be employed.
Section 18. Interpretation of Agreement
Where appropriate in this Agreement, words used in the singular shall
include the plural and words used in the masculine shall include the feminine
and vice versa. The headings of sections and subsections of this Agreement are
for convenience of reference only.
Section 19. No Implied Right to Employment
Neither this Agreement nor the payment of any premiums hereunder by the
Company shall be construed to create any obligation to give the Executive any
right to continue employment.
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New England Power Service Company
By:
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Name:
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Title: Treasurer
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EXHIBIT A
Insurance Policies
Metropolitan Policy Number
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EXHIBIT B
Split-Dollar Collateral Assignment
FOR VALUE RECEIVED, the undersigned owner (hereafter the Assignor) assigns,
transfers, and sets over to New England Power Service Company (Assignee), its
successors and assigns, certain rights in and to policy number ___________ (the
Policy), and any and all supplemental benefit riders or agreements issued under
the Policy, issued by Metropolitan Life Insurance Company (the Insurer), subject
to all the terms and conditions of the Policy and this Assignment and to all
superior liens, if any, which the Insurer or any prior Assignee may have against
the Policy. The Assignor by this instrument and the Assignee by acceptance of
the Assignment jointly and severally agree to the conditions and provisions
hereof. This Assignment is made and the Policy is to be held as collateral
security for any and all liabilities of the Assignor to the Assignee, either now
existing or that may hereafter arise between the Assignor or any successors or
assigns and the Assignee under the New England Electric System Companies Life
Insurance Program for Executives I, dated ______, with regard to the Policy.
1. (a) It is expressly agreed that the Assignee shall have the following
rights in the Policy:
(i) the right to make and receive withdrawals from the Policy
(from the Insurer or otherwise), to the extent of the
aggregate premiums paid by the Assignee on the Policy;
(ii) the right to release this Assignment to the Assignor or his
assigns;
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(iii) the right to surrender the Policy and to receive the Policy
cash value and any dividend credits outstanding of the
excess over the Target Benefit (as defined in the Program);
and
(iv) the right to receive from the death proceeds of the Policy,
and to elect an income settlement option with respect
thereto, an amount equal to the excess over the Target
Benefit (as defined in the Program).
(b) Except as provided in Paragraph (a) above, all other rights in
the Policy, including but not limited to the right to designate
and change the beneficiary of the Policy and the right to make
loans against or withdrawals from the Policy and to receive any
cash values and dividends credits outstanding in excess of
aggregate premiums paid by the Assignee on the Policy, are
expressly reserved to the Assignor and are, therefore, excluded
from this Assignment.
(c) For purposes of Paragraphs (a) and (b) above, the signature of
either the Assignor or the Assignee shall be adequate. Both the
Assignor and the Assignee acknowledge that, between themselves,
they are bound by the limitations of this Assignment and that the
Insurer will recognize the signature of either.
2. For purposes of this Assignment, aggregate premiums paid by the Assignee
on the Policy shall exclude premiums for any extra benefit riders or agreements
issues under the Policy.
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3. All provisions of this Assignment shall be binding upon the successors,
assigns, heirs, executors, administrators, or beneficiaries of the Assignor.
4. All Policy options and designations in effect as of the date of this
Assignment shall remain in effect unless specifically changed by this Assignment
or by action taken thereafter consistent with this Assignment.
5. The Insurer is hereby authorized to recognize the Assignee's claim of
right hereunder without investigating the validity or amount thereof, the giving
of any notice, or the existence or amount of any liabilities of the Assignor to
the Assignee. Payment by the Insurer of any or all death proceeds of the Policy
to the Assignee in reliance upon an affidavit of any officer of the Company as
to the share of death proceeds due it shall be a full discharge of the Insurer
for such share and shall be binding on all parties claiming any interest under
the Policy.
Signed at on .
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(City and State) (Date)
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Witness (Owner)
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Accepted and Agreed to: New England Power Service Company
- ------------------------------------- By:
Witness ------------------------------------
Name:
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Title: Treasurer
The Insurer hereby acknowledges receipt of a copy of this Collateral
Assignment form.
Insurer
Date: By:
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