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Exhibit 10(z)
NEW ENGLAND ELECTRIC SYSTEM COMPANIES
LIFE INSURANCE PROGRAM FOR EXECUTIVES I
FOR
CHERYL A. LAFLEUR
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TABLE OF CONTENTS
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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
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COLLATERAL ASSIGNMENT
LIFE INSURANCE PROGRAM
Agreement entered into as of the 1st day of January, 1996, between
New
England Power Service Company, a Massachusetts corporation (the
Company), and
Cheryl A. LaFleur (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 (including NEES Goals) 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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2
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.
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3
(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.
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
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4
(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
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:
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5
(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
(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)
If the Executive has Retired from the Company before the tenth
anniversary of a Policy, the Company will continue to pay premiums
on that
Policy in accordance with section 8 until such tenth anniversary.
On or after
such tenth anniversary, the Company may withdraw from the Policy
amounts equal
to the Company's Cost. The Company may delay withdrawals from the
Policy in
order to preserve the Policy's tax treatment.
For the purposes of this Agreement, the Executive will be
considered
to have Retired from the Company if the termination of employment
occurs (i) at
age 61 or older with a minimum of 10 years of service (as defined
in Final
Average Pay Pension Plan I) or (ii) at age 55 or older with age
plus years of
service equal to at least 85.
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6
(b)
If the Executive terminated employment but has not Retired from
the
Company before the tenth anniversary of the first Policy, 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.
(c)
If the Executive terminated employment but has not Retired from
the
Company after the tenth anniversary of the first Policy, the
Company may
withdraw its Cost from the Policy as soon as it may be withdrawn
without causing
the Policy to lose its tax treatment as life insurance. The
Executive will
receive no life insurance coverage under the New England Electric
System
companies' group life insurance plan.
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.
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 Executiv
