Exhibit 10.20
KEYSPAN ENERGY
SENIOR EXECUTIVE CHANGE OF CONTROL SEVERANCE PLAN
INTRODUCTION
The Board of Directors of MarketSpan Corporation d/b/a KeySpan Energy
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 employees 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
has been developed and is hereby adopted, as of October 30, 1998.
ARTICLE I
ESTABLISHMENT OF PLAN
As of the Effective Date, the Company hereby establishes a separation
compensation plan known as the KeySpan Energy Senior Executive Change of Control
Severance Plan, as set forth in this document.
ARTICLE II
DEFINITIONS
As used herein, the following words and phrases shall have the
following respective meanings unless the context clearly indicates otherwise.
(a) ANNUAL BONUS AWARD. The annual cash bonus that a Participant is
eligible to earn pursuant to the 1998 Corporate Incentive Compensation Plan
and/or any successor thereto.
(b) 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.
(c) BOARD. The Board of Directors of the Parent.
(d) 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.
(e) CHANGE OF CONTROL. The occurrence of any of the following events
following the Effective Date:
(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 the Effective Date, 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 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 such 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.
(f) CODE. The Internal Revenue Code of 1986, as amended from time to time.
(g) COMMITTEE. The Compensation and Nominating Committee of the Board.
(h) COMPANY. MarketSpan Corporation d/b/a KeySpan Energy and its
Subsidiaries.
(i) DATE OF THE CHANGE OF CONTROL. The date on which a Change of Control
occurs.
(j) DATE OF TERMINATION. The date on which a Participant ceases to be an
Employee.
(k) 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 for 180
consecutive business days.
(l) EFFECTIVE DATE. October 30, 1998.
(m) EMPLOYEE. Any full-time, regular benefit, nonbargaining employee of the
Company.
(n) EMPLOYMENT. The state of being an Employee.
(o) ERISA. The Employee Retirement Income Security Act of 1974, as amended,
and the regulations thereunder.
(p) 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 Bonuses, 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.
(q) 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.
(r) 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.
(s) PARENT. MarketSpan Corporation d/b/a KeySpan Energy.
(t) PARTICIPANT. An individual who is designated as such pursuant to
Section 3.1.
(u) PLAN. The KeySpan Energy Senior Executive Change of Control Severance
Plan.
(v) RETIREMENT. A termination by Retirement shall have occurred where a
Participant's termination is due to his or her late, normal or early retirement
under a pension plan sponsored by the Company or any of its affiliates, as
defined in such plan.
(w) SEPARATION BENEFITS. The benefits described in Section 4.2 that are
provided to qualifying Participants under the Plan.
(x) 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.
(y) 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
ELIGIBILITY
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 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
SEPARATION BENEFITS
4.1 TERMINATIONS OF EMPLOYMENT WHICH GIVE RISE TO SEPARATION BENEFITS UNDER
PLAN. A Participant shall be entitled to Separation Benefits as set forth in
Section 4.2 below if, at any time before the third anniversary of the Date of
the Change of Control, the Participant's Employment is terminated (i) by the
Company for any reason other than Cause, death, Disability or Retirement or (ii)
by the Participant after the occurrence of Good Reason and on or before 90 days
after the occurrence of Good Reason.
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,
a cash lump sum as set forth in subsection (b) below and the continued benefits
set forth in subsection (c) below. 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:
(i) the sum of (1) the Participant's Annual Salary through the Date of
Termination to the extent not theretofore paid, (2) 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 (3) any compensation previously deferred by the Participant
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid and in full
satisfaction of the rights of the Participant thereto;
(ii) an amount equal to the product of (1) the Participant's Multiple times
(2) the sum of the Participant's (x) Annual Salary and (y) Highest Annual Bonus;
and
(iii) an amount equal to the difference between (a) the actuarial
equivalent of the benefit under the Company's qualified defined benefit
retirement plan (the "Retirement Plan") and any excess or supplemental
retirement plans in which the Participant participates (collectively, the
"SERP") which the Participant would receive if his or her employment continued
during the Separation Period, assuming that the Participant's compensation
during the Separation Period would have been equal to his or her compensation as
in effect immediately before the termination or, if higher, on the Effective
Date, and (b) the actuarial equivalent of the Participant's actual benefit (paid
or payable), if any, under the Retirement Plan and the SERP as of the Date of
Termination. The actuarial assumptions used for purposes of determining
actuarial equivalence shall be no less favorable to the Participant than the
most favorable of those in effect under the Retirement Plan and the SERP on the
Date of Termination and the Effective Date.
(c) The continued benefits referred to above are as follows:
(i) 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; and
(ii) 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);
To the extent any benefits described in this Section 4.2(c) 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, but excluding any severance
pay or pay in lieu of notice required to be paid to such Participant under
applicable law.
4.4 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(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 Section 4.4) (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
Arthur Andersen LLP 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 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 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 apprise 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:
(i) give the Company any information reasonably requested by the Company
relating to such claim;
(ii) 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;
(iii) cooperate with the Company in good faith in order effectively to
contest such claim; and
(iv) 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 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. Except as provided in Section 4.6, the
obligations of the Company to pay the separation benefits described in Section
4.2 and any additional payments 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) (i).
4.6 PAYMENT OBLIGATIONS UNDER PRIOR AGREEMENTS. If a Participant is
entitled to receive any benefits or payments under any agreement or plan between
or binding the Company or any predecessor thereof with respect to a change of
control that occurred prior to the Effective Date, and the Participant is
entitled to receive the Separation Benefits described in Section 4.2 and any
additional payments described in Section 4.4, the Participant may elect to
receive the benefits and payments provided pursuant to such prior agreement or
plan rather than the benefits and payments provided pursuant to this Plan by
providing notice of such election to the Company within five (5) days of the
Date of Termination. Any such election shall constitute a waiver of all rights
to receive benefits hereunder.
ARTICLE V
SUCCESSOR TO COMPANY
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
DURATION, AMENDMENT AND TERMINATION
6.1 DURATION. If a Change of Control has not occurred, this Plan shall expire
five 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, 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
MISCELLANEOUS
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 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
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.
ACKNOWLEDGEMENT
The undersigned Participant acknowledges that he or she has carefully
read and fully understood all of the provisions of the KeySpan Energy Senior
Executive Change of Control Severance Plan, dated October 30, 1998, 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 October 30,
1998, 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, including, without limitation, [the
Participant's prior Executive Employment Agreement dated as of ____________ with
Long Island Lighting Company] [the Amended and Restated Brooklyn Union Senior
Executive Change of Control Severance Plan] which shall cease to be of any
further effect except with respect to any rights to benefits thereunder arising
in connection with a change of control occurring prior to October 30, 1998 and
except as provided pursuant to Section 4.6 of the Plan.
IN WITNESS WHEREOF, the Participant has caused this Acknowledgement
to be executed and delivered this _____ day of December, 1998.
Participant:
By: ____________________________________
Name:
SCHEDULE I
Participants
NAME BENEFIT LEVEL
Robert B. Catell 3
Craig G. Matthews 3
Anthony J. DiBrita 3
Robert J. Fani 3
William K. Feraudo 3
Anthony Nozzolillo 3
Wallace P. Parker, Jr. 3
David L. Phillips 3
Lenore F. Puleo 3
Cheryl T. Smith 3
Steven L. Zelkowitz 3
G. Bruce Cocks 2
Charles A. Daverio 2
Lawrence S. Dryer 2
Jane A. Fernandez 2
John F. Haran 2
Ronald S. Jendras 2
George B. Jongeling 2
Anne C. Jordan 2
Howard A. Kosel Jr. 2
Brian R. McCaffrey 2
Arden D. Melick 2
Justin C. Orlando 2
Michael L. Ruff 2
Werner J. Schweiger 2
Richard M. Siegel 2
Michael J. Taunton 2
Roger J. Walz 2
Colin P. Watson 2
Elaine Weinstein 2
Robert R. Wieczorek 2
Edward J. Youngling 2