EXHIBIT 10.4
BOSTON EDISON COMPANY
KEY EXECUTIVE BENEFIT PLAN
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AGREEMENT
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THIS AGREEMENT is made as of October 1, 1983 between Boston Edison Company
(the "Company"), having its principal offices at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, and Xxxxxx X. May (the "Employee") residing at Westwood,
Massachusetts.
WITNESSETH
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WHEREAS, the Employee is employed by the Company; and
WHEREAS, the Company has purchased and owns policy no. 6913603 (the
"Policy") on the life of the Employee issued by New England Mutual Life
Insurance Company (the "Insurance Company"); and
WHEREAS, the Company and the Employee heretofore have agreed upon a plan
for the payment of the premiums and interest due or to become due on the Policy,
the disposition of the Policy, the mode of payment of death benefits thereunder,
and for supplementary retirement benefits to be paid under certain
circumstances, and for the protection of their mutual interest, desire to set
forth their agreement in writing;
NOW, THEREFORE, in consideration of the premises, it is mutually agreed by
and between the Company and the Employee as follows:
1. The Employee agrees that the Company as long as it is the owner of the
Policy, may exercise all rights of ownership with respect to the Policy, except
as otherwise hereinafter provided.
2. The Company agrees to pay all premiums on the Policy (except as
otherwise provided in paragraph 8) to the earlier of (a) the date the Policy is
fully paid or (b) the date the Employee purchases the Policy under paragraph 5,
if he does, in fact, purchase the Policy.
3. The Company agrees that the proceeds payable under the policy after the
payment of all policy loans shall be an amount equal to three times the
Employee's annual salary at the time of his death or retirement, less $50,000.
4. The Employee and the Company agree that if the Employee dies while an
active employee of the Company and has not elected the Supplementary Retirement
Benefit under paragraph 6, death benefits will be payable in two (2) parts, as
follows:
(a) The proceeds payable under the policy referred to in paragraph 3
shall be paid to such beneficiary as shall have been designated by the
Employee or the Employee's assignee; and
(b) The balance shall be paid to the Company.
If the Employee dies while an active employee and has elected the
Supplemental Retirement Benefit, the benefit will be payable annually for 15
years to the Employee's beneficiary.
5. The Company agrees that, unless the Employee has elected pursuant to
paragraph 6 to receive the Supplementary Retirement Benefit, upon the
termination of Employee's full-time employment with the Company (other than by
reason of death), the Company shall, upon the written request delivered to the
Company by the Employee, sell the Policy to the Employee or his assignee for an
amount equal to the excess of (i) the aggregate cash premiums (including
dividends used to purchase additional paid-up insurance on the life of the
Employee) paid by the Company under the Policy to the date of such sale over
(ii) the aggregate loans (including any interest outstanding on such loans)
against the Policy outstanding on the date of such sale.
6. The Company agrees that if the Employee is at least 60 years old he may
elect to forego the right to purchase the Policy pursuant to paragraph 5 and
instead receive upon termination of employment at age 65 a Supplementary
Retirement Benefit, the amount of which shall be equal to 33% of the Employee's
annual salary as of his date of termination, payable annually (without interest)
for 15 years to the Employee or his beneficiary. If the Employee retires prior
to age 65, he will be eligible to receive the Supplementary Retirement Benefit
only if he is at least 62 years old. Both parties agree that if the Employee
elects to receive a Supplementary Retirement Benefit, the Company will retain
ownership of the policy and all rights and benefits of the Policy will accrue to
the Company.
7. The Company agrees that if the Employee qualifies for the Supplementary
Retirement Benefit under paragraph 6, he may elect to apportion benefits between
paragraph 5 and 6 in a manner satisfactory to the Company.
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8. The Employee agrees that, prior to termination of full-time employment,
he will annually pay the Company a sum equal to the payment he would have made
if he had elected the Company's Supplemental Life Insurance.
9. The Employee acknowledges that as of the effective date of this
Agreement he cedes all coverage greater than $50,000 under the Company's Group
Life Insurance Plan (except for the double indemnity coverage) and is ineligible
to elect Supplemental Life Insurance under that Plan. Both parties agree that
the Employee will retain $50,000 coverage under the Company's Group Life
Insurance Plan so long as he is an active Employee and , after retirement, will
retain $50,000 coverage, subject to the limitations contained in the normal
declining scale of retirees' death benefits, in the Company's Group Life
Insurance Plan as it may be in effect from time to time.
10. The Employee agrees that for purposes of this Agreement he shall be
bound by the determination of the Company of (a) whether and for what months the
Employee was or was not in the full-time employ of the Company, and (b) what
constitutes full-time employment.
11. The Employee may assign the right to name the beneficiary and any
other rights he may have under his portion of the life insurance policy. The
Employee's rights to receive benefits under this Agreement are solely those of
an unsecured general creditor of the Company. Except as provided in the first
sentence of this paragraph, the Employee's rights to benefits under this
Agreement may not be assigned or otherwise transferred and are not subject to be
taken by the Employee's creditors by any process whatsoever, and any attempt to
cause such interest to be so subjected will be of no force and effect.
12. The Employee agrees that he has no rights to any benefits under this
Agreement except under the circumstances described in paragraphs 4, 5, and 6.
13. The Company can amend this Agreement from time to time by a written
instrument delivered to the Employee. However, no such amendment can reduce the
Employee's benefits without his consent.
14. It is the understanding of both parties that the Employee's benefits
under this Agreement, as of the date hereof, will be as shown in Schedule A
attached hereto.
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IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the day and year first above written.
/s/ Xxxxxx Anntona /s/ Xxxxxx X. May
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Witness Employee
BOSTON EDISON COMPANY
By: /s/ Xxxxxx X. Xxxxxxx Xx.
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Schedule A - Page 1 of 2 Age - 36
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Taxable Less Annual Executives
Death Value of Executive Taxable Cash Asset
Age Benefit (A) Insurance Payment Income Value (B)
----------------- -------------------- ------------------- ------------------- ------------------- --------------------
37 181,000 281 628 -0- -0-
38 181,000 288 628 -0- -0-
39 181,000 295 628 -0- -0-
40 181,000 302 628 -0- -0-
41 181,000 313 628 -0- -0-
42 181,000 324 628 -0- -0-
43 181,000 335 628 -0- 2,083
44 181,000 348 628 -0- 4,638
45 181,000 362 628 -0- 7,698
46 181,000 384 628 -0- 11,298
47 181,000 409 628 -0- 15,301
48 181,000 436 628 -0- 19,922
49 181,000 467 628 -0- 25,232
50 181,000 500 628 -0- 31,290
51 181,000 538 628 -0- 38,141
52 181,000 577 628 -0- 45,841
53 181,000 623 628 -0- 54,453
54 181,000 672 628 44 64,046
55 181,000 724 628 96 74,688
56 181,000 787 628 159 86,460
57 181,000 854 628 226 99,487
58 181,000 929 628 301 113,859
59 181,000 1,008 628 380 129,677
60 181,000 1,100 628 472 147,054
61 181,000 1,207 628 579 166,119
62 181,000 1,332 628 704 187,011
63 181,000 1,475 628 847 209,875
64 181,000 1,636 628 1,008 234,871
65 181,000 1,810 628 1,182 262,175
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Total 20,895 18,212 5,998
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Note: Asset values include guaranteed value and dividends. Dividends are on
the 1983 scale and are not guaranteed. All figures are approximate
using age at birthday closest to the policy anniversary date.
(A) Three times annual salary, less $50,000.
(B) Cash asset values are available only after termination of full-time
employment under the insurance option. At that time they may be
borrowed at 8% interest.
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Schedule A - Page 2 of 2 Age - 36
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Summary of Page 1
Average Total Executive
Death Total Payments Taxable Cash Asset
Year Benefit By Executive Income Value
--------------------- ---------------------- ---------------------- ---------------------- ----------------------
5 181,000 3,140 -0- -0-
10 181,000 6,280 -0- 11,298
15 181,000 9,420 -0- 38,141
20 181,000 12,560 299 86,460
25 181,000 15,700 2,257 166,119
29 181,000 18,212 5,998 262,175
Results at Age 65
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I. All contributions stopped at age 65:
II. Executives options at age 65:
A. Remain insured to age 65 and then receive:
Fully paid-up life insurance of $270,645
Less loan for corporate contribution 89,645
Net death benefit continues at 181,000
Annual interest on loan (at 8.00% tax deductible) 7,172 Net $ 3,586
Yearly increasing tax free dividend starting at 20,226
Yearly increasing cash value starting at 7,420
B. Assign all rights in the policy to the corporation
and receive a supplementary retirement benefit of
$25,410 for 15 years.
C. Other flexible options and combinations are
available on retirement, i.e. 50% insurance,
$90,500 and 50% supplemental pension for 15 years,
$12,705.
Note: Asset values include guaranteed values and dividends.
Dividends are on the 1983 scale and are not guaranteed.
(A) Cash values are only available after termination of
employment and selection of the insurance option.
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AMENDMENT TO KEY EXECUTIVE
BENEFIT PLAN AGREEMENTS
Pursuant to Paragraph 13 of all Key Executive Benefit Plan Agreements (the
"Agreements") existing as of this 1st day of February, 1986, between Boston
Edison Company (the "Company") and certain of its employees (hereinafter
collectively the "Employees" and individually the "Employee"), all such
Agreements are hereby amended as follows:
I. In order to clarify (a) that except where purchase of the Policy is
elected under Paragraph 5 of Agreements the Employees are no longer required to
contribute to premiums payable under the Policy referenced in the WHEREAS
Clauses of the Agreements and (b) that henceforth the Employees are no longer
prohibited from participating in the Company's Supplemental and Dependents Life
Insurance Programs in addition to their participation in these Agreements,
Paragraphs 2, 8 and 9 of the Agreements are hereby amended as follows:
A. The parenthetical phrase "(except as otherwise provided in Paragraph
8)" is hereby deleted from Paragraph 2 of the Agreements. Henceforth
said Paragraph 2 shall read as follows:
2. The Company agrees to pay all premiums on the Policy to the earlier
of (a) the date the Policy is fully paid or (b) the date the
Employee purchases the Policy under paragraph 5, if he/she does, in
fact, purchase the Policy.
B. Paragraph 8 of the Agreements is hereby deleted in its entirety and
the succeeding paragraphs are renumbered accordingly.
C. The words "and is ineligible to elect Supplemental Life Insurance under
that Plan" are hereby deleted from the first sentence of Paragraph 9 of
the Agreements. Henceforth, the first sentence of said Paragraph 9 shall
read as follows:
The Employee acknowledges that as of the effective date of this
Agreement, he/she cedes all coverage greater than $50,000 under the
Company's Group Life Insurance Plan (except for the double indemnity
coverage.)
II. In order to clarify that the proceeds payable to an Employee under
the Policy upon death or retirement after the payment of all policy loans shall
be an amount equal to three times his or her annual salary without the addition
of any bonuses or any other additional compensation but prior to any deductions
for contributions to the Boston Edison Savings Plan or salary deferrals under
any deferred compensation agreement, Paragraph 3 of the Agreements is hereby
amended to read as follows:
3. The Company agrees that the proceeds payable under the Policy after
the payment of all Policy loans shall be an amount equal to three
times the Employee's annual salary at the time of his/her death or
retirement, less $50,000. For purposes of this Agreement, "annual
salary" shall mean the annual compensation payable to the Employee by
the Company, exclusive of all bonuses and all other forms of
additional compensation, but including any amounts elected by the
Employee to be contributed to the Boston Edison Company Savings Plan
or any non-bonus amounts deferred under any deferred compensation
agreement.
III. In order to clarify that the $50,000 coverage under the Company's
Group Life Insurance Plan to which the Employees are entitled pursuant to
Paragraph 9 of the Agreements shall remain constant from retirement until the
Employee's death without being subject to the normal declining scale of
retirees' death benefits otherwise contained in the Company's Group Life
Insurance Plan, the second sentence of Paragraph 9 of the Agreements is hereby
amended to read as follows:
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Both parties agree that the Employee will retain $50,000 coverage under the
Company's Group Life Insurance Plan so long as he/she is an active Employee
and, after retirement, will retain $50,000 coverage without being subject
to the limitations otherwise contained in the normal declining scale of
retirees' death benefits, in the Company's Group Life Insurance Plan as it
may be in effect from time to time.
This Amendment to the Agreements to take effect as of the day and year first
above written.
BOSTON EDISON COMPANY
By: /s/ XXXXXXX XXXXXXX
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Xxxxxxx Xxxxxxx
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AMENDMENT TO KEY EXECUTIVE
BENEFIT PLAN AGREEMENT
Pursuant to Paragraph 12 of the Key Executive Benefit Plan Agreement
existing between Boston Edison Company (the "Company") and Xxxxxx X. May (the
"Employee"), Paragraph 6 of the Agreement is hereby amended to read as follows:
6. The Company agrees that if the Employee has at least 5 years' service
occurring after June 1, 1987, he may elect, at any time prior to his
date of termination, to forego the right to purchase the Policy
pursuant to paragraph 5 and instead receive upon termination of
employment a Supplementary Retirement Benefit, payable annually
(without interest) for 15 years to the Employee or his beneficiary, in
accordance with the following schedule:
Percent of Annual Salary
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After 5 years' service 16.5%
After 6 years' service 19.8%
After 7 years' service 23.1%
After 8 years' service 26.4%
After 9 years' service 29.7%
After 10 years' service 33.0%
Both parties agree that if the Employee elects to receive a
Supplementary Retirement Benefit, the Company will retain ownership of
the Policy and all rights and benefits of the Policy will accrue to the
Company.
BOSTON EDISON COMPANY
By: /s/ XXXXXXX XXXXXXX
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/s/ XXXXXX X. MAY
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Xxxxxx X. May
October 30, 1989
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KEY EXECUTIVE BENEFIT PLAN
Xxxxxx X. May
Agreement dated October 1, 1983
Amendment dated February 1, 1986
Amendment dated October 30, 1989
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