EXECUTIVE PERMANENT LIFE INSURANCE AGREEMENT
Exhibit
10c(23)
THIS
AGREEMENT is made this ____________
between
CAROLINA POWER & LIGHT
COMPANY
("Company") and ____________________________________ ("Employee").
WITNESSETH:
WHEREAS,
the Company has instituted an Executive Permanent Life Insurance Program in
order to assist selected key employees in providing death benefits for their
beneficiaries; and
WHEREAS,
the Company desires to provide such benefits in the Executive Permanent
Life
Insurance Program to the extent provided herein;
NOW,
THEREFORE, it is mutually agreed that:
1.
Insurance
Policy.
In
furtherance of the purpose of the Executive Permanent Life Insurance Program,
the Company and Employee have jointly applied for and purchased life insurance
from
Northwestern Mutual Life Insurance Company ("Insured") insuring the life of
__________________,
an employee of the Company. The policy number is __________________and
the
original face amount is ________________ ("Policy").
2.
Policy
Ownership.
The
Company and the Employee agree that the Policy shall be divided into two
separate and distinct policy interests as provided in Paragraph 4. During the
term of this Agreement, the parties shall have the following ownership rights
with respect to such policy interests.
a) Company.
i)
The
contingent limited right to obtain one or more loans or advances on the Policy
which shall be limited to the extent of the Company's Policy Interest, as
defined in Paragraph 4 below, and to pledge or assign the Policy for such loans
or advances. Any such loan, advance, pledge or assignment by the Company shall
be subject to the written consent of the Employee. If such loans are for the
purpose of paying premiums or otherwise to purchase or carry the Policy, the
Company agrees to adhere to the requirement of Section 264 of the Internal
Revenue code of 1986, as amended from time to time, so that the interest paid
on
such loans, or some portion thereof, may be deductible for federal income tax
purposes;
ii)
Ownership
of Policy cash value equal to the sum of all "Company premiums" as defined
in
Paragraph 3(a) hereof; and
iii)
The
limited right to receive death proceeds of the Policy to the extent of the
Company’s
Policy Interest in the event of the Employee’s death during the term
of
this
Agreement.
b)
Employee.
Except
as provided in Paragraph 2(a) above and otherwise in this Agreement, the
Employee shall have all remaining ownership rights in the Policy, including
but
not limited to, the following:
i)
The
contingent limited right to obtain one or more loans or advances on the Policy
which shall be limited to the extent of the Employee's Policy Interest, as
defined in Paragraph 4 below, and to pledge or assign the Policy for such loans
or advances. Any
such
loan, advance, pledge or assignment by the Employee shall be subject to
the
written
consent of the Company;
ii)
The
right
to designate beneficiaries of the Employee's Policy Interest including selection
of settlement options;
iii)
The right to assign any part or all of the Employee's ownership rights in the
Policy to any person, entity or trust by execution of appropriate
documents;
iv)
The
right
to surrender the Policy subject to the Company’s Policy Interest;
and
v)
Ownership
of all Policy cash value not owned by the Company.
3. Payment
of Premiums.
a)
i)
Subject
to Paragraph 3(b) below, payment of the Policy’s annual premium shall be split
between the Company and the Employee. The Employee shall pay that portion
of
the annual premium equal to the “economic benefit” as
defined in Revenue Rulings 64-325 and 66-110. The value of the economic benefit
shall be calculated by using
the lower of the P.S. 58 rates or the Insurer’s term
rates. The Company shall pay the remainder of the premium (hereafter referred
to
as “Company premium(s)”).
ii)
Notwithstanding
the foregoing, during the term of this Agreement, the Company shall pay its
portion of the annual premium for ten (10) years commencing with the premium
for
the initial policy year beginning July 1, 1998, and including the premium due
on
the July 1, 2007 policy anniversary; provided, however, that the Company may
agree to pay such additional premiums as it and the Employee may agree. In
the
event the Company is not obligated to pay a portion of the premium on the policy
for any policy year during the term of this Agreement, the Employee shall pay
such premium either in cash or by the application of policy dividends and/or
values.
iii)
By mutual consent of the parties hereto and for administrative convenience,
the
Company
may pay the entire premium as it becomes due, whereupon the Employee
shall
reimburse the Company for the Employee's share of the premium in such manner
as
the Company and the Employee may mutually agree.
b) If
either
a standard disability waiver of premium benefit or accidental death benefit
is
added
as
a rider to the Policy, the Employee agrees to pay the annual cost of such
riders.
4. Policy
Interests.
a)
Subject
to Paragraph 4(b) below, during the term of this Agreement and prior to or
upon
the
death of the Employee, the Company, by reason of payment of
premiums pursuant
to Paragraph 3 above, shall have an interest in the Policy equal to the sum
of
Company premiums paid reduced by any Policy indebtedness
which is incurred by the
Company and unpaid interest on such Policy indebtedness ("Company's Policy
Interest").
The Employee, by reason of payment
of premiums pursuant to Paragraph 3
above,
shall have all the remaining interest in the Policy in excess of the
Company's
Policy
Interest ("Employee's Policy Interest").
|
b)
|
In
the event of the death of the Employee during the term of this Agreement,
the proceeds of the Policy shall be payable as
follows:
|
i)
The
Company shall be entitled to receive an amount of the Policy death proceeds
equal to the proceeds of the Policy reduced by the death benefit payable to
the
Employee’s beneficiary pursuant to Paragraph 4(b)(ii) below, less any Policy
indebtedness
which is incurred by the Company and unpaid interest on such Policy
indebtedness.
ii)
The
Employee's beneficiary shall be entitled to receive an amount of the Policy
death proceeds as follows plus death proceeds, if any, from an accidental death
benefit rider:
|
Year
|
Amount
|
|
1
|
705,000
|
|
2
|
747,300
|
|
3
|
792,138
|
|
4
|
839,666
|
|
5
|
890,046
|
|
6
|
943,449
|
|
7
|
1,000,056
|
|
8
|
1,060,059
|
|
9
|
1,123,663
|
|
10
|
1,191,083
|
|
11
|
1,262,548
|
|
12
|
1,338,300
|
5.
Dividends.
During
the term of the Agreement, the Company and Employee agree that any dividends
attributable to the Policy shall be used to purchase paid-up additional life
insurance
on the
Employee's life unless mutually agreed otherwise. Notwithstanding the foregoing,
in the event a premium on the Policy becomes due during the term of this
Agreement and the Company is not obligated to pay any portion of such premium,
the Employee may elect to have Policy dividends first offset such premium due
with any remaining dividends used to purchase paid-up additional life
insurance.
6.
Beneficiary
Designation.
The
Company and Employee agree that the beneficiary designation for the payment
of
death proceeds in the Policy Application shall be completed so that the
Company
will be entitled to receive proceeds equal to the Company's Policy Interest
and
the Employee's
beneficiary will be entitled to receive proceeds equal to the Employee's Policy
Interest. The Employee may change his designated beneficiary at any time upon
notification to the Insurer and completion of the proper beneficiary designation
forms.
7.
Termination.
This
Agreement shall terminate upon the happening of any of the
following:
a) The
July
I, 2008 policy anniversary (which is the policy anniversary next following
the Employee's attainment of age 65);
|
b)
|
Failure
of the Employee to either pay his share of a premium or to reimburse
the
Company for the Employee share of a premium pursuant to Paragraph
3;
|
|
c)
|
Surrender
of the Policy by the Employee;
|
|
d)
|
Termination
for cause of the Employee's employment with the Company. For purposes
hereof,
termination for cause shall mean the termination of the Employee's
employment with
the Company for any one or more of the following reasons: (a) embezzlement
or theft from the Company, or other acts of dishonest or disloyalty
injurious to the Company;
(b) use by the Employee of alcohol, drugs, narcotics,
or other controlled substances to such an extent that the Employee's
ability to perform his duties as an employee of the Company is materially
impaired; (c) disclosing without authorization proprietary
or confidential information of the Company; (d) committing any act
of gross
negligence
or gross malfeasance; or (e) conviction of a crime amounting to a
felony
under the laws of
the United
States of America or any of the several states. The determination
of
whether or not there has been a termination for cause
shall be made by the
Board of Directors of the Company
provided
that, if the Employee or the terminated
Employee is a member of the Board of Directors, he shall not participate
in the
determination.
|
|
e)
|
Termination
of the Employee's employment with the Company prior to attainment
of age
62 for any reason other than due to the Employee's disability or
following
a change in control; provided, however, that in its sole and absolute
discretion the Chief Executive Officer of the Company may elect to
continue this Agreement. For purposes
hereof:
|
i)
Disability
shall have the same meaning as “total disability” in the Company's Long-Term
Disability Insurance Plan; provided, however, that if at the time of
determination
of disability the Company does not sponsor the Long-Term Disability
Insurance Plan, disability shall mean the complete inability to perform the
normal duties of occupation during the first 18 months after commencement of
disability; thereafter, disability means the inability to engage in any gainful
occupation for which
the
Employee is reasonably fitted by education, training or experience.
ii)
Change
in
control shall mean a change in control of the Company of a nature that would
be
required to be reported in response to Item 1(a) of the Current Report on form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); provided, that without
limitation,
such a change in control shall be deemed to have occurred at such time
as
a
"person" (as used in Section 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 25% or more of the combined voting power of the Company's
outstanding securities ordinarily having the right to vote in elections of
directors; or (b) individuals who constitute the Board of Directors of the
Company on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was approved
by a vote of at least three quarters of the directors comprising the Incumbent
Board shall be, for purposes of this subsection (b), considered as though such
person were a member of the Incumbent Board. Notwithstanding the foregoing
definition,
no change in control shall be deemed to have occurred unless and until
the
Employee
or the Employee has actual knowledge from one of the following sources: a report
filed with the Securities and Exchange Commission, a public statement issued
by
the Company, or a periodical of general circulation, including but not limited
to The
New York Times
or
The
Wall Street Journal.
8.
Rights
Upon Termination.
a)
Upon
the
termination of this Agreement pursuant to Paragraph 7 above if the Employee's
interest in Policy cash value (prior to reduction for Policy indebtedness)
is
zero, the Employee shall surrender his interest in the Policy to the Company
and
the Company shall become the sole owner of the Policy. In such event the
Employee shall immediately execute any documents necessary to assign and release
all of his interest in the Policy to the Company.
b)
Upon
the
termination of this Agreement pursuant to Paragraph 7 above if the Employee's
interest in Policy cash value (prior to reduction for Policy indebtedness)
is
greater than zero, the Policy shall be divided into a separate policy owned
solely by the Company and a separate policy owned solely by the Employee. The
values of each separate policy shall be determined by dividing the total value
of the Policy prior to such division in proportion to each party's ownership
interest in Policy cash value determined prior to reduction for Policy
indebtedness. In the event there are outstanding policy loans, the separate
policy received shall be subject to either the Company's or Employee's
outstanding policy loan, as the case may be. The Company and the Employee shall
immediately
execute any documents necessary to cause the Policy to be divided into
such
separate
policies.
9.
Special
Provisions.
The
following provisions are part of this Agreement and the Executive Permanent
Life
Insurance Program and are intended to meet the requirements of the Employee
Retirement Income Security Act of 1974:
a) The
named
fiduciary: The Company.
b) The
funding policy under this Agreement is that the Company and the Employee remit
all premiums on the Policy when due.
c) Direct
payment by the Insurer is the basis of payment of benefits under this Agreement,
with
those benefits in turn being based on the payment of premiums by the
Company and
the
Employee.
d) For
claims procedure purposes, the "Claims Manager" shall be the Secretary of the
Company.
i)
If
for
any reason a claim for benefits under this Agreement is denied by the
Company,
the
Secretary shall
deliver
to the claimant a written explanation setting forth the specific
reasons for the denial, pertinent references to the section of the Agreement
on which
the
denial is based, such other data as may be pertinent and information on
the
procedures to be followed by the claimant in obtaining a review of his claim,
all written in a manner calculated to be understood by the claimant. For this
purpose:
(1) The
claimant's claim shall be deemed filed when presented orally or in writing
to the Secretary.
(2) The
Secretary's explanation shall be in writing delivered to the claimant
within
ninety (90) days of the date the claim is filed.
ii)
The
claimant shall have sixty (60) days following his receipt of the denial of
the
claim
to
file with the Secretary a written request for review of the denial. For
such
review,
the claimant or his representative may submit pertinent documents and written
issues and comments.
iii) The Secretary shall decide the issue on
review and furnish the claimant with a copy within sixty (60) days of receipt
of
the claimant's request for review of his claim. The decision on review shall
be
in writing and shall include specific reasons for the decision written in a
manner calculated to be understood by the claimant, as well as specific
references to the pertinent provisions of the Agreement on which the
decision
is
based. If a copy of the decision is not so furnished to the claimant within
such
sixty (60) days, the claim shall be deemed denied on review.
10.
Amendment
and Assignment of Agreement.
This
Agreement may be altered, amended,
or modified by written Agreement signed by the Company and the Employee.
In
addition, either
party may assign its rights, interests and obligations under
this
Agreement; provided,
however,
that any assignment shall be made subject to the terms
of this Agreement.
11. Liability
of Insurer.
The
Insurer shall be bound only by the provisions of and endorsements
on the Policy, and any payments made or action taken by it is accordance
therewith
shall fully discharge it from all claims, suits and demands of all persons
whatsoever. The Insurer shall
be
entitled to rely exclusively on a statement by the Company
as to the
determination of
the
Company's Policy Interest and the Employee's
Policy
Interest. The Insurer shall in no way be bound by or be deemed to have notice
of
the
provisions
of this Agreement.
12.
Miscellaneous.
Where
appropriate in this Agreement, words used in the singular shall include the
plural, and words used in masculine shall include the feminine. The Agreement
shall bind the Company and its successors and its assigns, and the Employee
and
its successors and its assigns. The laws of the State of North Carolina shall
govern this
Agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement under seal as of
the
day
and year
first above written.
CAROLINA
POWER & LIGHT COMPANY
BY: _____________________________________
Title
_____________________________________
(CORPORATE
SEAL)
ATTEST:
____________________________________
EMPLOYEE:
________________________________
