Exhibit 10(x)
LIFE INSURANCE PROGRAM
FOR
MICHAEL E. JESANIS
Revised Collateral Assignment
TABLE OF CONTENTS
Page
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Section 1. The Program.................................................. 1
Section 2. Prior Insurance Program .................................... 1
Section 3. Vesting and Forfeiture ...................................... 2
Section 4. Life Insurance Policy ...................................... 2
Section 5. Policy Death Benefit ........................................ 4
Section 6. Termination of Agreement During the Executive's Lifetime..... 5
Section 7. Options on Termination During the Executive's Lifetime....... 6
Section 8. Assignment by Executive .................................... 7
Section 9. Policy Premiums ............................................ 8
Section 10. Withdrawals from Policy .................................... 8
Section 11. Policy Loans ................................................ 9
Section 12. Limitation of Obligation .................................... 9
Section 13. Return of Premiums .......................................... 9
Section 14. Liability.................................................... 10
Section 15. Named Fiduciary, Determination of Benefits, Claims
Procedure and Administration ................................ 10
Section 16. Notices...................................................... 13
Section 17. Binding Effect .............................................. 13
Section 18. Governing Law................................................ 13
Section 19. Further Documentation ...................................... 14
Section 20. Amendments .................................................. 14
Section 21. Interpretation of Agreement .... ........................... 14
Signatures............................................................... 14
Exhibit A. Insurance Policies
Exhibit B. Collateral Assignment
LIFE INSURANCE PROGRAM
(Collateral Assignment)
Agreement entered into as of the 23rd day of March, 1993, between New
England Power Service Company, a Massachusetts corporation (the Company), and
Michael E. Jesanis (the Executive).
Section 1. The Program
The program provides the Executive death benefits. The program is designed
with a goal of three times the Executive's annual base pay at the time of death
(or if the Executive has retired, three times his final annual base pay) (the
Target Benefit).
Section 2. Prior Insurance Program
The Executive hereby reaffirms his waiver of benefits under the Company's
group term-life insurance policy, to the extent that the benefit provided to the
Executive's beneficiaries, in accordance with Section 5, from the Policy (as
hereinafter defined) plus the group term-life insurance equals the Target
Benefit. 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 and contributions made by the Company to or
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under any form of employee benefit program including NEES Goals 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). 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.
(a) Interest in the Policy
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.
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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 repayment to the company of the Company's Cost and the right
of the Company to the Excess Value (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) Company's cost
For the purposes of this Agreement, the Company's Cost means the amount of
the premiums on the Policy paid by it hereunder, plus the after-tax interest
accrued on premium payments made by the Company, plus the after-tax interest
accrued on any Policy loans to the extent paid by the Company, less any
withdrawals by the Company from the Policy in accordance with Section 10 and
loans to the Company in accordance with Section 11 remaining outstanding on the
date of determination.
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(d) 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. Policy Death Benefit
Upon the death of the Executive, the Company shall have the unqualified
right to receive a portion of the Policy death benefit equal to the Company's
Cost. In no event shall the amount payable to the Company hereunder exceed the
Policy proceeds payable at the death of the Executive. No amount shall be paid
from the Policy death benefit to the beneficiary or beneficiaries designated by
the Executive until the full amount due the Company under this paragraph has
been paid.
The beneficiary or beneficiaries designated by the Executives 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 balance of 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.
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Section 6. Termination of Agreement During the Executive's Lifetime.
(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) the Executive's employment by the Company or by any direct or
indirect subsidiary of the New England Electric System terminates
for cause; or
(iv) failure of the Executive to timely pay to the Company the
Executive's portion of the premium, if any, due hereunder, unless
the Company elects to make such payment on behalf of the
Executive, as provided herein.
(b) In addition, the Executive may terminate this Agreement, while no
premium under the Policy is overdue, by written notice to the Company. Such
termination shall be effective as of the date of such notice.
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Section 7. Options on Termination 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 reducing
the policy death benefit to the (i) Company's Cost plus (ii) the Target Benefit
(but substituting "time of termination" for "time of death") and obtaining the
release of the collateral assignment of the Policy to the Company. To obtain
such release, the Executive shall repay the Company's Cost to the Company;
provided, if the net cash value of the Policy after withdrawal of the Company's
Cost is in excess of that required to provide, at the date of termination, the
Target Benefit on a paid up basis, the Executive shall pay such excess amount to
the Company. Upon receipt of such Cost and any excess amount, the Company shall
release the collateral assignment of the Policy. For the purposes of this
Agreement "paid up" means having a cash surrender value, as of the calculation
date, projected to age 100 with an 8% policy dividend rate and current expense
and mortality assumptions, that will support the Target Benefit with no future
premium payments.
(b) If the Executive fails to exercise such option within such sixty day
period, then, at the request of the Company, the Executive shall execute any
document or documents required by the Insurer to transfer the interest of the
Executive in the Policy to the Company. Alternatively, the Company may enforce
its right
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to be repaid the Company's Cost from the cash surrender value of the Policy
under collateral assignment of the Policy; provided that in the event the cash
surrender value of the Policy exceeds the amount due the Company, any excess up
to the amount required to provide the Target Benefit, but substituting "time of
termination" for "time of death" on a paid up basis shall be paid to the
Executive. Thereafter, neither the Executive nor his heirs, assigns, or
beneficiaries shall have any further interest in and to the Policy, either under
the terms thereof or under this Agreement.
Section 8. Assignment by Executive
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 Section 4(b). 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.
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Section 9. Policy Premiums
Until the Policy can be kept in force with no future premiums due based
upon the then current crediting of the Policy, the Company shall promptly pay
all premiums on the Policy when due.
The Company shall bill the Executive for his 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
he then enjoys. The Executive shall transfer his contribution to the company
within thirty days of the bill.
If the Executive fails to make such timely payment, the Company, in its
sole discretion, may elect to make the Executive's portion of the premium
payment, which payment shall be recovered by the Company as provided herein.
Section 10. Withdrawals from Policy
If no additional premiums are then required to be paid under the policy to
maintain the death benefit to the Executive's beneficiaries, the Company may
withdraw from the Policy amounts equal to the Company's Cost at a time when such
withdrawal will not cause the Policy to be terminated.
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Section 11. Policy Loans
The Company shall have the right, without the Executive's consent, at any
time and from time to time, to withdraw premiums from the Policy, to obtain a
loan against the Policy from the Insurer, or to effect a collateral assignment
of its interest in the policy to any other party. The Company may not, however,
obtain loans other than loans for premiums or interest payments. The Company
shall pay the interest on any such loans as and when due.
Section 12. Limitation of Obligation
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 his annual base pay at the time of such written
notification.
Section 13. 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
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premiums based on the respective cumulative contributions thereto.
Section 14. Liability
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 optional method of settlement election filed with it without
regard to this Agreement or any amendment thereof.
The Company has no responsibility, liability, or obligation for the
benefits provided the Executive from the Policy.
Section 15. 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.
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(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 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
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(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 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
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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.
Section 16. 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 17. Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns, and the Executive, his successors,
assigns, heirs, executors, administrators, and beneficiaries.
Section 18. Governing Law
This Agreement shall be governed by the laws of The Commonwealth of
Massachusetts.
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Section 19, 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 20. Amendments
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.
Section 21. 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.
/s/ Illegible
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Executive
NEW ENGLAND POWER SERVICE COMPANY
By: /s/ Illegible
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EXHIBIT A
Insurance Policies
CONFEDERATION LIFE 5 177836
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 5-177-836 (the
Policy), and any and all supplemental benefit riders or agreements issued under
the Policy, issued by Confederation 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 Life Insurance Program, dated
March 23, 1993, 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 loans against and withdrawals
from the Policy (from the Insurer or otherwise), to the
extent of the aggregate premiums paid by
the Assignee on the Policy plus the after-tax interest
accrual on premium payments made by the Assignee, plus the
after-tax interest accrual on said loans to the extent paid
by the Assignee;
(ii) the right to release this Assignment to the Assignor or his
assigns;
(iii) the right to surrender the Policy and to receive the Policy
cash value and any dividend credits outstanding (but not in
excess of (a) the aggregate premiums paid by the Assignee on
the Policy plus (b) the excess over three times the
Executive's annual base pay at the time of death (or if the
Executive has retired, three times his final base pay));
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 (a) the aggregate premiums paid
by the Assignee on the Policy plus the after-tax interest
accrued on the premium payments made by the Assignee plus
the after-tax interest on any indebtedness incurred by the
Assignee, but reduced by any indebtedness incurred by the
Assignee on the Policy
plus (b) the excess over three times the Executive's annual
base pay at the time of death (or if the Executive has
retired, three times his final base pay).
(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. This Assignment does not change the Insurer's right under the "Policy
Loan" provision of the Policy to charge interest on any Policy loan. If interest
is not paid under the terms of the Policy, the Insurer has the right to add such
interest to the unpaid loan from whatever cash value remains
regardless of who is entitled to that cash value under the terms of this
Assignment.
3. 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.
4. Any death proceeds of the Policy in excess of the amount payable to the
Assignee shall be paid by the Insurer directly to the beneficiary named under
the Policy.
5. All provisions of this Assignment shall be binding upon the successors,
assigns, heirs, executors, administrators, or beneficiaries of the Assignor.
6. 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.
7. 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 Illegible on March 23, 1993.
(City and State) (Date)
/s/ Illegible /s/ Illegible
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Witness Owner
Accepted and Agreed to: New England Power Service
Company
/s/ Illegible By: /s/ Illegible
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Witness
The Insurer hereby acknowledges receipt of a copy of this Collateral Assignment
form.
Insurer
Date: 4/13/93 By: /s/ Illegible
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Confideration Life