Exhibit 4.3
THE NATIONAL GRID GROUP PLC and NATIONAL GRID
COMPANY PLC
And
Xxxxxx Xxxxx
Dated 27 July 2001
SERVICE
AGREEMENT
INDEX TO CLAUSES
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THIS SERVICE AGREEMENT DATED 27 July 2001 IS BETWEEN:–
THE NATIONAL GRID GROUP plc (the "Company") and THE NATIONAL GRID COMPANY plc whose registered offices are at 00 Xxxxxxxxxx Xxxx, Xxxxxx XX0 0XX and National Xxxx Xxxxx, Xxxxx Xxxxxx Xxxx, Xxxxxxxx, XX0 0XX respectively (the "Companies") and
Xx Xxxxxx Xxxxx, Xxxxxx'x Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxx XX0 0XX.
| 1. |
APPOINTMENT AND TERM |
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| 1.1 |
You will be employed by the
Company as a Director and will perform such duties as may be assigned
to you from time to time in accordance with Clause 2. Your current job
title is Group Director, Telecommunications, National Grid Group and
you will report to the Group Chief Executive. |
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| 1.2 |
Your appointment to this post
will be effective from 1st September 2001 and will continue, subject
to and in accordance with
the provisions of this contract, until terminated:- |
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(a) |
by the Companies in accordance with Clause
15; |
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(b) |
by the Companies giving you not less than
twelve months' notice (24 months for the first year, declining on a straight
line basis in the second year to 12 months); |
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(c) |
by you giving the Companies not less than
twelve
months' notice. |
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| 1.3 |
In accordance
with the Company's Articles of Association, your appointment is subject
to ratification by shareholders in General
Meeting. |
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| 2. |
DUTIES |
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| 2.1 |
During the continuance
of your employment,
you will:- |
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(a) |
perform such duties as may
from time to time be reasonably assigned to you whether those duties
relate to the business of the Company or to the business of any of its
Subsidiaries or Associates (including
the holding of offices therein); |
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(b) |
in all respects comply with
all lawful directions
given by or under the authority of the Company; |
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(c) |
use your best endeavours
to promote, develop and extend the business and the interests of the
Company and any of its subsidiaries; |
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(d) |
unless prevented by sickness
or injury and except during holidays, devote the whole of your time,
attention and ability during
your hours of work to the performance of your duties under this
Contract; |
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(e) |
act only in accordance with the Memorandum
and Articles of Association of the Company or of the relevant Associate
or Subsidiary
In the Company; and |
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(f) |
keep the board of directors of the Company
(and, where applicable of the relevant Group company) promptly and fully
informed (in writing if so requested) of your conduct of the business
or affairs of the Company and provide such explanations as they may require. |
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| 2.2 |
Your normal hours of work
total 37 hours per week. However, you will be expected to work such other
hours as may
reasonably be required for the proper performance of your duties and
you will not be entitled to receive additional remuneration for work
over and above normal hours. In line with the Working Time Regulations,
you will not be required to work more than an average of 48 hours per
week. |
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| 2.3 |
You will be based at the Group
Headquarters at
00 Xxxxxxxxxx Xxxx, Xxxxxx XX I 5JD. |
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| 2.4 |
The Company reserves the right
(as far as it is reasonable to do so and after giving you reasonable
notice of the change) to relocate your main place of work to (or to require
you to perform some of your duties from or to post you temporarily to)
any of its UK offices. |
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| 3. |
SALARY |
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| 3.1 |
During the continuance of
your employment (subject to Clause 10.2), you will be entitled to a salary
at the rate of £310,000 per annum (or such higher rate as may from time
to time be agreed between the parties). |
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| 3.2 |
Your salary will accrue from
day to day, be payable by equal monthly instalments on or before the
last day of each month, and be inclusive of any remuneration to which
you may be, or become entitled as a holder of any office in the Company
or any other company for the time being in the Company. |
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| 3.3 |
The salary referred to in
Clause 3.1 above shall be reviewed annually. The current review date
is 1 April and your salary will be reviewed for the first time in April
2002. |
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| 3.4 |
The remuneration of senior
staff is linked to the Company's and their own performance and you will
be covered by these arrangements. This includes performance management
principles and clear and agreed performance targets and objectives for
each year which will be discussed and agreed with you by the Group Chief
Executive. Following assessment of performance against these targets
an annual bonus, currently of up to 60%, may be payable in June following
the relevant year end. The performance year is 1 April to 31 March and your
first participation in this bonus will commence 1st September 2001 and
will be pro-rated for the period
to 31 March 2002. From 1st September 2001 until 31 March 2002
you will also be covered by a special bonus. Details of this, together with the
fundamental considerations underpinning the subsequent special bonus
plans, are set out in Schedule 1. |
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| 4. |
PENSION |
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| 4.1 |
In this Clause the "ESPS" means the Electricity
Supply Pension Scheme and words used in this Clause have the same meaning
as they have under the provisions of the ESPS. |
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| 4.2 |
Subject to the terms and conditions (both
statutory and non-statutory) in force from time to time in respect of
the ESPS Group in which the Companies participate or of which it is Principal
Employer, you will be eligible (but not obliged) to be a Member of the
ESPS. You will also be entitled to enhanced pension arrangements as set
out in Schedule 2 to this contract. |
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| 4.3 |
As a member of the ESPS a Contracting-out
certificate
is in force in respect of your employment |
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| 5. |
INSURANCE BENEFITS |
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| 5.1 |
The Company will, during your employment,
provide you and, if appropriate, your partner and dependent children
with cover under a private medical expenses insurance scheme. This scheme
is maintained from time to time by the Company for its employees, and
cover is subject to and in accordance with the rules of such scheme which
may be reviewed from time to time. |
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| 5.2 |
The Company will, during your employment,
provide you with personal accident insurance cover, subject to and in
accordance with the rules from time to time of the relevant scheme, current
details of which
are available from Group Human Resources. |
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| 5.3 |
The Company will provide Permanent Health
Insurance to you whilst you are employed under this Contract until 1
September 2006, subject to underwriting by our insurers. At that time
you will be eligible for ill health
provisions of ESPS. |
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| 6. |
PROFESSIONAL FEES |
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| 6.1 |
The Company will reimburse you in full
for subscriptions for any professional memberships which, in its opinion,
are relevant to your
employment. |
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| 7. |
CAR |
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| 7.1 |
You will be provided with a car allowance OR a
car of suitable age, make, model and specification during the continuance
of your employment in accordance with the policy laid down by the Company
from time
to time and the Company shall pay all
standing and running costs relating to it (including the cost of fuel for private
mileage) but not any taxable benefit arising. You shall comply with all rules
laid down by the Company in relation to Company vehicles, notify the Company
immediately of any accident involving your car and of any charge brought against
you for a motoring offence and, unless otherwise agreed, shall return the car
to your place of work forthwith on termination of your employment. |
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| 8. |
EXPENSES |
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| 8.1 |
You will be reimbursed with
all reasonable travelling, hotel and other expenses properly incurred by
you in the performance of your duties under this Contract, subject to you
providing the Company with receipts or other evidence as shall be required,
of payment of the said expenses. The Company will also, during your employment,
reimburse line rental and cost of business calls in respect of your home
telephone. |
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| 9. |
HOLIDAYS
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| 9.1 |
You will be entitled, on a
pro-rata monthly basis, to 31 working days' holiday without loss of pay
in each Holiday Year to be taken at such times as may be approved in advance
by the Group Chief Executive. Holidays may not be carried forward from one
Holiday Year to the next. No payment will be made by the Company during
the continuance of this Contract in lieu of holidays not taken. |
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| 9.2 |
Upon termination of this Contract,
if (in the opinion of the Company) its business needs have prevented you
from taking your holiday entitlement, you shall be entitled to payment (at
the rate of 1/260th of your annual salary for each day) in lieu on a pro
rata basis for any holidays not taken which have accrued in the Holiday
Year up to the Date of Termination. However, if appropriate, the Company
shall be entitled to deduct from your final salary instalment an amount
equal to 1/260th of your salary for each day's holiday taken prior to the
Date of Termination in excess of your proportionate entitlement. |
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| 10. |
SICKNESS AND INJURY
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| 10.1 |
If you are absent from work
as a result of sickness or injury you will:– |
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(a) |
notify the Company by telephone on the
first day of your absence or in the event of being unable to do so, as soon
as practicable thereafter; |
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(b) |
if the period of absence is less than
8 consecutive calendar days, submit to the Company on your return a certificate
of sickness completed by yourself; |
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(c) |
if it is 8 consecutive calendar days or
more, submit to the Company without delay a medical certificate signed by
a practising medical practitioner in respect of each week of absence after
the first; |
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(d) |
you will, on request by the Company, allow
yourself to be examined by the Company doctor who shall report to the Group
Chief Executive as appropriate. |
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| 10.2 |
You will, subject to compliance
with sub-clause 10.1 above and to Clause 15 below, be entitled to:– |
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(a) |
payment of salary at the full basic rate
and maintenance of other contributions and benefits contractually provided
by the Company (less any social security or other benefits payable to you)
during any period of absence from work as a result of sickness or injury
up to a maximum of a continuous period of 180 days or for an aggregate of
130 working days in any 12 consecutive months; |
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(b) |
payment of salary at half the full basic
rate in addition to other contributions and benefits (less any social security
or other benefits payable to you) during any such periods of absence in
excess of a continuous period of 180 days or for an aggregate of 130 working
days in any 12 consecutive months; |
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but you will not be entitled
to any payment of salary or maintenance of benefits during-any absence
in excess of 12 months. |
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| 10.3 |
The Company will pay statutory
sick pay, where appropriate, in accordance with the legislation in force
at the time of absence, and any payment of salary in accordance with Clause
10.2 will go towards discharging its liability to pay statutory sick pay.
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| 11. |
CODE OF CORPORATE GOVERNANCE
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| 11.1 |
The National Grid Group plc's
Code of Corporate Governance provides for you, in furtherance of your duties
as a Director of the Company, to take independent professional advice, if
necessary, at the Company's expense. The Chairman or the Group Company Secretary
should be notified if this step is taken, which should only be taken in
the best interests of the Company. |
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| 11.2 |
As a Director of the Company
you are, of course, bound by the provisions of the Companies Act and the
Stock Exchange Listing Requirements, the details of which are available
from the Group General Counsel and Company Secretary. If at any point you
are uncertain as to the interpretation of such provisions you must seek
the advice of the Group Chief Executive. |
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| 12. |
INTERESTS IN OTHER BUSINESSES
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| 12.1 |
You shall disclose promptly
in writing to the Company all your interests and those of your spouse
and
dependent children, in any business other than the business of the Company
and its Subsidiaries and Associates and, save with the written consent
of
the Company (such consent not to be unreasonably withheld), you will not
during the continuance of your employment accept any public office nor
will you hold any directorship
nor will you be engaged or interested (except as the holder for passive
investment purposes of any shares or other securities quoted or dealt
in
on a recognised stock exchange not exceeding, in any case, 3 per cent of
the class of securities of the company concerned) either directly or
indirectly
in any business or commercial occupation other than the business of the
Company and its Subsidiaries and Associates. |
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| 12.2 |
You shall comply where relevant
with every rule of law, every regulation of The Stock Exchange and every
regulation of the Company from time to time in force including compliance
with the spirit as well as the letter of the rules for the time being applicable
to the relevant stock exchanges on which shares of the Company are for the
time being listed or traded. In relation to overseas dealings, you will
also comply with all laws of the state and all regulations of the stock
exchange, market or dealing system in which such dealings take place; and
you will not (and will procure so far as you are able that your spouse and
children do not) deal or become or cease to be interested (within the meaning
of Part 1 of Schedule XIII to the Companies Act 1985) in any securities
of the Company except in accordance with any rules or guidelines from time
to time relating to securities transactions by senior executives of the
Company. |
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| 13. |
CONFIDENTIALITY
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| 13.1 |
You will not during the continuance
of your employment or afterwards (unless authorised to do so by the Company
or by a court of competent jurisdiction). directly or indirectly:– |
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(a) |
use for your own benefit or the benefit
of any other person; or |
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(b) |
disclose to any person, |
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any trade secrets
or other confidential information relating to the business, affairs, finances,
products or processes of the Company and/or of any of its Subsidiaries or
Associates ("Confidential Information"). |
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| 13.2 |
The restriction
in this Clause will not prevent you after the Date of Termination, from
using for your own or another's benefit, any Confidential Information which:–
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(a) |
by virtue of your employment, becomes
part of your own skill and knowledge; and |
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(b) |
apart from the provisions of this Contract,
could lawfully be used by you for that purpose, and in this respect you
acknowledge without limitation the restrictions in Section 57 of the Electricity
Xxx 0000. |
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| 13.3 |
During your
employment, you will not:– |
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(a) |
directly or indirectly solicit, receive
or obtain any discount, rebate, commission or other inducement (whether
in cash or in kind) which is not authorised by regulations or guidelines
from time to time governing dealings by executives on behalf of the Company,
or, if you do, you will account immediately to the Company for the amount
so received; |
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(b) |
except in the proper course of your duties
under this Agreement remove from Company premises or copy or allow others
to copy (or transmit by fax, e-mail or other means) the contents of any
document, computer disk, tape or other tangible item which contains any
Confidential Information
or which belongs to the Company; or |
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(c) |
at any time make any untrue or misleading
statement
relating to the Company, or any of its Subsidiaries or Associates. |
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| 14. |
PROTECTION OF INTERESTS OF COMPANY |
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| 14.1 |
During the period
of 12 months after the Date of Termination, you will not directly or
indirectly offer employment to or solicit or entice away or endeavour
to entice away from the Company, or any of its Subsidiaries or Associates,
any person who is and was, at any time during the period of two years
prior to the Date of Termination, employed or engaged by the Company
or any of its Subsidiaries or Associates in a senior management, senior
technical or senior sales position and who, by reason of such position,
possesses any Confidential Information or is likely to be able to solicit
the custom of any customer of
the Company, or its Subsidiaries or Associates. |
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| 14.2 |
After the Date
of Termination you will not represent yourself or permit yourself to
be held out as being in any way connected with or interested in the business
of the Company; and after such date you will not represent yourself or
permit yourself to be held out as being in any way connected with the
business of any of the Subsidiaries or Associates of the Company, except
if and for so long as you remain an employee of that Subsidiary or Associate. |
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| 14.3 |
It is your obligation
to ensure you take no action and make no statement (or omit to take any
action or make any statement) which constitutes unlawful discrimination
whether under the Equal Pay Xxx 0000, the Sex Discrimination Xxx 0000,
the Race Relations Xxx 0000, the Trade Union and Labour Relations (Consolidation)
Xxx 0000, the Disability Discrimination Xxx
0000 or otherwise. |
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| 14.4 |
You are required
to comply with the provisions of the legislation on health and safety
and working conditions. You are further required to do your utmost to
ensure that the Company, and any of its Subsidiaries or Associates, comply
with such health and safety legislation, all legislation concerning their
areas of activity and generally with all legal obligations affecting
the Company, or any of its Subsidiaries or Associates. |
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| 14.5 |
In this Clause
references to acting directly
or indirectly include (without prejudice to the generality of that
expression) references to acting alone or jointly with or by means of
any other person, firm or company. |
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| 15. |
TERMINATION |
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| 15.1 |
At any time after notice to
terminate your employment has been served or received by the Company,
the Company may:– |
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(a) |
require you to return to the Company any
documents, computer disks and tapes and other tangible items in your
possession or under your control which belong to the Company or which
contain or refer to any Confidential
Information; and/or |
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(b) |
require you to delete all Confidential
Information from any computer disks, tapes or other re-usable material
in your possession or under your control and destroy all other documents
and tangible items in your possession or under your control which contain
or refer to any Confidential Information;
and/or |
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(c) |
for such period as it considers reasonable
ending no later than the expiry of such notice suspend you from the performance
of all or any of your duties under this Agreement; and/or |
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(d) |
appoint a replacement to hold the same
or similar job title as you and/or to carry out all or any of your duties
instead of you; and/or |
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(e) |
for such period as it considers reasonable
ending not later than the expiry of such notice exclude you from all
or any premises
of the Company or its Subsidiaries or Associates; and/or |
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(f) |
for such period as it considers reasonable
ending no later than the expiry of such notice require you not, without
its prior consent, to engage in any contact (whether or not at your own
instance) with any customer, supplier, employee, director, officer or
agent of any company in the Company which touches and concerns any of
the business affairs of the Company. |
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| 15.2 |
Without prejudice to the Company's right
to summarily dismiss you for gross misconduct, the Company will be entitled
to terminate your
employment without notice if you:– |
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(a) |
commit a serious or persistent breach
of any
term of this Contract; |
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(b) |
commit any act of dishonesty or engage
in any conduct (in either case whetherr or not in the course of your
employment) which, in the opinion of the Company, causes or is likely
to cause your continued employment to be detrimental to the interests
or reputation of the Company, or any of its
Subsidiaries or Associates; |
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(c) |
become bankrupt or compound
with your creditors; or |
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(d) |
are convicted of any arrestable
criminal offence (other than an offence under road traffic legislation
in the United Kingdom or elsewhere for which a fine or non-custodial penalty
is imposed). |
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| 15.3 |
If you are incapacitated
by sickness (including mental disorder) or injury from carrying out your
duties under this Contract for a continuous period of 180 days or for an
aggregate of 130 working days in any 12 consecutive months, the Company
will be entitled, notwithstanding Clause 10.2 or your entitlement at that
time to sick pay or benefits under the Company's permanent health insurance
scheme, to terminate this Contract by not less than 6 months' written notice
given within 6 months after the end of the 180 or (as the case may be)
130 working days. |
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| 15.4 |
When requested
to do so during the currency of any notice to terminate your employment
given or received by you and, in any event, on the Date of Termination
you will promptly:– |
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resign (if you have not already
done so) from all offices held by you in the Company and its Subsidiaries
and Associates; |
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(b) |
deliver up (if you have not
already done so) to the Company all lists of customers, correspondence,
documents, discs, tapes, data listing, codes, designs, drawings and all
other materials and property belonging to the Company or any of its Subsidiaries
or Associates which may be in your possession or under your control, including
any copies; |
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(c) |
confirm in writing that you
no longer have in your possession, custody or power any property of or
relating to the business of the Company and that you have not retained
or made any unauthorised copy (whether in documentary or electronic form)
of any data which contains or refers to any Confidential information; and |
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(d) |
deliver up to the Company forthwith
any car provided under this Contract; and you hereby irrevocably authorise
the Company to appoint someone as your attorney to act in your name and
on your behalf to execute all documents and do all things necessary to
effect the resignations referred to above, in the event of your failure
to do so within 7 days of your being so requested or of the Termination
Date (as the case may be). |
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| 15.5 |
On serving or receiving
notice to terminate this Contract or at any time thereafter during the
currency of such notice the Company reserves the right in its absolute
discretion
to pay to you your salary (at the rate then payable under Clause 3.1 hereof)
in lieu of your entitlement to notice. |
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| 15.6 |
Any termination
of your employment will be without prejudice to your continuing obligations
under this Agreement. |
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| 16. |
WAIVER OF RIGHTS |
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| 16.1 |
If:– |
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(a) |
your employment is terminated:– |
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by reason of the liquidation of the Company
for
the purpose of amalgamation or reconstruction; or |
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ii |
as part of any arrangement for the amalgamation
of the undertaking of the Company not involving liquidation or for the
transfer of the whole or part of the undertaking of the Company to any
of its Subsidiaries
or Associates, and |
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(b) |
you are offered employment of a similar
nature with the amalgamated or reconstructed or transferee company on
terms not generally
less favourable to you than the terms of this Contract; |
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you will have no claim against the Company
under this Contract in respect of that termination. |
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| 17. |
DISCIPLINE AND GRIEVANCES |
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| 17.1 |
As a Director of the Company, you are
expected to conduct yourself in a thoroughly professional manner at all
times. A copy of the Employee Rules of the Company for the time being
in force, which apply to you by virtue of your employment hereunder but
which do not form part of your terms and conditions of employment, can
be obtained from Group Human Resources. |
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| 18. |
INVENTIONS |
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| 18.1 |
If
at any time during the continuance of your employment you, whether alone
or with any other person, make, discover or produce any invention, process,
development or design which relates to, or affects, or in the opinion
of the Company is capable of being used or adapted for use in or in connection
with, the business or any product, process or intellectual property right
of the Company or any of its Subsidiaries or Associates:– |
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(a) |
the invention, process, development or
design will be the absolute property of the Company (except to the extent,
if any, provided otherwise by Section 39 of the Patents Act 1977); and |
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(b) |
you will immediately disclose it to the
Company
in writing. |
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| 18.2 |
You will, if and when required
to do so by the Company (whether during the continuance of your employment
or
afterwards), and
at its expense:– |
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(a) |
apply, or join with the Company, or any
of its Subsidiaries or Associates in applying for letters patent or other
protection in any part of the world for any invention, process, development
or design to which Clause 18.1 above applies; |
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(b) |
execute or procure to be executed all
instruments, and do or procure to be done all things, which are necessary
for vesting such letters patent or other protection in the Company or
any other company, or subsequently for renewing and maintaining the same
in the name of the Company or its nominee;
and |
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(c) |
assist in defending any proceedings relating
to, or to any application for, such letters patent or other protection. |
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| 18.3 |
In relation to each and every
copyright work or design which relates either directly or indirectly
to the business
of the
Company, or any of its Subsidiaries or Associates (a "Group Work") which you
(jointly or alone) originate, conceive, write or make at any time during the
period of your employment:– |
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(a) |
you will promptly disclose such Group
Work to the Company. Group Works made wholly outside your normal working
hours which are wholly unconnected with your employment are not Group
Works; |
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(b) |
you hereby assign to the Company by
way of future assignment all copyright, design right and other proprietary
rights (if any)
throughout the world in such Group Work; |
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(c) |
you hereby irrevocably and unconditionally
waive in favour of the Company any and all moral rights conferred on
you by Part 1 of the Copyright Designs and Patents Xxx 0000 in relation
to any such Group Works; |
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(d) |
you acknowledge that, for the purposes
of the proviso to Section 2(1) of the Registered Designs Xxx 0000 (as
amended by the Copyright Designs and Patents Act 1988), the covenants
on the part of you and the Company will be treated as good consideration
and, for the purposes of that Act, the Company will be the proprietor
of any design which forms part of the Group Works. |
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| 19. |
INTERPRETATION |
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In this Contract:– |
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| 19.1 |
"Associate" means a body corporate which
for the time being has not less than 20 per cent of its equity share
capital beneficially owned by the Company; |
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| 19.2 |
"Date of Termination" means the date
upon which your employment under this Agreement terminates or, where
so notified by the Company, the date with effect from which the Company
exercises its right to suspend you under Clause 15.1(c); |
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| 19.3 |
"Holiday Year" means each 12 month period
commencing 1st February and ending 31st January; |
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| 19.4 |
"Subsidiary" has the meaning attributed
to it by Section 736 of the Companies Xxx 0000 and "equity share capital" has
the meaning attributed to it by Section 744 of the Companies Xxx 0000; |
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| 19.5 |
unless otherwise stated and except in
Clause
20 below, a reference to "your employment" is to your employment by the Companies
under this Contract; |
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| 19.6 |
unless the context otherwise requires,
words in the singular include the plural and vice versa, and a reference
to a person includes a reference to a body corporate and to an unincorporated
body of persons; |
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| 19.7 |
a reference to a statute or statutory
provisions includes a reference to that statute or provision as from
time to time modified
or re-enacted. |
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| 20. |
ENTIRE CONTRACT CONTINUITY AND CONDITIONALITY |
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| 20.1 |
Except as otherwise expressly provided
by its terms and for any detailed rules (not being inconsistent with
the express terms
hereof) from time to time
laid down by the Company, this Contract, together with its two Schedules
and the covering letter dated 27 July 2001, represents the entire understanding,
and supersedes any previous agreement between the parties in relation
to your employment by the Company, its Subsidiaries or Associates. |
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| 21. |
NOTICES |
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| 21.1 |
Any notice to be given under this Contract
will be in writing and will be deemed to be sufficiently served by one
party on the other if it is either delivered personally or is sent by
prepaid first class post and addressed to the party to whom it is to
be given, in the case of yourself, at your last known residence and in
the case of the Company, at its registered office, and any such notice
if so posted will be deemed to have been served on the day (excluding
Sundays and public holidays) following that on which it was
posted. |
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| 22. |
JURISDICTION |
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| 22.1 |
This Contract shall be governed by and
interpreted in accordance with the laws of England and Wales and each
of the parties submits to the jurisdiction of the English and Welsh courts
as regards any claim or matter arising under this Contract or as a direct
result of your employment by the Company. |
14
SCHEDULE 1
THE NATIONAL GRID GROUP plc and THE NATIONAL GRID COMPANY
plc
SPECIAL BONUS PLAN ARRANGEMENTS AND OTHER ITEMS
Xxxxxx Xxxxx
| This Schedule, should be read in conjunction
with the Service Agreement between the National Grid Group plc and National
Grid Company plc (“the Company”) and Xxxxxx Xxxxx. |
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| 1. |
Special Bonus Scheme: |
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You will participate in a special bonus
scheme that will cover an initial Review period followed by the ongoing
Delivery period. |
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a) |
To 31 March 2002: Review
period: |
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In addition to the annual performance
bonus that applies to all Executive Directors, there will be an enhanced
bonus delivering £100,000 covering the period ending 31 March 2002. This
bonus will be contingent on completing the telecommunications strategic
review and gaining Board approval both for the review and for the business
plans that result from the review. |
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b) |
Post 31 March 2002: Delivery
period: |
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When the strategy and business plans
have been agreed, the Company will be in a much better position to set
out a specific structure regarding incentives that reflect achievement
and the realities of the telecommunications market. |
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There are certain fundamental considerations
that will underpin whatever structures are put in place. |
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i) |
The special scheme will be in addition
to the various incentive schemes that apply to the other Group Executive
Directors. |
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ii) |
Maximum achievement will deliver 100%
of base
salary on an annualised basis. |
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iii) |
Target achievement will deliver about
66%
of base salary on an annualised
basis. |
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iv) |
Assessment of achievement against targets
will be determined by the Remuneration Committee. |
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v) |
The special scheme will be structured
in the way that best supports the achievement of whatever business objectives
are agreed. The
special scheme might be structured as an annual or as
a long-term plan (which may be a phantom option plan). If a long-term plan is
set up, shareholder approval would need to be sought. |
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If we are unable to draw
up a mutually acceptable special scheme then the Company would recognise
the importance
of the telecommunications portfolio to enhancing NGG shareholder value
by granting an increased multiple of share options for an additional
two years after the initial grant. This multiple would be 3 times annual
base salary. |
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| 2. |
IPO / Divestment |
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An additional special bonus, recognising
your personal contribution, will be paid in the event of an IPO or any
divestment – subject to the transaction(s) significantly enhancing shareholder
value. The Remuneration Committee will decide on the exact level of bonus
– but an award of up to two times base salary would be envisaged for
a successful and significant transaction. Corporate Finance will develop
a method of calculating potential awards up to this level. |
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| 3. |
Termination of services, by the Company,
for
reasons unrelated to your performance and outside your control |
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i) |
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In the event of termination you would
have contractual
notice which initially is for two years. |
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ii) |
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The special bonus (1 (a) above) would
still be
paid in the event of termination on or before 31 March 2002. |
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iii) |
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For a termination after 31 March 2002
the Company
would recommend to the Remuneration Committee that the |
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a) Annual Bonus be paid in line with
actual achievement against objectives for the pro-rated period to actual
date of departure PLUS an amount equal to 50% of the outstanding notice
period assessed at target achievement. |
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b) Special Bonus (see 1(b) above) be
paid in line with actual achievement against objectives for the pro-rated
period to actual date of departure. |
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iv) |
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Notwithstanding 3 (iii) (a) and (b)
above, the Remuneration Committee will be able, at its discretion, to
determine whether any additional payment should be made, having regard
to the circumstances prevailing
at the time. |
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v) |
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The Remuneration Committee would have
the discretion to grant a period of time wherein you could exercise National
Grid Group Executive
Share Options. |
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vi) |
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The above terms regarding termination
of services will remain in force for the first three years of your employment.
Thereafter termination terms will revert to those applicable to the other
Executive Directors. |
2
SCHEDULE 2
THE NATIONAL GRID GROUP plc and THE NATIONAL GRID COMPANY plc
SUMMARY OF ENHANCED PENSION AND LIFE ASSURANCE
ARRANGEMENTS
Xxxxxx Xxxxx
This summary, which should be read in conjunction
with the National Grid Company plc ("the Company") section of the ESPS booklet,
notifies you of your entitlement to additional benefits to those provided
by the ESPS. The additions are as follows:
| 1. |
Your Normal Pension Age is age 60. |
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| 2. |
Your pension will
accrue at a rate of 1/30th of your Pensionable Salary for
each year of Pensionable Service from 1st September 2001 (complete
days will count) or such higher amount as may be advised by the Actuary
to the Scheme, subject to pension payable, including any retained benefits,
not exceeding Inland Revenue limits (but see 12 below). You will be able
to exchange part of your pension for a tax free lump sum up to the maximum
permitted by the Inland Revenue. The provisions of paragraph 12 of this
Schedule shall apply in respect of any pension benefits which cannot be
provided under the ESPS due to Inland Revenue limits. |
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| 3. |
(a) |
You may retire with the consent
of the Companies at any time on or after your 55th birthday and receive
an immediate pension. Under these circumstances, the immediate unreduced
pension will be based on your Pensionable Service and your Pensionable
Salary at the date of termination. |
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(b) |
You may retire without the
consent of the Companies at any time on or after your 55th
birthday and receive an immediate pension. Under these circumstances, the
immediate
pension will be based on your Pensionable Service and your Pensionable
Salary at the date of termination, and will be reduced for early payment
by an amount determined by the Remuneration Committee on the advice of
the Actuary, having regard to the actuarial factors prevailing at that
time within the ESPS. |
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| 4. |
Should your
employment be terminated as a result of redundancy, and the termination
is with the
consent of the Companies, you will be entitled to the greater of: |
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(a) |
the severance terms of The National Grid
Group, as amended from time to time, which currently include payment
of a pension under standard ESPS terms only, (i.e. not a pension based
on the enhanced accrual rate set out in this summary) at age 50, or immediately
if aged over 50, or; |
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(b) |
a deferred pension (and lump sum) payable
at your request from age 50, or such later date as you may choose but
no later than 60. The pension (and lump sum) will be calculated on your
Pensionable Service and your Pensionable Salary at the date of termination.
Should such a termination occur after your 50th birthday you will be
entitled to an immediate unreduced pension (and lump sum) calculated
on your Pensionable Service and your Pensionable Salary at the date of
termination. |
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| 5. |
In the event that it is agreed
with the Companies that you should continue in service beyond age 60,
there will be an appropriate adjustment to your benefits. The exact terms
of the adjustment will be determined by the Companies and notified to
you, upon advice received from the Actuary, when you reach age 60. |
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| 6. |
On death in service before
the Normal Pension Age a lump sum is available for your beneficiaries
equal to four times your annual rate of basic salary at death, plus the
total amount of contributions with interest paid by you into the National
Grid Company plc Section of the ESPS. |
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| 7. |
The pension payable to a
spouse on death in service before Normal Pension Age is calculated as
2/3 of the pension you would have received at Normal Pension Age based
on your Pensionable Salary at death. |
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| 8. |
The pension payable to a
spouse on death after retirement is calculated as 2/3 of your pension.
The calculation will assume you chose to exchange no pension for cash
at retirement and will be increased at the same rate as your pension
has increased between retirement and death. |
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| 9. |
In the event of a transfer
in of accrued pension benefits from another pension provider, any Back
Service Credit will be calculated
on standard ESPS benefits. |
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| 10. |
Your contributions will
be normally be 6% of your Salary. However, this may be reduced from time
to time based on actuarial advice. In this respect, you will benefit
from a reduction in your contribution to 3% of your salary until March
2002 or such later time as notified. |
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| 11. |
In this schedule "Salary" means
the annual amount of salary payable by the Companies as stipulated in
your Agreement as increased from time to time but excluding any bonus,
allowance or emoluments in kind appertaining to your employment, unless
otherwise determined by the Companies. |
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"Pensionable Salary" means
the greater of |
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(a) |
the Salary paid or payable in the highest
paid year in the last five years of Pensionable Service, or if Pensionable
Service is for a shorter period than five years in respect of such shorter
period, or; |
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(b) |
the average annual Salary paid in the
three highest paid consecutive years in the last ten of Pensionable Service,
or if your Pensionable Service is for a shorter period, in respect of
such shorter period. |
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Where a year other than the
last one is used, such Salary to be increased in line with RPI. |
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"Pensionable Service" means
service whilst a contributing member of the ESPS. It is calculated in
complete years but with each day completed in excess of a complete year
calculated as 1/365 of a year and may include a Back Service Credit or
Added year. |
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| 12. |
You should note that the
Inland Revenue have
placed a restriction (the "earnings cap") on the amount of pay on which benefits
may be calculated in an approved arrangement (£95,400 for the 2001/2002 Tax Year).
Your pension at Normal Pension Age will be augmented under the
National Grid Company plc Section of the ESPS, if necessary, up to the
maximum allowable at that date. If your full pension promise, as set out
in paragraph 2 of this Schedule, cannot be met from the National Grid Company
plc Section of the ESPS, you will be provided with additional benefits
of equivalent value under a separate agreement. For the avoidance of doubt,
if your Pensionable Service is terminated (for any reason) prior to your
Normal Pension Age you will be entitled at Normal Pension Age to pension
benefits which give effect to your full pension promise as set out in paragraph
2 of this Schedule, but only in respect of your Pensionable Service up
to the date of termination of your Pensionable Service, and this will apply
mutatis mutandis to the provisions of paragraphs 3 and 4 (b). With the
exception of the earnings cap restriction, all other limits imposed by
the Inland Revenue on approved arrangements will apply to the benefits
referred to in this summary. |
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| 13. |
In all other respects the
provisions of ESPS
will apply to you. |
3
