Exhibit 10.1
KEYSPAN CORPORATION
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SENIOR EXECUTIVE CHANGE OF CONTROL SEVERANCE PLAN
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As amended and restated
Effective (February 23, 2006)
Introduction
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The Board of Directors of KeySpan Corporation recognizes that, as is the
case with many publicly held corporations, there exists the possibility of a
Change of Control. This possibility and the uncertainty it creates may result in
the loss or distraction of senior executives of the Company, to the detriment of
the Company and its shareholders.
The Board considers the avoidance of such loss and distraction to be
essential to protecting and enhancing the best interests of the Company and its
shareholders. The Board also believes that when a Change of Control is perceived
as imminent, or is occurring, the Board should be able to receive and rely on
disinterested service from senior executives regarding the best interests of the
Company and its shareholders, without concern that senior executives might be
distracted or concerned by the personal uncertainties and risks created by the
perception of an imminent or occurring Change of Control.
In addition, the Board believes that it is consistent with the Company's
employment practices and policies and in the best interests of the Company and
its shareholders to treat fairly its Executive's whose employment terminates in
connection with or following a Change of Control.
Accordingly, the Board has determined that appropriate steps should be
taken to assure the Company of the continued employment and attention and
dedication to duty of its senior executives and to seek to ensure the
availability of their continued service, notwithstanding the possibility, threat
or occurrence of a Change of Control.
Therefore, in order to fulfill the above purposes, the following plan
adopted effective October 31, 1998 is amended and restated to reflect all
amendments through February 23, 2006.
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ARTICLE I
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ESTABLISHMENT OF PLAN
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As of the Effective Date, the Company establishes a separation compensation plan
known as the KeySpan Senior Executive Change of Control Severance Plan, as set
forth in this document. This Plan has been modified and is now extended. In
addition, the Plan has been restated effective (February 23, 2006) to include
all prior amendments to the Plan.
ARTICLE II
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DEFINITIONS
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As used herein, the following words and phrases shall have the following
respective meanings unless the context clearly indicates otherwise.
Annual Bonus Award. The annual bonus that a Participant is eligible to earn
pursuant to the 2003 Corporate Incentive Compensation Plan and/or any successor
thereto The term, "Annual Bonus Award"excludes any special bonus(es), lump sump
sum payment or any other special bonus(es) authorized by the Board for a
Participant.
Annual Salary. The Participant's regular annual base salary immediately prior to
his or her termination of employment, including compensation converted to other
benefits under a flexible pay arrangement maintained by the Company or deferred
pursuant to a written plan or agreement with the Company.
Board. The Board of Directors of the Parent.
Cause. With respect to any Participant: (i) the willful and continued failure of
the Participant to perform substantially the Participant's duties with the
Company or one of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Participant by the Board or the
Chief Executive Officer of the Parent which specifically identifies the manner
in which the Board or Chief Executive Officer believes that the Participant has
not substantially performed the Participant's duties, or (ii) the willful
engaging by the Participant in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company. For purposes of this
definition, no act or failure to act on the part of the Participant shall be
considered willful unless it is done, or omitted to be done, by the Participant
in bad faith or without reasonable belief that the Participant's action or
omission was in the best interests of the Company. Any act or failure to act
based upon authority given pursuant to a resolution duly adopted by the Board or
upon the instructions of the Chief Executive Officer or a senior officer of the
Parent or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Participant in good faith and
in the best interests of the Company.
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Change of Control. The occurrence of any of the following events after October
29, 2003:
(i) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (x) the then outstanding shares of common stock of the
Parent (the "Outstanding Common Stock") or (y) the combined voting power of
the then outstanding voting securities of the Parent entitled to vote
generally in the election of directors (the "Outstanding Voting
Securities"); provided, however, that for purposes of this subsection (i),
the following acquisitions shall not constitute a Change of Control: (A)
any acquisition directly from the Parent, (B) any acquisition by the
Parent, (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Parent or any corporation controlled by the
Parent or (D) any acquisition by any corporation pursuant to a transaction
which complies with clauses (A) , (B) and (C) of paragraph (iii) below; or
(ii) Individuals who, as of October 30, 2003, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination for election
by the Parent's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or
(iii)Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Parent or the
acquisition of assets of another corporation (a "Business Combination") in
each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Common Stock and Outstanding
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively,
the then outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote generally in the
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election of directors, as the case may be, of the corporation resulting
from such Business Combination in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Common Stock and Outstanding Voting Securities, as the case may
be, (B) no Person (excluding the Parent, any employee benefit plan (or
related trust) of the Parent or such corporation resulting from suc
Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors except to the
extent that such ownership existed prior to the Business Combination and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Parent of a complete liquidation or
dissolution of the Parent.
Code. The Internal Revenue Code of 1986, as amended from time to time.
Committee. The Compensation and Management Development Committee of the Board.
Company. KeySpan Corporation and its Subsidiaries.
Date of the Change of Control. The date on which a Change of Control occurs.
Date of Termination. The date on which a Participant ceases to be an Employee
and such Employee receives written notice of such termination in accordance with
this Plan.
Disability. A termination of a Participant's Employment for Disability shall
have occurred if the Termination occurs because illness or injury has prevented
the Participant from performing his or her duties (as they existed immediately
prior to the illness or (injury) on a full time basis for180 consecutive
business days.
Effective Date. October 30, 1998.
Employee. Any full-time, regular benefit, nonbargaining employee of the Company.
Employment. The state of being an Employee.
ERISA. The Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder.
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Good Reason. With respect to any Participant, the occurrence after the date of a
Change of Control of any one or more of the following, without the Participant's
express written consent: (i) the assignment to the Participant of any duties
materially inconsistent in any respect with the Participant's position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities immediately before the Change of Control, or any
other action by the Company which results in a significant diminution in such
position, authority, duties or responsibilities, excluding for this purpose an
isolated insubstantial and inadvertent action which is remedied by the Company
promptly after receipt of notice thereof given by the Participant; (ii) any
material reduction in the Participant's Annual Salary, opportunity to earn
Annual or Long Term Bonuses with the same target level as in effect immediately
prior to the Change of Control, or other compensation or employee benefits,
other than as a result of an isolated and inadvertent action which is remedied
by the Company promptly after receipt of notice thereof given by the
Participant; (iii) the Company's requiring the Participant to relocate his or
her principal place of business to a place which is more than 50 miles from his
or her previous principal place of business; (iv) any purported termination of
the Plan otherwise than as expressly permitted by the Plan; or (v) any failure
by the Company to comply with and satisfy Article V of the Plan.
Highest Annual Bonus. With respect to any Participant, the higher of (i) the
average of the Annual Bonuses received by the Participant with respect to the
three most recent years before the Date of the Change of Control and (ii) the
Annual Bonus most recently received by the Participant.
Multiple. With respect to any Participant, the number set forth opposite the
Participant's name under the heading "Benefit Level" on Schedule I hereto [or,
if less, the number of years and fractions thereof remaining, as of the
Participant's Date of Termination, until the Participant reaches his or her
mandatory retirement age (if any) under the applicable Company policy].
Parent. KeySpan Corporation.
Participant. An individual who is designated as such pursuant to Section 3.1.
Plan. The KeySpan Corporation Senior Executive Change of Control Severance Plan.
Protection Period. The period beginning with the date that KeySpan enters into a
definitive agreement relative to a transaction which constitutes a Change of
Control and ending on the date which follows the related Change of Control by 24
months.
Separation Benefits. The benefits described in Section 4.2 that are provided to
qualifying Participants under the Plan.
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Separation Period. With respect to any Participant, the period beginning on a
Participant's Date of Termination and ending after the expiration of a number of
years equal to the Multiple for such Participant.
Subsidiaries. Each corporation or other entity of which the Parent directly or
indirectly owns beneficially of record, twenty-five percent (25%) or more of (i)
the outstanding shares of capital stock if such entity is a corporation or (ii)
the outstanding ownership interests if such entity is not a corporation.
ARTICLE III
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ELIGIBILITY
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3.1 Participation. Each of the individuals named on Schedule I hereto shall
be a Participant in the Plan. Schedule I may be amended by the Board from time
to time to add or delete individuals as Participants.
3.2 Duration of Participation. A Participant shall only cease
to be a Participant in the Plan as a result of an amendment or termination of
the Plan complying with Article VI of the Plan, or when he or she ceases to be
an Employee, unless, at the time he or she ceases to be an Employee, such
Participant is entitled to payment of a Separation Benefit as provided in the
Plan or there has been an event or occurrence that constitutes Good Reason that
which would enable the Participant to terminate his or her employment and
receive a Separation Benefit. A Participant entitled to payment of a Separation
Benefit or any other amounts under the Plan shall remain a Participant in the
Plan until the full amount of the Separation Benefit and any other amounts
payable under the Plan have been paid to the Participant.
ARTICLE IV
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SEPARATION BENEFITS
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4.1 Terminations of Employment Which Give Rise to Separation Benefits Under
the Plan. A Participant shall be entitled to Separation Benefits as set forth in
Section 4.2 below if, at any time before the end of the Protection Period, the
Participant's Employment is terminated (i) by the Company for any reason other
than Cause or death or (ii) by the Participant after the occurrence of Good
Reason and on or before 90 days after the occurrence of Good Reason or for
termination due to Disability. An Employee's written notice of termination of
employment setting forth the Date of Termination must be delivered to such
Employee not less than 30 days before the last day of employment.
4.2 Separation Benefits.
(A) If a Participant's employment is terminated under circumstances
entitling him or her to Separation Benefits as provided in Section 4.1, the
Company shall pay such Participant, within ten days of the Date of Termination,
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a cash lump sum as set forth in subsection (B) below and the continued benefits
set forth in subsection (C) below. Notwithstanding the above, payment pursuant
to this Plan can not be made until the Change of Control has actually occurred.
If the Company or its successor fails to remit any payment within 10 days,
the delayed payments pursuant to this Plan will receive interest calculated at
the rate of 150% of Prime Rate as posted by Citibank, N.A.
For purposes of determining the benefits set forth in subsection (B) and
(C), if the termination of the Participant's employment is for Good Reason after
there has been a reduction of the Participant's Annual Salary, opportunity to
earn Annual bonuses, or other compensation or employee benefits, such reduction
shall be ignored.
(B) The cash lump sum referred to in Section 4.2 (A) is the aggregate of
the following amounts:
(1) The sum of (a) the Participan s Annual Salary through the Date of
Termination to the extent not theretofore paid, (b) the product of (x)
the Highest Annual Bonus and (y) a fraction, the numerator of which is
the number of days in such year through the Date of Termination, and
the denominator of which is 365, and (c) any compensation previously
deferred by the Participant (together with any accrued interest or
earnings thereon) and any unused and accrued vacation pay, in each
case to the extent not theretofore paid and in full satisfaction of
the rights of the Participant thereto;
(2) An amount equal to the produc of (a) the Participant's Multiple times
(b)the sum of the Participant's (x) Annual Salary and (y) Highest
Annual Bonus; and
(C) (1) An additional monthly retirement annuity calculated utilizing the
assumptions below and the formulas under the Company's qualified
defined benefit retirement plans (the "Retirement Plans") and any
excess or supplemental retirement plans in which the Participant
participates (collectively, the "SERP").
For purposes of this calculation, the following assumptions are to be
utilized: (i) the Participant will be deemed to have worked during the
Separation Period with Compensation as described in (iv) below with
such time, i.e. two or three years as set forth on Schedule I, added
as additional time for either (a) accrued credited service under the
KeySpan Retirement Plan or (b) credited service pursuant to the
Retirement Income Plan of KeySpan Energy; (ii) Participant's age will
be deemed to have increased by the level indicated on Schedule I for
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such Participant, i.e. two or three years; (iii) a Participant is
deemed to be an active employee during the Separation Period if such
Separation Period extends the age required to be first eligible to
retire under the Retirement Plans, then at the first eligible
retirement date, Participant will begin to receive this Plan's
retirement annuity; i.e. such Participant will not be a Term Vested
for the pension benefit calculation purposes; and (iv) Compensation to
be used for the Separation Period is the aggregate of the
Participant's Annual Salary and Highest Annual Bonus for each of the
two or three years.
If the monthly retirement benefits as described above are not paid by
the Company Retirement Plans and SERP, such benefit shall be payable
by the Company outside such plans at no additional cost (including
without limitation tax cost) to the Participant.
(2) The continued benefits referred to above are as follows:
(a) During the Separation Period, the Participant and his or her
family shall be provided with medical, dental and life insurance
benefits as if the Participant's employment had not been terminated;
provided, however, that if the Participant becomes reemployed with
another employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility.
For purposes of determining eligibility (but not the time of
commencement of benefits) of the Participant for retiree medical,
dental and life insurance benefits under the Company's plans,
practices, programs and policies, the Participant shall be considered
to have remained employed during the Separation Period and to have
retired on the last day of such period if eligible for such retiree
benefits based upon age and service at the end of the Separation
Period. The Retiree benefits provided under this provision shall be
governed by the benefits, terms and conditions of the retiree benefit
plans or programs in effect prior to the Change of Control; and
(b) The Company shall, at its sole expense as incurred, provide the
Participant with outplacement services the scope and provider of which
shall be selected by the Participant in his or her sole discretion
(but at a cost to the Company of not more than $30,000).
(a) Pursuant to the Executive Leased Vehicle Program, Participant
shall be deemed to have resigned and will be permitted to acquire the
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vehicle leased at the Change of Control under the terms and conditions
of the Program in effect prior to the Change of Control.
To the extent any benefits described in this Section 4.2 cannot be provided
pursuant to the appropriate plan or program maintained for Employees, the
Company shall provide such benefits outside such plan or program at no
additional cost (including without limitation tax cost) to the Participant.
4.3 Other Benefits Payable. The cash lump sum and continuing benefits
described in Section 4.2 above shall be payable in addition to, and not in lieu
of, all other accrued or vested or earned but deferred compensation, rights,
options or other benefits which may be owed to a Participant upon or following
termination, including but not limited to accrued vacation or sick pay, amounts
or benefits payable under any bonus or other compensation plans, stock option
plan, stock ownership plan, stock purchase plan, life insurance plan, health
plan, disability plan or similar or successor plan.
4.4 Certain Additional Payments by the Company
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(A) Anything in this Plan to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of any
Participant (whether paid or payable or distributed or distributable
pursuant to the terms of this Plan or otherwise, but determined
without regard to any additional payments required under this
Section4.4) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred
by the Participant with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Participant
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Participant of
all taxes (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Participant retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(B) Subject to the provisions of Section 4.4(C), all determinations
required to be made under this Section 4.4, including whether and when
a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination,
shall be made by PWCoopers or such other certified public accounting
firm as may be designated by the Participant (the "Accounting Firm"),
which shall provide detailed supporting calculations both to the
Company and the Participant within 15 business days of the receipt of
notice from the Participant that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the
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Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the
Participant shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section
4.4 shall be paid by the Company to the Participant within five days
of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company
and the Participant. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 4.4(C) and the Participant thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any
such Underpayment, interest and penalties shall be promptly paid by
the Company to or for the benefit of the Participant.
(C) The Participant shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten business
days after the Participant is informed in writing of such claim and
shall apprize the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Participant shall not
pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Participant in writing
prior to the expiration of such period that it desires to contest such
claim, the Participant shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim;
(2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by
the Company;
(3) cooperate with the Company in good faith in order to contest
effectively such claim; and
(4) permit the Company to participate in any proceedings relating to
such claim, provided, however, that the Company shall bear and
pay directly all costs and expenses (including additional
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interest and penalties) incurred in connection with such contest
and shall indemnify and hold the Participant harmless, on an
after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 4.4(C),
the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo
any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Participant to pay
the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Participant agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that
if the Company directs the Participant to pay such claim and sue
for a refund, the Company shall advance the amount of such
payment to the Participant, on an interest-free basis and shall
indemnify and hold the Participant harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the
taxable year of the Participant with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Participant
shall be entitled to settle or contest as the case may be, any
other issue raised by the Internal Revenue Service or any other
taxing authority.
(D) If, after the receipt by the Participant of an amount
advanced by the Company pursuant to Section 4.4(C), the Participant
becomes entitled to receive any refund with respect to such claim, the
Participant shall (subject to the Company's complying with the
requirements of Section 4.4(C)) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the
Participant of an amount advanced by the Company pursuant to Section
4.4(C), a determination is made that the Participant shall not be
entitled to any refund with respect to such claim and the Company does
not notify the Participant in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be
paid.
4.5 Payment Obligations Absolute. The obligations of the Company to pay the
Separation Benefits described in Section 4.2 and any additional payments
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described in Section 4.4 shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against any Participant. In no event shall a Participant be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to a Participant under any of the provisions of this Plan, nor shall the
amount of any payment hereunder be reduced by any compensation earned by a
Participant as a result of employment by another employer, except as
specifically provided in Section 4.2(C)(1).
ARTICLE V
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SUCCESSOR TO COMPANY
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This Plan shall bind any successor of the Company, 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 the Company would be
obligated under this Plan 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 Plan, the Company
shall require such successor expressly and unconditionally to assume and agree
to perform the Company's obligations under this Plan, in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place. The term "Company", as used in this Plan, shall mean
the Company as hereinbefore defined and any successor or assignee to the
business or assets which by reason hereof becomes bound by this Plan.
ARTICLE VI
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DURATION, AMENDMENT AND TERMINATION
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6.1 Duration. If a Change of Control has not occurred, this Plan shall
expire ten years from the Effective Date, unless extended for an additional
period or periods by action of the Board. If a Change of Control occurs while
this Plan is in effect, this Plan shall continue in full force and effect and
shall not terminate or expire until after all Participants who become entitled
to any payments hereunder shall have received such payments in full and all
adjustments required to be made pursuant to Section 4.4 have been made.
6.2 Amendment or Termination. The Board may amend or terminate this Plan at
any time; provided, that this Plan may not be terminated or amended (i)
following a Change of Control, (ii) at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control, or (iii)
otherwise in connection with or in anticipation of a Change of Control, in each
case, in any manner that could adversely affect the rights of any Participant
without such Participant's express written consent.
6.3 Procedure for Extension, Amendment or Termination. Any extension,
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amendment or termination of this Plan by the Board in accordance with the
foregoing shall be made by action of the Board in accordance with the Parent's
charter and by-laws and applicable law, and shall be evidenced by a written
instrument signed by a duly authorized officer of the Parent, certifying that
the Board has taken such action.
ARTICLE VII
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MISCELLANEOUS
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7.1 Indemnification. If a Participant institutes any legal action in
seeking to obtain or enforce, or is required to defend in any legal action the
validity or enforceability of, any right or benefit provided by this Plan, the
Company will pay for all actual legal fees and expenses incurred (as incurred)
by such Participant, regardless of the outcome of such action.
7.2 Employment Status. This Plan does not constitute a contract of
employment, nor does it impose on the Participant or the Company any obligation
for the Participant to remain an Employee or change the status of the
Participant's employment or the Company's policies regarding termination of
employment.
7.3 Named Fiduciary; Administration. The Company is the named fiduciary of
the Plan, with full authority to control and manage the operation and
administration of the Plan, acting through the Human Resources Division.
7.4 Claim Procedure. If an Employee or former Employee makes a written
request alleging a right to receive benefits under this Plan or alleging a right
to receive an adjustment in benefits being paid under the Plan, the Company
shall treat it as a claim for benefit. All claims for benefit under the Plan
shall be sent to the Human Resources Division of the Company and must be
received within 30 days after termination of employment. If the Company
determines that any individual who has claimed a right to receive benefits, or
different benefits, under the Plan is not entitled to receive all or any part of
the benefits claimed, it will inform the claimant in writing of its
determination and the reasons therefor in terms calculated to be understood by
the claimant. The notice will be sent within 90 days of the claim unless the
Company determines additional time, not exceeding 90 days, is needed. The notice
shall make specific reference to the pertinent Plan provisions on which the
denial is based, and describe any additional material or information that is
necessary. Such notice shall, in addition, inform the claimant what procedure
the claimant should follow to take advantage of the review procedures set forth
below in the event the claimant desires to contest the denial of the claim. The
claimant may within 90 days thereafter submit in writing to the Company a notice
that the claimant contests the denial of his or her claim by the Company and
desires a further review. The Company shall within 60 days thereafter review the
claim and authorize the claimant to appear personally and review pertinent
documents and submit issues and comments relating to the claim to the persons
responsible for making the determination on behalf of the Company. The Company
will render its final decision with specific reasons therefor in writing and
will transmit it to the claimant within 60 days of the written request for
review, unless the Company determines additional time, not exceeding 60 days, is
14
needed, and so notifies the Participant. If the Company fails to respond to a
claim filed in accordance with the foregoing within 60 days or any such extended
period, the Company shall be deemed to have denied the claim.
7.5 Arbitration. Any dispute or controversy arising out of or in connection
with this Plan or any alleged breach hereof which is not settled pursuant to the
provisions of Section 7.4, shall be settled by arbitration in New York, New York
pursuant to the rules of the American Arbitration Association. If the two
parties cannot jointly select a single arbitrator to determine the matter, one
arbitrator shall be chosen by the American Arbitration Association on behalf of
such parties. The decision of the single arbitrator will be final and binding
upon the parties and the judgment of a court of competent jurisdiction may be
entered thereon. Fees of the arbitrator and costs of arbitration shall be borne
by the parties in such manner as shall be determined by the arbitrator.
7.6 Unfunded Plan Status.. This Plan is intended to be an unfunded plan
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees, within the meaning
of Section 401 of ERISA. All payments pursuant to the Plan shall be made from
the general funds of the Company and no special or separate fund shall be
established or other segregation of assets made to assure payment. No
Participant or other person shall have under any circumstances any interest in
any particular property or assets of the Company as a result of participating in
the Plan. Notwithstanding the foregoing, the Company may (but shall not be
obligated to) create one or more grantor trusts, the assets of which are subject
to the claims of the Company's creditors, to assist it in accumulating funds to
pay its obligations under the Plan.
7.7 Validity and Severability. The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
7.8 Governing Law. The validity, interpretation, construction and
performance of the Plan shall in all respects be governed by the laws of New
York, without reference to principles of conflict of law, except to the extent
preempted by ERISA.
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ACKNOWLEDGMENT
The undersigned Participant acknowledges that he or she has carefully read
and fully understood all of the provisions of the KeySpan Corporation Senior
Executive Change of Control Severance Plan, as amended and restated effective
February 23, 2006, and all Schedules thereto (the "Plan") and is agreeing to be
bound by the terms and conditions of the Plan. The Participant acknowledges that
effective February 23, 2006, the Plan constitutes the entire plan and supercedes
any and all prior plans, agreements, understandings and arrangements, oral or
written, with respect to the subject matter thereof.
IN WITNESS WHEREOF, the Participant has caused this Acknowledgment to be
executed and delivered this _____ day of _______________, 2006.
Participant: __________________
Name: ______________________
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SCHEDULE I
Participants
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NAME BENEFIT LEVEL
---- -------------
17