Exhibit 10.12
Supplemental Retirement Agreement
This Agreement (the "Supplemental Retirement Agreement") dated as of
January 1, 2002 (the "Effective Date") between KeySpan Corporation ("KeySpan" or
the "Company") and Xxxxxx X. Xxxxxxxxx (the "Executive") sets forth the
understanding and agreement of the parties as to certain additional terms on
which the Executive continues to be employed by KeySpan.
WHEREAS, Executive is an Executive Vice President and General Counsel of
KeySpan who became an employee of KeySpan on October 1, 1998, and became a
participant in the Employees Retirement Plan of KeySpan Energy (the "ERP") on
January 1, 1999 and the KeySpan Executive Supplemental Pension Plan ("KESPP");
WHEREAS, Executive may have limited pension benefits due to shorter than
normal service at retirement and the Company desires to grant Executive
additional credited pension service in the calculation of his pension benefit if
he remains employed until his vesting date for qualified plan purposes, October
1, 2003;
WHEREAS, on October 24, 2001, KeySpan's Compensation and Nominating
Committee recommended and on December 20, 2001 KeySpan's Board of Directors
authorized through a Resolution (the "Resolution") that the proper officers
provide an individual supplemental retirement agreement with Executive;
NOW THEREFORE, the Company and Executive agree that Executive will accrue
additional pension service through this Supplemental Retirement Agreement and
the parties agree as follows;
1. Upon Executive's completion of at least five years of service (October
1, 2003) and his election to retire in accordance with the provisions
of the ERP, Executive's pension benefit service time will be increased
and Executive will be paid other retiree benefits pursuant to this
Agreement.
2. Executive's supplemental retirement benefit wil be determined as
follows:
a. When Executive retires, Executive' pension benefit credited
service time will be matched by the Company by adding one year of
credited service for each year worked up to a maximum of ten years.
The aggregate pension service time, including the matched time, will
be utilized to compute Executive's pension benefit in accordance with
the ERP's formula and KESPP. The pension benefit will be paid pursuant
to the retirement plan annuity option elected by the Executive under
the ERP. The matched service time provided under this agreement will
be applicable to any survivor option, if any, is elected under the
ERP.
b. If Executive retires pursuant to the ERP, after October 1,
2003 but before the fifth anniversary of the adoption of the
Resolution, December 20, 2006, Executive shall receive matched time in
accordance with the following schedule:
Retirement before Vesting Percentage
----------------------------------------------------
December 19, 2002 0
December 19, 2003 0
December 19, 2004 40
December 19, 2005 60
December 19, 2006 80
When Executive retires on or after December 20, 2006, his benefit will be 100%
vested.
3. In the event of the Executive's death in active service on or after
October 1, 2003, a survivor pension benefit for the matched service
provided under this agreement will be provided to the Executive's
spouse pursuant to the survivor provisions in the ERP and in
accordance with the provisions of paragraph 2 above. In the event of
the Executive's Disability as defined in the ERP, the provisions of
paragraph 2 will be applied to this Agreement.
4. In the event Executive's employment is terminated:
(a) after a "Change of Control" as suc term is defined in the
KeySpan Senior Executive Change of Control Plan.
(b) by the Company for any reason othe than for "Cause"; or
(c) by the Participant after the occurrence of Good Reason as
such term is defined below and on or before 90 days after the
occurrence of Good Reason;
then the Company agrees that Executive shall immediately vest in all
additional service time earned pursuant to this Agreement. The service
time provided under this Agreement will be provided in addition to any
additional pension service granted Executive pursuant to the KeySpan
Senio Executive Change of Control Plan with such additional pension
service time being matched subject to the ten year maximum limitation
set forth in 2a. above.
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Cause for termination ("Cause") shall mean Employee's:
(i) continued material failure or inability to achieve required
performance results, or to perform in a competent manner
following written notice and opportunity to improve performance,
(ii) conduct that constitutes dishonesty or knowing and willful
breach of fiduciary duty; (iii) insubordination or refusal to
perform assigned duties or comply with directions of the Board;
(iv) conviction by a court of competen jurisdiction or entry of a
plea of no contest for a crime involving any act of moral
turpitude or unlawful, dishonest, or unethical conduct that a
reasonable person would consider damaging to the reputation of
the Company or improper and unacceptable conduct by an Employee
thereof.
Good Reason shall mean any of the following:
(A) without Employee's express written consent, (i) any action,
or failure to take action, by the Company, the Board or the
shareholders of the Company by the Company that results in a
diminution in the Executive's position authority, titles, duties
or responsibilities, or (ii) if Employee is notified by the
Executive's immediate supervisor o the Chairman and Chief
Executive Officer that a recommendation will be made to the Board
of Directors of the Company that Executive's employment will be
terminated after a Change of Control.
Any isolated, insubstantial and inadvertent action that is
not taken in bad faith and is remedied by the Company promptly
after receipt of notice thereof from the Executive does not
constitute "Good Reason";
(B) a material breach by the Company of any material provision of
this Agreement which, if capable of being remedied, remains
unremedied for more than 15 days after written notice thereof is
given by Employee to the company;
(C) without Employee's written consent the relocation of the
principal executive offices of the Company to a location outside
the greater New York area;
For purposes of this agreement, any good faith determination of Good Reason
made by the Employee shall be conclusive.
5. In addition, Executive will be eligible to participate in the retiree
medical and dental benefits programs provided under the group retiree
benefit plans. At the time of Executive's retirement, the Executive
will be required to pay the full group rate of this coverage to
participate in the plans. The Company will pay to Executive upon
completion of enrollment, a monthly supplemental amount grossed up for
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income taxes (less employee contributions in effect at retirement) to
pay for such group retiree benefits. This monthly amount will be a
fixed amount determined at retirement based upon the then current cost
of the retiree medical and dental plans. If Executive is under age 65
at retirement, the amount will be adjusted at age 65 to reflect the
cost of medical and dental coverage at age 65. Once the amount of this
supplement at age 65 is determined, it will remain at this amount as a
monthly lifetime supplemental payment to the Executive.
Additionally, if Executive retires prior to the fifth anniversary of
the adoption of the Resolution, Executive will be eligible for the
monthly amount by multiplying such fixed amount determined above by
the percentage in paragraph 2b.
If the Executive does not enroll in the group plans in accordance with
this paragraph, no supplemental payment will be made to Executive.
6. Any payment due hereunder will be paid from general assets.
7. KeySpan and Executive agree that should such additional benefits
earned or accrued pursuant to this Agreement be determined to be
subject to Section 280G of the Internal Revenue Code, KeySpan agrees
that such additional benefits will be eligible for "Gross Up" in
accordance with the provisions of the KeySpan Senior Executive Change
of Control Plan.
8. Executive agrees not to disclose the terms and conditions of this
Supplemental Retirement Agreement or any confidential information made
available to or learned by him in the course of the performance of his
duties at KeySpan and with respect to the business of KeySpan and
described in KeySpan's Statement on Ethical Business Conduct. Any and
all confidentiality agreements and all other agreements executed by
Executive that contained provisions not to disclose any confidential
information are incorporated into this Agreement. The term
"confidential" means information disclosed to Executive or known,
learned, created or observed by him as a consequence of, or through
his employment by KeySpan concerning KeySpan or any subsidiary or
affiliated company which is presently existing or which may be formed
in the future, which is confidential, secret or otherwise not
generally known in the industry, and pertains directly or indirectly
to the business activities, products, services, customers or processes
of KeySpan or any of its subsidiaries or affiliated companies,
including, but not limited to, information concerning mailing lists,
publicity, data, research, copyrights, other printed matter,
photographs, films, reproductions, finances, processes, trade secrets,
business plans, customer lists and records, potential customer lists,
customer billing and other related information.
Executive shall not take any original or copy of any document or other
papers, computer diskettes, methods, procedures, etc., containing or
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disclosing such confidential information or documents or summaries
containing the substance of any part thereof. Any record of
confidential information prepared by Executive or which came into his
possession during the period of employment with KeySpan are and remain
the property of KeySpan and upon termination of Executive's
employment, all such records and copies thereof shall either be left
with or returned to KeySpan.
9. Executive agrees that the restrictions contained in Paragraph 8 of
this Agreement are necessary for the protection of KeySpan and any
breach thereof will cause KeySpan damage for which there is no
adequate remedy at law and he consents to the issuance of an
injunction in favor of KeySpan and its subsidiaries, affiliates,
successors and assigns enjoining the breach of the aforesaid
restrictions by any court of competent jurisdiction. Executive agrees
that the rights of KeySpan to obtain an injunction granted by this
Paragraph of the Agreement shall not be considered a waiver of the
rights of KeySpan to assert any other remedies they may have at law or
in equity.
10. Executive recognizes and acknowledges that while employed by KeySpan,
he had access to certain confidential and proprietary business
information for KeySpan, including, but not limited to, client and
customer information and customer lists, all of which are of
substantial value to KeySpan in its business. Executive further
acknowledges that disclosure of this information to a competitor of
KeySpan may result in damage to KeySpan's business and a loss of good
will.
In consideration thereof, Executive agrees that from January 1, 2002
through the second anniversary of his retirement, neither Executive
nor any corporation, partnership or other entity controlled by, under
common control with, or presently controlling Executive will (a) in
the New York City metropolitan area and in any area outside the New
York City Metropolitan area wherein KeySpan owns and operates lines of
business including Texas; New Hampshire, New Jersey; Connecticut;
Rhode Island; Massachusetts; Ohio; Canada; Northern Ireland and
Mexico, travel, canvas or advertise for, or otherwise assist, render
services to, become employed by, be a consultant to, or invest in any
business entity or with any individual engage in, or engage directly
or indirectly in, any line or lines of business carried on or
contemplated which, directly or indirectly, is a competitor of
KeySpan, its subsidiaries, affiliated companies, successors or
assigns, (b) in the New York City Metropolitan area, and in any area
outside the New York City Metropolitan area wherein KeySpan owns and
operates lines of business including Texas; New Jersey; Connecticut;
Rhode Island; Massachusetts; Ohio; Canada; Northern Ireland and
Mexico, travel, canvas or advertise for, or otherwise assist, render
services to, become employed by, be a consultant to or invest in any
business entity or with any individual engage in, or engage directly
or indirectly in, any business entity or with any individual engaged
in, the same or similar business as KeySpan , its
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subsidiaries, affiliated companies and assigns, (c) solicit business
or otherwise deal directly or indirectly with any customers or persons
who were employees of customers or vendors of KeySpan, its
subsidiaries, affiliated companies and assigns, at any time, (d)
directly or indirectly divert or attempt to divert from KeySpan , any
business in which it has been engaged during the term of Executive'
employment with KeySpan, or in which it might reasonably be expected
to become engaged, (e) directly or indirectly interfere or attempt to
interfere with the relationships between KeySpan, its subsidiaries,
affiliated companies and assigns, their customers, employees of
customers or vendors, (f) directly interfere or attempt to interfere
with the relationship of employer-employee or principal and agent of
any person bearing such relationship to KeySpan, its subsidiaries,
affiliated companies and assigns, nor directly divert or attempt to
divert any such person from employment or representation of KeySpan,
its subsidiaries, affiliated companies and assigns; provided, however,
that Executive shall not be prohibited by the terms of this Paragraph
from investing in and owning not more than one percent (1%) of the
outstanding shares of common stock of any corporation, the shares of
which are publicly traded pursuant to the Securities Exchange Act of
1934, and/or passively invest as a limited partner in any non-publicly
traded security.
Damages cannot compensate KeySpan in the event of a breach or
violation of this Paragraph and, injunctive relief being essential for
the protection of KeySpan and its successors and assigns, in addition
to other applicable remedies, KeySpan may obtain such injunctive
relief in the event of any such breach or violation and may assert any
other remedies it may have at law or in equity.
Notwithstanding the above, if Executive's employment is terminated
pursuant to Section 4a., Section 4b., or Section 4c., then the Company
agrees that such provision is not applicable to Executive and all
restrictions pursuant to this provision will be waived by the Company
with respect to Executive's subsequent employment.
11. Executive understands neither this Supplemental Retirement Agreement
nor participation in the ERP or KESPP constitute a contract of
employment, nor does it impose on the Executive or the Company, any
obligation for the Executive to remain an employee or change the
status of the Executive=s employment or the Company=s policies
regarding termination of employment.
12. This Agreement shall bind any successor of KeySpan, its assets or its
businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent
that KeySpan would be obligated under this Agreement if no succession
had taken place.
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In the case of any transaction in which a successor would not by the
foregoing provision or by operation of law be bound by this Agreement,
KeySpan shall require such successor expressly and unconditionally to
assume and agree to perform KeySpan=s obligations under this
Agreement, in the same manner and to the same extent that KeySpan
would be required to perform if no such succession had taken place.
13. In the event of any litigation or other proceeding arising out of this
Agreement after a Change of Control attributable to the subject matter
of this Agreement or enforcement of rights asserted in good faith,
which is initiated by the Executive, the successor to KeySpan shall
reimburse the Executive for all costs and expenses relating to such
litigation or other proceeding, including reasonable attorneys fees
and expenses, promptly upon receipt of a written demand therefore and
regardless of whether such litigation results in any settlement or
judgment or order in favor of any party.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and may be modified only by a
written instrument executed by the parties. This Agreement may be
executed in one or more counterparts, all of which shall be considered
one and the same agreement and each of which shall be deemed an
original.
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IN WITNESS WHEREOF, KeySpan has caused this Agreement to be executed by a
duly authorized officer and the Executive has executed this Agreement, all as of
the Effective Date.
KEYSPAN CORPORATION
By: /s/
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By: /s/
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Xxxxxx X. Xxxxxxxxx
