May 16, 2006
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of
the Securities and Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Section 240.14a-12
KeySpan Corporation
-------------------
(Name of Registrant as Specified in Its Charter)
(N/A)
-----
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
N/A______________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
N/A______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
N/A______________________________________________________________
(5) Total fee paid:
N/A______________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing registration
statement number, or the Form or Schedule and date of its filing.
(1) Amount Previously Paid:
N/A______________________________________________________________
(2) Form, Schedule or Registration Statement No.:
N/A______________________________________________________________
(3) Filing Party:
N/A______________________________________________________________
(4) Date Filed:
N/A______________________________________________________________
2
The following communication is being distributed to all KeySpan Corporation
("KeySpan") employees that have outstanding stock options pursuant to KeySpan's
Long Term Incentive Compensation Plan on or about today, :
Important Information Regarding Your KeySpan Stock Options
With the impending acquisition of KeySpan by National Grid, many employees have
questions regarding how this transaction will affect their KeySpan stock
options. The purpose of this communication is to address some of those
questions.
Q. What will happen to my KeySpan stock options once the National Grid
acquisition is consummated?
A. Any unvested stock options that you may hold will vest at the time of
the transaction. At that time, you will receive an amount in cash equal to
the excess of the transaction price of $42 per share and the option price,
less applicable withholding taxes, for all of your unexercised stock
options.
Q. Can I exchange my KeySpan stock options for National Grid stock or options to
purchase National Grid stock?
A. No. At the time of the acquisition you will only be entitled to receive
a cash payment for your KeySpan stock options as described above.
Q. What are the tax consequences with respect to the cash distribution of my
stock options at the time of the acquisition?
A. You will be taxed on the difference between the transaction price of $42
per share and the option price. This difference will be reported on Form
W-2 for employees (active and retired employees) and Form 1099-Misc for
non-employees.
For example, assume you were granted 300 stock options with an exercise
price of $32 per share. On the day before the acquisition was consummated
only 100 stock options were vested. Upon the consummation of the
transaction, the other 200 stock options will automatically vest and all
300 stock options will be exercised for cash. Your taxable compensation
will be $3,000 shown as follows:
- --------------------------------------------------------------------------------
All Options Held x Strike/Option Price = Option Cost (300 x $32 = $9,600)
All Options Held x Transaction Price = Transaction Amount (300 x $42 = $12,600)
Transaction Amount - Option Cost = Total Taxable Income ($12,600 - $9,600 =
$3,000)
- --------------------------------------------------------------------------------
Please note that federal, social security, medicare, state, and city tax
will be withheld where applicable.
3
Q. Can I exercise my stock options prior to the acquisition?
(Corporate Non-Insiders)
A. Generally, you may exercise your vested stock options at any time if you
are not a designated corporate insider pursuant to the KeySpan Stock
Trading Policy, so long as you do not possess any material, non-public
information regarding the Company.
(Corporate Insiders)
A. If you have been designated as an insider pursuant to the Company's
Stock Trading Policy, you are prohibited from engaging in transactions
involving KeySpan stock other than during prescribed trading window
periods. Generally, window periods commence after the filing of quarterly
or annual reports with the Securities and Exchange Commission. Please
contact the Office of General Counsel (718) 403-6121, if you are unsure
whether you have been designated as an insider.
Prior to the acquisition you may exercise your vested stock options in the
following three ways: 1) on-line at www.options.equiserve.com, 2) through
the Computershare IVR system by calling 1-800-666-7401, or 3) by filling
out a stock option exercise form and faxing it to Computershare at (201)
222-4737. Please note limit orders can only be placed via the internet or
by faxing your completed option form to Computershare. If you are a KeySpan
officer, the preceding instructions do not apply. You must contact the
Office of General Counsel for option exercises during an applicable trading
window period.
The following are three methods to exercise your stock options prior to
acquisition and each method has different tax implications. Please consult
with your tax advisors.
Cash Exercise - You notify Computershare that you want to exercise your
stock options and you remit payment to Computershare. After Computershare
processes your option exercise, you will be notified of any applicable
taxes and transaction fees that you must remit. When the transaction is
completed, share certificates will be sent to you or if you request,
Computershare will deposit shares in your dividend reinvestment account or
brokerage account. Any shares retained will receive a cash distribution of
$42 per share upon the consummation of the acquisition.
Cashless Exercise - You notify Computershare that you want to exercise your
stock options through a Cashless Exercise where you are not required to
remit a payment. Computershare will purchase shares at the option price and
simultaneously sell the shares at the market price. You will receive a
payment in the form of a check equal to the excess of the market price and
the option price, less applicable withholding taxes and transaction fees.
4
Cashless Partial Exercise/Sell Enough to Cover Purchase - You notify
Computershare to purchase shares at the exercise price. Computershare will
execute the purchase and simultaneously sell some shares at the market
price to cover the purchases of your shares, taxes and transaction fees.
When the transaction is completed, share certificates will be sent to you
or if you request, Computershare will deposit shares in your dividend
reinvestment account or brokerage account. Any remaining proceeds will be
remitted to you. Any shares retained will receive a cash distribution of
$42 per share upon the consummation of the acquisition.
Reminder:
- ---------
Please be assured that KeySpan is committed to keeping you informed about any
changes regarding your stock options and will continue to communicate with you
as KeySpan and National Grid work towards the consummation of the transaction.
If you have questions about exercising your stock options, please contact
Computershare at (800) 666-7401. If you have other questions regarding how the
National Grid acquisition of KeySpan will affect your stock options, please
contact KeySpan's Stock Plans Hotline at (718) 403-3131 or e-mail the Stock
Plans Group at financial@keyspanenergy.com.
Please look for additional communications regarding how the National Grid
transaction will affect your holdings in other KeySpan sponsored plans, such as
the KeySpan 401(k) Plan and Employee Discount Stock Purchase Plan.
Additional Information and Where to Find It
- -------------------------------------------
KeySpan intends to file with the Securities and Exchange Commission ("SEC") a
definitive proxy statement and other relevant documents in connection with the
proposed acquisition of KeySpan by National Grid. We filed a preliminary proxy
statement with the SEC on April 28, 2006. Investors and security holders of
KeySpan are advised to read the proxy statement and other relevant documents
when they become available, as they will contain important information about the
transaction. Investors and security holders may obtain a free copy of the proxy
statement and other documents filed by KeySpan with the SEC, when they become
available, at the SEC's web site at http://www.sec.gov.
KeySpan and its directors, executive officers and other members of its
management and employees may be deemed to be participants in the solicitation of
proxies from its security holders in connection with the proposed acquisition.
Information concerning the interests of KeySpan's participants in the
solicitation is set forth in KeySpan's Annual Report on Form 10-K (filed with
the SEC on February 28, 2006), Quarterly Report on Form 10-Q for the period
ended March 31, 2006, KeySpan's preliminary proxy statement (filed with the SEC
on April 28, 2006) and will be set forth in the definitive proxy statement
relating to the acquisition when it becomes available.
5
The following communication is being distributed to all KeySpan officers that
have outstanding stock options pursuant to KeySpan's Long Term Incentive
Compensation Plan:
Important Information Regarding Your KeySpan Stock Options
With the impending acquisition of KeySpan by National Grid, many employees have
questions regarding how this transaction will affect their KeySpan stock
options. The purpose of this communication is to address some of those
questions.
Q. What will happen to my KeySpan stock options once the National Grid
acquisition is consummated?
A. Any unvested stock options that you may hold will vest at the time of
the transaction. At that time, you will receive an amount in cash equal to
the excess of the transaction price of $42 per share and the option price,
less applicable withholding taxes, for all of your unexercised stock
options.
Q. Can I exchange my KeySpan stock options for National Grid stock or options to
purchase National Grid stock?
A. No. At the time of the acquisition you will only be entitled to receive
a cash payment for your KeySpan stock options as described above.
Q. What are the tax consequences with respect to the cash distribution of my
stock options at the time of the acquisition?
A. You will be taxed on the difference between the transaction price of $42
per share and the option price. This difference will be reported on Form
W-2 for employees (active and retired employees) and Form 1099-Misc for
non-employees.
For example, assume you were granted 300 stock options with an exercise
price of $32 per share. On the day before the acquisition was consummated
only 100 stock options were vested. Upon the consummation of the
transaction, the other 200 stock options will automatically vest and all
300 stock options will be exercised for cash. Your taxable compensation
will be $3,000 shown as follows:
- --------------------------------------------------------------------------------
All Options Held x Strike/Option Price = Option Cost (300 x $32 = $9,600)
All Options Held x Transaction Price = Transaction Amount (300 x $42 = $12,600)
Transaction Amount - Option Cost = Total Taxable Income ($12,600 - $9,600 =
$3,000)
- --------------------------------------------------------------------------------
Please note that federal, social security, medicare, state, and city tax
will be withheld where applicable.
6
Q. Can I exercise my stock options prior to the acquisition?
(Corporate Insiders)
A. If you have been designated as an insider pursuant to the Company's
Stock Trading Policy, you are prohibited from engaging in transactions
involving KeySpan stock other than during prescribed trading window
periods. Generally, window periods commence after the filing of quarterly
or annual reports with the Securities and Exchange Commission. Please
contact the Office of General Counsel (718) 403-6121, if you are unsure
whether you have been designated as an insider.
In addition to the Stock Trading Policy restrictions, all officers are requested
to pre-clear any option exercises during an applicable trading window period by
completing an "Officer Intent to Trade Securities Form", indicating the details
of their planned stock option exercise. Such form should also be completed for
any transaction in KeySpan securities. The form is available from the Office of
General Counsel and will generally be sent to the officers along with the
notification regarding the opening of a trading window period.
The following are three methods to exercise your stock options prior to
acquisition and each method has different tax implications. Please consult
with your tax advisors.
Cash Exercise - You must notify the Office of General Counsel that you want
to exercise your stock options and complete an "Officer Intent to Trade
Securities Form", indicating the details of your planned stock option
exercise and remit payment to Computershare. After Computershare processes
your option exercise, you will be notified of any applicable taxes and
transaction fees that you must remit. When the transaction is completed,
share certificates will be sent to you or if you request, Computershare
will deposit shares in your dividend reinvestment account or brokerage
account. Any shares retained will receive a cash distribution of $42 per
share upon the consummation of the acquisition.
Cashless Exercise - You must notify the Office of General Counsel that you
want to exercise your stock options and complete an "Officer Intent to
Trade Securities Form", indicating the details of your planned stock option
exercise where you are not required to remit a payment. Computershare will
purchase shares at the option price and simultaneously sell the shares at
the market price. You will receive a payment in the form of a check equal
to the excess of the market price and the option price, less applicable
withholding taxes and transaction fees.
Cashless Partial Exercise/Sell Enough to Cover Purchase - You must notify
the Office of General Counsel that you want to exercise your stock options
and complete an "Officer Intent to Trade Securities Form", indicating the
details of your planned stock option exercise. Computershare will execute
the purchase and simultaneously sell some shares at the market price to
cover the purchases of your shares, taxes and transaction fees. When the
7
transaction is completed, share certificates will be sent to you or if you
request, Computershare will deposit shares in your dividend reinvestment
account or brokerage account. Any remaining proceeds will be remitted to
you. Any shares retained will receive a cash distribution of $42 per share
upon the consummation of the acquisition.
Reminder:
- ---------
Please be assured that KeySpan is committed to keeping you informed about any
changes regarding your stock options and will continue to communicate with you
as KeySpan and National Grid work towards the consummation of the transaction.
If you have questions about exercising your stock options, please contact
Colleen Meade at (718) 403-6121. If you have other questions regarding how the
National Grid acquisition of KeySpan will affect your stock options, please
contact KeySpan's Stock Plans Hotline at (718) 403-3131 or e-mail the Stock
Plans Group at financial@keyspanenergy.com.
Please look for additional communications regarding how the National Grid
transaction will affect your holdings in other KeySpan sponsored plans, such as
the KeySpan 401(k) Plan and Employee Discount Stock Purchase Plan.
Additional Information and Where to Find It
- -------------------------------------------
KeySpan intends to file with the Securities and Exchange Commission ("SEC") a
definitive proxy statement and other relevant documents in connection with the
proposed acquisition of KeySpan by National Grid. We filed a preliminary proxy
statement with the SEC on April 28, 2006. Investors and security holders of
KeySpan are advised to read the proxy statement and other relevant documents
when they become available, as they will contain important information about the
transaction. Investors and security holders may obtain a free copy of the proxy
statement and other documents filed by KeySpan with the SEC, when they become
available, at the SEC's web site at http://www.sec.gov.
KeySpan and its directors, executive officers and other members of its
management and employees may be deemed to be participants in the solicitation of
proxies from its security holders in connection with the proposed acquisition.
Information concerning the interests of KeySpan's participants in the
solicitation is set forth in KeySpan's Annual Report on Form 10-K (filed with
the SEC on February 28, 2006), Quarterly Report on Form 10-Q for the period
ended March 31, 2006, KeySpan's preliminary proxy statement (filed with the SEC
on April 28, 2006) and will be set forth in the definitive proxy statement
relating to the acquisition when it becomes available.
8
Additional Information and Where to Find It
- -------------------------------------------
KeySpan intends to file with the Securities and Exchange Commission (the "SEC")
a definitive proxy statement and other relevant documents in connection with the
proposed acquisition of KeySpan by National Grid. We filed a preliminary proxy
statement with the SEC on April 28, 2006. Investors and security holders of
KeySpan are advised to read the proxy statementd and other relevant documents
when they become available, as they will contain important information about the
transaction. Investors and security holders may obtain a free copy of the proxy
statement and other documents filed by KeySpan with the SEC, when they become
available, at the SEC's web site at http:/www.sec.gov.
KeySpan and its directors, executive officers and other members of its
management and employees may be deemed to be participants in the solicitation of
proxies from its security holders in connection with the proposed acquisition.
Information concerning the interests of KeySpan's participants in the
solicitation is set forth in KeySpan's Annual Report on Form 10-K (filed with
the SEC on February 28, 2006), Quarterly Report on Form 10-Q for the period
ended March 31, 2006, KeySpan's preliminary proxy statement (filed with the SEC
on April 28, 2006) and will be set forth in the definitive proxy statement
relating to the acquisition when it becomes available.
9