EXHIBIT 10(j)
January 16, 2002
Mr. Williams F. Edwards
Sr. Vice President and CFO
Niagara Mohawk Corporation
300 Erie Blvd. West
Syracuse, NY 13202
Dear Bill:
I am pleased to offer you the position of Senior Vice President National
Grid USA, and President Niagara Mohawk Power Corporation. Your base salary will
be Four Hundred Thousand Dollars ($400,000.00) per year. You will be eligible
for a salary review on April 1, 2003. Thereafter you will be eligible for a
salary review on our annual executive salary review date, which currently is
April 1st. Your office will be located at Niagara Mohawk's Syracuse facility. Of
course, the offer is contingent upon the successful merger of National Grid and
Niagara Mohawk, and will be effective upon the closing date of the Merger.
You will be entitled to participate in all benefits and incentive
compensation plans that are provided to executives in ICP I A, including the
services of AYCO for financial consulting and tax preparation. In addition, you
will be provided with a lump sum bonus payment four years after the closing date
equal to 1X your base pay in effect on said date, taxes withheld, provided you
achieve the Merger Performance Objectives agreed to by you and Rick Sergel /
Mike Jesanis. Your performance will be evaluated based upon the percentage of
the objectives achieved. The result will then be used to determine your ultimate
bonus payment. Should your employment be terminated by the Company for any
reason other than "cause" prior to completion of the four year period, you will
receive a prorata bonus payment. Such prorata bonus payment will assume full
achievement of all objectives and reflect 1/48th of the full award opportunity
for each month served beyond the closing date. If no objectives are established,
the full award opportunity will be paid.
You will receive life insurance at 4X your base pay for the duration of
your Employment Agreement between Niagara Mohawk Holdings, Inc. and you dated
March 17, 1999 as amended, (Employment Agreement). Upon expiration of your
Employment Agreement, you will receive life insurance at 3X your base pay for
your lifetime. Until Niagara Mohawk's health care plans are converted into
National Grid's, you will be entitled to participate in Niagara Mohawk's health
care plans. Upon conversion, you will be entitled to participate in National
Grid's health care programs. Upon termination of your employment you will be
entitled to the health care benefits set forth in Paragraph 4(1) of your
Employment Agreement.
You will also be entitled to participate in our Executive Supplemental
Retirement Plan Level B. You will be paid a lump sum payment as a result of the
Merger under Niagara Mohawk's Supplemental Executive Retirement Plan, Amended
and Restated as of January 1, 1999, and calculated as if you had experienced a
termination of employment on the date of the Merger. Any future pension benefits
from National Grid USA will be offset by the annuity value
of such lump sum payment, determined in accordance with the actuarial
equivalence factors defined in National Grid USA Companies' pension plans.
We will honor your Employment Agreement for thirty-six months from the
closing date of the Merger, subject to the terms set forth in the attached
Amendment.
Upon the expiration of your Employment Agreement, should your employment
be terminated by the Company without cause, at any time during your employment,
the Company will provide you with a severance payment equal to the greater of
(1) 1.5X your total compensation (base salary and average of the three previous
actual award percentages for ICP I A bonus, or (2) the amount provided for in
any other severance plan in effect for National Grid USA executives of
equivalent status.
Attached you will find a copy of the Amendment to your Employment
Agreement that you will need to sign. As you are aware, in exchange for signing
the Amendment, you will be provided with a lump sum payment of Five Hundred
Thousand Dollars ($500,000.00), taxes withheld. We expect One Hundred Sixty
Thousand Dollars ($160,000.00) to be paid by Niagara Mohawk prior to the closing
and the remaining Three Hundred Forty Thousand Dollars ($340,000.00) to be paid
by National Grid at the time of closing. If, however, you have not received the
payment from Niagara Mohawk by closing, National Grid will pay the full Five
Hundred Thousand Dollars at the time of closing. If said payment or any other
payment should become subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, then National Grid shall pay said
amount of interest or penalties as set forth in Paragraph 4 (i) & (j) of your
Employment Agreement.
Bill, I am excited by the prospect of your joining our team and I hope you
accept what I believe to be a very generous offer. If you accept, please sign
below and return both the original of this letter and two originals of the
Amendment to your Employment Agreement to me as soon as possible.
Very truly yours,
/s/ David C. Kennedy
Attachment
Accepted:
_______________
Date:
AGREEMENT
BETWEEN
NATIONAL GRID USA
AND
WILLIAM F. EDWARDS
TABLE OF CONTENTS
1. Defined Terms....................................................... 1
2. Term of Agreement................................................... 1
3. Company's Covenants Summarized...................................... 2
4. The Executive's Covenants: Previous Agreement....................... 2
5. Compensation Other Than Severance Payments.......................... 3
6. Severance Payments.................................................. 4
7. Termination Procedures and Compensation During Dispute.............. 10
9. Successors: Binding Agreement....................................... 13
10. Notices............................................................. 14
11. Miscellaneous....................................................... 14
12. Validity............................................................ 15
13. Counterparts........................................................ 15
14. Settlement of Disputes; Arbitration................................. 15
15. Definitions......................................................... 16
AGREEMENT
THIS AGREEMENT is made by and between National Grid USA, on behalf of
itself, its affiliates and subsidiaries (the Company), and William F. Edwards
(the Executive).
WHEREAS the Company considers it essential to the best interests of its
business to foster the continuous employment of key management personnel; and
WHEREAS the Company recognizes that, as is the case with many
publicly-held companies, the possibility of a Change in Control or a Major
Transaction (as defined in the last section hereof) exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company; and
WHEREAS the Company has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of members of
the management of the Company and its subsidiaries (collectively, the System),
including the Executive, to their assigned duties without distraction in the
face of potentially disruptive circumstances arising from the possibility of a
Change in Control or a Major Transaction;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and the Executive hereby agree as follows:
1. Defined Terms. The definitions of capitalized terms used in this
Agreement are provided in the last Section hereof.
2. Term of Agreement. This Agreement shall be effective as of March 15,
2005 and shall continue in effect through March 30, 2006; provided, however, the
term
2
of this Agreement shall automatically be extended each year for one
additional year unless, not later than December 31 of the preceding year, the
Company or the Executive shall have given notice not to extend this Agreement or
a Change in Control or a Major Transaction shall have occurred prior to such
March 1; provided, however, if a Change in Control or a Major Transaction shall
have occurred during the term of this Agreement, this Agreement shall continue
in effect for a period of thirty-six months beyond the month in which such
Change in Control or Major Transaction occurred.
3. Company's Covenants Summarized. In order to induce the Executive to
remain in the employ of the National Grid USA Companies and in consideration of
the Executive's covenants set forth in Section 4 hereof, the Company agrees,
under the conditions described herein, to pay the Executive the Severance
Payments described in Section 6.1 hereof and the other payments and benefits
described herein in the event the Executive's employment with the National Grid
USA Companies is terminated following a Change in Control or a Major Transaction
and during the term of this Agreement. The obligations of the Company hereunder
shall be deemed satisfied to the extent payments are made by any National Grid
USA Company. No amount or benefit shall be payable under this Agreement unless
there shall have been (or, under the terms hereof, there shall be deemed to have
been) a termination of the Executive's employment with the National Grid USA
Companies following a Change in Control or a Major Transaction. This Agreement
shall not be construed as creating an express or implied contract of employment
and, except as otherwise agreed in writing between the Executive and the
Company, the Executive shall not have any right to be retained in the employ of
the National Grid USA Companies.
4. The Executive's Covenants: Previous Agreement. The Executive agrees
3
that, subject to the terms and conditions of this Agreement, in the event of a
Potential Change in Control or a Potential Major Transaction during the term of
this Agreement, the Executive will remain in the employ of the National Grid USA
Companies until the earliest of (i) a date which is twelve months from the date
of such Potential Change of Control or Potential Major Transaction, (ii) the
date of a Change in Control or a Major Transaction, (iii) the date of
termination by the Executive of the Executive's employment for Good Reason
(determined by treating the Potential Change in Control or Potential Major
Transaction as a Change in Control or a Major Transaction, as applicable, in
applying the definition of Good Reason), by reason of death or Disability or
Retirement, or (iv) the termination by the National Grid USA Companies of the
Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control or a Major Transaction and during
the term of this Agreement, during any period that the Executive fails to
perform the Executive's full-time duties with the National Grid USA Companies as
a result of incapacity due to physical or mental illness, the Company shall
provide the Executive with disability benefits equivalent to those under the
Disability Insurance Plan (without regard to any amendment to such plan made
subsequent to the Change in Control or Major Transaction which amendment would
adversely affect the Executive's rights thereunder) until the Executive's
employment is terminated by the Employer for Disability.
5.2 If the Executive's employment shall be terminated for any reason
following a Change in Control or a Major Transaction and during the term of this
Agreement, the Company shall pay the Executive's full salary to the Executive
through
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the Date of Termination at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of any compensation or
benefit plan, program or arrangement maintained by the Employer during such
period; except to the extent that the Executive is receiving payments with
respect to such period, or a portion thereof, in accordance with Section 5.1.
5.3 If the Executive's employment shall be terminated for any reason
following a Change in Control or a Major Transaction and during the term of this
Agreement, the Company shall pay to the Executive the normal post-termination
compensation and benefits due the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and paid
in accordance with, the System's applicable retirement, insurance and other
compensation or benefit plans, programs and arrangements. Provided that the
benefits payable to the Executive pursuant to the National Grid USA Companies'
Basic Severance Plan for Non-Union Employees or its successor and/or the
National Grid USA Companies' Executive Severance Plan or its successor or any
other severance plan or arrangement (the Severance Plans) do not exceed benefits
payable to the Executive under this Agreement, the Executive hereby waives all
rights to benefits pursuant to the Severance Plans.
6. Severance Payments.
6.1 Subject to Section 6.2 hereof, the Company shall pay the
Executive the payments described in this Section 6.1 (the Severance Payments)
upon the termination of the Executive's employment following a Change in Control
or a Major Transaction and during the term of this Agreement, in addition to the
payments
5
and benefits described in Section 5 hereof, unless such termination is (i) by
the Employer for Cause, (ii) by reason of death, Disability or Retirement, or
(iii) by the Executive without Good Reason. The Executive's employment shall be
deemed to have been terminated following a Change in Control or a Major
Transaction by the Employer without cause or by the Executive with Good Reason
if the Executive's employment is terminated prior to a Change in Control or a
Major Transaction without cause at the direction of a Person who has entered
into an agreement with the Company or National Grid Transco plc, the
consummation of which will constitute a Change in Control or a Major
Transaction, or if the Executive terminates his employment with Good Reason
prior to a Change in Control or a Major Transaction (determined by treating a
Potential Change in Control or Potential Major Transaction as a Change in
Control or a Major Transaction, as applicable, in applying the definition of
Good Reason) if the circumstance or event which constitutes Good Reason occurs
at the direction of such Person.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall pay to the
Executive a lump sum severance payment, in cash, equal to three times the sum of
(i) the higher of the Executive's annual base salary in effect as of the Date of
Termination or in effect immediately prior to the Change in Control or Major
Transaction, and (ii) the higher of the average amount paid to the Executive
pursuant to the National Grid USA Companies' Incentive Compensation Plan and
National Grid USA Companies' Incentive Share Plan or successors of any such
plans, with respect to the three years preceding the year in which the Date of
Termination occurs or the average amount paid with respect to the three years
preceding the year in which the Change in Control
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or Major Transaction occurs.
(B) In addition to the retirement benefits to which the Executive is
entitled under each Pension Plan or any successor plan thereto, the Company
shall pay the Executive a lump sum amount, in cash, equal to the excess of (x)
the actuarial equivalent of the retirement pension (taking into account any
early retirement subsidies associated therewith and determined as a straight
life annuity commencing at the later of age fifty-five or the third anniversary
of the Date of Termination) which the Executive would have accrued under the
terms of each such Pension Plan (without regard to any amendment to such Pension
Plan made subsequent to a Change in Control or a Major Transaction, which
amendment adversely affects in any manner the computation of retirement benefits
thereunder), determined as if the Executive were fully vested thereunder and had
accumulated (after the Date of Termination) thirty-six additional months of
service credit thereunder and had been credited under each such Pension Plan
during such period with compensation at the higher of (a) Executive's
compensation (as defined in such Pension Plan) during the twelve months
immediately preceding the Date of Termination or (b) Executive's compensation
(as defined in such Pension Plan) during the twelve months immediately preceding
the Change in Control or Major Transaction, over (y) the actuarial equivalent of
the retirement pension (taking into account any early retirement subsidies
associated therewith and determined as a straight life annuity commencing at the
later of age fifty-five or the Date of Termination) which the Executive had
accrued pursuant to the provisions of each such Pension Plan as of the Date of
Termination. For purposes of this Section 6.1(B), "actuarial equivalent" shall
be determined using the same methods and assumptions utilized under the Niagara
Mohawk Pension Plan immediately prior
7
to the Date of Termination (without regard to any amendment of such methods and
assumptions made subsequent to a Change in Control or a Major Transaction, which
amendment results in a lower actuarial equivalent value). The discount rate used
for the calculation of benefits hereunder shall be that used by the System for
valuing the liabilities of the Niagara Mohawk Pension Plan (or a successor
thereto) immediately prior to the Date of Termination. In determining the
retirement pension described in both (x) and (y) of this paragraph, said (x) and
(y) benefit calculations shall be offset by the annuity value of the lump sum
payment (determined in accordance with the actuarial factors defined in National
Grid USA Companies' pension plans) the Executive received under Niagara Mohawk's
Supplemental Executive Retirement Plan, amended and restated as of January 1,
1999, at the time of the merger between National Grid and Niagara Mohawk. The
application of said offset to (x) and (y) shall never result in a dollar amount
less than $0. Nothing in this offset calculation shall have any affect on the
value or delivery of the Executive's vested benefit pursuant to the Niagara
Mohawk Pension Plan.
(C) The Company shall provide the Executive with the medical,
prescription, drug, dental and hospitalization benefits set forth in Paragraph 4
(I) of the Employment Agreement between Niagara Mohawk Power Corporation and
William F. Edwards dated May 17, 1999, as amended (Employment Agreement) for the
lifetime of the Executive and his eligible dependents, and life insurance at 3X
the Executive's base pay in effect as of (1) the Date of Termination or (2)
immediately prior to the Change in Control or Major Transaction, whichever is
higher, for the Executive's lifetime.
6.2 Notwithstanding any other provisions of this Agreement, in the
8
event that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or a Major Transaction, or the termination
of the Executive's employment (whether pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the System, any Person whose
actions result in a Change in Control or a Major Transaction or any Person
affiliated with the System or such Person) (all such payments and benefits,
including the Severance Payments, being hereinafter called "Total Payments")
would be subject (in whole or part), to the Excise Tax, then the Severance
Payments shall be reduced to the extent necessary so that no portion of the
Total Payments is subject to the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of section 280G of the Code
in such other plan, arrangement or agreement) if (A) the net amount of such
Total Payments, as so reduced, (and after deduction of the net amount of
federal, state and local income tax on such reduced Total Payments) is greater
than (B) the excess of (i) the net amount of such Total Payments, without
reduction (but after deduction of the net amount of federal, state and local
income tax on such Total Payments), over (ii) the amount of Excise Tax to which
the Executive would be subject in respect of such Total Payments. For purposes
of determining whether and the extent to which the Total Payments will be
subject to the Excise Tax, (i) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively waived in writing prior
to the Date of Termination shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which in the opinion of tax counsel
selected by the Company does not constitute a "parachute payment" within the
meaning of section 280G(b)(2) of the Code, (including by reason of section
280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of
9
such Total Payments shall be taken into account which constitutes reasonable
compensation for services actually rendered, within the meaning of section
280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such
reasonable compensation, and (iii) the value of any noncash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Company in accordance with the principles of sections 280G(d)(3) and (4)
of the Code. Prior to the payment date set forth in Section 6.3 hereof, the
Company shall provide the Executive with its calculation of the amounts referred
to in this Section and such supporting materials as are reasonably necessary for
the Executive to evaluate the Company's calculations. If the Executive objects
to the Company's calculations, the Company shall pay to the Executive such
portion of the Severance Payments (up to 100% thereof) as the Executive
determines is necessary to result in the Executive receiving the greater of
clauses (A) and (B) of this Section.
6.3 The payments provided for in Section 6.1 (other than Section
6.1(C)) hereof shall be made not later than the fifth day following the Date of
Termination, provided, however, that if the amounts of such payments, and the
limitation on such payments set forth in Section 6.2 hereof, cannot be finally
determined on or before such day, the Company shall pay to the Executive on such
day an estimate, as determined in good faith by the Company, of the minimum
amount of such payments to which the Executive is clearly entitled and shall pay
the remainder of such payments (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth day after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such
10
excess shall constitute a loan by the Company to the Executive, payable on the
fifth business day after demand by the Company (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code). At the time that payments
are made under this Section, the Company shall provide the Executive with a
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without limitation,
any opinions or other advice the Company has received from counsel, auditors or
consultants (and any such opinions or advice which are in writing shall be
attached to the statement).
6.4 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any termination of
his employment hereunder or in seeking in good faith to obtain or enforce any
benefit or right provided by this Agreement or in connection with any tax audit
or proceeding to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder. Such payments shall be
made within five business days after delivery of the Executive's written
requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control or a Major
Transaction and during the term of this Agreement, any purported termination of
the Executive's employment (other than by reason of death) shall be communicated
by written Notice of Termination from one party hereto to the other party hereto
in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and
11
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of Termination
for Cause is required to include a copy of a statement from the Chief Executive
Officer of National Grid USA and the Chief Executive Officer of National Grid
Transco plc or his designee, that in the good faith opinion of the two (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard) that the Executive was
guilty of conduct set forth in clause (i) or (ii) of the definition of Cause
herein. Said statement shall specify the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control or
a Major Transaction and during the term of this Agreement, shall mean (i) if the
Executive's employment is terminated for Disability, thirty days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such thirty-day period),
and (ii) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination (which, in the case of a termination
by the Employer, shall not be less than thirty days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive, shall
not be less than fifteen days nor more than sixty days, respectively, from the
date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen days after any
Notice of Termination is given, or, if later, prior to the Date of Termination
(as determined without regard to this Section 7.3), the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination,
12
the Date of Termination shall be the date on which the dispute is finally
resolved, either by mutual written agreement of the parties or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected); provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence.
7.4 Compensation During Dispute. If a purported termination occurs
following a Change in Control or a Major Transaction and during the term of this
Agreement, and such termination is disputed in accordance with Section 7.3
hereof, the Company shall pay the Executive the full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
salary) and continue the Executive as a participant in all compensation, benefit
and insurance plans in which the Executive was participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
accordance with Section 7.3 hereof. Amounts paid under this Section 7.4 are in
addition to all other amounts due under this Agreement (other than those due
under Section 5.2 hereof) and shall not be offset against or reduce any other
amounts due under this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's employment
with the National Grid USA Companies terminates during the term of this
Agreement, the Executive is not required to seek other employment or to attempt
in any way to reduce any amounts payable to the Executive by the Company
pursuant to this Agreement. Further, the amount of any payment or benefit
provided for in this Agreement shall not be reduced by any compensation earned
by the Executive as the
13
result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the System, or
otherwise.
9. Successors: Binding Agreement.
9.1 In addition to any obligations imposed by law upon any successor
to the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control or a Major Transaction, except that, for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal
14
representatives or administrators of the Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
National Grid USA Service Company
25 Research Drive
Westborough, MA 01582-0099
Attention: Chief Executive Officer
To the Executive:
William F. Edwards
6109 Lakeshore Road
Cicero, NY 13039
11. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Chief Executive Officer of National Grid USA and the Chief
Executive Officer of National Grid Transco plc or his designee. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This Agreement
supersedes any other agreements or
15
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof except for the following agreements set forth in the
January 11, 2002 Letter between the Company and the Executive, which shall
remain in effect: (1) the agreement to pay the Executive a bonus payment on
January 31, 2006 if the Executive meets certain performance objectives; (2) the
agreement to provide the Executive with life insurance at 3X his base pay for
his lifetime; and (3) the agreement to provide the Executive and his eligible
dependents for the lifetime of the Executive and his eligible dependents with
the medical, prescription, drug, dental and hospitalization benefits set forth
in Paragraph 4 (l) of the Employment Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
The Commonwealth of Massachusetts. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed. The obligations of the
Company and the Executive under Sections 6 and 7 shall survive the expiration of
the term of this Agreement.
12. Validity. The invalidity or unenforceability or any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
16
benefits under this Agreement shall be directed to and determined by the Chief
Executive Officer of National Grid USA and the Chief Executive Officer of
National Grid Transco plc or his designee and shall be in writing. Any denial by
the Chief Executive Officer of National Grid USA and the Chief Executive Officer
of National Grid Transco plc or his designee of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set forth the
specific reasons for the denial and the specific provisions of this Agreement
relied upon. The Chief Executive Officer of National Grid USA and the Chief
Executive Officer of National Grid Transco plc or his designee shall afford a
reasonable opportunity to the Executive for a review of the decision denying a
claim and shall further allow the Executive to appeal to the Chief Executive
Officer of National Grid USA and the Chief Executive Officer of National Grid
Transco plc or his designee, a decision of the Chief Executive Officer of
National Grid USA and the Chief Executive Officer of National Grid Transco plc
or his designee within sixty days after notification by the Chief Executive
Officer of National Grid USA and the Chief Executive Officer of National Grid
Transco plc or his designee that the Executive's claim has been denied. Any
further dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Boston, Massachusetts,
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the following terms shall
17
have the meanings indicated below:
(A) "Base Amount" shall have the meaning defined in section 280G(b)(3) of
the Code.
(B) "Cause" for termination by the Employer of the Executive's employment,
after any Change in Control or Major Transaction, shall mean (i) the willful and
continued failure by the Executive to substantially perform the Executive's
duties with the System (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason by the Executive pursuant to Section 7.1) after a written demand for
substantial performance is delivered to the Executive by the Chief Executive
Officer of National Grid USA and the Chief Executive Officer of National Grid
Transco plc or his designee, which demand specifically identifies the manner in
which the Chief Executive Officer of National Grid USA and the Chief Executive
Officer of National Grid Transco plc or his designee believes that the Executive
has not substantially performed the Executive's duties, or (ii) the willful
engaging by the Executive in conduct which is demonstrably and materially
injurious to the System, monetarily or otherwise. For purposes of clauses (i)
and (ii) of this definition, no act, or failure to act, on the Executive's part
shall be deemed "willful" unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the Executive's act, or
failure to act, was in the best interest of the System.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any of the following paragraphs shall have been
satisfied:
(I) any Person or Persons in concert obtains Control (as defined
in
18
Section 840 of the United Kingdom's Income and Corporation
Taxes Act 1988) of National Grid Transco plc as a result of
making a general offer to acquire shares in National Grid
Transco plc or having obtained Control, makes such an offer;
(II) the consummation of the sale or disposition by National Grid
Transco plc of National Grid USA to a non-affiliated entity
(whether by merger, sale of all or substantially all of the
capital stock or assets of National Grid USA or otherwise);
(III) the complete liquidation, dissolution or winding up of
National Grid Transco plc and/or of National Grid USA; or
(IV) the acquisition by National Grid Transco plc or National Grid
USA or their successors of all or substantially all of the
assets of or ownership of all or substantially all of the
outstanding shares of a U.S. electric and/or gas utility
company which would increase the size or revenues of National
Grid USA by 25% or more.
A Change in Control shall not be deemed to have occurred
if the events referred to above are part of an arrangement ("a
Reorganization") which will mean that National Grid Transco
plc and/or National grid USA will be under the Control of
another company or the business of National Grid Transco plc
is carried on by another company, and the Persons who owned
the shares in National Grid Transco plc immediately before the
Change in Control will immediately afterwards own more than
50% of the shares in that other company.
19
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(E) "Company" shall mean National Grid USA and any successor to its
business and/or assets which assumes and agrees to perform this Agreement by
operation of law, or otherwise (except in determining, under Section 15(C)
hereof, whether or not any Change in Control or Major Transaction has occurred
in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section
7.2 hereof.
(G) "Disability" shall be deemed the reason for the termination by
the Employer of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the System
for a period of six consecutive months, the Company shall have given the
Executive a Notice of Termination for Disability, and, within thirty days after
such Notice of Termination is given, the Executive shall not have returned to
the full-time performance of the Executive's duties.
(H) "Disability Insurance Plan" shall mean the Company Disability
Insurance Plan or any successor thereto.
(I) "Employer" shall mean the National Grid USA company by which the
Executive is employed at the time of termination.
(J) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(K) "Excise Tax" shall mean any excise tax imposed under section
20
4999 of the Code.
(L) "Executive" shall mean the individual named in the first
paragraph of their Agreement.
(M) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) of any one of the following acts by the System, or
failures by the System to act, unless, in the case of any act or failure to act
described in paragraph (IV), (V), or (VI) below, such act or failure to act is
corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(I) a reduction in the Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time
to time;
(II) requiring the Executive to be based at a location more
than 100 miles from Syracuse, New York except for required travel on
the System's business to an extent substantially consistent with the
Executive's present business travel obligations;
(III) the failure by the Employer, to pay to the Executive any
portion of the Executive's compensation within seven days of the
date such compensation is due;
(IV) the failure by the System to continue in effect any
compensation plan in which the Executive participates immediately
prior to the Change in Control or the Major Transaction which is
material to the Executive's total compensation, including but not
limited to the National Grid USA Companies' Incentive Compensation
Plan, National
21
Grid USA Companies' Incentive Share Plan, National Grid USA
Companies' Deferred Compensation Plan and National Grid USA
Companies' Executive Supplemental Retirement Plan or any substitute
plans adopted prior to the Change in Control or Major Transaction,
unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan, or the
failure by the System to continue the Executive's participation
therein (or in such substitute or alternative plan) on a basis not
substantially less favorable, both in terms of the amount of
benefits provided and the level of the Executive's participation
relative to other participants, as existed at the time of the Change
in Control or Major Transaction;
(V) the failure by the System to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the System's pension, life insurance,
medical, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control or
the Major Transaction, the taking of any action by the System which
would directly or indirectly materially reduce any of such benefits
or deprive the Executive of any material fringe benefit enjoyed by
the Executive at the time of the Change in Control or Major
Transaction, or the failure by the Employer to provide the Executive
with the number of paid vacation days to which the Executive is
entitled on the basis of years of service with the National Grid USA
Companies in accordance with the Employer's normal vacation policy
in effect at the time of the Change in Control or Major
22
Transaction; or
(VI) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 7.1; for purposes of this Agreement, no
such purported termination shall be effective.
The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(N) A "Major Transaction" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied:
(I) any Person becomes bound or entitled to acquire shares
in National Grid Transco plc under Sections 428 to 430F
of the United Kingdom's Companies Act 1985, or a scheme
of arrangement or compromise under Section 425 of the
United Kingdom's Companies Act 1985 is proposed for
National Grid Transco plc;
(II) National Grid Transco plc shareholders, National Grid
USA's shareholders and/or the Board of Directors of
National Grid USA approve the sale of National Grid USA
to a non-affiliated entity (whether by merger, sale of
all or substantially all of the capital stock or assets
of National Grid USA, or otherwise);
23
(III) National Grid Transco plc passes a resolution for
voluntary winding up, or an order is made for the
compulsory winding up of National Grid Transco plc
and/or National Grid USA;
(IV) the shareholders of National Grid Transco plc, the
shareholders of National Grid USA and/or the Board of
Directors of National Grid USA approve an event the
consummation of which would result in the occurrence of
a Change in Control; or
(V) the Board of Directors of National Grid Transco plc
adopts a resolution that, for purposes of this
Agreement, a Major Transaction has occurred.
A Major Transaction shall not be deemed to have
occurred if the events referred to above are part of an
arrangement ("a Reorganization") which will mean that
National Grid Transco plc and/or National Grid USA will
be under the Control of another company or the business
of National Grid Transco plc is carried on by another
company, and the Persons who owned the shares in
National Grid Transco plc immediately before the series
of transactions are consummated will immediately after
consummation own more than 50% of the shares in that
other company.
(O) "National Grid USA Companies" shall mean all National Grid USA
companies, collectively.
24
(P) "National Grid USA Company" shall mean a subsidiary of the
Company.
(Q) "Notice of Termination" shall have the meaning stated in Section
7.1 hereof.
(R) "Pension Plan" shall mean Niagara Mohawk Pension Plan and
National Grid USA Companies' Executive Supplemental Retirement Plan.
(S) "Person" shall mean any individual, corporation, partnership,
trust, unincorporated association, business or other legal entity, and any
government or any governmental agency or political subdivision thereof.
(T) A "Potential Change in Control" shall be deemed to have occurred
if the conditions set forth in any one of the following paragraphs shall have
been satisfied:
(I) the Company or National Grid Transco plc enters into an
agreement, the consummation of which would result in the
occurrence of a Change in Control;
(II) the Company, National Grid Transco plc or any Person publicly
announces an intention to take or to consider taking actions
which, if consummated, would constitute a Change in Control;
(III) any Person who is not, as of the date hereof, the owner,
directly or indirectly, of securities constituting 10% or more
of the combined voting power of all of the outstanding voting
securities of National Grid Transco plc or any successor
thereof (a "10% Holder") becomes a 10% Holder;
(IV) any Person who is, as of the date hereof, a 10% Holder,
acquires
25
(whether in a single transaction or a series of transactions),
directly or indirectly, additional securities constituting 5%
or more of the combined voting power of all of the outstanding
voting securities of National Grid Transco plc or any
successor thereof (for purposes hereof, a Person who, as of
any particular date, holds, directly or indirectly, options to
purchase securities that are exercisable within sixty days of
such date shall be deemed to own such securities as of such
date); or
(V) the Board of Directors of National Grid Transco plc adopts a
resolution to the effect, that for purposes of this Agreement,
a potential Change in Control has occurred.
A Potential Change in Control shall not be deemed to
have occurred if the events referred to above are part of an
arrangement ("a Reorganization") which will mean that National
Grid Transco plc and/or National Grid USA will be under the
control of another company or the business of National Grid
Transco plc is carried on by another company, and the Persons
who owned the shares in National Grid Transco plc immediately
before the series of transactions are consummated will
immediately after consummation own more than 50% of the shares
in that other company.
(U) A "Potential Major Transaction" shall be deemed to have occurred
if the conditions set forth in any one of the following paragraphs shall have
been satisfied:
26
(I) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Major
Transaction;
(II) the Company or any Person publicly announces an
intention to take or to consider taking actions which,
if consummated, would constitute a Major Transaction; or
(III) the Board of Directors of National Grid Transco plc
adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Major Transaction has
occurred.
(V) "Retirement" shall be deemed the reason for the termination by
the Employer or the Executive of the Executive's employment if such employment
is terminated in accordance with the Employer's written mandatory retirement
policy, if any, as in effect immediately prior to the Change in Control or Major
Transaction, or in accordance with any retirement arrangement established with
the Executive's written consent with respect to the Executive.
(W) "Severance Payments" shall mean those payments described in
Section 6.1 hereof.
(X) "System" shall mean the Company and the National Grid USA
companies, collectively.
(Y) "Total Payments" shall mean those payments described in Section
6.2 hereof.
27
National Grid USA
By___________________________________
Chief Executive Officer
___________________________________
William F. Edwards