Exhibit 10.2
Supplemental Retirement Agreement
This Agreement (the "Supplemental Retirement Agreement") dated as of
January 1, 2005 (the "Effective Date") between KeySpan Corporation ("KeySpan" or
the "Company") and Anthony Sartor (the "Executive") sets forth the understanding
and agreement of the parties as to certain additional terms on which the
Executive continues to be employed by KeySpan. Any definitions used herein
unless otherwise defined herein are defined in the Employment Agreement dated as
of January 1, 2005 between KeySpan and the Executive.
WHEREAS, Executive is President of KeySpan Services, Inc. who became an
employee of KeySpan on January 30, 2000, and became a participant in the ERP on
January 1, 2002 and the KeySpan Executive Supplemental Pension Plan ("KESPP") on
June 1, 2003;
WHEREAS, Executive may have limited pension benefits due to shorter than
normal service at retirement and the Company desires to grant Executive
additional credited pension service in the calculation of a pension benefit and
to encourage the Executive to remain in the employ of KeySpan;
WHEREAS, on September 10, 2004, KeySpan's Compensation and Management
Development Committee recommended and on September 15, 2004, KeySpan's Board of
Directors authorized through a Resolution (the "Resolution") that the proper
officers provide an individual supplemental retirement agreement with Executive;
NOW THEREFORE, the Company and Executive agree that Executive will accrue
additional pension service through this Supplemental Retirement Agreement and
the parties agree as follows;
1. Upon Executive's completion of employment through April 1, 2008, and
his election to retire in accordance with the provisions of the ERP
and KESPP, Executive's pension benefit service time will be increased
and Executive will be paid other retiree benefits pursuant to this
Agreement. Executive acknowledges that Executive will in accordance
with the terms and conditions of the ERP be required to retire no
later than the Normal Retirement Date (age 65), as such term is
defined in the ERP.
2. Executive's supplemental retirement benefit will be determined as
follows:
a. (i) Notwithstanding Executive's actual date of participation in
the KESPP, for purposes of this Agreement, Executive will be
deemed to be a Participant in the KESPP as of January 31,
2000.
(ii) When Executive retires, Executive's pension benefit credited
service time will be matched by the Company by adding
one-half year of credited service for each year in which
Executive was a Participant in the KESPP. The aggregate
pension service time, including the matched time, will be
utilized to compute Executive's pension benefit in
accordance with the ERP's formula and KESPP. The pension
benefit will be paid pursuant to the retirement plan annuity
option elected by the Executive under the ERP. The matched
service time provided under this agreement will be
applicable to any survivor option, if any, is elected under
the ERP.
3. a. In the event of the Executive's death in active service on or after
the Effective Date, a survivor pension benefit for the matched service
provided under this agreement through the date of death will be
provided to the Executive's spouse pursuant to the survivor provisions
in the ERP and in accordance with the provisions of paragraph 2 above.
In the event of the Executive's Disability as defined in the ERP and
termination of his employment, he will be vested in all additional
matched service through the date of termination.
b. If Executive terminates his employment with the Company prior to April
1, 2008 or is terminated prior to such date for Good Cause, Executive
will not be eligible for any benefits pursuant to this Agreement.
4. a. In the event Executive's employment is terminated after a Change of
Control, then the Company agrees that Executive shall immediately vest
in all additional service time earned pursuant to this Agreement. The
service time provided under this Agreement will be provided in
addition to any additional pension service granted Executive pursuant
to the Change of Control Plan with such additional pension service
time being matched.
b. In the event Executive's employment is terminated by the Company for
any reason other than for "Good Cause", then the Company agrees that
Executive shall immediately vest in all additional service time earned
pursuant to this Agreement. In addition, for purposes of this pension
calculation, Compensation shall be the Executive's Base Salary for the
remainder of the term and 80% of the Executive's target incentive
payable in each year during the remainder of the Term.
c. In the event Executive's employment is terminated by the Executive for
"Good Reason", then the Company agrees that Executive shall
immediately vest in all additional service time earned pursuant to
this Agreement up to and including the date of resignation.
2
5. In addition, Executive will be eligible to participate in the retiree
medical and dental benefits programs provided under the group retiree
benefit plans in accordance with the terms and provisions of the group
retiree plan contribution in effect at the time of retirement. Upon
Executive's retirement on April 1, 2008, the Executive will be
required to pay the required retiree benefit contribution amount to
participate in the plans. The Company will pay to Executive upon
completion of enrollment, a monthly supplemental amount grossed up for
income taxes to pay such group retiree benefits. This monthly amount
will be a fixed amount determined at retirement based upon 50% of the
then current group cost of the retiree medical and dental plans. Once
the amount of this supplement at age 65 is determined, it will remain
at this amount as a monthly lifetime supplemental payment to the
Executive. In the event of the Executive's death after retirement,
Executive's spouse will continue to receive one half of the original
supplemental amount for a two year period. During the two year period,
Executive's spouse will pay the full group rate for individual
coverage. After the two year period, Executive's spouse shall be able
to continue in the group retire medical and dental plan by
contributing the full group rate for individual coverage.
If the Executive does not enroll in the group plans or retires prior
to April 1, 2008 in accordance with this paragraph, no supplemental
payment will be made to Executive unless such retirement or
termination is attributable to sections 4a., 4b or 4c of this
Agreement .
6. Any payment due hereunder will be paid from general assets of the
Company and subject to all Federal State and local tax and withholding
requirements.
7. KeySpan and Executive agree that should such additional benefits
earned or accrued pursuant to this Agreement be determined to be
subject to Section 280G of the Internal Revenue Code, KeySpan agrees
that such additional benefits will be eligible for "Gross Up" in
accordance with the provisions of the Change of Control Plan.
8. Executive agrees not to disclose the terms and conditions of this
Supplemental Retirement Agreement or any confidential information made
available to or learned by Executive in the course of the performance
of duties at KeySpan and with respect to the business of KeySpan and
described in KeySpan's Statement on Ethical Business Conduct. Any and
all confidentiality agreements and all other agreements executed by
Executive that contained provisions not to disclose any confidential
information are incorporated into this Agreement. The term
"confidential" means information disclosed to Executive or known,
learned, created or observed as a consequence of, or through
Executive's employment by KeySpan concerning KeySpan or any subsidiary
or affiliated company which is presently existing or which may be
formed in the future, which is confidential, secret or otherwise not
generally known in the industry, and pertains directly or indirectly
to the business activities, products, services, customers or processes
of KeySpan or any of its subsidiaries or affiliated companies,
3
including, but not limited to, information concerning mailing lists,
publicity, data, research, copyrights, other printed matter,
photographs, films, reproductions, finances, processes, trade secrets,
business plans, customer lists and records, potential customer lists,
customer billing and other related information.
9. Executive agrees that the restrictions contained in Paragraph 8 of
this Agreement are necessary for the protection of KeySpan and any
breach thereof will cause KeySpan damage for which there is no
adequate remedy at law and Executive consents to the issuance of an
injunction in favor of KeySpan and its subsidiaries, affiliates,
successors and assigns enjoining the breach of the aforesaid
restrictions by any court of competent jurisdiction. Executive agrees
that the rights of KeySpan to obtain an injunction granted by this
Paragraph of the Agreement shall not be considered a waiver of the
rights of KeySpan to assert any other remedies they may have at law or
in equity.
10. This Agreement shall bind any successor of KeySpan, its assets or its
businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent
that KeySpan would be obligated under this Agreement if no succession
had taken place.
In the case of any transaction in which a successor would not by the
foregoing provision or by operation of law be bound by this Agreement,
KeySpan shall require such successor expressly and unconditionally to
assume and agree to perform KeySpan's obligations under this
Agreement, in the same manner and to the same extent that KeySpan
would be required to perform if no such succession had taken place.
11. In the event of any litigation or other proceeding arising out of this
Agreement after a Change of Control attributable to the subject matter
of this Agreement or enforcement of rights asserted in good faith,
which is initiated by the Executive, the successor to KeySpan shall
reimburse the Executive for all costs and expenses relating to such
litigation or other proceeding, including reasonable attorneys fees
and expenses, promptly upon receipt of a written demand therefore and
regardless of whether such litigation results in any settlement or
judgment or order in favor of any party.
12. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and may be modified only by a
written instrument executed by the parties. This Agreement may be
executed in one or more counterparts, all of which shall be considered
one and the same agreement and each of which shall be deemed an
original.
IN WITNESS WHEREOF, KeySpan has caused this Agreement to be executed by a
duly authorized officer and the Executive has executed this Agreement, all as of
the Effective Date.
KEYSPAN CORPORATION
By: /s/
--------------------
By: /s/
--------------------
Anthony Sartor
4