EXHIBIT 10.5
BOSTON EDISON COMPANY
KEY EXECUTIVE BENEFIT PLAN
STANDARD FORM OF AGREEMENT
MAY, 1986 WITH MODIFICATIONS
AGREEMENT
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THIS AGREEMENT is made as of September 1, 1989 between Boston Edison Company
(the "Company"), having its principal offices at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, and Xxxxxx X. Xxxxxxx (the "Employee") residing at Kittery Point,
Maine.
WITNESSETH
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WHEREAS, the Employee is employed by the Company; and
WHEREAS, the Company has purchased and owns policy no. 8529321 (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 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.
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.
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 the 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. However, if the
Employee is over age 55 when this Agreement is entered into, and has attained
the age of 65 upon termination of full-time employment, and does not elect to
receive the Supplementary Retirement Benefit, the Company will retain the Policy
and provide death benefits to the Employee, under paragraph 3, until the tenth
anniversary date of the Policy. At that time the Company will sell the Policy
as stated above.
6. The Company agrees that if the Employee has at least 5 years' service
occurring after September 1, 1989, he may elect, at any time prior to his date
of termination, to forgo the right to purchase the Policy pursuant to paragraph
5 and instead received 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.
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 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). 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, 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.
9. 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.
10. 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.
11. The Employee agrees that he has no rights to any benefits under this
Agreement except under the circumstances described in paragraph 4, 5, and 6.
12. 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.
13. 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 1
attached hereto.
IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement
as of the date and year first above written.
/s/ Xxxxxx X. Xxxxxxx
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Witness Employee
BOSTON EDISON COMPANY
By
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PRELIMINARY
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Schedule A - Page 1 of 2 Age - 51
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Taxable
Death Value of
Age Benefit (A) Insurance
--- ----------- ---------
51 296,500 $ 418
52 296,500 445
53 296,500 471
54 296,500 498
55 296,500 531
56 296,500 581
57 296,500 640
58 296,500 712
59 296,500 792
60 296,500 878
61 296,500 990
62 296,500 1,115
63 296,500 1,254
64 296,500 1,408
65 296,500 1,586
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Total $12,319
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Note: Asset values include guaranteed value and dividends. Dividends are
on the 1989 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.
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Schedule A - Page 2 of 2 Age - 51
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Summary of Page 1
Average Total
Death Taxable
Age Benefit (A) Income
--- ----------- ---------
5 $296,500 $ 2,363
10 296,500 5,966
15 296,500 12,319
Results at Age 65
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I. All contributions stopped at age 65:
II. Executive's options at age 65:
A. Remain insured to age 65 and then receive:
Fully paid-up life insurance of $626,500
Less loan for corporate contribution 330,000
Net death benefit continues at 296,500
Annual interest on loan (at 8.00%) 26,400
Yearly increasing tax free dividend starting at 13,500
Yearly increasing cash value starting at (A) 10,000
B. Assign all right in the policy to the
corporation and receive a supplementary retirement
benefit of $38,115 for 16 years.
C. Other flexible options and combinations are
available on retirement, i.e. 50% insurance,
$148,250 and 50% supplemental pension for 15 years,
$19,058.
Note: Asset values include guaranteed values and
dividends. Dividends are on the 1989 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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