SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 30, 1998
For the quarterly period ended. . . . . . . .. . . . . . . . . .
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from. . . . . . . .to. . . . . . . . .
1-3103-2
Commission file number. . . . . . . . . . . .. . . . . . . . . .
New York State Electric & Gas Corporation
. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .
(Exact name of registrant as specified in its charter)
New York 15-0398550
. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 3287, Ithaca, New York 14852-3287
. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .
(Address of principal executive offices) (Zip Code)
607 347-4131
Registrant's telephone number, including area code . . . . . . .
N/A
. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x] No [ ]
The number of shares of common stock (par value $6.66 2/3
per share) outstanding as of July 31, 1998 was 64,508,477. All
shares were held by Energy East Corporation.
<PAGE>
TABLE OF CONTENTS
PART I
Page
Item 1. Financial Statements . . . . . . . . . . . . . . 1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
(a) Liquidity and Capital Resources . . . . . 7
(b) Results of Operations . . . . . . . . . . 10
PART II
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. . . . . . . . . . . . . . . . . 15
(b) Reports on Form 8-K . . . . . . . . . . . 15
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
New York State Electric & Gas Corporation
Consolidated Statements of Income - (Unaudited)
Three Months Six Months
Periods Ended June 30 1998 1997 1998 1997
(Thousands, except per share amounts)
Operating Revenues
Electric . . . . . . . . . . . . . . $404,768 $411,453 $910,356 $862,723
Natural gas. . . . . . . . . . . . . 54,535 58,917 176,179 195,784
------- ------- --------- ---------
Total Operating Revenues. . . . . 459,303 470,370 1,086,535 1,058,507
------- ------- --------- ---------
Operating Expenses
Fuel used in electric generation . . 20,991 52,706 80,083 112,689
Electricity purchased. . . . . . . . 142,629 98,247 288,840 191,459
Natural gas purchased. . . . . . . . 31,251 28,462 88,388 88,869
Other operating expenses . . . . . . 67,391 80,967 140,559 160,528
Maintenance. . . . . . . . . . . . . 20,702 30,550 52,650 54,467
Depreciation and amortization. . . . 37,044 48,027 84,638 96,316
Other taxes. . . . . . . . . . . . . 45,960 48,668 100,900 103,909
------- ------- --------- ---------
Total Operating Expenses. . . . . 365,968 387,627 836,058 808,237
------- ------- --------- ---------
Operating Income. . . . . . . . . . . 93,335 82,743 250,477 250,270
Interest Charges, Net . . . . . . . . 29,630 29,882 60,266 60,508
Other Income and Deductions . . . . . 706 4,578 3,428 9,346
------- ------- --------- ---------
Income Before Federal Income Taxes. . 62,999 48,283 186,783 180,416
Federal Income Taxes. . . . . . . . . 26,833 22,008 72,177 72,164
------- ------- --------- ---------
Net Income. . . . . . . . . . . . . . 36,166 26,275 114,606 108,252
Preferred Stock Dividends . . . . . . 2,260 2,352 4,529 4,667
------- ------- --------- ---------
Earnings Available for Common Stock . $33,906 $23,923 $110,077 $103,585
======= ======= ========= =========
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
New York State Electric & Gas Corporation
Consolidated Balance Sheets - (Unaudited)
June 30, Dec. 31,
1998 1997
(Thousands)
Assets
Current Assets
Cash and cash equivalents. . . . . . . . . . . . . . . $7,439 $8,168
Special deposits . . . . . . . . . . . . . . . . . . . 3,008 3,170
Accounts receivable, net . . . . . . . . . . . . . . . 92,594 189,008
Loan receivable - associated company . . . . . . . . . 129,865 -
Fuel, at average cost. . . . . . . . . . . . . . . . . 17,061 43,706
Materials and supplies, at average cost. . . . . . . . 10,242 41,561
Prepayments. . . . . . . . . . . . . . . . . . . . . . 72,418 68,452
Accumulated deferred federal income
tax benefits, net. . . . . . . . . . . . . . . . . . - 2,148
---------- ----------
Total Current Assets. . . . . . . . . . . . . . . . 332,627 356,213
Utility Plant, at Original Cost
Electric . . . . . . . . . . . . . . . . . . . . . . . 3,335,000 5,234,725
Natural gas. . . . . . . . . . . . . . . . . . . . . . 583,211 576,683
Common . . . . . . . . . . . . . . . . . . . . . . . . 142,905 152,034
---------- ----------
4,061,116 5,963,442
Less accumulated depreciation. . . . . . . . . . . . . 1,305,955 2,093,274
---------- ----------
Net Utility Plant in Service. . . . . . . . . . . . 2,755,161 3,870,168
Construction work in progress. . . . . . . . . . . . . 28,937 52,104
---------- ----------
Total Utility Plant . . . . . . . . . . . . . . . . 2,784,098 3,922,272
Other Property and Investments, Net . . . . . . . . . . 98,005 143,449
Regulatory and Other Assets
Regulatory assets
Unfunded future federal income taxes. . . . . . . . . 190,242 243,129
Unamortized debt expense. . . . . . . . . . . . . . . 73,974 76,418
Demand-side management program costs. . . . . . . . . 64,466 64,466
Environmental remediation costs . . . . . . . . . . . 62,500 82,900
Other . . . . . . . . . . . . . . . . . . . . . . . . 132,549 113,637
---------- ----------
Total regulatory assets. . . . . . . . . . . . . . . . 523,731 580,550
Other assets . . . . . . . . . . . . . . . . . . . . . 24,677 26,197
---------- ----------
Total Regulatory and Other Assets . . . . . . . . . 548,408 606,747
---------- ----------
Total Assets. . . . . . . . . . . . . . . . . . . . $3,763,138 $5,028,681
========== ==========
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
New York State Electric & Gas Corporation
Consolidated Balance Sheets - (Unaudited)
June 30, Dec. 31,
1998 1997
Liabilities (Thousands)
Current Liabilities
Current portion of long-term debt. . . . . . . . . . . $2,023 $38,240
Current portion of preferred stock . . . . . . . . . . 30,000 -
Commercial paper . . . . . . . . . . . . . . . . . . . 70,000 58,000
Accounts payable and accrued liabilities . . . . . . . 98,020 124,981
Interest accrued . . . . . . . . . . . . . . . . . . . 19,658 20,500
Taxes accrued. . . . . . . . . . . . . . . . . . . . . 38,421 6,146
Accumulated deferred federal income taxes, net . . . . 19,812 -
Other. . . . . . . . . . . . . . . . . . . . . . . . . 53,208 79,631
---------- ----------
Total Current Liabilities. . . . . . . . . . . . . . 331,142 327,498
Regulatory and Other Liabilities
Regulatory liabilities
Deferred income taxes . . . . . . . . . . . . . . . . 101,499 81,986
Deferred income taxes - unfunded future federal
income taxes. . . . . . . . . . . . . . . . . . . . 74,428 99,126
Other . . . . . . . . . . . . . . . . . . . . . . . . 41,067 79,709
---------- ----------
Total regulatory liabilities . . . . . . . . . . . . . 216,994 260,821
Other liabilities
Deferred income taxes . . . . . . . . . . . . . . . . 449,643 753,722
Other postretirement benefits . . . . . . . . . . . . 130,263 117,760
Environmental remediation costs . . . . . . . . . . . 82,500 82,900
Other . . . . . . . . . . . . . . . . . . . . . . . . 81,007 73,021
---------- ----------
Total other liabilities. . . . . . . . . . . . . . . . 743,413 1,027,403
Long-term debt . . . . . . . . . . . . . . . . . . . . 1,441,163 1,450,224
---------- ----------
Total Liabilities . . . . . . . . . . . . . . . . . 2,732,712 3,065,946
Commitments - -
Preferred Stock Redeemable Solely at the
Option of the Company. . . . . . . . . . . . . . . . 104,440 134,440
Preferred Stock Subject to Mandatory
Redemption Requirements. . . . . . . . . . . . . . . 25,000 25,000
Common Stock Equity
Common stock . . . . . . . . . . . . . . . . . . . . 430,057 462,250
Capital in excess of par value. . . . . . . . . . . . 429,740 811,648
Retained earnings . . . . . . . . . . . . . . . . . . 41,189 568,844
Treasury stock, at cost . . . . . . . . . . . . . . . - (39,447)
---------- ----------
Total Common Stock Equity . . . . . . . . . . . . . 900,986 1,803,295
---------- ----------
Total Liabilities and Stockholder's Equity . . . . $3,763,138 $5,028,681
========== ==========
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
New York State Electric & Gas Corporation
Consolidated Statements of Cash Flows - (Unaudited)
Six Months
Periods Ended June 30 1998 1997
(Thousands)
Operating Activities
Net income . . . . . . . . . . . . . . . . . . . . $114,606 $108,252
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization. . . . . . . . . . 84,638 96,316
Federal income taxes and investment tax credits
deferred, net. . . . . . . . . . . . . . . . . (5,980) (23,381)
Changes in current operating assets and liabilities
Accounts receivable . . . . . . . . . . . . . . 96,414 53,485
Loan receivable. . . . . . . . . . . . . . . . . (129,865) -
Inventory. . . . . . . . . . . . . . . . . . . . 57,964 957
Accounts payable and accrued liabilities . . . . (26,961) (28,658)
Taxes accrued. . . . . . . . . . . . . . . . . . 32,275 42,825
Other, net . . . . . . . . . . . . . . . . . . . . 82,342 27,146
------- -------
Net Cash Provided by Operating Activities . . . 305,433 276,942
------- -------
Investing Activities
Utility plant capital expenditures . . . . . . . . (74,403) (55,842)
Proceeds from governmental and other sources . . . 316 911
Expenditures for other property and investments. . 25,670 (804)
------- -------
Net Cash Used in Investing Activities . . . . . (48,417) (55,735)
------- -------
Financing Activities
Repurchase of common stock . . . . . . . . . . . . (114,023) (7,254)
Purchase of treasury stock . . . . . . . . . . . . - (39,565)
Repayments of first mortgage bonds . . . . . . . . (30,000) (48,000)
Changes in funds set aside for first
mortgage bond repayments . . . . . . . . . . . . - 25,000
Long-term notes, net . . . . . . . . . . . . . . . (736) (1,667)
Commercial paper, net. . . . . . . . . . . . . . . 12,000 (91,500)
Dividends on common and preferred stock. . . . . . (124,986) (53,052)
------- -------
Net Cash Used in Financing Activities . . . . . (257,745) (216,038)
------- -------
Net (Decrease) Increase in Cash and
Cash Equivalents. . . . . . . . . . . . . . . . . (729) 5,169
Cash and Cash Equivalents, Beginning of Period. . . 8,168 8,253
------- -------
Cash and Cash Equivalents, End of Period. . . . . . $7,439 $13,422
======= =======
Supplemental Disclosure of Cash Flows Information
Cash paid during the period
Interest, net of amounts capitalized. . . . . . . $52,514 $55,230
Income taxes. . . . . . . . . . . . . . . . . . . $37,346 $53,661
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
New York State Electric & Gas Corporation
Consolidated Statements of Retained Earnings - (Unaudited)
Six Months
Periods ended June 30 1998 1997
(Thousands)
Balance, beginning of period. . . . . . . . . . $568,844 $489,129
Add net income. . . . . . . . . . . . . . . . . 114,606 108,252
-------- --------
683,450 597,381
Deduct dividends on capital stock
Preferred. . . . . . . . . . . . . . . . . . . 4,529 4,667
Common . . . . . . . . . . . . . . . . . . . . 120,391 48,244
-------- --------
124,920 52,911
Deduct
Transfer of NGE Generation, Inc. and NGE
Enterprises, Inc. to parent . . . . . . . . . . 517,341 -
-------- --------
Balance, end of period. . . . . . . . . . . . . $41,189 $544,470
======== ========
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
Note 1. Holding Company Formation
On May 1, 1998, New York State Electric & Gas Corporation
(NYSEG or company) was reorganized into a holding company
structure pursuant to an Agreement and Plan of Share Exchange
between NYSEG and Energy East Corporation (Energy East). NYSEG's
outstanding common stock was exchanged on a share-for-share basis
for Energy East's common stock and Energy East became the parent
of NYSEG. Energy East's common stock is listed on the New York
Stock Exchange under the symbol NEG. NYSEG's common stock was
delisted from the New York Stock Exchange. The preferred stock
and debt of NYSEG were not exchanged and remain securities of
NYSEG. The unaudited consolidated financial statements reflect
the transfer at book value of NYSEG's ownership interests in NGE
Generation, Inc. (GenSub) and NGE Enterprises, Inc. (NGE
Enterprises) to Energy East. This transfer reduced NYSEG's
assets, liabilities and common stock equity by $1,059 million,
$279 million and $780 million, respectively. (See Item 2(a) -
Liquidity and Capital Resources - Competitive Conditions -
Electric Industry, Generation Business.)
Note 2. Principles of Consolidation
NYSEG's 1997 consolidated financial statements include
NYSEG, assets transferred to GenSub in February 1998, NGE
Enterprises and Somerset Railroad Corporation. NYSEG's 1998
consolidated financial statements do not include GenSub and NGE
Enterprises beginning May 1, 1998, the effective date of the
reorganization into a holding company structure.
Note 3. Unaudited Consolidated Financial Statements
The accompanying unaudited consolidated financial statements
reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of the company's consolidated
results for the interim periods. All such adjustments, other
than those related to the reorganization into a holding company
structure noted above, are of a normal recurring nature. The
unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
contained in the company's annual report for the year ended
December 31, 1997. Due to the seasonal nature of the company's
operations, financial results for interim periods are not neces-
sarily indicative of trends for a twelve-month period.
<PAGE>
Item 2. Management's discussion and analysis of financial
condition and results of operations
(a) Liquidity and Capital Resources
Competitive Conditions (See Form 10-K for the fiscal year ended
December 31, 1997, Item 7 - Liquidity and Capital Resources -
Competitive Conditions - Electric Industry, Natural Gas Industry
and Accounting Issues; and Form 10-Q for the quarter ended March
31, 1998, Item 2(a) - Liquidity and Capital Resources -
Competitive Conditions - Electric Industry and Natural Gas
Industry.)
Holding Company Structure
On May 1, 1998, Energy East became the parent of NYSEG. The
unaudited consolidated financial statements reflect the transfer
at book value of NYSEG's ownership interests in GenSub and NGE
Enterprises to Energy East. NYSEG is a regulated utility
transmitting and delivering electricity, transporting and
delivering natural gas, and generating electricity from its
nuclear and hydroelectric stations. GenSub produces electricity
from seven coal-fired stations. NGE Enterprises, a holding
company, has subsidiaries that provide energy services.
Electric Industry
Generation Business: All of GenSub's generating units are in
service for the summer peak load period, including the two units,
with a total generating capacity of 92 megawatts, that were
placed on long-term cold standby in 1995 and 1996.
The company put GenSub's seven coal-fired generating
stations and associated assets and liabilities up for auction
earlier this year. The company and GenSub accepted offers
totaling $1.85 billion from The AES Corporation and Edison
Mission Energy in August 1998, for the generation assets. The
contract with The AES Corporation is for the purchase of the
generation assets in New York State, and the contract with Edison
Mission Energy is for the purchase of the Homer City Generating
Station in Pennsylvania. The total sales price provides full
recovery of the net book value of the generation assets. There
are a number of items such as depreciation, book value of
inventories and taxes that between now and the date of the
closing will affect the financial statements as the company and
GenSub continue to precisely define the specific costs of the
items included in the transactions. Pursuant to the company's
restructuring plan approved by the Public Service Commission of
the State of New York (PSC) in January 1998 all proceeds, net of
taxes and transaction costs, in excess of the net book value of
the generation assets, less funded deferred taxes, will be used
to write down the company's 18% investment in Nine Mile Point
nuclear generating unit No. 2.
This transaction, including the writeoff and writedown of
coal-fired and nuclear generation assets, and corresponding
common stock equity, will not adversely affect the company's
financial condition. For regulatory purposes, any reduction in
the common stock equity balance resulting from such writeoff and
writedown of the generation assets, or the repurchase of common
stock, is eliminated before the company's electric return on
equity is calculated in accordance with the 12% earnings cap
approved by the PSC in January 1998 in the company's
restructuring plan.
The company and GenSub will file with the appropriate
regulatory bodies seeking approval of the sales, and the sales
are expected to close early next year. The company's parent,
Energy East, plans to use the proceeds from the sales to
repurchase common stock and expand its energy distribution system
throughout the Northeast.
FERC Orders 888 and 889: The Federal Energy Regulatory
Commission (FERC) issued Orders 888 and 889 in April 1996,
adopting rules to facilitate the development of competitive
wholesale electricity markets by opening up transmission services
and to address the resulting stranded costs. In subsequent orders
the FERC generally affirmed Orders 888 and 889. Various parties,
including the company, have filed petitions for review of these
orders with the United States Courts of Appeals in various
circuits.
The FERC accepted, in February 1997, a compliance filing of
the New York Power Pool (NYPP), of which the company is a member,
in response to Order 888. NYPP members submitted additional
filings to the FERC in 1997 proposing the restructuring of the
NYPP by establishing an Independent System Operator (NYISO), a
Power Exchange and a New York State Reliability Council (NYSRC).
The FERC approved the formation of the NYISO and NYSRC in June
1998 and indicated that it would later rule on the rates, terms
and conditions of service to be implemented by the NYISO under
the NYISO tariff. These additional FERC rulings are needed before
the NYISO, NYSRC and the restructured market can commence
operation. The company is unable to predict the outcome that the
remaining FERC proceedings will have on the NYISO and their
ultimate effect on the company's financial position or results of
operations.
Natural Gas Industry
Joint Venture with Central Maine Power Company: The Maine Public
Utilities Commission approved the joint venture's application to
provide natural gas service to the Augusta, Bangor, Bath-
Brunswick, Bethel, Waterville and Windham communities. The joint
venture's plans have been developed to coincide with the
construction schedules of two pipelines from Canada, with initial
service to customers anticipated by the end of 1998.
<PAGE>
NYSEG's Natural Gas Rate Settlement Agreement: The company filed
a natural gas rate settlement agreement with the Public Service
Commission of the State of New York (PSC) on May 26, 1998.
Subject to final approval by the PSC, this settlement agreement
will reduce prices for most customers. The settlement agreement
is expected to become effective September 1, 1998 and continue
through August 31, 2002.
The settlement agreement provides for a reduction of $26.9
million, or 2.2%, in the company's natural gas revenues over the
term of the agreement. An earnings sharing mechanism in the
settlement agreement provides that any excess of the average
earned equity returns, as determined for the first 24 months of
the agreement and then for the remaining term of the agreement,
will be shared equally between customers and shareholders. If the
company's gas-related equity ratio is 48% or higher, the average
earned equity return sharing threshold will be 13%. If the gas-
related equity ratio is below 48%, the average earned equity
return sharing threshold will be 12.5%.
Investing Activities
Capital expenditures for the first six months of 1998 were
$74 million. The company estimates its capital expenditures for
1998 will be about $140 million, primarily for extension of
service and necessary improvements to existing facilities. These
expenditures are expected to be financed entirely with internally
generated funds.
Financing Activities
In July 1998 the company redeemed, at a premium, $30 million
of 6.48% preferred stock.
Forward-Looking Statements
This Form 10-Q quarterly report includes certain forward-
looking statements that are based upon management's current
expectations and information currently available. Whenever used
in this report, the words "estimate," "expect," or similar
expressions are intended to identify forward-looking statements.
In addition to the assumptions and other factors referred to in
connection with such statements, factors that could cause actual
results to differ materially from those contemplated in any
forward-looking statements include, among others, regulatory
developments; the rapidly changing and increasingly competitive
electric and natural gas utility markets; the ability to obtain
adequate and timely rate relief; cost recovery, including the
potential effect of stranded costs; legal or administrative
proceedings; business conditions; technological developments;
changes in the cost or availability of capital; labor
developments; nuclear or environmental incidents; factors
affecting the utility industry in general, such as deregulation
and unbundling of energy services; weather conditions; changes in
fuel supply or cost; and other considerations that may be
disclosed from time to time in the company's publicly
disseminated documents and filings. The company undertakes no
obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or
otherwise.<PAGE>
(b) Results of Operations
Three Months Ended June 30,
1998 1997 Change
(Thousands)
Total Operating Revenues $459,303 $470,370 (2%)
Operating Income $93,335 $82,743 13%
Earnings Available for
Common Stock $33,906 $23,923 42%
Excluding the effect of the transfer of GenSub and NGE
Enterprises to NYSEG's parent as part of the reorganization into
a holding company structure on May 1, 1998, earnings for the
three months increased primarily due to cost control efforts and
higher electric deliveries partially offset by lower natural gas
deliveries due to warmer weather.
Six Months Ended June 30,
1998 1997 Change
(Thousands)
Total Operating Revenues $1,086,535 $1,058,507 3%
Operating Income $250,477 $250,270 -
Earnings Available for
Common Stock $110,077 $103,585 6%
Excluding the effect of the transfer of GenSub and NGE
Enterprises to NYSEG's parent as part the reorganization into a
holding company structure on May 1, 1998, earnings for the six
months increased due to cost control efforts and higher electric
wholesale deliveries. Those increases were partially offset by
lower electric and natural gas retail deliveries primarily
because of unusually warm weather during the heating season in
the first quarter of this year.
<PAGE>
Operating Results by Business Segment
Electric Three Months Ended June 30,
1998 1997 Change
(Thousands)
Retail Deliveries-
Megawatt-hours 3,130 3,071 2%
Operating Revenues $404,768 $411,453 (2%)
Operating Expenses $309,623 $334,939 (8%)
Operating Income $95,145 $76,514 24%
Excluding the effect of the transfer of GenSub and NGE
Enterprises to NYSEG's parent as part of the reorganization into
a holding company structure on May 1, 1998, operating revenues
increased due to higher electric deliveries. Operating expenses
increased for the three months primarily due to an increase in
electricity purchased for wholesale deliveries, partially offset
by a decrease in electricity purchased for retail deliveries and
a decrease in various operating and maintenance costs.
Six Months Ended June 30,
1998 1997 Change
(Thousands)
Retail Deliveries-
Megawatt-hours 6,520 6,563 (1%)
Operating Revenues $910,356 $862,723 6%
Operating Expenses $693,944 $666,908 4%
Operating Income $216,412 $195,815 11%
Excluding the effect of the transfer of GenSub and NGE
Enterprises to NYSEG's parent as part of the reorganization into
a holding company structure on May 1, 1998, operating revenues
for the six months increased primarily due to higher wholesale
deliveries, partially offset by a decrease in retail deliveries.
Operating expenses for the six months increased primarily due to
an increase in electricity purchased for wholesale deliveries
partially offset by a decrease in electricity purchased for
retail deliveries and a decrease in various operating and
maintenance costs.
<PAGE>
Natural Gas Three Months Ended June 30,
1998 1997 Change
(Thousands)
Retail Deliveries-
Dekatherms 9,305 10,889 (15%)
Operating Revenues $54,535 $58,917 (7%)
Operating Expenses $56,345 $52,688 7%
Operating Income ($1,810) $6,229 (129%)
Natural gas retail deliveries decreased because of warmer
weather this quarter.
The decrease in natural gas operating revenues was primarily
due to lower retail deliveries, partially offset by increases in
wholesale sales and other revenues and a more favorable sales
mix.
Natural gas operating expenses increased primarily due to an
increase in the amount of natural gas purchased.
Six Months Ended June 30,
1998 1997 Change
(Thousands)
Retail Deliveries-
Dekatherms 30,584 34,308 (11%)
Operating Revenues $176,179 $195,784 (10%)
Operating Expenses $142,114 $141,329 1%
Operating Income $34,065 $54,455 (37%)
Natural gas operating revenues decreased for the six months
due to lower retail deliveries, primarily due to warmer weather.
That decrease was partially offset by increases in wholesale
sales and other revenues and a more favorable sales mix.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
(a) By letter dated April 20, 1992, the Environmental Protection
Agency (EPA) notified the company that it had been identified as
a potentially responsible party (PRP) at the Bern Metal Removal
Site (Bern Metal Site) in Buffalo, New York. Six other PRPs have
been identified by the EPA. The EPA has taken response actions at
the Bern Metal Site, including investigation, excavation, and
removal of drums and contaminated soil, and implementation of
measures to prevent surface water run-off. The EPA demanded that
the company reimburse the EPA Hazardous Substances Superfund $2
million in response costs incurred to date by the EPA, with
interest accruing from the date of the demand. In September 1995
the company and the EPA reached an agreement on a consent order
under which the company would pay the sum of $10,000 in return
for a covenant by the EPA not to sue the company for the EPA's
response costs, and to protect the company from claims of
contribution by other PRPs for such costs incurred to date. The
consent order was approved and in July 1998 the company paid
$10,000 to the EPA. (See Form 10-K for the fiscal year ended
December 31, 1997, Item 3. Legal Proceedings.)
(b) On May 22, 1998, the company, along with fifteen other
parties, received a special notice pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980
(CERCLA) from the EPA, asking whether the recipients wished to
voluntarily finance or perform the remedial design and remedial
action at the Rosen Brothers Site in the City of Cortland, New
York. The estimated total present-worth cost of the selected
remedy is $3,140,000. The EPA also requested reimbursement of
past costs at the site of approximately $692,000, plus interest.
Pursuant to the special notice procedures of CERCLA, the company,
along with certain other parties that received the special
notice, submitted a "good faith offer" on July 21, 1998, to
voluntarily contribute to the cost of the remedial design and
remedial action. The company has entered into discussions with
the other PRPs at the site in an attempt to reach an agreement
concerning allocation of costs. Such discussions are proceeding
under the supervision of an alternative dispute resolution
specialist retained by the EPA. (See Form 10-K for the fiscal
year ended December 31, 1997, Item 3. Legal Proceedings.)
<PAGE>
(c) The company, on June 15, 1998, commenced an action in the New
York State Supreme Court, Tompkins County against Niagara Mohawk
Power Corporation (NiMo) seeking an order enjoining NiMo from
transferring operating responsibility for the Nine Mile Point
nuclear generating unit No. 2 (NMP2) to the New York Nuclear
Operating Company (NYNOC) without the company's consent. The
company has an undivided 18% interest in NMP2, which is operated
by NiMo. Ownership of NMP2 is shared with NiMo 41%, Long Island
Power Authority 18%, Rochester Gas and Electric Corporation 14%
and Central Hudson Gas & Electric Corporation 9%. The lawsuit
also seeks to recover damages for funds used by NiMo to promote
the establishment of NYNOC and the transfer of operating
responsibility for NMP2 to NYNOC. NYNOC was established for the
purpose of assuming operation of all of the nuclear generating
units in New York State. The company believes that the
establishment of NYNOC will not result in either improved
operational performance or reduced costs sufficient to offset the
development and implementation expenses likely to be incurred by
its creation. On July 7, 1998, the company served an amended
complaint on NiMo alleging that NiMo had breached its fiduciary
obligation to the company by engaging in negotiations with a
third party for the sale of NMP2, including the company's share,
without advising the company of those negotiations or allowing it
to participate in the negotiations and by NiMo conducting the
negotiations in a manner designed to limit the interest of the
third party in purchasing NMP2.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Exhibit Index.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
Signature
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NEW YORK STATE ELECTRIC & GAS CORPORATION
(Registrant)
By Sherwood J. Rafferty
Sherwood J. Rafferty
Senior Vice President and
Chief Financial Officer
Date: August 13, 1998
<PAGE>
EXHIBIT INDEX
(a) The following exhibits are delivered with this report:
Exhibit No.
3-15 - By-Laws of the Company as amended June 5, 1998.
(A)10-46 - Retirement Plan for Directors Amendment No. 4.
(A)10-47 - Amended and Restated Directors Share Plan.
(A)10-48 - Amended and Restated Supplemental Executive Retirement
Plan.
(A)10-49 - Amended and Restated Annual Executive Incentive Plan.
(A)10-50 - Amended and Restated Long-Term Executive Incentive
Share Plan.
(A)10-51 - Form of Amendment to the Company's Severance
Agreements.
(A)10-52 - Amended and Restated Employment Agreement for W. W.
von Schack.
(A)10-53 - Amended and Restated Employment Agreement for M. I.
German.
(A)10-54 - Amended and Restated Employment Agreement for K. M.
Jasinski.
27 - Financial Data Schedule.
(A) Management contract or compensatory plan or arrangement.
EXHIBIT 3-15
________________________________________________
________________________________________________
NEW YORK STATE ELECTRIC & GAS
CORPORATION
____________
B Y - L A W S
As Amended
June 5, 1998
________________________________________________
________________________________________________
<PAGE>
NEW YORK STATE ELECTRIC & GAS CORPORATION
_______
BY-LAWS
_______
OFFICES
1. The office shall be at the place specified in the Certificate
of Incorporation as from time to time amended, now Town of Dryden,
County of Tompkins, State of New York.
The Corporation may also have offices at such other places as the
Board of Directors may from time to time designate or the business of
the Corporation may require.
SEAL
2. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its organization and the words
"CORPORATE SEAL, NEW YORK". If authorized by the Board of Directors,
the corporate seal may be affixed to any certificates of stock, bonds,
debentures, notes or other engraved, lithographed or printed
instruments, by engravings, lithographing or printing thereon such
seal or a facsimile thereof, and such seal or facsimile thereof so
engraved, lithographed or printed thereon shall have the same force
and effect, for all purposes, as if such corporate seal had been
affixed thereto by indentation.
STOCKHOLDERS' MEETINGS
3. All meetings of the stockholders shall be held at the
principal office of the Corporation, or at such other location in the
State of New York as shall be stated in the notice of the meeting,
except when otherwise expressly provided by statute. All meetings of
stockholders shall be presided over by the Chairman or by the
President or a Vice President except when by statute the election of a
presiding officer is required.
4. The annual meeting of stockholders shall be held on the
second Friday of May in each year, if not a legal holiday, and if a
legal holiday, then on the next business day following, at eleven
o'clock A.M. or at such other date and time as shall be stated in the
notice of the meeting, at which the stockholders entitled to vote
shall elect directors, and transact such other business as may
properly be brought before the meeting.
5. The holders of a majority of the shares of stock of the
Corporation issued and outstanding and entitled to vote thereat,
without regard to class, present in person or by proxy, shall be
requisite for, and shall constitute a quorum at all meetings of the
stockholders for the transaction of business except for the election
or removal of directors and except as otherwise expressly provided by
statute, by the Certificate of Incorporation, as amended, or by these
By-Laws; provided that, in the case of any meeting of holders of the
serial preferred stock of the Corporation, the presence in person or
by proxy of the holders of record of shares representing a majority of
the votes entitled to be cast thereat by the holders of the
outstanding shares of serial preferred stock, without regard to
series, shall be necessary to constitute a quorum for the transaction
of business except for the election or removal of directors and except
as otherwise expressly provided by statute, by the Certificate of
Incorporation, as amended, or by these By-Laws. If, however, the
holders of a majority of such shares of stock or votes, as the case
may be, shall not be present or represented by proxy at any such
meeting, the stockholders entitled to vote thereat, present in person
or by proxy, shall have power, by a majority vote of those present or
represented, to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until the holders of the
amount of stock or votes, as the case may be, requisite to constitute
a quorum shall be present in person or by proxy. At any adjourned
meeting at which a quorum shall be present, in person or by proxy, any
business may be transacted which might have been transacted at the
meeting as originally noticed.
At any meeting for the election of directors by the common
stockholders, the presence in person or by proxy of the holders of
record of a majority of the outstanding shares of common stock shall
be necessary to constitute a quorum for the election of such
directors, except when otherwise expressly provided by statute.
6. At each meeting of stockholders each holder of record of
shares of capital stock then entitled to vote shall be entitled to
vote in person, or by proxy appointed by instrument executed in
writing, by such stockholder or by his duly authorized attorney; but
no proxy shall be valid after the expiration of eleven months from the
date of its execution unless the stockholder executing it shall have
specified therein its duration, which shall be for some limited
period. Except as otherwise provided by statute or by the Certificate
of Incorporation, as amended, each holder of record of shares of
capital stock entitled to vote at any meeting of stockholders shall be
entitled to one vote for every share of capital stock standing in his
name on the books of the Corporation, but, as provided by the
Certificate of Incorporation, as amended, at all elections of
directors by the common stockholders, each holder of common stock
shall be entitled to as many votes as shall equal the number of votes
which (except for such provision as to cumulative voting) he would be
entitled to cast for the election of directors with respect to his
shares of common stock multiplied by the number of directors to be
elected and he may cast all of such votes for a single director or may
distribute them among the number of directors to be voted for, or any
two or more of them, as he may see fit. All elections shall be
determined by a plurality vote. The vote for directors shall be by
ballot and, except as otherwise provided by statute or by the
Certificate of Incorporation, as amended, or by these By-Laws, all
other matters shall be determined by a vote of the holders of a
plurality of the shares of the capital stock present or represented at
a meeting and entitled to vote on such matters, and by ballot, if
demanded by any stockholder or his duly authorized proxy.
7. A list of stockholders as of the record date, certified by
the corporate officer responsible for its preparation or by a transfer
agent, shall be produced at any meeting of stockholders upon the
request thereat or prior thereto of any stockholder. If the right to
vote at any meeting is challenged, the inspectors of election, or
person presiding thereat, shall require such list of stockholders to
be produced as evidence of the right of the persons challenged to vote
at such meeting, and all persons who appear from such list to be
stockholders entitled to vote thereat may vote at such meeting.
8. Except as may be otherwise provided in the Certificate of
Incorporation, as amended, with respect to the right of holders of
serial preferred stock or preference stock of the Corporation to elect
a specified number of directors in certain circumstances, only persons
who are nominated in accordance with the following procedures shall be
eligible for election as directors of the Corporation. Nominations of
persons for election to the Board of Directors may be made at any
annual meeting of stockholders, or at any special meeting of
stockholders called for the purpose of electing directors, (a) by or
at the direction of the Board of Directors (or any duly authorized
committee thereof) or (b) by any stockholder of the Corporation (i)
who is a stockholder of record on the date of the giving of the notice
provided for in this By-Law and on the record date for the determina-
tion of stockholders entitled to vote at such meeting and (ii) who
complies with the notice procedures set forth in this By-Law.
In addition to any other applicable requirements, for a
nomination to be made by a stockholder, such stockholder must have
given timely notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices
of the Corporation (a) in the case of an annual meeting, not less than
sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual
meeting is called for a date that is not within thirty (30) days
before or after such anniversary date, notice by the stockholder in
order to be timely must be so received not later than the close of
business on the tenth (10th) day following the day on which such
notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first
occurs; and (b) in the case of a special meeting of stockholders
called for the purpose of electing directors, not later than the close
of business on the tenth (10th) day following the day on which notice
of the date of the special meeting was mailed or public disclosure of
the date of the special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth (a) as to each person whom the stockholder
proposes to nominate for election as a director (i) the name, age,
business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class or
series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by the person and (iv) any other
information relating to the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the
class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such
stockholder, (iii) a description of all arrangements or understandings
between such stockholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the
nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by
proxy at the meeting to nominate the person(s) named in its notice and
(v) any other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder. Such notice must be
accompanied by a written consent of each proposed nominee to being
named as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set
forth in this By-Law. If the chairman of the meeting determines that
a nomination was not made in accordance with the foregoing procedures,
the chairman shall declare to the meeting that the nomination was
defective and such defective nomination shall be disregarded.
9. No business may be transacted at an annual meeting of
stockholders, other than business that is either (a) specified in the
notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors (or any duly authorized committee
thereof), (b) otherwise properly brought before the annual meeting by
or at the direction of the Board of Directors (or any duly authorized
committee thereof) or (c) otherwise properly brought before the annual
meeting by any stockholder of the Corporation (i) who is a stockholder
of record on the date of the giving of the notice provided for in this
By-Law and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the
notice procedures set forth in this By-Law.
In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written
form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices
of the Corporation not less than sixty (60) days nor more than ninety
(90) days prior to the anniversary date of the immediately preceding
annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within thirty
(30) days before or after such anniversary date, notice by the
stockholder in order to be timely must be so received not later than
the close of business on the tenth (10th) day following the day on
which such notice of the date of the annual meeting was mailed or such
public disclosure of the date of the annual meeting was made,
whichever first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth as to each matter such stockholder proposes
to bring before the annual meeting (i) a brief description of the
business desired to be brought before the annual meeting and the
reasons for conducting such business at the annual meeting, (ii) the
name and record address of such stockholder, (iii) the class or series
and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such stockholder, (iv) a
description of all arrangements or understandings between such
stockholder and any other person or persons (including their names) in
connection with the proposal of such business by such stockholder and
any material interest of such stockholder in such business and (v) a
representation that such stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.
No business shall be conducted at the annual meeting of stock-
holders except business brought before the annual meeting in
accordance with the procedures set forth in this By-Law. If the
chairman of the annual meeting determines that business was not
properly brought before the annual meeting in accordance with the
foregoing procedures, the chairman shall declare to the meeting that
the business was not properly brought before the meeting and such
business shall not be transacted.
10. Special meetings of the stockholders for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate
of Incorporation, as amended, may be called by the Chairman or by the
President, and shall be called by the Chairman or the President or
Secretary at the request in writing of a majority of the Board of
Directors. Such request shall state the purpose or purposes of the
proposed meetings.
11. Except as otherwise may be required by provisions of the
Certificate of Incorporation of the Corporation, as amended, relative
to meetings of stockholders required or authorized by the provisions
of paragraph (F) or (H) of Article 7 of the Restated Certificate of
Incorporation filed October 25, 1988, notice of every meeting of
stockholders, setting forth the time, place and purpose or purposes
thereof, shall be mailed, not less than ten nor more than fifty days
prior to such meetings to all stockholders (at their respective
addresses appearing on the books of the Corporation unless the
stockholder shall have filed with the Secretary of the Corporation a
written request that notices intended for him be mailed to some other
address, in which case the notice shall be mailed to the address
designated in such request) entitled to vote at such meeting, of
record as of a date fixed by the Board of Directors, not more than
fifty days in advance of such meeting, for determining the
stockholders entitled to notice of and to vote at such meeting, unless
and except to the extent that such notice shall have been waived in
writing either before or after the holding of such meeting by
stockholders entitled to notice thereof and to vote thereat.
If any By-Law regulating an impending election of directors is
adopted or amended or repealed by the Board, there shall be set forth
in the notice of the next meeting of the stockholders of the
Corporation for the election of directors the By-Laws so adopted or
amended or repealed together with a concise statement of the changes
made.
DIRECTORS
12. The property and business of the Corporation shall be
managed under the direction of its Board of Directors, which shall
consist of not less than nine (9) nor more than fifteen (15)
directors. Directors need not be stockholders. Directors shall be
elected at the annual meeting of the stockholders, or, if no such
election shall be held, at a meeting called and held in accordance
with the statutes of the State of New York. Each director shall be
elected to hold office until the expiration of the term for which he
is elected, and thereafter until a successor shall be elected and
shall qualify. The directors shall be divided, with respect to the
terms for which they severally hold office, into three classes, hereby
designated Class I, Class II and Class III. Each class shall have at
least three directors and the three classes shall be as nearly equal
in number as possible. The initial terms of office of the Class I,
Class II and Class III directors, elected at the 1987 annual meeting
of stockholders, shall expire at the next succeeding annual meeting of
stockholders, the second succeeding annual meeting of stockholders and
the third succeeding annual meeting of stockholders, respectively. At
each annual meeting of stockholders after 1987, the successors of the
class of directors whose term expires at that annual meeting shall be
elected to hold office for a term expiring at the annual meeting of
stockholders to be held in the third year following the year of their
election.
The stockholders, at any annual meeting, or at any special
meeting called for that purpose, or a majority of the entire Board of
Directors, at any regular or special meeting, may determine to
increase or decrease the number of directors to the respective maximum
or minimum limits above prescribed, and, in the case of an increase,
shall thereupon elect the additional directors. No decrease in the
number of directors shall shorten the term of any incumbent director.
Any newly created directorships or any decrease in directorships shall
be so apportioned among the classes as to make all classes as nearly
equal in number as possible. If the number of directors is increased
by the Board and any newly created directorships are filled by the
Board, there shall be no classification of the additional directors
until the next annual meeting of stockholders. At any meeting of the
stockholders, the holders of a majority of the shares of common stock
issued and outstanding, voting separately as a class, or by written
consent without a meeting may remove at any time, with or without
cause, any director theretofore elected by the common stockholders or
elected by the Board to fill a vacancy among the directors elected by
the common stockholders, and may fill the vacancy in the Board for the
unexpired term thus caused.
No director who shall have attained the age of 70 shall stand for
re-election as a director; provided, however, that such age limitation
shall not apply in connection with the election of directors at the
1997 annual meeting of stockholders.
In the event that the holders of serial preferred stock or
preference stock become entitled to exercise their special rights to
elect directors pursuant to Article 5 or Article 7, respectively, of
the Certificate of Incorporation, as amended, the above provisions
respecting the classification of directors shall not apply, and
election of directors shall be accomplished in accordance with the
provisions of such Article 5 or Article 7. The election of directors
by holders of common stock at the first annual or special meeting of
stockholders after the divestment of such special rights of the
holders of serial preferred stock or preference stock shall be
accomplished in accordance with the provisions applicable to the
initial terms of the classified directors set forth above.
13. In addition to the powers and authorities by these By-
Laws expressly conferred upon them, the Board may exercise all such
powers of the Corporation, and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the
stockholders. A director or officer of this Corporation shall not be
disqualified by his office from dealing or contracting with the
Corporation either as a vendor, purchaser or otherwise, nor shall any
transaction or contract of this Corporation be void or voidable by
reason of the fact that any director or officer or any firm of which
any director or officer is a member or employee or any corporation of
which any director or officer is a shareholder, director, officer or
employee, is in any way interested in such transaction or contract,
provided that such transaction or contract is or shall be authorized,
ratified or approved either (1) by vote of a majority of a quorum of
the Board of Directors or of the Executive Committee without counting
in such majority or quorum any director so interested or member or
employee of a firm so interested or a shareholder, director, officer
or employee of a corporation so interested or (2) by vote at a
stockholders' meeting of the holders of record of a majority of all
the outstanding shares of capital stock of the Corporation having full
voting power or by writing or writings signed by a majority of such
holders; nor shall any director or officer be liable to account to the
Corporation for any profits realized by and from or through any such
transaction, or contract of this Corporation authorized, ratified or
approved as aforesaid by reason of the fact that he or any firm of
which he is a member or employee, or any corporation of which he is a
shareholder, director, officer or employee was interested in such
transaction or contract.
MEETINGS OF THE BOARD
14. The first meeting of the Board of Directors held after the
annual meeting of stockholders at which directors shall have been
elected shall be held for the purpose of organization, the election of
officers, and the transaction of any other business which may come
before the meeting.
15. Regular meetings of the Board may be held without notice,
except as otherwise provided by these By-Laws, at such time and place
as shall from time to time be designated by the Board.
16. Special meetings of the Board may be called by the
Chairman or by the President or a Vice President or any two directors
and may be held at the time and place designated in the call and
notice of the meeting. The Secretary or other officer performing his
duties shall give notice either personally or by mail or telegram at
least twenty-four hours before the meeting. Meetings may be held at
any time and place without notice if all the directors are present or
if those not present waive notice in writing either before or after
the meeting.
17. At all meetings of the Board one-third of the total
number of directors shall be requisite for and shall constitute a
quorum for the transaction of business, and the act of a majority of
the directors present at any meeting at which there is a quorum shall
be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of
Incorporation or by these By-Laws.
18. Any regular or special meeting may be adjourned to any
other time at the same or any other place by a majority of the
directors present at the meeting, whether or not a quorum shall be
present at such meeting, and no notice of the adjourned meeting shall
be required other than announcement at the meeting.
COMPENSATION OF DIRECTORS
19. Directors, other than salaried officers or employees of
the Corporation or of any affiliated company, shall receive
compensation for their services as directors in such form and amounts
and at such times as may be prescribed from time to time by the Board
of Directors. All directors shall be reimbursed for their reasonable
expenses, if any, for attendance at each regular or special meeting of
the Board of Directors.
20. Members of any committee of the Corporation, other than
salaried officers or employees of the Corporation or of any affiliated
company, shall receive compensation for their services on such
committee in such form and amounts and at such times as may be
prescribed from time to time by the Board of Directors.
Members of any committee of the Corporation shall be allowed such
additional compensation and reimbursement for expenses as may be fixed
by the Board of Directors.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
21. The Board of Directors may by vote of a majority of the
whole Board designate three or more of their number to constitute an
Executive Committee to hold office for such period as the Board shall
determine. The Chairman and the President shall each be a member of
the Executive Committee. The Board of Directors may likewise
designate one or more alternate members who shall serve on the
Executive Committee in the absence of any regular member or members of
such Committee. When a regular or alternate member of the Executive
Committee ceases to be a director he shall automatically cease to be
such regular or alternate member of the Executive Committee. Such
Executive Committee shall, between meetings of the Board, have all the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, except that no such committee shall have
authority as to: the submission to stockholders of any action that
needs stockholders' authorization under the Business Corporation Law;
the filling of vacancies in the Board of Directors or in any
committee; the fixing of compensation of the directors for serving on
the Board or on any committee; the amendment or repeal of the By-Laws,
or the adoption of new By-Laws; the amendment or repeal of any
resolution of the Board which by its terms shall not be so amendable
or repealable.
The Executive Committee shall cause to be kept regular minutes of
its proceedings, which may be transcribed in the regular minute book
of the Corporation, and all such proceedings shall be reported to the
Board of Directors at its next succeeding meeting, and shall be
subject to revision or alteration by the Board, provided that no
rights of third persons shall be affected by such revision or
alteration. A majority of the Executive Committee shall constitute a
quorum at any meeting. The act of a majority of the Executive
Committee present at any meeting at which there is a quorum shall be
the act of the Executive Committee. The Board of Directors may by
vote of a majority thereof fill any vacancies in the Executive
Committee. The Executive Committee may, from time to time, subject to
the approval of the Board of Directors, prescribe rules and
regulations for the calling and conduct of meetings of the Committee,
and other matters relating to its procedure and the exercise of its
powers.
22. In addition to having the power to designate an Executive
Committee, the Board of Directors may by vote of a majority of the
whole Board designate other committees, whether special or standing,
each to consist of three or more of their number, to hold office for
such period as the Board shall determine. With respect to each such
other committee, the Board of Directors may likewise designate one or
more alternate members who shall serve in the absence of any regular
member or members of such other committee. When a regular or
alternate member of such other committee ceases to be a director he
shall automatically cease to be a regular or alternate member of such
other committee. Each such other committee shall have authority only
to the extent provided by the Board of Directors, except that no such
other committee shall have authority as to: the submission to
stockholders of any action that needs stockholders' authorization
under the Business Corporation Law; the filling of vacancies in the
Board of Directors or in any committee; the fixing of compensation of
the directors for serving on the Board or on any committee; the
amendment or repeal of the By-Laws, or the adoption of new By-Laws;
the amendment or repeal of any resolution of the Board which by its
terms shall not be so amendable or repealable. A majority of each
such other committee shall constitute a quorum at any meeting thereof.
The act of a majority of each such other committee present at any
meeting thereof at which there is a quorum shall be the act of such
other committee. The Board of Directors may by vote of a majority
thereof fill any vacancies in each such other committee.
MEETINGS OF THE BOARD AND COMMITTEE THEREOF
BY CONFERENCE TELEPHONE OR SIMILAR MEANS
23. Any one or more of the members of the Board of Directors,
the Executive Committee or any special or standing committee of the
Board of Directors may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear
each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
ACTION BY BOARD OR COMMITTEE WITHOUT A MEETING
24. If all members of the Board of Directors, the Executive
Committee or any special or standing committee of the Board of
Directors consent in writing to the adoption of a resolution
authorizing action required or permitted to be taken by the Board or
any committee, such action may be taken without a meeting. The
resolution and the written consents thereto shall be filed with the
minutes of the proceeding.
OFFICERS
25. The officers of the Corporation shall be chosen by the
Board of Directors. The officers shall be a Chairman, one or more
Assistants to the Chairman, a President, one or more Assistants to the
President, one or more Vice Presidents, one or more Assistant Vice
Presidents, a Secretary, one or more Assistant Secretaries, a
Treasurer, one or more Assistant Treasurers, a Controller, one or more
Assistant Controllers, and such other officers as the Board may from
time to time choose and appoint. The Chairman and President may not
occupy any other such office, except that the same person may occupy
both the office of Chairman and the office of President. Neither the
Treasurer nor an Assistant Treasurer may at the same time be
Controller or an Assistant Controller. Except as above set forth, any
two of such offices may be occupied by the same person but no officer
shall execute, acknowledge or verify any instrument in more than one
capacity.
26. The Board of Directors, at its first meeting after the
election of directors by the stockholders, shall choose a Chairman and
a President from among their own number, and a Secretary, a Treasurer
and a Controller, and such Assistants to the Chairman, Assistants to
the President, Vice Presidents, Assistant Vice Presidents, Assistant
Secretaries, Assistant Treasurers and Assistant Controllers, as it
shall deem necessary, none of whom need be members of the Board.
27. The Board may appoint such other officers and agents as
it shall deem necessary, who shall hold their offices for such terms,
and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
28. The salary or other compensation of the officers of the
Corporation shall be fixed by the Board of Directors. The salary or
other compensation of all other employees shall, in the absence of any
action by the Board be fixed by the Chairman or the President or by
such other officers or executives as shall be designated by the
Chairman or the President.
29. The officers of the Corporation shall hold office until
the first meeting of the Board of Directors after the next succeeding
annual meeting of stockholders and until their successors are chosen
and qualify in their stead. Any officer or agent elected or appointed
by the Board of Directors may be removed at any time, with or without
cause, by the affirmative vote of a majority of the whole Board of
Directors. Any other employee or agent of the Corporation may be
removed at any time, with or without cause, by the affirmative vote of
a majority of the whole Board of Directors or, in the absence of any
action by the Board, by the Chairman or the President or by such other
officers or executives as shall have been designated by the Chairman
or the President.
CHAIRMAN
30. The Chairman shall be the chief executive officer of the
Corporation and shall, when present, preside at all meetings of the
Board of Directors and of the stockholders, except as otherwise by law
provided. He may sign in the name of and on behalf of the
Corporation, certificates of stock, notes, and any and all contracts,
agreements and other instruments of a contractual nature pertaining to
matters which arise in the normal conduct and ordinary course of
business of the Corporation. He shall be a member of the Executive
Committee and of all standing committees except the Executive
Compensation and Succession Committee, the Audit Committee and the
Nominating Committee. He shall also generally have the powers and
perform the duties which appertain to the office.
The Assistants to the Chairman shall assist the Chairman in the
performance of his duties and exercise and perform such other powers
and duties as may be conferred or required by the Board.
PRESIDENT
31. The President shall, when present in the absence of the
Chairman, preside at all meetings of the Board of Directors and of the
stockholders, except as otherwise by law provided. He may sign in the
name of and on behalf of the Corporation, certificates of stock,
notes, and any and all contracts, agreements and other instruments of
a contractual nature pertaining to matters which arise in the normal
conduct and ordinary course of business of the Corporation. He shall
be a member of the Executive Committee and of all standing committees
except the Executive Compensation and Succession Committee, the Audit
Committee and the Nominating Committee. He shall also generally have
the powers and perform the duties which appertain to the office.
The Assistants to the President shall assist the President in the
performance of his duties and exercise and perform such other powers
and duties as may be conferred or required by the Board.
VICE PRESIDENT
32. A Vice President may sign, in the name of and on behalf
of the Corporation, certificates of stock, notes and any and all
contracts, agreements and other instruments of a contractual nature
pertaining to matters which arise in the normal conduct and ordinary
course of business, and shall perform such other duties as the Board
of Directors may prescribe.
If there be more than one Vice President, the Board of Directors
may designate one or more Vice Presidents as Executive Vice Presidents
who shall have general supervision, direction and control of the
business and affairs of the Corporation in the absence or disability
of the Chairman and the President, and may designate one or more Vice
Presidents as Senior Vice Presidents who shall have general
supervision, direction and control of the business and affairs of the
Corporation in the absence or disability of the Chairman and the
President and the Executive Vice Presidents. A Vice President who has
not been designated as Executive Vice President or as Senior Vice
President shall have general supervision, direction and control of the
business and affairs of the Corporation in the absence or disability
of the Chairman and the President, and the Executive Vice Presidents
and the Senior Vice Presidents.
The Assistant Vice Presidents shall assist the President and Vice
Presidents in the performance of their duties and exercise and perform
such other powers and duties as may be conferred or required by the
Board.
SECRETARY
33. The Secretary shall attend all sessions of the Board and
all meetings of the stockholders and record all votes and the minutes
of all proceedings in a book to be kept for that purpose; and shall
perform like duties for the standing committees when required. He
shall give, or cause to be given, notice of all meetings of the
stockholders and of the Board of Directors, and shall perform such
other duties as may be prescribed by the Board of Directors. He shall
be sworn to the faithful discharge of his duty. Any records kept by
him shall be the property of the Corporation and shall be restored to
the Corporation in case of his death, resignation, retirement or
removal from office.
He shall be the custodian of the seal of the Corporation and,
when authorized by the Board of Directors or by the Chairman, the
President or a Vice President, shall affix the seal to all instruments
requiring it and shall attest the seal and/or the execution of such
instruments, as required. He shall have control of the stock
ledger, stock certificate book and minute books of the Corporation and
its committees, and other formal records and documents relating to the
corporate affairs of the Corporation.
The Assistant Secretary or Assistant Secretaries shall assist the
Secretary in the performance of his duties, exercise and perform his
powers and duties in his absence or disability, and such powers and
duties as may be conferred or required by the Board.
TREASURER
34.(a) The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys, and other valuable effects in the name and
to the credit of the Corporation, in such depositories as may be
designated by the Board of Directors.
(b) He shall disburse the funds of the Corporation in such
manner as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the Chairman, the President and
directors, at the regular meetings of the Board, or whenever they may
require it, an account of all his transactions as Treasurer and of the
financial condition of the Corporation.
(c) He shall give the Corporation a bond if required by the
Board of Directors in a sum, and with one or more sureties
satisfactory to the Board, for the faithful performance of the duties
of his office, and for the restoration of the Corporation, in case of
his death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in
his possession or under his control belonging to the Corporation.
The Assistant Treasurer or Assistant Treasurers shall assist the
Treasurer in the performance of his duties, exercise and perform his
powers and duties in his absence or disability, and such powers and
duties as may be conferred or required by the Board.
CONTROLLER
35. The Controller of the Corporation shall have full control
of all the books of account of the Corporation and keep a true and
accurate record of all property owned by it, of its debts and of its
revenues and expenses and shall keep all accounting records of the
Corporation other than the record of receipts and disbursements and
those relating to the deposit or custody of money and securities of
the Corporation, which shall be kept by the Treasurer, and shall also
make reports to the directors and others of or relating to the
financial condition of the Corporation.
The Assistant Controller or Assistant Controllers shall assist
the Controller in the performance of his duties, exercise and perform
his powers and duties in his absence or disability, and such powers
and duties as may be conferred or required by the Board.
VACANCIES
36. If the office of any director becomes vacant by reason of
death, resignation, removal or disability, or any other cause, the
directors then in office, except as otherwise provided in the
Certificate of Incorporation, as amended, although less than a quorum,
by a majority vote, may choose a successor or successors, who shall
hold office until the next annual meeting of stockholders, and
thereafter until a successor or successors shall be elected and shall
qualify. If the office of any officer of the Corporation shall become
vacant for any reason, the Board, by a majority vote of those present
at any meeting at which a quorum is present, may choose a successor or
successors who shall hold office for the unexpired term in respect of
which such vacancy occurred.
RESIGNATIONS
37. Any officer or any director of the Corporation may resign
at any time, such resignation to be made in writing and to take effect
from the time of its receipt by the Corporation, unless some time be
fixed in the resignation, and then from that time.
DUTIES OF OFFICERS MAY BE DELEGATED
38. In case of the absence of any officer of the Corporation,
or for any other reason the Board may deem sufficient, the Board may
delegate, for the time being, the powers or duties, or any of them, of
such officer to any other officer or to any director, provided a
majority of the entire Board concur therein.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
39. The Corporation shall fully indemnify to the extent not
prohibited by law any person made, or threatened to be made, a party
to an action or proceeding, whether civil or criminal, including an
investigative, administrative, legislative or other proceeding, and
including an action by or in the right of the Corporation or any other
corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, by reason of the fact that he, his testator or intestate,
(i) is or was a director, officer, or employee of the Corporation or
(ii) is or was serving at the request of the Corporation, as a
director, officer, or in any other capacity, any other corporation of
any type or kind, domestic or foreign, or any partnership, joint
venture, trust, employee benefit plan or other enterprise, against any
and all judgments, fines, amounts paid in settlement and expenses,
including attorneys' fees, actually and reasonably incurred as a
result of or in connection with any such action or proceeding or any
appeal therein, except as provided in the next paragraph.
No indemnification shall be made to or on behalf of any director,
officer, or employee if a judgment or other final adjudication adverse
to the director, officer, or employee establishes that his acts were
committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or
that he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
Except in the case of an action or proceeding against a director,
officer, or employee specifically approved by the Board of Directors,
the Corporation shall pay expenses incurred by or on behalf of such a
person in defending such a civil or criminal action or proceeding
(including appeals) in advance of the final disposition of such action
or proceeding. Such payments shall be made promptly upon receipt by
the Corporation, from time to time, of a written demand of such person
for such advancement, together with an undertaking by or on behalf of
such person to repay any expenses so advanced to the extent that the
person receiving the advancement is ultimately found not to be
entitled to indemnification for such expenses.
The rights to indemnification and advancement of defense expenses
granted by or pursuant to this By-Law (i) shall not limit or exclude,
but shall be in addition to, any other rights which may be granted by
or pursuant to any statute, certificate of incorporation, by-law,
resolution or agreement, (ii) shall be deemed to constitute
contractual obligations of the Corporation to any director, officer,
or employee who serves in such capacity at any time while this By-Law
is in effect, (iii) are intended to be retroactive and shall be
available with respect to events occurring prior to the adoption of
this By-Law and (iv) shall continue to exist after the repeal or
modification hereof with respect to events occurring prior thereto.
It is the intent of this By-Law to require the Corporation to
indemnify the persons referred to herein for the aforementioned
judgments, fines, amounts paid in settlement and expenses, including
attorneys' fees, in each and every circumstance in which such indem-
nification could lawfully be permitted by an express provision of a
by-law, and the indemnification required by this By-Law shall not be
limited by the absence of an express recital of such circumstances.
The Corporation may, with the approval of the Board of Directors,
enter into an agreement with any person who is, or is about to become,
a director, officer, or employee of the Corporation, or who is
serving, or is about to serve, at the request of the Corporation, as a
director, officer, or in any other capacity, any other corporation of
any type or kind, domestic or foreign, or any partnership, joint
venture, trust, employee benefit plan or other enterprise, which
agreement may provide for indemnification of such person and
advancement of defense expenses to such person upon such terms, and to
the extent, not prohibited by law.
STOCK OF OTHER CORPORATIONS
40. The Board of Directors shall have the right to authorize
any officer or other person on behalf of the Corporation to attend,
act and vote at meetings of the stockholders of any corporation in
which the Corporation shall hold stock, and to exercise thereat any
and all the rights and powers incident to the ownership of such stock
and to execute waivers of notice of such meetings and calls therefor;
and authority may be given to exercise the same either on one or more
designated occasions, or generally on all occasions until revoked by
the Board. In the event that the Board shall fail to give such
authority, such authority may be exercised by the Chairman or the
President in person or by proxy appointed by him on behalf of the
Corporation.
CERTIFICATES OF STOCK
41. Stock of the Corporation may be in certificated or
uncertificated form. Stock of the Corporation represented by
certificates shall be numbered and shall be entered in the books of
the Corporation as the certificates are issued. The certificates
shall exhibit the holder's name and number of shares and shall be
signed by the Chairman, President or a Vice President and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, and the seal of the Corporation shall be affixed thereto.
Where any such certificates of stock are signed by a transfer agent
and by a registrar, the signatures of the Chairman, President or a
Vice President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary upon any such certificates, if
authorized by the Board of Directors, may be made by engraving,
lithographing or printing thereon a facsimile of such signatures, in
lieu of actual signatures, and such facsimile signatures so engraved,
lithographed or printed thereon shall have the same force and effect
as if such officers had actually signed the same.
In case any officer who has signed, or whose facsimile signature
has been affixed to, any such certificate shall cease to be such
officer before such certificate shall have been delivered by the
Corporation, such certificate may nevertheless be issued and delivered
as though the person who signed such certificate, or whose facsimile
signature has been affixed thereto, had not ceased to be such officer
of the Corporation.
To the extent permitted by law, some or all of any or all classes
and series of stock of the Corporation may be uncertificated stock,
provided that no stock represented by a certificate shall be
registered on the books of the Corporation as uncertificated stock
until such certificate is surrendered to the Corporation.
TRANSFERS OF STOCK
42. Transfers of certificated stock shall be made on the
books of the Corporation only upon the request of the person named in
the certificate or by attorney, lawfully constituted in writing, and
upon surrender of the certificate therefor.
Transfers of uncertificated stock shall be made on the books of
the Corporation only upon the request of the holder of record of such
uncertificated stock or by attorney, lawfully constituted in writing,
and upon receipt by the Corporation of a written instruction signed by
the holder of record of such uncertificated stock or by such attorney
requesting that the transfer of such uncertificated stock be
registered on the books of the Corporation.
FIXING OF RECORD DATE
43. Except as otherwise may be required by provisions of the
Certificate of Incorporation, as amended, relative to meetings of
stockholders required or authorized by the provisions of paragraph (F)
or (H) of Article 7 of the Restated Certificate of Incorporation filed
October 25, 1988, the Board of Directors is hereby authorized to fix a
day and hour not exceeding fifty (50) days (and in the case of a
meeting not less than ten (10) days) preceding the date of any meeting
of stockholders or the date fixed for the payment of any dividend or
for the delivery of evidences of rights, as a record time for the
determination of the stockholders entitled to notice of and to vote at
any such meeting or entitled to receive any such dividend or rights,
as the case may be; and all persons who are holders of record of
voting stock at such time, and no others, shall be entitled to notice
of and to vote at such meeting, and only stockholders of record at any
time so fixed shall be entitled to receive any such dividend or
rights; and the stock transfer books shall not be closed during any
such period.
REGISTERED STOCKHOLDERS
44. The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof
and accordingly shall not be bound to recognize any equitable or other
claim to, or interest in, such share on the part of any other person,
whether or not it shall have express or other notice thereof, save as
expressly provided by the statutes of the State of New York.
LOST CERTIFICATES
45. Any person claiming a certificate of stock to be lost or
destroyed shall make an affidavit or affirmation of that fact,
whereupon a new certificate may be issued of the same tenor and for
the same number of shares as the one alleged to be lost or destroyed;
provided, however, that the Board of Directors may require, as a
condition to the issuance of a new certificate, a bond of indemnity in
such form and amount and with such surety or sureties, or without
surety, as the Board of Directors shall determine, and may also
require the advertisement of such loss in such manner as the Board may
prescribe.
INSPECTION OF BOOKS
46. The Board of Directors shall have power to determine
whether and to what extent, and at what time and places and under what
conditions and regulations, the accounts and books of the Corporation
(other than the books required by statute to be open to the inspection
of stockholders), or any of them, shall be open to the inspection of
stockholders, and no stockholders shall have any right to inspect any
account or book or document of the Corporation, except as such right
may be conferred by the statutes of the State of New York or by
resolution of the directors or of the stockholders.
CHECKS, NOTES, BONDS AND OTHER INSTRUMENTS
47. All checks or demands for money and notes of the
Corporation shall be signed by such person or persons (who may but
need not be an officer or officers of the Corporation) as may be
authorized by these By-Laws or as the Board of Directors may from time
to time designate, either directly or through such officers of the
Corporation as shall, by resolution of the Board of Directors, be
authorized to designate such person or persons. If authorized by the
Board of Directors, the signatures of such persons, or any of them,
upon any checks for the payment of money may be made by engraving,
lithographing or printing thereon a facsimile of such signatures, in
lieu of actual signatures, and such facsimile signatures so engraved,
lithographed or printed thereon shall have the same force and effect
as if such persons had actually signed the same.
All bonds, mortgages and other instruments requiring a seal shall
be executed on behalf of the Corporation by the Chairman or the
President or a Vice President, and the seal of the Corporation shall
be thereunto affixed by the Secretary or an Assistant Secretary who
shall, when required, attest the seal and/or the execution of said
instruments. If authorized by the Board of Directors, the signatures
of the Chairman or the President or a Vice President and the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer
upon any engraved, lithographed or printed bonds, debentures, notes or
other instruments may be made by engraving, lithographing or printing
thereon a facsimile of such signatures, in lieu of actual signatures,
and such facsimile signatures so engraved, lithographed or printed
thereon shall have the same force and effect as if such officers had
actually signed the same.
In case any officer who has signed any such bonds, debentures,
notes or other instruments shall cease to be such officer before such
bonds, debentures, notes or other instruments shall have been
delivered by the Corporation, such bonds, debentures, notes or other
instruments may nevertheless be adopted by the Corporation and be
issued and delivered as though the person who signed the same had not
ceased to be such officer of the Corporation.
RECEIPTS FOR SECURITIES
48. All receipts for stocks, bonds or other securities
received by the Corporation shall be signed by the Treasurer or an
Assistant Treasurer or by such other person or persons as the Board of
Directors or Executive Committee shall designate.
FISCAL YEAR
49. The fiscal year shall begin the first day of January in
each year.
DIVIDENDS
50. Dividends upon the capital stock of the Corporation, when
earned, may be declared by the Board of Directors at any regular or
special meeting.
The Board of Directors shall have power to fix and determine, and
from time to time to vary, the amount to be reserved as working
capital; to determine whether any, and if any, what part of any,
accumulated surplus net profits shall be declared and paid as
dividends, to determine the date or dates for the declaration or
payment of dividends and to direct and determine the use and
disposition of any surplus net profits, and before payment of any
dividend or making any distribution of profits there may be set aside
out of the surplus or net profits of the Corporation such sum or sums
as the directors from time to time, in their absolute discretion,
think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of
the Corporation, or for such other purpose as the directors shall
think conducive to the interests of the Corporation.
DIRECTORS' ANNUAL STATEMENT
51. The Board of Directors shall present at each annual
meeting, and when called for by vote of the stockholders at any
special meeting of the stockholders, a full and clear statement of the
business and condition of the Corporation.
NOTICES
52. Whenever under the provisions of these By-Laws notice is
required to be given to any director, officer or stockholder, it shall
not be construed to require personal notice, but such notice may be
given in writing, by mail, by depositing a copy of the same in a post
office, letter box or mail chute, maintained by the Post Office
Department, in a postpaid sealed wrapper, addressed to such
stockholder, officer or director, at his address as the same appears
on the books of the Corporation.
A stockholder, director or officer may waive in writing any
notice required to be given to him under these By-Laws.
INSPECTORS OF ELECTION
53. Preceding each meeting of the stockholders for the
election of directors, the Board of Directors shall appoint two
inspectors of election to act at such meeting or any adjournment or
adjournments thereof as inspectors of election. In the event that
such inspectors shall not be so appointed, they shall be appointed at
the meeting at which such election is to be held, and if any inspector
shall refuse to serve, or neglect to attend at the election or his
office become vacant, the meeting may appoint an inspector in his
place. The inspectors appointed to act at any meeting of the
stockholders shall, before entering upon the discharge of their
duties, be sworn to faithfully execute the duties of inspector at such
meeting with strict impartiality, and according to the best of their
ability, and the oaths so taken shall be subscribed by them and
delivered to the Secretary of the meeting with a certificate of the
result of the vote taken thereat.
AMENDMENTS
54. These By-Laws may be altered or amended by the
affirmative vote of a majority of the stock issued and outstanding and
entitled to vote, or by the affirmative vote of a majority of the
Board of Directors at any meeting duly held as above provided, the
notice of which includes notice of the proposed amendment; provided,
however, that no By-Laws adopted by the Board of Directors regulating
the election of directors or officers shall be valid unless published
for at least once a week for two successive weeks in a newspaper in
the County where the election is to be held, and at least thirty days
before such election.
EMERGENCY BY-LAWS
1. These Emergency By-Laws shall be effective upon the order
of the New York State Defense Council, as constituted under the New
York State Defense Emergency Act, or any successor body, in the event
of attack and shall cease to be effective when the Council or
successor body declares the end of the period of attack. During such
period, the By-Laws of this Corporation shall remain in effect except
to the extent superseded by or inconsistent with these Emergency By-
Laws.
2. The powers of the Board of Directors of the Corporation
shall be vested in such directors of the Corporation as are readily
available to act. If such directors do not constitute a quorum, then
the full powers of the Board shall be vested in the members of the
Executive Committee who are readily available to act. If members of
the Executive Committee readily available to act do not constitute a
quorum, then the property and business of the Corporation shall be
managed by an Emergency Management Committee composed of not more than
five of the following persons who are readily available to act: (a)
Directors of the Corporation; (b) to the extent necessary, Executive
Vice Presidents of the Corporation, in order of seniority of service
in that office; (c) to the extent necessary, Senior Vice Presidents of
the Corporation, in order of seniority of service in that office; (d)
to the extent necessary, Vice Presidents of the Corporation, in order
of seniority of service in that office; and (e) to the extent
necessary and in the following order: Assistant Vice Presidents in
order of seniority of service in that office; Assistants to the
Chairman in order of seniority of service in that office; Assistants
to the President in order of seniority of service in that office;
Secretary; Treasurer.
3. Meetings of such Directors, the Executive Committee or the
Emergency Management Committee may be held at any time and place. At
any meeting of the Emergency Management Committee, three shall consti-
tute a quorum and the act of a majority present at any meeting at
which there is a quorum shall be the act of the Committee.
In the event it is impracticable to hold a meeting of such
Directors, the Executive Committee or the Emergency Management Commit-
tee, the concurrence of individuals comprising any such group may be
expressed orally or in writing (regardless of the manner of
transmission or communication) and such concurrence shall be deemed to
be the act of any such group.
4. Nothing herein shall be deemed to abrogate the power of
Directors remaining in office to choose a successor or successors in
the event of vacancy in the office of any Director, as provided in
the By-Laws of the Corporation. Upon the taking of any such action,
any powers theretofore vested pursuant to these Emergency By-Laws in
the Executive Committee or the Emergency Management Committee shall
terminate.
5. Any action taken in good faith under these Emergency By-
Laws shall be as valid and binding as if taken by the Board of
Directors even though subsequent developments may show that at the
time such action was taken conditions requisite for such action did
not in fact exist.
EXHIBIT 10-46
AMENDMENT NO. 4
to
RETIREMENT PLAN FOR DIRECTORS
of
NEW YORK STATE ELECTRIC & GAS CORPORATION
<PAGE>
The Retirement Plan for Directors ("Plan") of New York State
Electric & Gas Corporation, effective January 1, 1992, is hereby
amended as follows:
1. Article 2(c) of the Plan is hereby amended to read in
its entirety as follows:
"Retainer" shall mean the cash remuneration, expressed
on an annual basis, payable to an individual in
consideration for service as a Director of the Company,
including cash remuneration for service as a Director
after December 31, 1995. The term "Retainer" shall not
include any amounts received either as a reimbursement
of expenses incurred by a Director or as payment for
attending, scheduled or special Meetings of the Board
or its Committees or acting as a chair of any
Committee.
2. The first sentence of the first paragraph of Article 6
of the Plan is hereby amended to read in its entirety as follows:
Payout of a Participant's monthly benefit shall
commence as of the first day of the calendar month next
following the latest to occur of the following: (i)
the date on which the Participant ceases to serve as a
director of the Company; (ii) the date on which the
Participant ceases to serve as a director of Energy
East; or (iii) the date on which the Participant
attains age 65.
EXHIBIT 10-47
( As Amended and Restated Effective June 1, 1998)
NEW YORK STATE ELECTRIC & GAS CORPORATION
DIRECTOR SHARE PLAN
I. Plan Objective
The objective of the Director Share Plan (the "Plan") is to
attract and retain current and future Directors of New York
State Electric & Gas Corporation ("NYSEG") and effective June
1, 1998, Energy East Corporation ("Energy East") by providing
such Directors with benefits, in addition to current cash
compensation, that enhance the linkage between director and
shareholder interests.
II. Definitions
Wherever used in the Plan, unless the context clearly
indicates otherwise, the following words and phrases shall
have the meanings set forth below:
A. "Account" shall mean the account to be established by the
Committee to which Phantom Shares and Dividend Phantom
Shares will be credited for each Participant.
B. "Energy East Board" shall mean the Board of Directors of
Energy East.
C. "NYSEG Board" shall mean the Board of Directors of NYSEG.
D. "Director" shall mean (i) a member of the NYSEG Board on
the effective date of the Plan or thereafter and (ii) a
member of the Energy East Board on June 1, 1998 or
thereafter.
E. "Dividend Phantom Shares" shall mean the "phantom" (not
corporate) shares that accrue in accordance with Article V
hereof during each Plan Year.
<PAGE>
F. "Participant" shall mean a non-employee Director who has
satisfied the eligibility and participation requirements of
Article IV hereof.
G. "Phantom Shares" shall mean the "phantom" (not corporate)
shares that are granted to Participants in the Plan pursuant
to Article VI hereof.
H. "Plan" shall mean the New York State Electric & Gas
Corporation Director Share Plan as embodied herein and as
amended from time to time.
I. "Plan Year" shall mean the calendar year.
J. "Prior Plan" shall mean the New York State Electric & Gas
Corporation Retirement Plan for Directors, effective as of
January 1, 1992, as amended.
III. Administration
The Plan shall be administered by a committee to be known as
the Director Share Plan Committee (the "Committee"), the
members of which shall be appointed by the NYSEG Board. No
member of the Committee while serving as such shall be
eligible for participation in the Plan. Decisions and
determinations by the Committee shall be final and binding
upon all parties. The Committee shall have the authority to
interpret the Plan, to establish and revise rules and
regulations relating to the Plan, and to make any other
determinations that it believes necessary or advisable for the
administration of the Plan.
<PAGE>
IV. Eligibility and Participation
All NYSEG Directors who are non-employee NYSEG Directors on
the effective date of the Plan or thereafter are eligible to
participate in the Plan in accordance with the following
provisions:
A. Each eligible NYSEG Director first elected to the NYSEG
Board prior to January 1, 1996 must chose one of the
following irrevocable options by January 31, 1997:
1. To remain in the Prior Plan and receive retirement
benefits pursuant to the Prior Plan. An eligible NYSEG
Director choosing this option will not participate in the
Plan and shall have no rights under the Plan except as
otherwise provided in Article IV.D. below.
2. To cease participation in the Prior Plan effective
January 1, 1997 and instead participate in the Plan as of
that date. An eligible NYSEG Director choosing this
option shall have no further rights under the Prior Plan.
B. Each eligible NYSEG Director first elected to the NYSEG
Board at any time between January 1, 1996 and December 31,
1996, inclusive, shall become a Plan Participant on the
effective date of the Plan.
C. Each eligible NYSEG Director who first becomes a non-
employee NYSEG Director on or after the effective date of
the Plan automatically becomes a Plan Participant upon
becoming a non-employee NYSEG Director.
D. Notwithstanding anything to the contrary contained in any
provision of this Plan, Messrs. Gilmour and Marshall shall
(i) be eligible to participate in this Plan as of June 1,
1998, (ii) receive an initial grant of 937 Phantom Shares
effective as of June 1, 1998, and (iii) shall thereafter be
eligible for further awards pursuant to Article VI.B.
<PAGE>
E. In the event that a Plan Participant serves at the same
time as both a NYSEG Director and an Energy East Director,
there shall be no duplication of benefits and such Plan
Participant shall be eligible to receive awards solely as a
NYSEG Director. Accordingly, all non-employee NYSEG
Directors who as of June 1, 1998 also serve as non-employee
Energy East Directors will after June 1, 1998 continue to be
eligible for awards in their capacities as NYSEG Directors.
F. Except as otherwise provided herein, each Energy East
Director who first becomes a non-employee Energy East
Director after June 1, 1998 automatically becomes a Plan
Participant upon becoming a non-employee Energy East
Director.
V. Phantom Shares and Dividend Phantom Shares
All Phantom Shares granted to a Participant shall be credited
to a Phantom Share Account which shall be maintained for the
Participant. On each common stock dividend payment date of
Energy East, Dividend Phantom Shares, including fractional
Dividend Phantom Shares computed to four decimal places, shall
be credited to each Participant's Phantom Share Account. The
number of Dividend Phantom Shares to be credited shall be
calculated by first determining the amount of the dividends
that would be paid by Energy East upon all Phantom Shares and
Dividend Phantom Shares held for the Participant as if such
shares actually were issued and outstanding common stock of
Energy East. The amount of dividends so determined shall then
be divided by the price per share paid by Energy East's
dividend reinvestment plan for common stock that was purchased
by said Plan with respect to the common stock dividend payment
date for which the Dividend Phantom Shares are being credited.
<PAGE>
The quotient of said division is the number of Dividend
Phantom Shares which shall be credited to a Participant's
Phantom Share Account.
An award of Phantom Shares or Dividend Phantom Shares under
the Plan shall not entitle the recipient to any actual
dividend or voting rights or any other rights of a shareholder
with respect to such Phantom Shares or Dividend Phantom
Shares.
VI. Plan Grants
A. Each Participant who chooses to cease participation in
the Prior Plan and participate in this Plan pursuant to
Article IV.A.2 hereof shall receive an initial grant of
Phantom Shares based on the actuarial present value of the
vested accrued benefit the Participant earned under the
Prior Plan as set forth in the following schedule:
Present Value of
Director Vested Accrued Benefit
Carrigg $133,000
Casarett 181,000
Castiglia 23,000
DeFleur 23,000
Gilmour 181,000
Gioia 40,000
Keeler 99,000
Kintigh 192,000
Lynch 95,000
Marshall 183,000
Stuart 192,000
<PAGE>
The initial number of Phantom Shares to be granted will be
determined for a Participant by dividing the Participant's
Present Value of Vested Accrued Benefit by the average
closing price of NYSEG's common stock for the five trading
days immediately preceding the effective date of the Plan.
B. In addition, commencing January 1, 1997 and on each April
1, July 1, October 1, and January 1 thereafter, 150 Phantom
Shares will be granted to each Director who is a Plan
Participant as of that date.
VII. Form and Timing of Payments
A. Form - Upon the later of (i) a Participant's ceasing
to serve as a Director of NYSEG and (ii) a
Participant's ceasing to serve as a Director of
Energy East ("Service Termination Date"), all Phantom
Shares and Dividend Phantom Shares in the
Participant's Phantom Share Account on the Service
Termination Date shall be settled in cash. Payments
shall be calculated by multiplying the number of
Phantom Shares and Dividend Phantom Shares in a
Participant's Phantom Share Account on the Service
Termination Date by the average of Energy East's
Common Stock closing prices for the five trading days
immediately preceding the Service Termination Date.
B. Timing - Cash payments shall be made by the tenth day of
the calendar month next following the Service
Termination Date. The Committee or the NYSEG Board
or Energy East Board may adopt procedures allowing
Participants to defer the cash payments they will be
entitled to receive under the Plan.
VIII. Dilution and Other Adjustments
In the event of any change in the outstanding shares of common
stock of Energy East by reason of any stock dividend or split,
recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares or other
similar corporate change, if the Committee shall determine, in
its sole discretion, that such change equitably requires an
adjustment in the number of Phantom Shares then held in each
Participant's Phantom Share Account or which may be awarded to
any Participant, or an adjustment in the number of Dividend
Phantom Shares then held in each Participant's Phantom Share
Account or which may be awarded to any Participant, such
adjustments shall be made by the Committee and shall be
conclusive and binding for all purposes of the Plan.
IX. Amendments and Termination
The NYSEG Board may at any time suspend, terminate, modify or
amend the Plan. Neither the suspension or termination of the
Plan nor any modification or amendment thereto shall diminish
the previously accrued rights of any Director who, at the date
of such suspension, termination, modification or amendment, is
a Participant in the Plan.
X. Miscellaneous Provisions
A. In the case of a Participant's death, payments with
respect to Phantom Shares and Dividend Phantom Shares shall
be made to his or her designated beneficiary, or in the
absence of such designation, by will or the laws of descent
and distribution.
<PAGE>
B. Except as set forth in A. above, a Participant's rights
and benefits under the Plan shall not be subject in any
manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment,
attachment, execution or levy of any kind, either voluntary
or involuntary, including any such liability which arises
from the Participant's bankruptcy or for the support of a
spouse or former spouse or for any other relative of the
Participant prior to payments actually being received by the
person eligible to benefit under the Plan. Any attempt at
such prohibited anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment,
attachment, execution or levy, shall be void and
unenforceable except as otherwise provided by law.
C. No Participant shall have any claim or right to be
granted an award under this Plan. Neither this Plan nor any
action taken hereunder shall be construed as giving a
Participant any right to be retained in the service of NYSEG
or Energy East, as the case may be.
D. NYSEG or Energy East, as the case may be, shall have the
right to deduct from the cash payments made pursuant to
Article VII any taxes required by law to be withheld with
respect to such cash payments.
E. The Plan shall inure to the benefit of, and be binding
upon, NYSEG and Energy East, and its successors and assigns,
including any company into or with which NYSEG or Energy
East may be merged or consolidated, and shall inure to the
benefit of, and be binding upon, the Director or Participant
and his or her heirs, executors, administrators, and, if
applicable, his or her committee, conservator or other
person serving in a similar capacity.
XI. Effective Date
The Plan shall be effective as of January 1, 1997.
XII. Funding
There shall be no funding of any amounts to be paid pursuant
to this Plan; provided, however, that NYSEG or Energy East, in
its discretion, may establish a trust to pay such amounts,
which trust shall be subject to the claims of NYSEG's or
Energy East's creditors in the event of NYSEG's or Energy
East's bankruptcy or insolvency; and provided, further, that
NYSEG or Energy East shall remain responsible for the payment
of any such amounts which are not so paid by any such trust.
XIII. Conversion of Phantom Shares and Dividend Phantom Shares
Effective May 1, 1998, NYSEG was reorganized into a holding
company structure pursuant to an Agreement and Plan of Share
Exchange. As part of the reorganization, all outstanding
Common Stock of NYSEG was exchanged for Common Stock of Energy
East and NYSEG became a wholly-owned subsidiary of Energy
East. Effective May 1, 1998, the Phantom Shares and Dividend
Phantom Shares held in each Participant's Phantom Share
Account, without further action, were deemed to be converted
into the equivalent number of Phantom Shares and Dividend
Phantom Shares of Energy East.
<PAGE>
INITIAL BENEFICIARY FORM
I hereby designate ______________________ as beneficiary
under the Director Share Plan of New York State Electric & Gas
Corporation.
____________________ __________
Director Date
<PAGE>
CHANGE OF BENEFICIARY FORM
I hereby designate ____________________ as beneficiary under
the Director Share Plan of New York State Electric & Gas
Corporation superseding all beneficiary designations previously
made by me.
_________________________ ________
Director Date
Receipt Acknowledged:
_____________________________ ________
Director Share Plan Date
Committee Member
EXHIBIT 10-48
NEW YORK STATE ELECTRIC & GAS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Amended and Restated Effective May 1, 1998
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1. Establishment of the Plan and Effective Date. New York
State Electric & Gas Corporation (hereinafter called the
"Corporation") has established a Supplemental Executive
Retirement Plan (hereinafter called the "Plan"). The Corporation
is the Plan Sponsor.
Energy East Corporation (hereinafter called "EEC") is the
common parent of an "affiliated group", within the meaning of
Section 1504 of the Internal Revenue Code of 1986, as amended
(hereinafter that affiliated group is called the "EEC Group").
The Corporation is one of the members of the EEC Group
(hereinafter members of the EEC Group individually are called a
"Member" and collectively are called "Members").
The purpose of the Plan is to increase retirement benefits
for the salaried employees of those Members that elect to
participate beyond those currently provided for in the
Corporation's tax qualified Retirement Benefit Plan for Employees
(hereinafter those Members that elect to participate are called
"Participating Members"). The Plan is effective as of September
7, 1984 and will continue in effect unless terminated or modified
by the Corporation.
2. Plan Administrator. The Plan Administrator is the
Corporation.
3. Provisions Applicable to All Salaried Employees
Concerning Pension Benefits. All employees of Participating
Members, other than ones included in a unit of employees covered
by a collective bargaining agreement, shall receive the amount of
benefits specified under the Corporation's tax qualified
Retirement Benefit Plan for Employees (i) without regard to any
limitations imposed on these pension benefits by any provision of
the Internal Revenue Code of 1986, as amended, and the
regulations thereunder, whether now existing or as may hereafter
be adopted and (ii) by including as "Basic Compensation" for
purposes of said plan any amounts of the salaried employee's
compensation that would constitute "Basic Compensation" under
said plan but for the salaried employee's election to defer such
<PAGE>
amount pursuant to any Participating Member's Deferred
Compensation Plan for Salaried Employees (hereinafter called a
"Deferred Compensation Plan"). Payment of this benefit shall be
made in the same form as elected by the salaried employee under
the Corporation's tax qualified Retirement Benefit Plan for
Employees. The benefit payable pursuant to this Paragraph 3
shall be calculated by subtracting the sum of (i) the benefit
payable under the Corporation's tax qualified Retirement Benefit
Plan for Employees and (ii) any benefit payable pursuant to
Section 7 of a Deferred Compensation Agreement executed pursuant
to a Deferred Compensation Plan in order to defer part of the
salaried employee's compensation (other than awards pursuant to
the Corporation's Annual Executive Incentive Plan, its
predecessor plan, the Annual Executive Incentive Compensation
Plan or any incentive plan of a Participating Member) from the
benefit described in the first sentence of this Paragraph 3.
<PAGE>
4. Provisions Applicable to Certain Key Persons Concerning
Pension Benefits.
A. Determination of Benefit. In addition to the benefits
provided pursuant to Paragraph 3 hereof, all Key Persons who
retire from the EEC Group either voluntarily or by reason of a
disability at age 60 (or age 55 in the case of a Participant in
the Corporation's tax qualified Retirement Benefit Plan for
Employees who is described in Section 2 of Article XI of said
plan as in effect on June 30, 1997) or later shall be entitled to
receive a total retirement benefit equivalent to the percentage
of the average of such Key Person's highest three years of
earnings within the last ten years of employment with a
Participating Member that is determined as follows: (i) the
percentage benefit shall be 45% for each Key Person who has ten
years of service; (ii) the percentage amount shall be increased
by one percentage point per year for each additional full year of
Service up to a maximum of 75% for forty or more years of
service. For the purpose of determining the earnings of a Key
Person who is a participant in the Corporation's Annual Executive
Incentive Plan or Long Term Executive Incentive Share Plan (or
their respective predecessor plans, the Annual Executive
Incentive Compensation Plan and the Performance Share Plan, or
any incentive plan of a Participating Member), there shall be
excluded any amounts received pursuant to such plans.
Additionally, upon and after a Change in Control (as defined in
Paragraph 7 hereof), all Key Persons whose employment is
terminated from the EEC Group at age 55 or later for any reason
other than death or Cause (as defined in Paragraph 7 hereof)
shall be entitled to receive the retirement benefit described in
this Paragraph 4A, as well as any benefits provided pursuant to
the terms of Paragraph 3 hereof. For purposes of the benefits
payable pursuant to the immediately preceding sentence, the
benefit calculated under Paragraph 4A hereof shall be determined
by applying the same reduction in benefits for commencement prior
to age 60 as is applied upon early retirement under the
Corporation's tax qualified Retirement Benefit Plan for
Employees.
From the amount determined in accordance with the
provisions of this paragraph there shall be subtracted
(i) any amounts received by the Key Person pursuant to
Paragraph 3 hereof or from the Corporation's tax
qualified Retirement Benefit Plan for Employees (prior
to reduction for the survivor's benefit or ten year
certain benefit) and (ii) any social security benefits
which the Key Person is eligible or expected to become
eligible to receive as determined by the Plan
Administrator. If after the subtraction there remains
a positive amount, that amount shall be paid by the
Corporation as an additional benefit to the Key Person
in accordance with the terms of this Plan.
For purposes of making the subtraction set forth
in the immediately preceding paragraph, if (i) a Key
Person retires at or after age 60 (or age 55 in the
case of a Participant in the Corporation's tax
qualified Retirement Benefit Plan for Employees who is
described in Section 2 of Article XI of said plan as in
effect on June 30, 1997) and prior to age 62, or (ii) a
Key Person's employment is terminated, upon and after a
Change in Control (as defined in Paragraph 7 hereof),
for any reason other than death or Cause (as defined in
Paragraph 7 hereof) at or after age 55 and prior to age
62, the amount of social security benefits subtracted
will be the amount of estimated social security
benefits that the Plan Administrator estimates that the
Key Person would have received if he had retired at age
62.
B. Survivor's Benefit. One-half of any amount
being paid to a key person pursuant to Paragraph 4A
hereof after retirement will be paid to the surviving
spouse of the Key Person during the spouse's lifetime
upon the death of the Key Person after retirement. If
a Key Person dies prior to retirement and such Key
Person would have been entitled to payments pursuant to
Paragraph 4A hereof if, at the time of his death, he
had retired rather than died, his spouse shall be paid
during her lifetime the amount specified in the next
sentence of this Paragraph 4B. Said amount shall be
determined by applying the first sentence of this
Paragraph 4B as if the Key Person had retired on the
date of his death, rather than dying on such date, and
survived long enough to receive the first payment due
to him pursuant to Paragraph 4A hereof.
C. Payment of Benefit. Benefits payable under
Paragraph 4A of this Plan shall be payable monthly to
the Key Person.
All benefits payable pursuant to Paragraphs 4A and
4B of this Plan will cease upon the death of the
surviving spouse of the Key Person or, if there is no
surviving spouse, upon the death of the Key Person. No
rights shall accrue under this paragraph to (i) the
estate of the Key Person, (ii) any beneficiary of the
Key Person other than a surviving spouse or (iii) the
estate of the surviving spouse.
Except as specifically provided in the last two
sentences of the first paragraph of Paragraph 4A hereof
or in the second and third sentences of Paragraph 4B
hereof, no benefits will be paid to the Key Person or
any surviving spouse pursuant to this plan if the Key
<PAGE>
Person dies prior to retirement from the EEC Group or the
employment of the Key Person is terminated by the Member
that employs the Key Person and such termination is not in
connection with the Key Person becoming an Employee of
another Member.
D. Definition of Key Person. For purposes of
this Plan, the term "Key Person" means a person who has
at least 10 years of service and either (i) who, for at
least 5 years, either had been an officer of a
Participating Member or had a salary grade level of at
least 18, or (ii) who was, on December 31, 1990, a
member of the Executive Staff of the Corporation and
who first became a member of the Executive Staff of the
Corporation at least 5 years prior to his retirement.
5. Other Provisions. The Corporation reserves the right to
terminate or modify the Plan in whole or in part at any time by
action of the Board of Directors of the Corporation. Any such
<PAGE>
termination or modification shall not affect rights previously
accrued. Participation in the Plan shall not be deemed to be an
employment contract. A participant's rights and benefits under
the Plan may not be assigned, pledged, or encumbered by the
participant, his estate or beneficiary. The Plan Administrator
will make such decisions, rules and regulations as are necessary
to administer the Plan and interpret the provisions of the Plan.
6. Funding. There will be no funding of any amounts to be
paid pursuant to this Plan; provided, however, that the
Corporation, in its discretion, may establish a trust to pay such
amounts, which trust shall be subject to the claims of the
Corporation's creditors in the event of the Corporation's
bankruptcy or insolvency; and provided, further, that the
Corporation shall remain responsible for the payment of any such
amounts which are not so paid by any such trust.
<PAGE>
7. Definitions of Cause and Change in Control.
"Cause" for termination from the EEC Group of a Key Person's
employment (for purposes of this Plan), after any Change in
Control, shall mean (i) the willful and continued failure by the
Key Person to substantially perform the Key Person's duties with
the Member that employs the Key Person (other than any such
failure resulting from the Key Person's incapacity due to
physical or mental illness) after a written demand for
substantial performance is delivered to the Key Person by the
Board of Directors of that Member, which demand specifically
identifies the manner in which the Board of Directors of that
Member believes that the Key Person has not substantially
performed the Key Person's duties, or (ii) the willful engaging
by the Key Person in conduct which is demonstrably and materially
injurious to any Member, monetarily or otherwise. For purposes
of clauses (i) and (ii) of this definition, no act, or failure to
act, on the Key Person's part shall be deemed "willful" unless
done, or omitted to be done, by the Key Person not in good faith
and without reasonable belief that the Key Person's act, or
failure to act, was in the best interest of the EEC Group.
A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs
shall have been satisfied:
(i) any Person (as defined in this Paragraph 7) is or
<PAGE>
becomes the Beneficial Owner (as defined in this Paragraph
7), directly or indirectly, of securities of EEC (not
including in the securities beneficially owned by such
Person any securities acquired directly from EEC or its
affiliates) representing 25% or more of the combined voting
power of the EEC's then outstanding securities; or
(ii) during any period of two consecutive years (not
including any period prior to May 1, 1998), individuals who
at the beginning of such period constitute the Board of
Directors of EEC and any new director (other than a director
designated by a Person who has entered into an agreement
with EEC to effect a transaction described in paragraph (i),
(iii) or (iv) of this Change in Control definition or a
director 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 solicitations of proxies or consents by
or on behalf of a Person other than the Board of Directors
of EEC) whose election by the Board of Directors of EEC or
nomination for election by EEC's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning
of the period or whose election or nomination for election
was previously so approved, cease for any reason to
constitute a majority thereof; or
(iii) the shareholders of EEC approve a merger or
consolidation of EEC with any other corporation, other than
(x) a merger or consolidation which would result in the
voting securities of EEC outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of
any trustee or other fiduciary holding securities under an
employee benefit plan of EEC or a subsidiary of EEC, at
least 75% of the combined voting power of the voting
securities of EEC or such surviving entity outstanding
immediately after such merger or consolidation or (y) a
merger or consolidation effected to implement a
recapitalization of EEC (or similar transaction) in which no
Person acquires more than 50% of the combined voting power
of EEC's then outstanding securities; or
(iv) the shareholders of EEC approve a plan of
complete liquidation of EEC or an agreement for the sale or
disposition by EEC of all or substantially all EEC's assets.
For purposes of the definition of Change in Control in
this Paragraph 7:
"Beneficial Owner" shall have the meaning
defined in Rule 13d-3 under the Exchange Act.
<PAGE>
"Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to
time.
"Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include (i) EEC or any
of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under any employee
benefit plan of EEC or any of its subsidiaries,
(iii) an underwriter temporarily holding
securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly
or indirectly, by the stockholders of EEC in
substantially the same proportions as their
ownership of stock of EEC.
<PAGE>
IN WITNESS WHEREOF OF THE ADOPTION OF THIS AMENDED AND
RESTATED PLAN, NYSEG has set its hand and seal to this amended
and restated plan as of the 1st day of May, 1998.
NEW YORK STATE ELECTRIC & GAS
CORPORATION
By___________________________
Title:
Attest _____________________
D.W. Farley
Vice President and
Secretary
<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF TOMPKINS )
I, _________________ a Notary Public in and for the
aforesaid jurisdiction, do hereby certify that _________________,
who is personally known to me to be the person who executed the
foregoing amended and restated NYSEG Supplemental Executive
Retirement Plan, personally appeared before me in the aforesaid
jurisdiction, and as _________________________ of New York State
& Electric & Gas Corporation and by virtue of the power and
authority vested in him, acknowledged the same to be the act and
deed of New York State Electric & Gas Corporation and he executed
the same as such.
Given under my hand and seal this ____ day of ______, 1998.
_______________________
Notary Public
EXHIBIT 10-49
As Amended and Restated
Effective May 1, 1998
NEW YORK STATE ELECTRIC & GAS CORPORATION
ANNUAL EXECUTIVE INCENTIVE PLAN
I. Plan Objective
The objective of the Annual Executive Incentive Plan (the
"Plan") is to provide certain key employees of New York
State Electric & Gas Corporation ("NYSEG") with the
opportunity to earn annual incentive compensation through
superior management performance. Exceptional performance
will promote the future growth and success of NYSEG and
Energy East Corporation ("Energy East") and enhance the
linkage between employee and shareholder interests.
II. Definitions
Wherever used in the Plan, unless the context clearly
indicates otherwise, the following words and phrases shall
have the meanings set forth below:
A. "Plan" shall mean the NYSEG Annual Executive
Incentive Plan as embodied herein and as amended
from time to time.
B. "Participant" shall mean an individual who has
satisfied the eligibility requirements of Article
IV hereof.
C. "Performance Period" shall mean the period
commencing January 1 and ending December 31 of the
same calendar year for which performance is being
measured.
D. "Earnings Per Common Share (Earnings)" shall mean
Energy East's annual net income reduced by
preferred stock dividends and divided by the
average common shares outstanding during the year.
For 1998, Earnings will be determined with
reference to NYSEG and Energy East, as
appropriate.
E. "Threshold Earnings Level" shall mean the minimum
level of Earnings Per Common Share at which an
award may be earned.
F. "Maximum Earnings Level" shall mean the level of
Earnings Per Common Share at which a maximum award
may be earned.
G. "Level of Achievement" shall mean the
Participant's achievement of a Participant's
individual objective for the Performance Period
expressed as a percentage, ranging from zero to
100%.
H. "NYSEG Board" shall mean the Board of Directors of
NYSEG.
<PAGE>
III. Administration
The Plan shall be administered by the Executive Compensation
and Succession Committee (the "Committee") of the Board of
Directors of Energy East (the "Energy East Board") composed
of such members as shall be appointed from time to time by
the Energy East Board. No member of the Committee while
serving as such shall be eligible for participation in the
Plan.
Except as otherwise provided in this Plan, decisions and
determinations by the Committee shall be final and binding
upon all parties. The Committee shall have the authority to
interpret the Plan, to establish and revise rules and
regulations relating to the Plan, and to make any other
determinations that it believes necessary or advisable for
the administration of the Plan.
IV. Eligibility
Eligibility for participation in the Plan is limited to
officers of NYSEG holding the positions set forth below,
plus any other employee of NYSEG who is approved for
participation by the Chairman of NYSEG. Participants shall
be grouped as follows:
Group I Chairman and President
Group II Executive Vice Presidents and Senior Vice
Presidents
Group III Vice Presidents
Group IV All other Participants
In the event that, during the Performance Period an employee
becomes eligible for participation in the Plan, incentive
awards payable under the Plan will be determined based on
length of participation in the Plan measured retroactively
from the first day of the month in which the employee
becomes eligible for participation in the Plan.
In the event that, during the Performance Period a
Participant changes from one eligibility group to another,
incentive awards payable under the Plan will be prorated
based on length of participation in each eligibility group
measured from the first day of the month coinciding with or
following the Participant's change in eligibility.
If during any Performance Period a Participant ceases to be
an employee of NYSEG for any reason, other than disability,
retirement or death, such Participant shall not be entitled
<PAGE>
to receive an award for such Performance Period unless
otherwise determined by the NYSEG Board in its sole
discretion. For the 1998 Performance Period, any
Participant that ceases to be an employee of NYSEG by reason
of a transfer of employment to a subsidiary of Energy East,
such Participant will continue to participate in the Plan at
the position level held by the individual prior to the
transfer of employment to a subsidiary of Energy East and
will be eligible to receive an award for such Performance
Period with employment by the subsidiary treated for
purposes of this Plan as employment by NYSEG. In the event
of disability, retirement or death, the Participant (or his
or her successor in interest) shall be entitled to a
prorated award based on the number of full months of
participation.
Participation in the Plan precludes a Participant's
eligibility in any other annual incentive compensation plan
provided by NYSEG (such as the Performance Plus Plan).
Individuals entering the Plan during a Performance Period
remain eligible to receive prorated awards under other
annual incentive compensation plans provided by NYSEG for
periods prior to their participation in the Plan.
<PAGE>
V. Performance Measurement and Criteria
The Plan uses the financial performance measure of Earnings
Per Common Share (Earnings) in determining whether incentive
awards may be earned by Participants. A Threshold Earnings
Level, a Maximum Earnings Level and individual objectives
for each Participant will be established for each
Performance Period. The Threshold Earnings Level must be
achieved by Energy East in order for Participants to be
eligible for incentive awards. The actual Earnings level
achieved at or above Threshold Level will then be used to
determine the Participant's Incentive Level Percentage in
accordance with the provisions of Article VII. A
Participant's actual award will also depend on the
Participant's Level of Achievement of the Participant's
individual objectives for the Performance Period, as further
set forth in Article VII.
VI. Objective Setting
A. Corporate
Performance objectives will be established annually (or for
an individual who becomes eligible to participate in the
Plan while a Performance Period is in progress in accordance
with Item C below) upon a recommendation of the Chairman of
<PAGE>
NYSEG which recommendation shall be approved by the NYSEG
Board.
B. Adjustments
The NYSEG Board may adjust the size of incentive awards in
its discretion for extraordinary events if it determines
that such adjustment is necessary for the benefit of NYSEG.
C. Timing
The Threshold and Maximum Earnings Levels and the individual
objectives for each Participant for the yearly Performance
Period are to be established not later than the end of
February, retroactive to the first of that year.
Performance objectives for individuals who become eligible
to participate in the Plan while the yearly Performance
Period is in progress are to be established at such time as
the NYSEG Board determines it necessary for the benefit of
NYSEG.
VII. Determination of Incentive Award
At the conclusion of each Performance Period a determination
will be made by the Committee as to the Earnings level
<PAGE>
achieved by Energy East. The achievement of an Earnings
level at or above the Threshold Earnings Level is the first
step in qualifying Participants for an incentive award.
Each Participant has Threshold and Maximum Incentive Level
Percentages assigned to the Participant's Group, as defined
in Article IV, based on that Group's potential impact on
NYSEG's performance. The Threshold and Maximum Incentive
Level Percentages by Group for the 1998 Performance Period
and thereafter are as follows:
Threshold Incentive Maximum Incentive
Group Level Percentages Level Percentages
I 50% 60%
II 40% 50%
III 30% 40%
IV 20% 30%
A Participant's Incentive Level Percentage will depend on
the Earnings level achieved by Energy East for each
Performance Period. If only the Threshold Earnings Level is
achieved, the Participant's Incentive Level Percentage will
be the Threshold Incentive Level Percentage for the
Participant's Group. If the Maximum Earnings Level is met
or exceeded, the Participant's Incentive Level Percentage
<PAGE>
will be the Maximum Incentive Level Percentage for the
Participant's Group. When the Earnings level achieved by
Energy East is greater than the Threshold Earnings Level but
less than Maximum Earnings Level, the Participant's
Incentive Level Percentage will be calculated based on a
corresponding interpolation between Threshold and Maximum
Incentive Level Percentages for the Participant's Group.
Each Participant will be assigned individual objectives for
the Performance Period which will be used to measure
individual performance. Each individual objective will also
be assigned a relative weight, which in the aggregate will
total 100%. To determine the Incentive Award Percentage to
be used in calculating a Participant's Incentive Award, the
weight of each individual objective will be multiplied by
the Participant's Level of Achievement for that objective
with the product further multiplied by the Participant's
Threshold Incentive Level Percentage. The resultant
Incentive Award Percentages for each individual objective
will then be aggregated to determine the Participant's
Incentive Award Percentage. The following is an example of
the calculation of an Incentive Award Percentage for a Group
<PAGE>
III Participant at the Threshold Incentive Level Percentage:
<TABLE>
<CAPTION>
Objective Level of Threshold Incentive Incentive Award
Weight Achievement Level Percentage Percentage
<S> <C> <C> <C> <C>
Individual Objective 1 40% x 100% x 30% = 12%
Individual Objective 2 40% x 50% x 30% = 6%
Individual Objective 3 20% x 0% x 30% = 0%
100 % 18%
</TABLE>
To calculate an Incentive Award for a Participant, the
Participant's cumulative Incentive Award Percentage will be
multiplied by the Participant's annual base salary as of the
last day of the Performance Period. The Incentive Award
will be rounded to the nearest whole dollar amount.
Approval of incentive awards will be made by the NYSEG Board
not later than the end of February following the end of each
Performance Period. Distribution of incentive awards will
be made as soon thereafter as practical.
VIII.Incentive Award
Incentive awards will be granted in cash. Participants may
elect, during the year preceding the performance period, to
defer up to 100% of any potential incentive award pursuant
to NYSEG's Deferred Compensation Plan for Salaried
Employees. Incentive awards payable under the Plan will not
be considered as a component of regular earnings or base
compensation for any purpose.
IX. Effective Date
This Plan shall be effective as of January 1, 1996.
<PAGE>
X. Miscellaneous
The NYSEG Board may at any time suspend, terminate, modify
or amend this Plan.
No Participant shall have any claim or right to be granted
an award under this Plan. Participation in the Plan shall
not be deemed an employment contract.
NYSEG shall have the right to deduct from the cash incentive
awards made pursuant to this Plan any taxes required by law
to be withheld with respect to such cash payments.
In the case of a Participant's death, an incentive award
shall be made to his or her designated beneficiary, or in
the absence of such designation, by will or the laws of
descent and distribution.
Except as set forth in the preceding paragraph, a
Participant's rights and benefits under the Plan shall not
be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge,
garnishment, attachment, execution or levy of any kind,
either voluntary or involuntary, including any such
liability which arises from the Participant's bankruptcy or
for the support of a spouse or former spouse or for any
other relative of the Participant prior to the incentive
<PAGE>
award actually being received by the person eligible to
benefit under the Plan. Any attempt at such prohibited
anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, attachment,
execution or levy, shall be void and unenforceable except as
otherwise provided by law.
XI. Payments Upon a Change in Control
A. Calculation of Payments
Notwithstanding any other provisions hereof (including,
without limitation, Article VIII hereof), if a Change in
Control (as defined in Section B of this Article XI) shall
occur, the following shall be paid, in cash, no later than
the tenth (10th) day following such Change in Control:
i) all incentive awards for any completed fiscal year of
Energy East which preceded the Change in Control, which
awards have been finally determined but not yet either (x)
distributed or (y) deferred pursuant to the NYSEG Deferred
Compensation Plan for Salaried Employees,
ii) if, at the time of the Change in Control, the NYSEG
Board has not yet finally determined the incentive awards
with respect to the fiscal year of Energy East immediately
preceding the fiscal year in which the Change in Control
<PAGE>
occurs, an incentive award with respect to such fiscal year,
determined by the NYSEG Board in accordance with the
provisions of the preceding Articles hereof, and
iii) an incentive award with respect to the fiscal year of
Energy East in which the Change in Control occurs which
shall be calculated by (x) assuming that the Threshold
Earnings Level for such fiscal year has been achieved and
that a Participant's Level of Achievement for each
individual objective is one hundred percent, and (y)
multiplying the result so obtained by a fraction the
numerator of which is the number of days elapsed from the
beginning of such fiscal year until the Change in Control
and the denominator of which is three hundred and sixty-five
(365). Notwithstanding anything contained herein to the
contrary, following a Change in Control, the Plan shall
continue in full force and effect, and a Participant shall
be entitled to receive an additional incentive award with
respect to the fiscal year in which the Change in Control
occurs, equal to the excess (if any) of the amount of the
incentive award for such year, determined in accordance with
Article VII hereof, over the amount paid pursuant to the
preceding provision of this paragraph (iii).
<PAGE>
B. Definition of a Change in Control
A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following
paragraphs shall have been satisfied:
i) any Person (as defined in this Section B) is or becomes
the Beneficial Owner (as defined in this Section B),
directly or indirectly, of securities of Energy East (not
including in the securities beneficially owned by such
Person any securities acquired directly from Energy East or
its affiliates) representing 25% or more of the combined
voting power of Energy East's then outstanding securities;
or
ii) during any period of two consecutive years (not
including any period prior to May 1, 1998), individuals who
at the beginning of such period constitute the Energy East
Board and any new director (other than a director designated
by a Person who has entered into an agreement with Energy
East to effect a transaction described in paragraph (i),
(iii) or (iv) of this Change in Control definition or a
director 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 solicitations of proxies or consents by
<PAGE>
or on behalf of a Person other than the Energy East Board)
whose election by the Energy East Board or nomination for
election by Energy East's stockholders was approved by a
vote of at least two thirds (2/3) of the directors then
still in office who either were directors at the beginning
of the period or whose election or nomination for election
was previously so approved, cease for any reason to
constitute a majority thereof; or
iii) the shareholders of Energy East approve a merger or
consolidation of Energy East with any other corporation,
other than (x) a merger or consolidation which would result
in the voting securities of Energy East outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of Energy East or
any of its subsidiaries, at least 75% of the combined voting
power of the voting securities of Energy East or such
surviving entity outstanding immediately after such merger
or consolidation, or (y) a merger or consolidation effected
to implement a recapitalization of Energy East (or similar
transaction) in which no Person acquires more than 50% of
the combined voting power of Energy East's then outstanding
<PAGE>
securities; or
iv) the shareholders of Energy East approve a plan of
complete liquidation of Energy East or an agreement for the
sale or disposition by Energy East of all or substantially
all of Energy East's assets.
For purposes of the definition of Change in Control in this
Section B:
"Beneficial Owner" shall have the meaning defined in Rule
13d-3 under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
"Person" shall have the meaning given in Section 3(a) (9) of
the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof; however, a Person shall not include (i)
Energy East or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit
plan of Energy East or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of Energy East
<PAGE>
in substantially the same proportions as their ownership of
stock of Energy East.
XII. Plan Administration After a Change in Control
Notwithstanding any other provisions of the Plan (including,
without limitation, Articles VI (B) and X hereof), upon and
after the occurrence of a Change in Control, neither the
NYSEG Board, nor the Committee shall be authorized to, and
no termination, suspension, modification or amendment of the
Plan shall be permitted to, amend or modify the terms and
provisions (including, without limitation, the payment
provisions) of any incentive awards theretofore made to
Participants in any way which adversely affects the rights
of such Participants.
EXHIBIT 10-50
As Amended and Restated
Effective May 1, 1998
NEW YORK STATE ELECTRIC & GAS CORPORATION
LONG-TERM EXECUTIVE INCENTIVE SHARE PLAN
I. Plan Objective
The objective of the Long-Term Executive Incentive Share
Plan (the "Plan") is to attract and motivate current and
future executives of New York State Electric & Gas
Corporation ("NYSEG") by providing them with the opportunity
to receive, in addition to current compensation, long-term
incentives which are tied directly to the creation of
shareholder value.
II. Definitions
Wherever used in the Plan, unless the context clearly
indicates otherwise, the following words and phrases shall
have the meanings set forth below:
A. "Plan" shall mean the NYSEG Long-Term Executive
Incentive Share Plan as embodied herein and as amended
from time to time.
B. "Participant" shall mean an individual who has
satisfied the eligibility requirements of Article IV
hereof.
C. "Performance Cycle" shall mean a consecutive three-year
period over which performance is measured. A new
Performance Cycle begins January 1 of each calendar
year.
<PAGE>
D. "Performance Shares" shall mean the "phantom" (not
corporate) shares that are granted to Participants at
the beginning of each Performance Cycle and as
otherwise provided in Article VI hereof.
E. "Dividend Performance Shares" shall mean the "phantom"
(not corporate) shares that accrue in accordance with
Article V hereof during the Performance Cycle.
F. "Salary Grade Midpoint" shall mean the midpoint of each
Plan Participant's salary grade level as of the first
day of the Performance Cycle.
[Effective January 1, 1999, Item F will read as
follows: "Base Salary" shall mean the Participant's
annual base salary as of the first day of the
Performance Cycle.]
G. "Total Shareholder Return (TSR)" shall mean Energy
East's average annual shareholder return for the three
years of a Performance Cycle including change in stock
price, dividends and other distributions to
shareholders.
H. "NYSEG Board" shall mean the Board of Directors of
NYSEG.
I. "Energy East Board" shall mean the Board of Directors
of Energy East Corporation ("Energy East").
<PAGE>
III. Administration
The Plan shall be administered by the Executive Compensation
and Succession Committee (the "Committee") of the Board of
Directors of Energy East composed of such members as shall
be appointed from time to time by the Energy East Board. No
member of the Committee while serving as such shall be
eligible for participation in the Plan.
Except as otherwise provided in this Plan, decisions and
determinations by the Committee shall be final and binding
upon all parties. The Committee shall have the authority to
interpret the Plan, to establish and revise rules and
regulations relating to the Plan, and to make any other
determinations that it believes necessary or advisable for
the administration of the Plan.
IV. Eligibility
Eligibility for participation in the Plan is limited to
officers of NYSEG holding the positions set forth below.
Each Plan Participant has an incentive level assigned by
Class based on the Class's potential impact on NYSEG's
performance which will be used in determining initial awards
of Performance Shares.
<PAGE>
Participants shall be divided into the following Classes for
purposes of initial awards of Performance Shares:
Incentive
Class Position Level
I Chairman and President 40%
II Executive Vice Presidents & Senior Vice Presidents 30%
III Vice Presidents 20%
V. Performance Shares and Dividend Performance Shares
All Performance Shares granted to a Participant shall be
credited to a Performance Share Account which shall be
maintained for the Participant. On each common stock
dividend payment date of Energy East, Dividend Performance
Shares, including fractional Dividend Performance Shares
computed to four decimal places, shall be credited to each
Participant's Performance Share Account. The number of
Dividend Performance Shares to be credited shall be
calculated by first determining the amount of dividends that
would be paid by Energy East upon all Performance Shares and
Dividend Performance Shares held for the Participant as if
such shares actually were issued and outstanding common
stock of Energy East. The amount of dividends so determined
shall then be divided by the price per share paid by Energy
East's dividend reinvestment plan for common stock that was
purchased by said plan with respect to the common stock
dividend payment date for which the Dividend Performance
Shares are being credited. The quotient of said division is
<PAGE>
the number of Dividend Performance Shares which shall be
credited to a Participant's Performance Share Account.
An award of Performance Shares or Dividend Performance
Shares under the Plan shall not entitle the recipient to any
actual dividend or voting rights or any other rights of a
shareholder with respect to such Performance Shares or
Dividend Performance Shares.
VI. Initial Plan Grants
An initial grant of Performance Shares will be made to a
Participant at the beginning of each Performance Cycle. The
initial grant will be determined by multiplying a
Participant's Salary Grade Midpoint on the first day of the
Performance Cycle by an incentive factor based on a
Participant's Class as set forth in Article IV and then
dividing said product by the average of the last five
trading days closing prices of NYSEG s common stock in the
preceding calendar year.
[Effective January 1, 1999, the above sentence will read as
follows: The initial grant will be determined by
multiplying a Participant's Base Salary on the first day of
the Performance Cycle by an incentive factor based on a
Participant's Class as set forth in Article IV and then
dividing said product by the average of the last five
<PAGE>
trading days' closing prices of Energy East's common stock
in the preceding calendar year.]
Individuals who become eligible to participate in the Plan
while one or more Performance Cycles are in progress will
receive an initial grant of Performance Shares only for the
Performance Cycle that began in the same calendar year that
the individual became a Participant. The initial grant
shall be based on the Salary Grade Midpoint that was in
effect for the Participant's new salary grade on the first
day of the Performance Cycle multiplied by an incentive
level based on the Participant's Class as set forth in
Article IV with the product then divided by the average of
the last five trading days closing prices of NYSEG's common
stock prior to the beginning of the Performance Cycle.
[Effective January 1, 1999, the above sentence will read as
follows: The initial grant shall be based on the
Participant's new Base Salary on the first day of the
Performance Cycle multiplied by an incentive level based on
the Participant's Class as set forth in Article IV with the
product then divided by the average of the last five trading
days' closing prices of Energy East's common stock prior to
the beginning of the Performance Cycle.] The initial grant
will then be prorated based on the number of full months
remaining out of a possible 36 months in the Performance
<PAGE>
Cycle that the Participant is eligible to participate in the
Plan.
A Participant who is promoted into a higher Class, or salary
grade within a Class, while one or more Performance Cycles
are in progress will receive a grant of additional
Performance Shares only for the Performance Cycle that began
in the calendar year of the promotion. As of the effective
date of the promotion, a Participant shall receive
additional Performance Shares based on the Participant's new
Class and/or Salary Grade Midpoint calculated pursuant to
the following formula: First, the Participant's Salary
Grade Midpoint as of the effective date of the promotion
shall be multiplied by an incentive level based on the
Participant's Class as set forth in Article IV as of the
effective date of the promotion. [Effective January 1,
1999, the above sentence will read as follows: As of the
effective date of the promotion, a Participant shall receive
additional Performance Shares based on the Participant's new
Class and/or Base Salary calculated pursuant to the
following formula: First, the Participant's Base Salary as
of the effective date of the promotion shall be multiplied
by an incentive level based on the Participant's Class as
set forth in Article IV as of the effective date of the
promotion.] From this product shall be subtracted the
product of the Participant's Salary Grade Midpoint at the
<PAGE>
beginning of the calendar year of the promotion (or if the
Participant received a prior promotion in the same calendar
year, the Participant's Salary Grade Midpoint as of the
effective date of the prior promotion) multiplied by an
incentive level based on the Participant's Class as set
forth in Article IV at the beginning of the calendar year of
the promotion (or in the case of a prior promotion in the
same calendar year, the effective date of the prior
promotion). [Effective January 1, 1999, the above sentence
will read as follows: From this product shall be subtracted
the product of the Participant's Base Salary at the
beginning of the calendar year of the promotion (or if the
Participant received a prior promotion in the same calendar
year, the Participant's Base Salary as of the effective date
of the prior promotion) multiplied by an incentive level
based on the Participant's Class as set forth in Article IV
at the beginning of the calendar year of the promotion (or
in the case of a prior promotion in the same calendar year,
the effective date of the prior promotion).] This
difference shall then be divided by the average of the last
five trading days' closing prices of either NYSEG's or
Energy East's common stock, as applicable, prior to the
effective date of the promotion. The resulting quotient
shall then be prorated based on the number of full months
remaining out of a possible 36 months in the Performance
Cycle that the Participant is eligible to participate in the
<PAGE>
Plan. Such grant of additional Performance Shares will be
in addition to shares granted at the beginning of the
Performance Cycle that began in the calendar year of the
promotion. No additional Performance Shares will be granted
in connection with Performance Cycles which may be running
concurrently but which began in prior years.
VII. Termination of Employment
If during the term of the Plan, a Participant ceases to be
an employee of NYSEG by reason of death, retirement,
disability (as defined in NYSEG's long-term disability
plan), or termination without cause, the Participant (or his
or her successor in interest) shall remain a Participant in
the Plan and eligible for incentive award payments pursuant
to Article IX for all Performance Cycles which were in
progress while the Participant was an employee. All
Performance Shares and Dividend Performance Shares in such
Participant's Performance Share Account will continue to
accrue Dividend Performance Shares in accordance with
Article V. At the conclusion of each Performance Cycle any
incentive award payments to be made under the Plan will be
prorated based on the number of full months that the
Participant was an employee during the Performance Cycle;
provided, however, that if a Participant ceases to be an
employee for the reasons set forth above at any time during
<PAGE>
1996, the Participant will be deemed to have been an
employee for all of 1996.
For a Participant that ceases to be an employee by reason of
transfer in employment to another subsidiary of Energy East,
the Participant will continue to participate in the Plan at
the position level held by the individual prior to the
transfer in employment, with employment by the subsidiary
treated for purposes of the Plan as employment by NYSEG for
all Performance Cycles which were in progress in the year in
which the transfer in employment occurred. Such
Participant, however, shall not be eligible for awards for
any Performance Cycles that commence after the transfer of
employment occurs.
If a Participant leaves the employ of NYSEG (or in the case
of an individual described in the prior paragraph, the
subsidiary of Energy East) voluntarily or involuntarily, for
any reason other than retirement, disability, death,
termination without cause, the Participant shall forfeit any
payment opportunity for the Performance Cycles in progress
and the Performance Shares and Dividend Performance Shares
in the Participant's Performance Share Account shall be
forfeited and canceled, unless the NYSEG Board determines
otherwise.
<PAGE>
VIII.Performance Measurement and Criteria
The Plan uses one comparative performance measure as the
basis for determining incentive award payments to
Participants. This measure compares Energy East's average
TSR for the three year period of a Performance Cycle to the
average total shareholder return for such three year period
of each of the top 100 utilities (including any utility
holding companies) by revenue in the United States, such
utilities to include electric, gas and combination utilities
("top 100 utilities"). The NYSEG Board may adopt any other
measurers to define the top 100 utilities. Energy East's
performance is based on Energy East's percentile ranking of
TSR for the Performance Cycle ("Percentile Ranking"). The
top 100 utilities shall be determined for each Performance
Cycle at the commencement of each Performance Cycle. For
all periods prior to May 1, 1998, the TSR of NYSEG shall be
deemed to be Energy East's TSR.
Each Performance Cycle is three years in length, with a new
Performance Cycle beginning on January 1 of each calendar
year and ending on December 31 of the third year. Cash
payments payable under the Plan shall be paid only at the
end of a Performance Cycle. A Participant is not entitled
to receive any payments prior to the completion of a
Performance Cycle.
<PAGE>
The following Performance Schedule sets forth an Award
Percentage ( Award Percentage") for Energy East's
achievement of various Percentile Rankings (where 100% is
the worst percentile ranking and 1% is the best percentile
ranking). The Award Percentage shall be used to calculate
the amount of incentive award payments in accordance with
Article X.
Energy East Energy East
Percentile Award Percentile Award
Ranking Percentage Ranking Percentage
Below 65% 0%
65% 25.0% 42% 113.3%
64% 30.0% 41% 115.0%
63% 35.0% 40% 116.7%
62% 40.0% 39% 118.3%
61% 45.0% 38% 120.0%
60% 50.0% 37% 121.7%
59% 55.0% 36% 123.3%
58% 60.0% 35% 125.0%
57% 65.0% 34% 126.7%
56% 70.0% 33% 128.3%
55% 75.0% 32% 130.0%
54% 80.0% 31% 131.7%
53% 85.0% 30% 133.3%
52% 90.0% 29% 135.0%
51% 95.0% 28% 136.7%
50% 100.0% 27% 138.3%
49% 101.7% 26% 140.0%
48% 103.3% 25% 141.7%
47% 105.0% 24% 143.3%
46% 106.7% 23% 145.0%
45% 108.3% 22% 146.7%
44% 110.0% 21% 148.3%
43% 111.7% 20% or better 150.0%
IX. Determination of Payments
At the conclusion of each Performance Cycle, a determination
will be made by the NYSEG Board of Energy East's Percentile
Ranking within the top 100 utilities. The Performance
Schedule will then be used to determine the applicable Award
Percentage. Interpolation will be applied between those
<PAGE>
ranges listed in the Performance Schedule rounded to the
nearest four decimal places. The Award Percentage will then
be used to determine the incentive award payments in
accordance with Article X. Final determination of incentive
award payments will be approved by the NYSEG Board and will
be made not later than the end of February following the end
of each Performance Cycle. Distribution of incentive award
payments will be made as soon thereafter as practical.
X. Incentive Award Payments
Incentive award payments will be made only in cash.
Incentive award payments will be calculated by multiplying
the Award Percentage as determined in Article VIII by the
number of Performance Shares and Dividend Performance Shares
in a Participant's Performance Share Account accumulated for
that Performance Cycle and multiplying the product by the
closing price of Energy East's common stock calculated as
the average of the last five trading days closing prices of
the Performance Cycle.
If on the basis of the Performance Schedule, a cash payment
for only a portion of the Performance Shares and Dividend
Performance Shares accumulated during a Performance Cycle is
to be made, then the remaining portion of the Performance
Shares and Dividend Performance Shares accumulated for that
Performance Cycle will be forfeited and canceled.
XI. Dilution and Other Adjustments
In the event of any change in the outstanding shares of
common stock of Energy East by reason of any stock dividend
or split, recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares or other
similar corporate change, if the Committee shall determine,
<PAGE>
in its sole discretion, that such change equitably requires
an adjustment in the number of Performance Shares then held
in Participants' Performance Share Accounts or which may be
awarded to any employee, or an adjustment in the number of
Dividend Performance Shares then held in Participants'
Performance Share Accounts, such adjustments shall be made
by the Committee and shall be conclusive and binding for all
purposes of the Plan. Notwithstanding anything to the
contrary contained herein, in connection with a binding
share exchange between NYSEG and Energy East on the
effective date of the binding share exchange, the
Performance Shares and Dividend Performance Shares held in
each Participant's Performance Share Account will, without
further action, be deemed to be converted into the
equivalent number of Performance Shares and Dividend
Performance Shares of Energy East, with the same terms and
conditions as set forth herein.
XII. Amendments and Termination
The NYSEG Board may at any time suspend, terminate, modify
or amend this Plan.
XIII.Miscellaneous Provisions
A. In the case of a Participant's death, payments with
respect to Performance Shares and Dividend Performance
Shares shall be made to his or her designated
beneficiary, or in the absence of such designation, by
will or the laws of descent and distribution.
B. Except as set forth in A. above, a Participant's rights
and benefits under the Plan shall not be subject in any
manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment,
attachment, execution or levy of any kind, either
<PAGE>
voluntary or involuntary, including any such liability
which arises from the Participant's bankruptcy or for
the support of a spouse or former spouse or for any
other relative of the Participant prior to incentive
award payments actually being received by the person
eligible to benefit under the Plan. Any attempt at such
prohibited anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment,
attachment, execution or levy, shall be void and
unenforceable except as otherwise provided by law.
C. No Participant shall have any claim or right to be
granted an award under this Plan. Neither this Plan nor
any action taken hereunder shall be construed as giving
a Participant any right to be retained in the employ of
NYSEG.
D. NYSEG shall have the right to deduct from the cash
payments made pursuant to Article X any taxes required
by law to be withheld with respect to such cash
payments.
E. The NYSEG Board or the Committee may adopt procedures
allowing Participants to defer any payments they will be
entitled to receive under this Plan.
F. Payments with respect to Performance Shares and Dividend
Performance Shares will not be considered as a component
of regular earnings or base compensation for any
purpose.
XIV. Effective Date
The Plan shall be effective as of January 1, 1996.
<PAGE>
XV. Payments upon and after a Change in Control
A. Calculation of Payments. Notwithstanding any other
provisions of this Plan (including, without limitation,
Article XIII(E) hereof), if a Change in Control (as
defined in Section C of this Article XV) shall occur,
the following shall be paid, in cash, no later than the
tenth (10th) day following such Change in Control:
(i) amounts which have already been determined to be
payable pursuant to Article IX hereof, based on Energy
East's Percentile Ranking for any completed Performance
Cycle which preceded the Change in Control, which
amounts have not yet been paid (or deferred pursuant to
procedures established in accordance with Article
XIII(E) hereof),
(ii) if, at the time of the Change in Control, the NYSEG
Board has not yet determined Energy East's Percentile
Ranking with respect to the Performance Cycle ending on
the December 31 immediately preceding the Change in
Control, amounts determined by the NYSEG Board to be
payable, based on its calculation (in accordance with
the provisions of the preceding Articles hereof) of
Energy East's Percentile Ranking with respect to the
Performance Cycle ending on the December 31 immediately
preceding the Change in Control, and
(iii) amounts, which might otherwise subsequently be
determined by the NYSEG Board to be payable for the
Performance Cycles existing on the date on which the
Change in Control occurs, calculated based on an assumed
Percentile Ranking of 50%.
(iv) for purposes of the incentive awards payable
pursuant to paragraph (iii) of this Section A, the
<PAGE>
calculation of the payments shall be made using the
"Change-in-Control Price" of Energy East's common stock.
For this purpose, "Change-in-Control Price" means the
higher of (x) the highest reported sales price, regular
way, of a share of Energy East's common stock in any
transaction reported on the New York Stock Exchange
Composite Tape or other national exchange on which such
shares are listed or on the NASDAQ during the 60-day
period prior to and including the date of a Change in
Control or (y) if the Change in Control is the result of
a tender or exchange offer or approval of a merger or
consolidation, the highest price per share of common
stock paid or to be paid in such tender or exchange
offer or merger or consolidation. To the extent that
the consideration paid in any such transaction described
above consists all or in part of securities or other
non-cash consideration, the value of such securities or
other non-cash consideration shall be determined based
on the public trading value of such property or, if such
property is not publicly traded, by the NYSEG Board
based on reasonable assumptions.
B. Forfeitures After a Change in Control. Notwithstanding
anything contained herein to the contrary, following a
Change in Control, the Plan shall continue in full force
and effect, and a Participant shall be entitled to
receive incentive award payments for outstanding
Performance Shares and Dividend Performance Shares with
respect to any Performance Cycle that begins before and
ends after the Change in Control, equal to the excess of
(i) the amount determined in accordance with Articles IX
and X hereof over (ii) the amount previously paid with
respect to such Performance Cycle pursuant to paragraph
(iii) of Section A above.
<PAGE>
C. Definition of a Change in Control. A "Change in
Control" shall be deemed to have occurred if the
conditions set forth in any one of the following
paragraphs shall have been satisfied:
(i) any Person (as defined in this Section C) is or
becomes the Beneficial Owner (as defined in this Section
C), directly or indirectly, of securities of Energy East
(not including in the securities beneficially owned by
such Person any securities acquired directly from Energy
East or its affiliates) representing 25% or more of the
combined voting power of Energy East's then outstanding
securities; or
(ii) during any period of two consecutive years (not
including any period prior to May 1, 1998), individuals
who at the beginning of such period constitute the
Energy East Board and any new director (other than a
director designated by a Person who has entered into an
agreement with Energy East to effect a transaction
described in paragraph (i), (iii) or (iv) of this Change
in Control definition or a director 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
solicitations of proxies or consents by or on behalf of
a Person other than the Energy East Board) whose
election by the Energy East Board or nomination for
election by Energy East's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the
beginning of the period or whose election or nomination
for election was previously so approved, cease for any
reason to constitute a majority thereof; or
<PAGE>
(iii) the shareholders of Energy East approve a merger
or consolidation of Energy East with any other
corporation, other than (x) a merger or consolidation
which would result in the voting securities of Energy
East outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an
employee benefit plan of Energy East or any of its
subsidiaries, at least 75% of the combined voting power
of the voting securities of Energy East or such
surviving entity outstanding immediately after such
merger or consolidation, or (y) a merger or
consolidation effected to implement a recapitalization
of Energy East (or similar transaction) in which no
Person acquires more than 50% of the combined voting
power of Energy East's then outstanding securities; or
(iv) the shareholders of Energy East approve a plan of
complete liquidation of Energy East or an agreement for
the sale or disposition by Energy East of all or
substantially all of Energy East's assets.
For purposes of the definition of Change in Control in this
Section C:
"Beneficial Owner" shall have the meaning defined in
Rule 13d-3 under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
<PAGE>
"Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; however, a Person shall not
include (i) Energy East or any of its subsidiaries, (ii)
a trustee or other fiduciary holding securities under an
employee benefit plan of Energy East or any of its
subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by
the stockholders of Energy East in substantially the
same proportions as their ownership of stock of Energy
East.
XVI. Plan Administration After a Change in Control
Notwithstanding any other provisions of the Plan (including,
without limitation, Articles III and XII hereof), upon and
after the occurrence of a Change in Control, neither the
NYSEG Board, nor the Committee, shall be authorized to, and
no termination, suspension, modification or amendment of the
Plan shall be permitted to, amend or modify the terms and
provisions (including, without limitation, the payment
provisions) of any awards theretofore made to Participants
in any way which adversely affects the rights of such
Participants.
EXHIBIT 10-51
AMENDMENT NO. ___ TO SEVERANCE AGREEMENT
THIS AMENDMENT NO. ___ TO SEVERANCE AGREEMENT (the
"Amendment"), dated as of May 1, 1998, is made and entered into
by and between New York State Electric & Gas Corporation, a New
York corporation (the "Company"), and _____________ (the
"Executive"), and amends certain provisions of the Agreement,
dated as of _____________, as amended (the "Agreement"), by and
between the Company and the Executive.
WHEREAS, the Company has become a subsidiary of Energy East
Corporation, a New York corporation ("Energy East"), on May 1,
1998 and wishes to amend the Severance Agreement in connection
therewith.
NOW THEREFORE, the parties hereto agree as follows:
1. Except as otherwise provided herein, all references
in Sections 15(E), 15(P) and 15(Q), and the first reference in
the second sentence of Section 6.1 of the Agreement to "the
Company" shall be deemed to refer to Energy East.
2. Section 6.1(C) of the Agreement is amended by adding
after the words "Supplemental Executive Retirement Plan" wherever
they appear in such section the words "(or any successor plan").
3. Section 11 of the Agreement is renumbered Section
11.1 and a new Section 11.2 is added to the Agreement to read in
its entirety as follows:
"11.2 References in this Agreement to employee benefit
plans, compensation plans, incentive plans, pension plans,
disability policies or similar plans, programs or
arrangements of the Company include such plans, programs or
arrangements of Energy East if maintained for the benefit
of employees of the Company."
4. Sections 15(E)(II) and 15(Q)(IV) of the Agreement are
amended by adding after the word "Board" wherever it may appear
in such sections the words "of Directors of Energy East".
5. Section 15(E)(III) of the Agreement is amended by
replacing the words "employee benefit plan of the Company," in
such section with the words "employee benefit plan of Energy East
or any of its subsidiaries,".
6. Section 15(H) of the Agreement is amended by deleting
the parenthetical phrase thereof.
7. Section 15(J) of the Agreement is amended by adding
after the words "Disability Policy for Salaried Employees" the
words "(or any successor policy)".
<PAGE>
8. A new section 15(V) is added to the Agreement to read
in its entirety as follows:
"(V) "Energy East" shall mean Energy East Corporation, a
New York corporation."
9. Except as expressly modified hereby, the terms and
provisions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment
to be duly executed and delivered as of the date first above
written.
NEW YORK STATE ELECTRIC &
GAS CORPORATION
By:________________________
Name:
Title:
___________________________
(the "Executive")
EXHIBIT 10-52
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of
August 1, 1998 (the "Agreement"), by and among Energy East
Corporation, a New York corporation ("Energy East"), New York
State Electric & Gas Corporation, a New York corporation (the
"Company") and Wesley W. von Schack (the "Executive"), amends and
restates that certain Employment Agreement dated August 7, 1996,
as amended, between the Company and the Executive.
The Board of Directors of Energy East and the Board of
Directors of the Company desire to provide for the employment of
the Executive as a member of the management of Energy East and
the Company, in the best interest of Energy East and its
shareholders. The Executive is willing to commit himself to
serve Energy East and the Company, on the terms and conditions
herein provided.
In order to effect the foregoing, Energy East, the Company
and the Executive wish to enter into an employment agreement on
the terms and conditions set forth below. Accordingly, in
consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Defined Terms. The definitions of capitalized terms
used in this Agreement, unless otherwise defined herein, are
provided in the last Section hereof.
2. Employment. Energy East and the Company hereby agree
to employ the Executive, and the Executive hereby agrees to serve
Energy East and the Company, on the terms and conditions set
forth herein, during the term of this Agreement (the "Term").
3. Term of Agreement. The Term will commence on September
9, 1996 and end on September 8, 1999, unless further extended as
hereinafter provided. Commencing on September 9, 1997 and each
September 9 thereafter, the Term of this Agreement shall
automatically be extended for one (1) additional year unless, not
later than the June 8 immediately preceding each such September
9, Energy East (upon authorization by the Board) or the Executive
shall have given notice not to extend this Agreement; provided,
however, if a Change-in-Control shall have occurred during the
Term of this Agreement, Sections 5.4, 6, 7 and 10 through 20 of
this Agreement and the second and third paragraphs of Section 5.2
of this Agreement shall continue in effect until at least the end
of the Change-in-Control Protective Period (whether or not the
Term of the Agreement shall have expired for other purposes).
<PAGE>
4. Position and Duties. The Executive shall serve as
Chairman, President and Chief Executive Officer of Energy East,
and as Chairman, President and Chief Executive Officer of the
Company and shall have such responsibilities, duties and
authority that are consistent with such positions as may from
time to time be assigned to the Executive by the Board or by the
NYSEG Board. The Executive shall devote substantially all his
working time and efforts to the business and affairs of Energy
East and the Company; provided, however, that the Executive may
also serve on the boards of directors or trustees of other
companies and organizations, as long as such service does not
substantially interfere with the performance of his duties
hereunder.
5. Compensation and Related Matters.
5.1 Base Salary. The Company shall pay the Executive
a base salary ("Base Salary") during the period of the
Executive's employment hereunder, which shall be at an initial
rate of Five Hundred Seventy-Five Thousand Dollars ($575,000.00)
per annum. The Base Salary shall be paid in substantially equal
bi-weekly installments, in arrears. The Base Salary may be
discretionarily increased by the Board from time to time as the
Board deems appropriate in its reasonable business judgment. The
Base Salary in effect from time to time shall not be decreased
during the Term. During the period of the Executive's employment
hereunder, the Board shall make an annual review of the
Executive's compensation.
Compensation of the Executive by Base Salary payments
shall not be deemed exclusive and shall not prevent the Executive
from participating in any other compensation or benefit plan of
Energy East or the Company. The Base Salary payments (including
any increased Base Salary payments) hereunder shall not in any
way limit or reduce any other obligation of Energy East or the
Company hereunder, and no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of the
Company to pay the Executive's Base Salary hereunder.
5.2 Benefit Plans. The Executive shall be entitled to
participate in or receive benefits under any "employee benefit
plan" (as defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended from time to time
("ERISA")) or employee benefit arrangement made available by
Energy East or the Company now or during the period of the
Executive's employment hereunder to their executives and key
management employees, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans
and arrangements; provided, however, that there shall be no
duplication of the benefits created by this Agreement. The
<PAGE>
Executive's participation in such employee benefit plans and
arrangements shall be on an appropriate level, as determined by
the Board or the NYSEG Board, as appropriate.
If the Executive's service with Energy East or the
Company from September 9, 1996 exceeds five full years, the
Company shall pay to the Executive a monthly pension supplement
that results in the Executive receiving a total monthly pension
based upon two years of service for each of the Executive's first
five years of service. Specifically, the monthly pension
supplement shall be equal to the amount by which (i) the total
monthly payments that would be due to the Executive under the
Company's Retirement Benefit Plan (or any successor plan) and the
Company's Supplemental Executive Retirement Plan (or any
successor plan) if the Executive's monthly benefits under those
two plans were calculated by giving the Executive credit for two
years of service for each of the Executive's actual first five
years of service exceeds (ii) the actual total monthly amounts
that are due under those two plans.
During the Term of this Agreement (or, if later, until
the end of the Change-in-Control Protective Period), the Company
will, on each January 5, beginning January 5, 1997, pay the
premium on a Whole Life Insurance Policy issued by The Guardian
Life Insurance Company of New York, Policy No. 3810692, on the
life of the Executive (the "Life Insurance Policy"); provided
that in no event shall the Company pay on any such date more than
$96,000 toward payment of such premium and provided that the
Company shall not pay such premium if the Executive's employment
has been terminated for any reason prior to such January 5,
except as otherwise provided in Sections 6.1 and 10.1(A) hereof.
5.3 Expenses. Upon presentation of reasonably
adequate documentation to the Company, the Executive shall
receive prompt reimbursement from the Company for all reasonable
and customary business expenses incurred by the Executive in
accordance with the Company policy in performing services
hereunder.
5.4 Vacation. The Executive shall be entitled to five
(5) weeks of vacation during each year of this Agreement, or such
greater period as the Board shall approve, without reduction in
salary or other benefits.
5.5 Transition Payments. Except as otherwise provided
in the second paragraph of this Section 5.5, the Company agrees
to pay to the Executive, as an offset to any losses the Executive
may incur as a result of joining the Company, the sum of $195,000
less any amount the Executive receives, or becomes entitled to
receive, as a bonus for the calendar year 1996 from DQE, Inc. or
<PAGE>
Duquesne Light Company ("Prior Employers"). Such amount shall be
paid to the Executive no later than December 31, 1996. The
Executive agrees to promptly notify the Company of the amount of
any bonus payments he receives, or becomes entitled to receive,
for the calendar year 1996 from the Prior Employers. In the
event the Executive receives, or becomes entitled to receive, any
bonus payment for the calendar year 1996 from the Prior Employers
after payment by the Company as provided in this Section 5.5 has
been made, the Executive will promptly remit to the Company the
amount received or that he becomes entitled to receive.
The Company agrees to make a payment in an amount not
to exceed $96,000 in connection with the transfer of the Life
Insurance Policy from DQE, Inc. to the Company; provided that, if
the Company makes a payment of more than $40,170, the amount in
excess of $40,170 shall be deducted from the amount that the
Company is required to pay to the Executive pursuant to the first
paragraph of this Section 5.5.
The Company agrees to reimburse the Executive in
accordance with the Company's Employee Relocation Policy for any
moving expenses he incurs in moving himself and his family from
Pittsburgh, PA to upstate New York.
6. Compensation Related to Disability or Termination
(Other Than Certain Post-Termination Payments).
6.1 During the Term of this Agreement (or, if later,
at any time prior to the end of the Change-in-Control Protective
Period), during any period that the Executive fails to perform
the Executive's full-time duties with Energy East or the Company
as a result of incapacity due to physical or mental illness, the
Company shall pay the Executive's Base Salary to the Executive at
the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the
Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by Energy East or the Company
during such period, until the Executive's employment is
terminated by Energy East for Disability; provided, however, that
such Base Salary payments shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior to the time
of any such Base Salary payment under disability benefit plans of
Energy East or the Company or under the Social Security
disability insurance program, which amounts were not previously
applied to reduce any such Base Salary payment; and provided
further, however, that if the Executive's employment is
terminated by Energy East for Disability, the Company will pay
through the end of the Term of this Agreement (or, if later,
until the end of the Change-in-Control Protective Period), the
amount the Company agreed to pay in connection with the Life
<PAGE>
Insurance Policy referred to in the third paragraph of Section
5.2 hereof. Subject to Sections 7, 8, 9 and 10 hereof, after
completing the expense reimbursements required by Section 5.3
hereof and making the payments and providing the benefits
required by this Section 6.1, Energy East and the Company shall
have no further obligations to the Executive under this
Agreement.
6.2 If the Executive's employment shall be terminated
for any reason during the Term of this Agreement (or, if later,
prior to the end of the Change-in-Control Protective Period), the
Company shall pay the Executive's Base Salary (to the Executive
or in accordance with Section 14.2 if the Executive's employment
is terminated by his death) through the Date of Termination at
the rate in effect at the time the Notice of Termination is
given, together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of any
compensation or benefit plan, program or arrangement maintained
by Energy East or the Company during such period. Subject to
Sections 6.1, 7, 8, 9 and 10 hereof, after completing the expense
reimbursements required by Section 5.3 hereof and making the
payments and providing the benefits required by this Section 6.2,
Energy East and the Company shall have no further obligations to
the Executive under this Agreement.
7. Normal Post-Termination Payments Upon Termination of
Employment. If the Executive's employment shall be
terminated for any reason during the Term of this Agreement (or,
if later, prior to the end of the Change-in-Control Protective
Period), the Company shall pay the Executive's normal post-
termination compensation and benefits to the Executive as such
payments become due. Subject to Section 10.1 hereof and the
second paragraph of Section 5.2 hereof, such post-termination
compensation and benefits shall be determined under, and paid in
accordance with, Energy East's or the Company's retirement,
insurance and other compensation or benefit plans, programs and
arrangements (other than this Agreement).
8. Termination of Employment (During the Term and Prior to
a Change-in-Control) by Energy East Without
Cause. If Energy East shall terminate the Executive's
employment during the Term and prior to a Change-in-Control,
without Cause (and not for Disability or in connection with the
Executive's Retirement or the Executive's death), then in lieu of
any further salary payments to the Executive for periods
subsequent to the Date of Termination, the Company shall pay to
the Executive, within the five days immediately following the
Date of Termination, a lump sum amount equal to the present value
(calculated using a discount at the appropriate corresponding
United States Treasury Bill rate) of the aggregate Base Salary
otherwise payable to the Executive through the end of the Term.
9. Post-Termination Continuation of Welfare Benefit Plan
Coverage. If the termination of the Executive's
employment is described in Section 8 hereof, Energy East and the
Company shall maintain in full force and effect, for the
continued benefit of the Executive for the number of years
(including partial years) remaining in the Term, each "employee
welfare benefit plan" (as described in Section 3(1) of ERISA) in
which the Executive was entitled to participate immediately prior
to the Date of Termination, provided that the Executive's
continued participation is possible under the general terms and
provisions of such plans. In the event that the Executive's
participation in any such plan is barred, the Company shall
arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been
entitled to receive under the plan from which his continued
participation is barred. For purposes of this Section 9, the
term "employee welfare benefit plan" shall be deemed not to
include the payment by the Company of the amount referred to in
the third paragraph of Section 5.2 hereof with respect to the
Life Insurance Policy.
10. Severance Payments.
10.1 The Company shall pay the Executive the payments
described in this Section 10.1 (the "Severance Payments") upon
the termination of the Executive's employment following a Change-
in-Control and prior to the end of the Change-in-Control
Protective Period, in addition to the payments and benefits
described in Sections 6 and 7 hereof, unless such termination is
(i) by Energy East for Cause, (ii) by reason of death, Disability
or Retirement, or (iii) by the Executive without Good Reason.
For purposes of the immediately preceding sentence, if a
termination of the Executive's employment occurs prior to a
Change-in-Control, but following a Potential Change-in-Control in
which a Person has entered into an agreement with Energy East the
consummation of which will constitute a Change-in-Control, such
termination shall be deemed to have followed a Change-in-Control
and to have been (i) by Energy East without Cause, if the
Executive's employment is terminated without Cause at the
direction of such Person, or (ii) by the Executive with Good
Reason, if the Executive terminates his employment with Good
Reason and the act (or failure to act) which constitutes Good
Reason occurs following such Potential Change-in-Control and at
the direction of such Person.
(A) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination,
in lieu of any lump sum payment with respect to aggregate
Base Salary otherwise payable pursuant to Section 8 hereof,
and in lieu of any severance benefit otherwise payable to
the Executive, the Company shall pay to the Executive a lump
sum severance payment, in cash, equal to three (3) times the
sum of:
(i) the higher of the Executive's annual Base Salary
in effect immediately prior to the occurrence of
the event or circumstance upon which the Notice of
Termination is based or the Executive's annual
Base Salary in effect immediately prior to the
Change-in-Control, and
(ii) the incentive compensation award the Executive
would have received under the Annual Executive
Incentive Plan, or any successor annual executive
incentive compensation plan, for the year in which
the Date of Termination occurs, calculated in
accordance with Article XI (A) (iii) of the Annual
Executive Incentive Plan or any comparable
provision in any successor annual executive
incentive compensation plan, without, however,
giving effect to any pro-rata adjustments
contained in said provisions, and
(iii) the amount the Company agreed to pay in connection
with the Life Insurance Policy referred to in the
third paragraph of Section 5.2 hereof.
(B) Notwithstanding any provision of the Company's
Annual Executive Incentive Plan, or any successor annual
executive incentive compensation plan, the Company shall pay
to the Executive a lump sum amount, in cash, equal to the
sum of (i) any incentive compensation which has been
allocated or awarded to the Executive for a completed fiscal
year preceding the Date of Termination under the Annual
Executive Incentive Plan, or any successor annual executive
incentive compensation plan, but has not yet been either
(x) paid (pursuant to Section 6.2 hereof or otherwise) or
(y) deferred pursuant to the Deferred Compensation Plan for
Salaried Employees, and (ii) a pro-rata portion to the Date
of Termination of the aggregate value of any contingent
incentive compensation award to the Executive for any
uncompleted fiscal year under the Annual Executive Incentive
Plan or any successor annual executive incentive
compensation plan, calculated as to each such award in
accordance with Article XI (A) (iii) of the Annual Executive
Incentive Plan or any comparable provision in any successor
annual executive incentive compensation plan.
<PAGE>
(C) The Company shall pay to the Executive the
retirement benefits to which the Executive is entitled under
the Company's Supplemental Executive Retirement Plan (or any
successor plan), and in determining such benefits, the
Executive shall be given an additional two (2) years of
service credit at the Executive's highest annual rate of
compensation during the twelve (12) months immediately
preceding the Date of Termination and shall be deemed to be
five (5) years older than he is and a "Key Person" as
defined in, and for all purposes under, the Company's
Supplemental Executive Retirement Plan (or any successor
plan); provided that if the Executive does not have at least
ten (10) years of service credit and age eligibility under
the Company's Supplemental Executive Retirement Plan (or any
successor plan) after such additional service and age
credit, the Executive shall be deemed to have at least ten
(10) years of service credit and age eligibility under the
Company's Supplemental Executive Retirement Plan (or any
successor plan); such benefits shall be determined without
regard to any amendment to the Company's Supplemental
Executive Retirement Plan (or any successor plan) made
subsequent to a Change-in-Control and on or prior to the
Date of Termination, which amendment adversely affects in
any manner the computation of retirement benefits
thereunder.
Notwithstanding any provision in the Company's
Supplemental Executive Retirement Plan (or any successor
plan) that may be to the contrary, the benefits otherwise
payable to the Executive pursuant to this Section 10.1(C)
shall be paid to the Executive in a lump sum payment that is
equal in amount to the present value (calculated under
generally accepted actuarial methods that are consistent
with the actuarial methods used in producing the tables of
Appendix A of the Company's Retirement Benefit Plan (or any
successor plan)) of such benefits and such payment shall be
in lieu of any payments to which the Executive otherwise
would have been entitled under the Company's Supplemental
Executive Retirement Plan (or any successor plan) and shall
satisfy any obligations that the Company would otherwise
have to the Executive under the Company's Supplemental
Executive Retirement Plan (or any successor plan). Such
lump sum payment shall be paid to the Executive no later
than the due date of the first payment otherwise due to the
Executive under the Company's Supplemental Executive
Retirement Plan (or any successor plan).
Notwithstanding the immediately preceding paragraph of
this Section 10.1(C), the Executive may elect to have the
benefits otherwise payable to the Executive pursuant to this
<PAGE>
Section 10.1(C) be paid to the Executive in the manner
provided for under the Company's Supplemental Executive
Retirement Plan (or any successor plan) and such method of
payment shall be in lieu of a lump sum payment. The
Executive shall make such election by sending a letter to
the Company in which he states that he has decided to make
such election. The election shall not be effective unless
the letter is received by the Company (i) at least 60 days
prior to the day (the "Change-in-Control Day") that the
Change-in-Control, or Potential Change-in-Control, that
gives rise to the applicability of Section 10.1(C) occurs
and (ii) prior to the first day of the calendar year in
which the Change-in-Control Day occurs. The Executive shall
have the right to revoke any such election by sending a
letter to the Company in which he states that he has decided
to revoke such election. The revocation of such election
shall not be effective unless the letter is received by the
Company (i) at least 60 days prior to the Change-in-Control
Day and (ii) prior to the first day of the calendar year in
which the Change-in-Control Day occurs. If the Executive
revokes an election, he can make a new election (in the
manner, and subject to the timing requirements, set forth in
this paragraph), and he can revoke any such new election (in
the manner, and subject to the timing requirements, set
forth in this paragraph).
(D) For a thirty-six (36) month period after the Date
of Termination, the Company shall arrange to provide the
Executive with life (other than the Life Insurance Policy),
disability, accident and health insurance benefits
substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination
(without giving effect to any reduction in such benefits
subsequent to a Change-in-Control if the Executive
terminated his employment for Good Reason or was terminated
without Cause). Benefits otherwise receivable by the
Executive pursuant to this Section 10.1(D) shall be reduced
to the extent comparable benefits are actually received by
or made available to the Executive without cost during the
thirty-six (36) month period following the Executive's
termination of employment (and any such benefits actually
received by the Executive shall be reported to Energy East
by the Executive). If the benefits provided to the
Executive under this Section 10.1(D) shall result in a
Gross-Up Payment pursuant to Section 10.2, and these Section
10.1(D) benefits are thereafter reduced pursuant to the
immediately preceding sentence because of the receipt of
comparable benefits, the Gross-Up Payment shall be
recalculated so as to reflect that reduction, and the
<PAGE>
Executive shall refund to the Company an amount equal to any
calculated reduction in the Gross-Up Payment, but only if,
and to the extent, the Executive receives a refund of any
Excise Tax previously paid by the Executive pursuant to
Section 10.2 hereof.
10.2 (A) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by Energy East or the Company to or for
the benefit of the Executive on account of a Change-in-Control,
whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise (a "Payment"), would
be subject to the excise tax imposed by Section 4999 of the Code
or any interest or penalties 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 Executive shall be entitled to receive an additional
payment ("Gross-Up Payment") in an amount such that after payment
by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without
limitation, any income taxes and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(B) Subject to the provisions of Section 10.2(C)
hereof, all determinations required to be made under this Section
10.2, including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be used in
arriving at such determinations, shall be made by Energy East's
principal outside accounting firm (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Board
and the Executive within fifteen (15) business days of the Date
of Termination and/or such earlier date(s) as may be requested by
Energy East or the Executive (each such date and the Date of
Termination shall be referred to as a "Determination Date", for
purposes of this Section 10.2(B) and Section 10.3 hereof). All
fees and expenses of the Accounting Firm shall be borne solely by
the Company. The initial Gross-Up Payment, if any, as determined
pursuant to this Section 10.2(B), shall be paid by the Company to
the Executive within five (5) days of the receipt of the
Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure
to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the
Accounting Firm under this Section 10.2(B) shall be binding upon
Energy East, the Company and the Executive. 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
<PAGE>
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 Energy East exhausts its
remedies pursuant to Section 10.2(C) and the Executive 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 Executive.
(C) The Executive shall notify Energy East in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of an
Underpayment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the
Executive is informed in writing of such claim and shall apprise
Energy East of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the thirty (30) day period
following the date on which he gives such notice to Energy East
(or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If Energy East
notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive
shall:
(i) give Energy East any information reasonably
requested by Energy East relating to such claim,
(ii) take such action in connection with contesting
such claim as Energy East 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 Energy East,
(iii) cooperate with Energy East in good faith in order
effectively to contest such claim, and
(iv) permit Energy East to participate in any
proceeding 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 Executive 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 10.2(C),
<PAGE>
Energy East 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 Executive to pay
the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive 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 Energy East shall determine; provided, however, that
if Energy East directs the Executive to pay such claim and sue
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive 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 Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Energy East's control of the
contest shall be limited to issues with respect to which a Gross-
Up Payment would be payable hereunder and the Executive 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 Executive of an
amount advanced by the Company pursuant to Section 10.2(C)
hereof, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to Energy
East's and the Company's complying with the requirements of
Section 10.2(C) hereof) 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
Executive of an amount advanced by the Company pursuant to
Section 10.2(C) hereof, a determination is made that the
Executive shall not be entitled to any refund with respect to
such claim and Energy East does not notify the Executive in
writing of its intent to contest such denial of refund prior to
the expiration of thirty (30) days after such determination, then
such advance shall be forgiven and shall not be required to be
repaid.
10.3 The payments provided for in Section 10.1 hereof
(other than Section 10.1(C) and (D)) shall be made not later than
the fifth day following each Determination Date, provided,
however, that if the amounts of such payments cannot be finally
determined on or before such day, the Company shall pay to the
<PAGE>
Executive on such day an estimate, as determined by the
Executive, of the minimum amount of such payments to which the
Executive is clearly entitled and shall pay the remainder of such
payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day
after each Determination Date. In the event that the amount of
the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the
Company to the Executive, payable on the fifth (5th) business day
after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
10.4 The Company also shall pay to the Executive all
legal fees and expenses incurred by the Executive as a result of
a termination which entitles the Executive to the Severance
Payments (including all such fees and expenses, if any, incurred
in disputing any such termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement
or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to
any payment or benefit provided hereunder). Such payments shall
be made within five (5) business days after delivery of the
Executive's written requests for payment accompanied with such
evidence of fees and expenses incurred as Energy East reasonably
may require.
11. Termination Procedures.
11.1 Notice of Termination. During the Term of this
Agreement (and, if longer, until the end of the Change-in-Control
Protective Period), any purported termination of the Executive's
employment (other than by reason of death) shall be communicated
by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board which
was called and held for the purpose of considering such
termination (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Executive was guilty of conduct
set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.
11.2 Date of Termination. "Date of Termination", with
respect to any purported termination of the Executive's
employment during the Term of this Agreement (or prior to the end
of the Change-in-Control Protective Period, if a Change-in-
Control shall have occurred), shall mean (i) if the Executive's
employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day
period), and (iii) if the Executive's employment is terminated
for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination by Energy East,
shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days, respectively, from the date such Notice of
Termination is given).
12. No Mitigation. Energy East and the Company agree that,
if the Executive's employment hereunder is terminated during the
Term (or, if later, prior to the end of the Change-in-Control
Protective Period), the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable
to the Executive by Energy East or the Company hereunder.
Further, the amount of any payment or benefit provided for
hereunder (other than pursuant to Section 10.1(D) hereof) shall
not be reduced by any compensation earned by the Executive as the
result of employment by another employer, by retirement benefits,
by offset against any amount claimed to be owed by the Executive
to Energy East or the Company, or otherwise.
13. Confidentiality and Noncompetition.
13.1 The Executive will not, during or after the Term,
disclose to any entity or person any information which is treated
as confidential by Energy East or the Company and to which the
Executive gains access by reason of his position as an employee
or director of Energy East or the Company.
13.2 If, at any time prior to the end of the Term (or,
if later, the end of the Change-in-Control Protective Period),
the Executive terminates his own employment without Good Reason
(and not in connection with his Disability, Retirement or death)
or Energy East terminates his employment with Cause, then for a
twelve-month period immediately following his Date of
Termination, the Executive shall not, except as permitted by
Energy East upon its prior written consent, enter, directly or
indirectly, into the employ of or render or engage in, directly
or indirectly, any services to any person, firm or corporation
<PAGE>
within the "Restricted Territory," which is a major competitor of
Energy East, the Company or any generation subsidiary of Energy
East with respect to products which Energy East, the Company or
any generation subsidiary of Energy East are then producing or
services Energy East, the Company or any generation subsidiary of
Energy East are then providing (a "Competitor"). However, it
shall not be a violation of the immediately preceding sentence
for the Executive to be employed by, or render services to, a
Competitor, if the Executive renders those services only in lines
of business of the Competitor which are not directly competitive
with the primary lines of business of Energy East, the Company or
any generation subsidiary of Energy East or are outside of the
Restricted Territory. For purposes of this Section 13.2, the
"Restricted Territory" shall be the states of Maryland, New
Jersey, New York and Pennsylvania.
If, at any time following a Change-in-Control, or a
Potential Change-in-Control under the circumstances described in
the second sentence of Section 10.1 hereof, and prior to the end
of the Term (or, if later, the end of the Change-in-Control
Protective Period), the Executive terminates his own employment
with Good Reason (and not in connection with his Disability or
Retirement) or Energy East terminates his employment without
Cause, then for a twelve month period immediately following his
Date of Termination, the Executive shall not enter into the
employ of any person, firm or corporation or any affiliate
thereof (as such term is defined in Rule 12b-2 of the Exchange
Act) that caused the Change-in-Control, or the Potential Change-
in-Control under the circumstances described in the second
sentence of Section 10.1 hereof.
14. Successors; Binding Agreement.
14.1 In addition to any obligations imposed by law
upon any successor to Energy East or the Company, Energy East and
the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of Energy East
or the Company, as the case may be, to expressly assume and agree
to perform this Agreement in the same manner and to the same
extent that Energy East and the Company would be required to
perform it if no such succession had taken place. Failure of
Energy East or the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to
compensation from Energy East and the Company in the same amount
and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change-in-Control, except
that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the
Date of Termination.
14.2 This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die
while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued
to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the
Executive's estate.
15. Notices. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be
effective only upon actual receipt:
To Energy East:
Energy East Corporation
Post Office Box 12904
Albany, NY 12212-2904
Attention: Corporate Secretary
To the Company:
New York State Electric & Gas Corporation
Post Office Box 3607
Binghamton, NY 13902-3607
Attention: Corporate Secretary
To the Executive:
Wesley W. von Schack
404 Beaver Road
Sewickly, PA 15143
16. Miscellaneous.
16.1 No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and
such officers as may be specifically designated by the Board and
the NYSEG Board, respectively. No waiver by any party hereto at
any time of any breach by any other party hereto of, or
<PAGE>
compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which are not
expressly set forth in this Agreement. This Agreement sets forth
the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York.
All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such
sections. There shall be withheld from any payments provided for
hereunder any amounts required to be withheld under federal,
state or local law and any additional withholding amounts to
which the Executive has agreed. The obligations under this
Agreement of Energy East, the Company or the Executive which by
their nature and terms require satisfaction after the end of the
Term (or after the end of the Change-in-Control Protective
Period) shall survive such event and shall remain binding upon
such party.
16.2 Notwithstanding any provision of this Agreement
to the contrary, Energy East and the Company shall be jointly and
severally liable to the Executive and his personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees or legatees for all payment obligations
under this Agreement.
17. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
18. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
19. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to
and determined by the Board and shall be in writing. Any denial
by the Board of a claim for benefits under this Agreement shall
be delivered to the Executive in writing and shall set forth the
<PAGE>
specific reasons for the denial and the specific provisions of
this Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision denying
a claim and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days after
notification by the Board that the Executive's claim has been
denied. To the extent permitted by applicable law, any further
dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in
Binghamton, New York in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction.
20. Definitions. For purposes of this Agreement, the
following terms shall have the meaning indicated below:
(A) "Base Salary" shall have the meaning stated in
Section 5.1 hereof.
(B) "Beneficial Owner" shall have the meaning defined
in Rule 13-d-3 under the Exchange Act.
(C) "Board" shall mean the Board of Directors of
Energy East.
(D) "Cause" for termination by Energy East of the
Executive's employment, for purposes of this Agreement, shall
mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with Energy East and
the Company (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to
Section 11.1) after a written demand for substantial performance
is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes
that the Executive has not substantially performed the
Executive's duties, or (ii) the willful engaging by the Executive
in conduct which is demonstrably and materially injurious to
Energy East or its subsidiaries, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful"
unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the Executive's act, or
failure to act, was in the best interest of Energy East.
(E) A "Change-in-Control" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied during the Term:
<PAGE>
(I) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of Energy
East (not including in the securities beneficially
owned by such Person any securities acquired directly
from Energy East or its affiliates) representing 25% or
more of the combined voting power of Energy East's then
outstanding securities; or
(II) during any period of two consecutive years
(not including any period prior to the date of this
Agreement), individuals who at the beginning of such
period constitute the Board and any new director (other
than a director designated by a Person who has entered
into an agreement with Energy East to effect a
transaction described in paragraph (I), (III) or (IV)
of this Change-in-Control definition or a director
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 solicitations of proxies or
consents by or on behalf of a Person other than the
Board) whose election by the Board or nomination for
election by Energy East's stockholders was approved by
a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination
for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(III) the shareholders of Energy East approve a
merger or consolidation of Energy East with any other
corporation, other than (i) a merger or consolidation
which would result in the voting securities of Energy
East outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an
employee benefit plan of Energy East or any of its
subsidiaries, at least 75% of the combined voting power
of the voting securities of Energy East or such
surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization
of Energy East (or similar transaction) in which no
Person acquires more than 50% of the combined voting
power of Energy East's then outstanding securities; or
(IV) the shareholders of Energy East approve a
plan of complete liquidation of Energy East or an
agreement for the sale or disposition by Energy East of
all or substantially all Energy East's assets.
(F) "Change-in-Control Protective Period" shall mean
the period from the occurrence of a Change-in-Control until the
later of (i) the second anniversary of such Change-in-Control or,
(ii) if such Change-in-Control shall be caused by the shareholder
approval of a merger or consolidation, as described in Section
20(E)(III) hereof, the second anniversary of the consummation of
such merger or consolidation, provided, however, that in the
event that the agreement providing for such merger or
consolidation, as described in Section 20(E)(III) hereof, is
terminated without consummation of such merger or consolidation,
the Change-in-Control Protective Period shall expire 90 days
following such termination, unless there has occurred another
event constituting a Change-in-Control, in which case the Change-
in-Control Protective Period shall expire upon the date described
herein with respect to such subsequent Change-in-Control.
(G) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(H) "Company" shall mean New York State Electric & Gas
Corporation and any successor to its business and/or assets which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
(I) "Date of Termination" shall have the meaning
stated in Section 11.2 hereof.
(J) "Disability" shall be deemed the reason for the
termination by Energy East of the Executive's employment, if, as
a result of the Executive's incapacity due to physical or mental
illness, the Executive shall have been absent from the full-time
performance of the Executive's duties with Energy East and the
Company for the maximum number of months applicable to the
Executive under the Company's Disability Policy for Salaried
Employees (or any successor policy) (but in no event for less
than six (6) consecutive months), Energy East shall have given
the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the
Executive shall not have returned to the full-time performance of
the Executive's duties.
(K) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended from time to time.
(L) "Excise Tax" shall have the meaning stated in
Section 10.2(A) hereof.
(M) "Executive" shall mean the individual named in the
first paragraph of this Agreement.
<PAGE>
(N) "Good Reason" for termination by the Executive of
the Executive's employment shall mean the occurrence (without the
Executive's express written consent) after any Change-in-Control,
or after any Potential Change-in-Control under the circumstances
described in the second sentence of Section 10.1 hereof (treating
all references in paragraphs (I) through (VII) below to a
"Change-in-Control" as references to a "Potential Change-in-
Control), of any one of the following acts by Energy East or the
Company, or failures by Energy East or the Company to act,
unless, in the case of any act or failure to act described in
paragraphs (I), (V), (VI) or (VII) below, such act or failure to
act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(I) the assignment to the Executive of any
duties inconsistent with the Executive's status as an
executive officer of Energy East or the Company or a
substantial alteration in the nature or status of the
Executive's responsibilities from those in effect
immediately prior to the Change-in-Control (including,
without limitation, any such alteration attributable to
the fact that Energy East or the Company may no longer
be a public company);
(II) a reduction by Energy East or the Company in
the Executive's annual base salary as in effect on the
date hereof or as the same may be increased from time
to time;
(III) the relocation of Energy East's principal
executive offices to a location more than fifty (50)
miles from the location of such offices immediately
prior to the Change-in-Control or Energy East's or the
Company's requiring the Executive to be based anywhere
other than Energy East's principal executive offices
except for required travel on Energy East's or the
Company's business to an extent substantially
consistent with the Executive's present business travel
obligations;
(IV) the failure by Energy East or the Company,
without the Executive's consent, to pay to the
Executive any portion of the Executive's current
compensation, or to pay to the Executive any portion of
an installment of deferred compensation under any
deferred compensation program of Energy East or the
Company, within seven (7) days of the date such
compensation is due;
(V) the failure by Energy East or the Company to
continue in effect any compensation plan in which the
Executive participates immediately prior to the Change-
in-Control which is material to the Executive's total
compensation, including but not limited to the
Company's Annual Executive Incentive Plan, Long Term
Executive Incentive Share Plan, and Supplemental
Executive Retirement Plan, or any substitute plans
adopted prior to the Change-in-Control, unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with
respect to such plan, or the failure by Energy East or
the Company to continue the Executive's participation
therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of the
Executive's participation relative to other
participants, as existed at the time of the Change-in-
Control;
(VI) the failure by Energy East or the Company to
continue to provide the Executive with benefits
substantially similar to those enjoyed by the Executive
under any of Energy East's or the Company's pension,
life insurance, medical, health and accident, or
disability plans in which the Executive was
participating at the time of the Change-in-Control, the
taking of any action by Energy East or the Company
which would directly or indirectly materially reduce
any of such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the
time of the Change-in-Control, or the failure by Energy
East or the Company to provide the Executive with the
number of paid vacation days to which the Executive is
entitled to under Section 5.4 hereof, or the failure by
the Company to provide the Executive with the pension
supplement it agreed to provide pursuant to the second
paragraph of Section 5.2 hereof, or the failure by the
Company to pay the amount it agreed to pay in
connection with the Life Insurance Policy referred to
in the third paragraph of Section 5.2 hereof; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice
of Termination satisfying the requirements of Section
11.1; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the
Executive's incapacity due to physical or mental illness. The
Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(O) "Gross-Up Payment" shall have the meaning stated
in Section 10.2(A) hereof.
(P) "Life Insurance Policy" shall have the meaning
stated in the third paragraph of Section 5.2 hereof.
(Q) "Notice of Termination" shall have the meaning
stated in Section 11.1 hereof.
(R) "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; however, a Person shall not include
(i) Energy East or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan
of Energy East or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
by the stockholders of Energy East in substantially the same
proportions as their ownership of stock of Energy East.
(S) "Potential Change-in-Control" shall be deemed to
have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied during the Term:
(I) Energy East enters into an agreement, the
consummation of which would result in the occurrence of
a Change-in-Control;
(II) Energy East or any Person publicly announces
an intention to take or to consider taking actions
which, if consummated, would constitute a Change-in-
Control;
(III) any Person (x) is or becomes the Beneficial
Owner, directly or indirectly, (y) discloses directly
or indirectly to Energy East (or publicly) a plan or
intention to become the Beneficial Owner, directly or
indirectly, or (z) makes a filing under the Hart-Scott-
Rodino Anti-Trust Improvements Act of 1976, as amended,
with respect to securities to become the Beneficial
Owner, directly or indirectly, of securities of Energy
East representing 9.9% or more of the combined voting
power of Energy East's then outstanding securities; or
(IV) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential
Change-in-Control has occurred.
<PAGE>
(T) "Retirement" shall be deemed the reason for the
termination by Energy East or the Executive of the Executive's
employment if such employment is terminated in accordance with
Energy East's retirement policy, not including early retirement,
generally applicable to its salaried employees, as in effect
immediately prior to the Change-in-Control, or in accordance with
any retirement arrangement established with the Executive's
consent with respect to the Executive.
(U) "Severance Payments" shall mean those payments
described in Section 10.1 hereof.
(V) "Term" shall have the meaning stated in Section 3
hereof.
(W) "Energy East" shall mean Energy East Corporation
and any successor to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or
otherwise (except in determining, under Section 20(E) hereof,
whether or not any Change-in-Control of Energy East has occurred
in connection with such succession).
(X) "NYSEG Board" shall mean the Board of Directors of
the Company.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first above written.
ENERGY EAST CORPORATION
By: Kenneth M. Jasinski
Kenneth M. Jasinski
Senior Vice President and
General Counsel
NEW YORK STATE ELECTRIC & GAS
CORPORATION
By: Michael I. German
Michael I. German
Executive Vice President and
Chief Operating Officer
WESLEY W. VON SCHACK
WESLEY W. VON SCHACK
EXHIBIT 10-53
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of
August 1, 1998 (the "Agreement"), by and among Energy East
Corporation, a New York corporation ("Energy East"), New York
State Electric & Gas Corporation, a New York corporation (the
"Company") and Michael I. German (the "Executive"), amends and
restates that certain Employment Agreement dated March 1, 1998,
between the Company and the Executive.
The Board of Directors of Energy East and the Board of
Directors of the Company desire to provide for the employment of
the Executive as a member of the management of Energy East and
the Company, in the best interest of Energy East and its
shareholders. The Executive is willing to commit himself to
serve Energy East and the Company, on the terms and conditions
herein provided.
In order to effect the foregoing, Energy East, the Company
and the Executive wish to enter into an employment agreement on
the terms and conditions set forth below. Accordingly, in
consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Defined Terms. The definitions of capitalized terms
used in this Agreement, unless otherwise defined herein, are
provided in the last Section hereof.
2. Employment. Energy East and the Company hereby agree
to employ the Executive, and the Executive hereby agrees to serve
Energy East and the Company, on the terms and conditions set
forth herein, during the term of this Agreement (the "Term").
3. Term of Agreement. The Term will commence on March 1,
1998 and end on February 28, 2001, unless further extended as
hereinafter provided. Commencing on March 1, 1999 and each March
1 thereafter, the Term of this Agreement shall automatically be
extended for one (1) additional year unless, not later than the
November 30 immediately preceding each such March 1, Energy East
(upon authorization by the Board) or the Executive shall have
given notice not to extend this Agreement; provided, however, if
a Change-in-Control shall have occurred during the Term of this
Agreement, Sections 5.4, 6, 7 and 10 through 20 of this Agreement
and the second paragraph of Section 5.2 of this Agreement shall
continue in effect until at least the end of the Change-in-
Control Protective Period (whether or not the Term of the
Agreement shall have expired for other purposes).
<PAGE>
4. Position and Duties. The Executive shall serve as
Senior Vice President of Energy East and as Executive Vice
President and Chief Operating Officer of the Company and shall
have such responsibilities, duties and authority that are
consistent with such positions as may from time to time be
assigned to the Executive by the Board or by the NYSEG Board.
The Executive shall devote substantially all his working time and
efforts to the business and affairs of Energy East and the
Company; provided, however, that the Executive may also serve on
the boards of directors or trustees of other companies and
organizations, as long as such service does not substantially
interfere with the performance of his duties hereunder.
5. Compensation and Related Matters.
5.1 Base Salary. The Company shall pay the Executive
a base salary ("Base Salary") during the period of the
Executive's employment hereunder, which shall be at an initial
rate of Three Hundred Twenty-Five Thousand Dollars ($325,000.00)
per annum. The Base Salary shall be paid in substantially equal
bi-weekly installments, in arrears. The Base Salary may be
discretionarily increased by the Board from time to time as the
Board deems appropriate in its reasonable business judgment. The
Base Salary in effect from time to time shall not be decreased
during the Term. During the period of the Executive's employment
hereunder, the Board shall make an annual review of the
Executive's compensation.
Compensation of the Executive by Base Salary payments
shall not be deemed exclusive and shall not prevent the Executive
from participating in any other compensation or benefit plan of
Energy East or the Company. The Base Salary payments (including
any increased Base Salary payments) hereunder shall not in any
way limit or reduce any other obligation of Energy East or the
Company hereunder, and no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of the
Company to pay the Executive's Base Salary hereunder.
5.2 Benefit Plans. The Executive shall be entitled to
participate in or receive benefits under any "employee benefit
plan" (as defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended from time to time
("ERISA")) or employee benefit arrangement made available by
Energy East or the Company now or during the period of the
Executive's employment hereunder to their executives and key
management employees, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans
and arrangements; provided, however, that there shall be no
duplication of the benefits created by this Agreement. The
Executive's participation in such employee benefit plans and
arrangements shall be on an appropriate level, as determined by
the Board or the NYSEG Board, as appropriate.
If the Executive's service with Energy East or the
Company from December 5, 1994 exceeds five full years, the
Company shall pay to the Executive a monthly pension supplement
that results in the Executive receiving a total monthly pension
based upon two years of service for each of the Executive's first
five years of service. Specifically, the monthly pension
supplement shall be equal to the amount by which (i) the total
monthly payments that would be due to the Executive under the
Company's Retirement Benefit Plan (or any successor plan) and the
Company's Supplemental Executive Retirement Plan (or any
successor plan) if the Executive's monthly benefits under those
two plans were calculated by giving the Executive credit for two
years of service for each of the Executive's actual first five
years of service exceeds (ii) the actual total monthly amounts
that are due under those two plans.
5.3 Expenses. Upon presentation of reasonably
adequate documentation to the Company, the Executive shall
receive prompt reimbursement from the Company for all reasonable
and customary business expenses incurred by the Executive in
accordance with the Company policy in performing services
hereunder.
5.4 Vacation. The Executive shall be entitled to five
(5) weeks of vacation during each year of this Agreement, or such
greater period as the Board shall approve, without reduction in
salary or other benefits.
6. Compensation Related to Disability or Termination
(Other Than Certain Post-Termination Payments).
6.1 During the Term of this Agreement (or, if later,
at any time prior to the end of the Change-in-Control Protective
Period), during any period that the Executive fails to perform
the Executive's full-time duties with Energy East or the Company
as a result of incapacity due to physical or mental illness, the
Company shall pay the Executive's Base Salary to the Executive at
the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the
Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by Energy East or the Company
during such period, until the Executive's employment is
terminated by Energy East for Disability; provided, however, that
such Base Salary payments shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior to the time
of any such Base Salary payment under disability benefit plans of
Energy East or the Company or under the Social Security
disability insurance program, which amounts were not previously
applied to reduce any such Base Salary payment. Subject to
Sections 7, 8, 9 and 10 hereof, after completing the expense
reimbursements required by Section 5.3 hereof and making the
<PAGE>
payments and providing the benefits required by this Section 6.1,
Energy East and the Company shall have no further obligations to
the Executive under this Agreement.
6.2 If the Executive's employment shall be terminated
for any reason during the Term of this Agreement (or, if later,
prior to the end of the Change-in-Control Protective Period), the
Company shall pay the Executive's Base Salary (to the Executive
or in accordance with Section 14.2 if the Executive's employment
is terminated by his death) through the Date of Termination at
the rate in effect at the time the Notice of Termination is
given, together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of any
compensation or benefit plan, program or arrangement maintained
by Energy East or the Company during such period. Subject to
Sections 6.1, 7, 8, 9 and 10 hereof, after completing the expense
reimbursements required by Section 5.3 hereof and making the
payments and providing the benefits required by this Section 6.2,
Energy East and the Company shall have no further obligations to
the Executive under this Agreement.
7. Normal Post-Termination Payments Upon Termination of
Employment. If the Executive's employment shall be
terminated for any reason during the Term of this Agreement (or,
if later, prior to the end of the Change-in-Control Protective
Period), the Company shall pay the Executive's normal post-
termination compensation and benefits to the Executive as such
payments become due. Subject to Section 10.1 hereof and the
second paragraph of Section 5.2 hereof, such post-termination
compensation and benefits shall be determined under, and paid in
accordance with, Energy East's or the Company's retirement,
insurance and other compensation or benefit plans, programs and
arrangements (other than this Agreement).
8. Termination of Employment (During the Term and Prior to
a Change-in-Control) by Energy East Without Cause. If
Energy East shall terminate the Executive's employment during the
Term and prior to a Change-in-Control, without Cause (and not for
Disability or in connection with the Executive's Retirement or
the Executive's death), then in lieu of any further salary
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive, within the
five days immediately following the Date of Termination, a lump
sum amount equal to the present value (calculated using a
discount at the appropriate corresponding United States Treasury
Bill rate) of the aggregate Base Salary otherwise payable to the
Executive through the end of the Term.
<PAGE>
9. Post-Termination Continuation of Welfare Benefit
Plan Coverage. If the termination of the Executive's
employment is described in Section 8 hereof, Energy East and the
Company shall maintain in full force and effect, for the
continued benefit of the Executive for the number of years
(including partial years) remaining in the Term, each "employee
welfare benefit plan" (as described in Section 3(1) of ERISA) in
which the Executive was entitled to participate immediately prior
to the Date of Termination, provided that the Executive's
continued participation is possible under the general terms and
provisions of such plans. In the event that the Executive's
participation in any such plan is barred, the Company shall
arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been
entitled to receive under the plan from which his continued
participation is barred.
10. Severance Payments.
10.1 The Company shall pay the Executive the payments
described in this Section 10.1 (the "Severance Payments") upon
the termination of the Executive's employment following a Change-
in-Control and prior to the end of the Change-in-Control
Protective Period, in addition to the payments and benefits
described in Sections 6 and 7 hereof, unless such termination is
(i) by Energy East for Cause, (ii) by reason of death, Disability
or Retirement, or (iii) by the Executive without Good Reason.
For purposes of the immediately preceding sentence, if a
termination of the Executive's employment occurs prior to a
Change-in-Control, but following a Potential Change-in-Control in
which a Person has entered into an agreement with Energy East the
consummation of which will constitute a Change-in-Control, such
termination shall be deemed to have followed a Change-in-Control
and to have been (i) by Energy East without Cause, if the
Executive's employment is terminated without Cause at the
direction of such Person, or (ii) by the Executive with Good
Reason, if the Executive terminates his employment with Good
Reason and the act (or failure to act) which constitutes Good
Reason occurs following such Potential Change-in-Control and at
the direction of such Person.
(A) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination,
in lieu of any lump sum payment with respect to aggregate
Base Salary otherwise payable pursuant to Section 8 hereof,
and in lieu of any severance benefit otherwise payable to
the Executive, the Company shall pay to the Executive a lump
sum severance payment, in cash, equal to three (3) times the
sum of:
<PAGE>
(i) the higher of the Executive's annual Base Salary
in effect immediately prior to the occurrence of
the event or circumstance upon which the Notice of
Termination is based or the Executive's annual
Base Salary in effect immediately prior to the
Change-in-Control, and
(ii) the incentive compensation award the Executive
would have received under the Annual Executive
Incentive Plan, or any successor annual executive
incentive compensation plan, for the year in which
the Date of Termination occurs, calculated in
accordance with Article XI (A) (iii) of the Annual
Executive Incentive Plan or any comparable
provision in any successor annual executive
incentive compensation plan, without, however,
giving effect to any pro-rata adjustments
contained in said provisions.
(B) Notwithstanding any provision of the Company's
Annual Executive Incentive Plan, or any successor annual
executive incentive compensation plan, the Company shall pay
to the Executive a lump sum amount, in cash, equal to the
sum of (i) any incentive compensation which has been
allocated or awarded to the Executive for a completed fiscal
year preceding the Date of Termination under the Annual
Executive Incentive Plan, or any successor annual executive
incentive compensation plan, but has not yet been either (x)
paid (pursuant to Section 6.2 hereof or otherwise) or (y)
deferred pursuant to the Deferred Compensation Plan for
Salaried Employees, and (ii) a pro-rata portion to the Date
of Termination of the aggregate value of any contingent
incentive compensation award to the Executive for any
uncompleted fiscal year under the Annual Executive Incentive
Plan or any successor annual executive incentive
compensation plan, calculated as to each such award in
accordance with Article XI (A) (iii) of the Annual Executive
Incentive Plan or any comparable provision in any successor
annual executive incentive compensation plan.
(C) The Company shall pay to the Executive the
retirement benefits to which the Executive is entitled under
the Company's Supplemental Executive Retirement Plan (or any
successor plan), and in determining such benefits, the
Executive shall be given an additional two (2) years of
service credit at the Executive's highest annual rate of
compensation during the twelve (12) months immediately
preceding the Date of Termination and shall be deemed to be
five (5) years older than he is and a "Key Person" as
defined in, and for all purposes under, the Company's
<PAGE>
Supplemental Executive Retirement Plan (or any successor
plan); provided that if the Executive does not have at least
ten (10) years of service credit and age eligibility under
the Company's Supplemental Executive Retirement Plan (or any
successor plan) after such additional service and age
credit, the Executive shall be deemed to have at least ten
(10) years of service credit and age eligibility under the
Company's Supplemental Executive Retirement Plan (or any
successor plan) ; such benefits shall be determined without
regard to any amendment to the Company's Supplemental
Executive Retirement Plan (or any successor plan) made
subsequent to a Change-in-Control and on or prior to the
Date of Termination, which amendment adversely affects in
any manner the computation of retirement benefits
thereunder.
Notwithstanding any provision in the Company's
Supplemental Executive Retirement Plan (or any successor
plan) that may be to the contrary, the benefits otherwise
payable to the Executive pursuant to this Section 10.1(C)
shall be paid to the Executive in a lump sum payment that is
equal in amount to the present value (calculated under
generally accepted actuarial methods that are consistent
with the actuarial methods used in producing the tables of
Appendix A of the Company's Retirement Benefit Plan (or any
successor plan)) of such benefits and such payment shall be
in lieu of any payments to which the Executive otherwise
would have been entitled under the Company's Supplemental
Executive Retirement Plan (or any successor plan) and shall
satisfy any obligations that the Company would otherwise
have to the Executive under the Company's Supplemental
Executive Retirement Plan (or any successor plan). Such
lump sum payment shall be paid to the Executive no later
than the due date of the first payment otherwise due to the
Executive under the Company's Supplemental Executive
Retirement Plan (or any successor plan).
Notwithstanding the immediately preceding paragraph of
this Section 10.1(C), the Executive may elect to have the
benefits otherwise payable to the Executive pursuant to this
Section 10.1(C) be paid to the Executive in the manner
provided for under the Company's Supplemental Executive
Retirement Plan (or any successor plan) and such method of
payment shall be in lieu of a lump sum payment. The
Executive shall make such election by sending a letter to
the Company in which he states that he has decided to make
such election. The election shall not be effective unless
the letter is received by the Company (i) at least 60 days
prior to the day (the "Change-in-Control Day") that the
Change-in-Control, or Potential Change-in-Control, that
<PAGE>
gives rise to the applicability of Section 10.1(C) occurs
and (ii) prior to the first day of the calendar year in
which the Change-in-Control Day occurs. The Executive shall
have the right to revoke any such election by sending a
letter to the Company in which he states that he has decided
to revoke such election. The revocation of such election
shall not be effective unless the letter is received by the
Company (i) at least 60 days prior to the Change-in-Control
Day and (ii) prior to the first day of the calendar year in
which the Change-in-Control Day occurs. If the Executive
revokes an election, he can make a new election (in the
manner, and subject to the timing requirements, set forth in
this paragraph), and he can revoke any such new election (in
the manner, and subject to the timing requirements, set
forth in this paragraph).
(D) For a thirty-six (36) month period after the Date
of Termination, the Company shall arrange to provide the
Executive with life, disability, accident and health
insurance benefits substantially similar to those which the
Executive is receiving immediately prior to the Notice of
Termination (without giving effect to any reduction in such
benefits subsequent to a Change-in-Control if the Executive
terminated his employment for Good Reason or was terminated
without Cause). Benefits otherwise receivable by the
Executive pursuant to this Section 10.1(D) shall be reduced
to the extent comparable benefits are actually received by
or made available to the Executive without cost during the
thirty-six (36) month period following the Executive's
termination of employment (and any such benefits actually
received by the Executive shall be reported to Energy East
by the Executive). If the benefits provided to the
Executive under this Section 10.1(D) shall result in a
Gross-Up Payment pursuant to Section 10.2, and these Section
10.1(D) benefits are thereafter reduced pursuant to the
immediately preceding sentence because of the receipt of
comparable benefits, the Gross-Up Payment shall be
recalculated so as to reflect that reduction, and the
Executive shall refund to the Company an amount equal to any
calculated reduction in the Gross-Up Payment, but only if,
and to the extent, the Executive receives a refund of any
Excise Tax previously paid by the Executive pursuant to
Section 10.2 hereof.
10.2 (A) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by Energy East or the Company to or for
the benefit of the Executive on account of a Change-in-Control,
whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise (a "Payment"), would
<PAGE>
be subject to the excise tax imposed by Section 4999 of the Code
or any interest or penalties 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 Executive shall be entitled to receive an additional
payment ("Gross-Up Payment") in an amount such that after payment
by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without
limitation, any income taxes and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(B) Subject to the provisions of Section 10.2(C)
hereof, all determinations required to be made under this Section
10.2, including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be used in
arriving at such determinations, shall be made by Energy East's
principal outside accounting firm (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Board
and the Executive within fifteen (15) business days of the Date
of Termination and/or such earlier date(s) as may be requested by
Energy East or the Executive (each such date and the Date of
Termination shall be referred to as a "Determination Date", for
purposes of this Section 10.2(B) and Section 10.3 hereof). All
fees and expenses of the Accounting Firm shall be borne solely by
the Company. The initial Gross-Up Payment, if any, as determined
pursuant to this Section 10.2(B), shall be paid by the Company to
the Executive within five (5) days of the receipt of the
Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure
to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the
Accounting Firm under this Section 10.2(B) shall be binding upon
Energy East, the Company and the Executive. 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 Energy East exhausts its
remedies pursuant to Section 10.2(C) and the Executive 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 Executive.
<PAGE>
(C) The Executive shall notify Energy East in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of an
Underpayment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the
Executive is informed in writing of such claim and shall apprise
Energy East of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the thirty (30) day period
following the date on which he gives such notice to Energy East
(or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If Energy East
notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive
shall:
(i) give Energy East any information reasonably
requested by Energy East relating to such claim,
(ii) take such action in connection with contesting
such claim as Energy East 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 Energy East,
(iii) cooperate with Energy East in good faith in order
effectively to contest such claim, and
(iv) permit Energy East to participate in any
proceeding 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 Executive 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 10.2(C),
Energy East 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 Executive to pay
the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive 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 Energy East shall determine; provided, however, that
<PAGE>
if Energy East directs the Executive to pay such claim and sue
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive 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 Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Energy East's control of the
contest shall be limited to issues with respect to which a Gross-
Up Payment would be payable hereunder and the Executive 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 Executive of an
amount advanced by the Company pursuant to Section 10.2(C)
hereof, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to Energy
East's and the Company's complying with the requirements of
Section 10.2(C) hereof) 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
Executive of an amount advanced by the Company pursuant to
Section 10.2(C) hereof, a determination is made that the
Executive shall not be entitled to any refund with respect to
such claim and Energy East does not notify the Executive in
writing of its intent to contest such denial of refund prior to
the expiration of thirty (30) days after such determination, then
such advance shall be forgiven and shall not be required to be
repaid.
10.3 The payments provided for in Section 10.1 hereof
(other than Section 10.1(C) and (D)) shall be made not later than
the fifth day following each Determination Date, provided,
however, that if the amounts of such payments cannot be finally
determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined by the
Executive, of the minimum amount of such payments to which the
Executive is clearly entitled and shall pay the remainder of such
payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day
after each Determination Date. In the event that the amount of
the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the
Company to the Executive, payable on the fifth (5th) business day
after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
10.4 The Company also shall pay to the Executive all
legal fees and expenses incurred by the Executive as a result of
a termination which entitles the Executive to the Severance
Payments (including all such fees and expenses, if any, incurred
in disputing any such termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement
or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to
any payment or benefit provided hereunder). Such payments shall
be made within five (5) business days after delivery of the
Executive's written requests for payment accompanied with such
evidence of fees and expenses incurred as Energy East reasonably
may require.
11. Termination Procedures.
11.1 Notice of Termination. During the Term of this
Agreement (and, if longer, until the end of the Change-in-Control
Protective Period), any purported termination of the Executive's
employment (other than by reason of death) shall be communicated
by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board which
was called and held for the purpose of considering such
termination (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Executive was guilty of conduct
set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.
11.2 Date of Termination. "Date of Termination", with
respect to any purported termination of the Executive's
employment during the Term of this Agreement (or prior to the end
of the Change-in-Control Protective Period, if a Change-in-
Control shall have occurred), shall mean (i) if the Executive's
employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day
period), and (iii) if the Executive's employment is terminated
<PAGE>
for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination by Energy East,
shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days, respectively, from the date such Notice of
Termination is given).
12. No Mitigation. Energy East and the Company agree that,
if the Executive's employment hereunder is terminated during the
Term (or, if later, prior to the end of the Change-in-Control
Protective Period), the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable
to the Executive by Energy East or the Company hereunder.
Further, the amount of any payment or benefit provided for
hereunder (other than pursuant to Section 10.1(D) hereof) shall
not be reduced by any compensation earned by the Executive as the
result of employment by another employer, by retirement benefits,
by offset against any amount claimed to be owed by the Executive
to Energy East or the Company, or otherwise.
13. Confidentiality and Noncompetition.
13.1 The Executive will not, during or after the Term,
disclose to any entity or person any information which is treated
as confidential by Energy East or the Company and to which the
Executive gains access by reason of his position as an employee
or director of Energy East or the Company.
<PAGE>
13.2 If, at any time prior to the end of the Term (or,
if later, the end of the Change-in-Control Protective Period),
the Executive terminates his own employment without Good Reason
(and not in connection with his Disability, Retirement or death)
or Energy East terminates his employment with Cause, then for a
twelve-month period immediately following his Date of
Termination, the Executive shall not, except as permitted by
Energy East upon its prior written consent, enter, directly or
indirectly, into the employ of or render or engage in, directly
or indirectly, any services to any person, firm or corporation
within the "Restricted Territory," which is a major competitor of
Energy East, the Company or any generation subsidiary of Energy
East with respect to products which Energy East, the Company or
any generation subsidiary of Energy East are then producing or
services Energy East, the Company or any generation subsidiary of
Energy East are then providing (a "Competitor"). However, it
shall not be a violation of the immediately preceding sentence
for the Executive to be employed by, or render services to, a
Competitor, if the Executive renders those services only in lines
of business of the Competitor which are not directly competitive
with the primary lines of business of Energy East, the Company or
any generation subsidiary of Energy East or are outside of the
Restricted Territory. For purposes of this Section 13.2, the
"Restricted Territory" shall be the states of Maryland, New
Jersey, New York and Pennsylvania.
If, at any time following a Change-in-Control, or a
Potential Change-in-Control under the circumstances described in
the second sentence of Section 10.1 hereof, and prior to the end
of the Term (or, if later, the end of the Change-in-Control
Protective Period), the Executive terminates his own employment
with Good Reason (and not in connection with his Disability or
Retirement) or Energy East terminates his employment without
Cause, then for a twelve month period immediately following his
Date of Termination, the Executive shall not enter into the
employ of any person, firm or corporation or any affiliate
thereof (as such term is defined in Rule 12b-2 of the Exchange
Act) that caused the Change-in-Control, or the Potential Change-
in-Control under the circumstances described in the second
sentence of Section 10.1 hereof.
<PAGE>
14. Successors; Binding Agreement.
14.1 In addition to any obligations imposed by law
upon any successor to Energy East or the Company, Energy East and
the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of Energy East
or the Company, as the case may be, to expressly assume and agree
to perform this Agreement in the same manner and to the same
extent that Energy East and the Company would be required to
perform it if no such succession had taken place. Failure of
Energy East or the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to
compensation from Energy East and the Company in the same amount
and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change-in-Control, except
that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the
Date of Termination.
14.2 This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die
while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued
to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the
Executive's estate.
15. Notices. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be
effective only upon actual receipt:
To Energy East:
Energy East Corporation
Post Office Box 12904
Albany, NY 12212-2904
Attention: Corporate Secretary
To the Company:
New York State Electric & Gas Corporation
Post Office Box 3607
Binghamton, NY 13902-3607
Attention: Corporate Secretary
To the Executive:
Michael I. German
8 Meadowood Lane
Binghamton, NY 13901
16. Miscellaneous.
16.1 No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and
such officers as may be specifically designated by the Board and
the NYSEG Board, respectively. No waiver by any party hereto at
any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which are not
expressly set forth in this Agreement. This Agreement sets forth
the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York.
All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such
sections. There shall be withheld from any payments provided for
hereunder any amounts required to be withheld under federal,
state or local law and any additional withholding amounts to
which the Executive has agreed. The obligations under this
Agreement of Energy East, the Company or the Executive which by
their nature and terms require satisfaction after the end of the
Term (or after the end of the Change-in-Control Protective
Period) shall survive such event and shall remain binding upon
such party.
<PAGE>
16.2 Notwithstanding any provision of this Agreement
to the contrary, Energy East and the Company shall be jointly and
severally liable to the Executive and his personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees or legatees for all payment obligations
under this Agreement.
17. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
18. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
19. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to
and determined by the Board and shall be in writing. Any denial
by the Board of a claim for benefits under this Agreement shall
be delivered to the Executive in writing and shall set forth the
specific reasons for the denial and the specific provisions of
this Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision denying
a claim and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days after
notification by the Board that the Executive's claim has been
denied. To the extent permitted by applicable law, any further
dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in
Binghamton, New York in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction.
20. Definitions. For purposes of this Agreement, the
following terms shall have the meaning indicated below:
(A) "Base Salary" shall have the meaning stated in
Section 5.1 hereof.
(B) "Beneficial Owner" shall have the meaning defined
in Rule 13-d-3 under the Exchange Act.
(C) "Board" shall mean the Board of Directors of
Energy East .
(D) "Cause" for termination by Energy East of the
Executive's employment, for purposes of this Agreement, shall
mean (i) the willful and continued failure by the Executive to
<PAGE>
substantially perform the Executive's duties with Energy East and
the Company (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to
Section 11.1) after a written demand for substantial performance
is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes
that the Executive has not substantially performed the
Executive's duties, or (ii) the willful engaging by the Executive
in conduct which is demonstrably and materially injurious to
Energy East or its subsidiaries, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful"
unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the Executive's act, or
failure to act, was in the best interest of Energy East.
(E) A "Change-in-Control" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied during the Term:
(I) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of Energy
East (not including in the securities beneficially
owned by such Person any securities acquired directly
from Energy East or its affiliates) representing 25% or
more of the combined voting power of Energy East's then
outstanding securities; or
(II) during any period of two consecutive years
(not including any period prior to the date of this
Agreement), individuals who at the beginning of such
period constitute the Board and any new director (other
than a director designated by a Person who has entered
into an agreement with Energy East to effect a
transaction described in paragraph (I), (III) or (IV)
of this Change-in-Control definition or a director
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 solicitations of proxies or
consents by or on behalf of a Person other than the
Board) whose election by the Board or nomination for
election by Energy East's stockholders was approved by
a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination
for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(III) the shareholders of Energy East approve a
merger or consolidation of Energy East with any other
corporation, other than (i) a merger or consolidation
which would result in the voting securities of Energy
East outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an
employee benefit plan of Energy East or any of its
subsidiaries, at least 75% of the combined voting power
of the voting securities of Energy East or such
surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization
of Energy East (or similar transaction) in which no
Person acquires more than 50% of the combined voting
power of Energy East's then outstanding securities; or
(IV) the shareholders of Energy East approve a
plan of complete liquidation of Energy East or an
agreement for the sale or disposition by Energy East of
all or substantially all Energy East's assets.
(F) "Change-in-Control Protective Period" shall mean
the period from the occurrence of a Change-in-Control until the
later of (i) the second anniversary of such Change-in-Control or,
(ii) if such Change-in-Control shall be caused by the shareholder
approval of a merger or consolidation, as described in Section
20(E)(III) hereof, the second anniversary of the consummation of
such merger or consolidation, provided, however, that in the
event that the agreement providing for such merger or
consolidation, as described in Section 20(E)(III) hereof, is
terminated without consummation of such merger or consolidation,
the Change-in-Control Protective Period shall expire 90 days
following such termination, unless there has occurred another
event constituting a Change-in-Control, in which case the Change-
in-Control Protective Period shall expire upon the date described
herein with respect to such subsequent Change-in-Control.
(G) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(H) "Company" shall mean New York State Electric & Gas
Corporation and any successor to its business and/or assets which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
(I) "Date of Termination" shall have the meaning
stated in Section 11.2 hereof.
(J) "Disability" shall be deemed the reason for the
termination by Energy East of the Executive's employment, if, as
a result of the Executive's incapacity due to physical or mental
illness, the Executive shall have been absent from the full-time
performance of the Executive's duties with Energy East and the
Company for the maximum number of months applicable to the
Executive under the Company's Disability Policy for Salaried
Employees (or any successor policy) (but in no event for less
than six (6) consecutive months), Energy East shall have given
the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the
Executive shall not have returned to the full-time performance of
the Executive's duties.
(K) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended from time to time.
(L) "Excise Tax" shall have the meaning stated in
Section 10.2(A) hereof.
(M) "Executive" shall mean the individual named in the
first paragraph of this Agreement.
(N) "Good Reason" for termination by the Executive of
the Executive's employment shall mean the occurrence (without the
Executive's express written consent) after any Change-in-Control,
or after any Potential Change-in-Control under the circumstances
described in the second sentence of Section 10.1 hereof (treating
all references in paragraphs (I) through (VII) below to a
"Change-in-Control" as references to a "Potential Change-in-
Control), of any one of the following acts by Energy East or the
Company, or failures by Energy East or the Company to act,
unless, in the case of any act or failure to act described in
paragraphs (I), (V), (VI) or (VII) below, such act or failure to
act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(I) the assignment to the Executive of any duties
inconsistent with the Executive's status as an
executive officer of Energy East or the Company or a
substantial alteration in the nature or status of the
Executive's responsibilities from those in effect
immediately prior to the Change-in-Control (including,
without limitation, any such alteration attributable to
the fact that Energy East or the Company may no longer
be a public company);
(II) a reduction by Energy East or the Company in
the Executive's annual base salary as in effect on the
date hereof or as the same may be increased from time
to time;
(III) the relocation of Energy East's principal
executive offices to a location more than fifty (50)
miles from the location of such offices immediately
prior to the Change-in-Control or Energy East's or the
Company's requiring the Executive to be based anywhere
other than Energy East's principal executive offices
except for required travel on Energy East's or the
Company's business to an extent substantially
consistent with the Executive's present business travel
obligations;
(IV) the failure by Energy East or the Company,
without the Executive's consent, to pay to the
Executive any portion of the Executive's current
compensation, or to pay to the Executive any portion of
an installment of deferred compensation under any
deferred compensation program of Energy East or the
Company, within seven (7) days of the date such
compensation is due;
(V) the failure by Energy East or the Company to
continue in effect any compensation plan in which the
Executive participates immediately prior to the Change-
in-Control which is material to the Executive's total
compensation, including but not limited to the
Company's Annual Executive Incentive Plan, Long Term
Executive Incentive Share Plan, and Supplemental
Executive Retirement Plan, or any substitute plans
adopted prior to the Change-in-Control, unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with
respect to such plan, or the failure by Energy East or
the Company to continue the Executive's participation
therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of the
Executive's participation relative to other
participants, as existed at the time of the Change-in-
Control;
(VI) the failure by Energy East or the Company to
continue to provide the Executive with benefits
substantially similar to those enjoyed by the Executive
under any of Energy East's or the Company's pension,
life insurance, medical, health and accident, or
disability plans in which the Executive was
participating at the time of the Change-in-Control, the
taking of any action by Energy East or the Company
which would directly or indirectly materially reduce
any of such benefits or deprive the Executive of any
<PAGE>
material fringe benefit enjoyed by the Executive at the
time of the Change-in-Control, or the failure by Energy
East or the Company to provide the Executive with the
number of paid vacation days to which the Executive is
entitled to under Section 5.4 hereof, or the failure by
the Company to provide the Executive with the pension
supplement it agreed to provide pursuant to the second
paragraph of Section 5.2 hereof; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice
of Termination satisfying the requirements of Section
11.1; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the
Executive's incapacity due to physical or mental illness. The
Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(O) "Gross-Up Payment" shall have the meaning stated
in Section 10.2(A) hereof.
(P) "Notice of Termination" shall have the meaning
stated in Section 11.1 hereof.
(Q) "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; however, a Person shall not include (i)
Energy East or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of
Energy East or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
by the stockholders of Energy East in substantially the same
proportions as their ownership of stock of Energy East.
(R) "Potential Change-in-Control" shall be deemed to
have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied during the Term:
(I) Energy East enters into an agreement, the
consummation of which would result in the occurrence of
a Change-in-Control;
(II) Energy East or any Person publicly announces
an intention to take or to consider taking actions
which, if consummated, would constitute a Change-in-
Control;
(III) any Person (x) is or becomes the Beneficial
Owner, directly or indirectly, (y) discloses directly
or indirectly to Energy East (or publicly) a plan or
intention to become the Beneficial Owner, directly or
indirectly, or (z) makes a filing under the Hart-Scott-
Rodino Anti-Trust Improvements Act of 1976, as amended,
with respect to securities to become the Beneficial
Owner, directly or indirectly, of securities of Energy
East representing 9.9% or more of the combined voting
power of Energy East's then outstanding securities; or
(IV) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential
Change-in-Control has occurred.
(S) "Retirement" shall be deemed the reason for the
termination by Energy East or the Executive of the Executive's
employment if such employment is terminated in accordance with
Energy East's retirement policy, not including early retirement,
generally applicable to its salaried employees, as in effect
immediately prior to the Change-in-Control, or in accordance with
any retirement arrangement established with the Executive's
consent with respect to the Executive.
(T) "Severance Payments" shall mean those payments
described in Section 10.1 hereof.
(U) "Term" shall have the meaning stated in Section 3
hereof.
(V) "Energy East" shall mean Energy East Corporation
and any successor to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or
otherwise (except in determining, under Section 20(E) hereof,
whether or not any Change-in-Control of Energy East has occurred
in connection with such succession).
(W) "NYSEG Board" shall mean the Board of Directors of
the Company.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
ENERGY EAST CORPORATION
By: Wesley W. von Schack
Wesley W. von Schack
Chairman, President and
Chief Executive Officer
NEW YORK STATE ELECTRIC &
GAS CORPORATION
By: Kenneth M. Jasinski
Kenneth M. Jasinski
Executive Vice President
MICHAEL I. GERMAN
MICHAEL I. GERMAN
EXHIBIT 10-54
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of
August 1, 1998 (the "Agreement"), by and among Energy East
Corporation, a New York corporation ("Energy East"), New York
State Electric & Gas Corporation, a New York corporation (the
"Company") and Kenneth M. Jasinski (the "Executive") amends and
restates that certain Employment Agreement dated April 29, 1998,
among Energy East, the Company and the Executive.
The Board of Directors of Energy East and the Board of
Directors of the Company desire to provide for the employment of
the Executive as a member of the management of Energy East and
the Company, in the best interest of Energy East and its
shareholders. The Executive is willing to commit himself to
serve Energy East and the Company, on the terms and conditions
herein provided.
In order to effect the foregoing, Energy East, the Company
and the Executive wish to enter into an employment agreement on
the terms and conditions set forth below. Accordingly, in
consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Defined Terms. The definitions of capitalized terms
used in this Agreement, unless otherwise defined herein, are
provided in the last Section hereof.
2. Employment. Energy East and the Company hereby agree
to employ the Executive, and the Executive hereby agrees to serve
Energy East and the Company, on the terms and conditions set
forth herein, during the term of this Agreement (the "Term").
3. Term of Agreement. The Term will commence on April 29,
1998, and end on April 28, 2001, unless further extended as
hereinafter provided. Commencing on April 29, 1999 and each
April 29 thereafter, the Term of this Agreement shall
automatically be extended for one (1) additional year unless, not
later than the January 28 immediately preceding each such April
29, Energy East (upon authorization by the Board) or the
Executive shall have given notice not to extend this Agreement;
provided, however, if a Change-in-Control shall have occurred
during the Term of this Agreement, Sections 5.4, 6, 7 and 10
through 20 of this Agreement and the second paragraph of Section
5.2 of this Agreement shall continue in effect until at least the
end of the Change-in-Control Protective Period (whether or not
the Term of the Agreement shall have expired for other purposes).
<PAGE>
4. Position and Duties. The Executive shall serve as
Senior Vice President and General Counsel of Energy East and as
Executive Vice President of the Company and shall have such
responsibilities, duties and authority that are consistent with
such positions as may from time to time be assigned to the
Executive by the Board or by the NYSEG Board. The Executive
shall devote substantially all his working time and efforts to
the business and affairs of Energy East and the Company;
provided, however, that the Executive may also serve on the
boards of directors or trustees of other companies and
organizations, as long as such service does not substantially
interfere with the performance of his duties hereunder.
5. Compensation and Related Matters.
5.1 Base Salary. The Company shall pay the Executive
a base salary ("Base Salary") during the period of the
Executive's employment hereunder, which shall be at an initial
rate of Three Hundred Seventy-Five Thousand Dollars ($375,000.00)
per annum. The Base Salary shall be paid in substantially equal
bi-weekly installments, in arrears. The Base Salary may be
discretionarily increased by the Board from time to time as the
Board deems appropriate in its reasonable business judgment. The
Base Salary in effect from time to time shall not be decreased
during the Term. During the period of the Executive's employment
hereunder, the Board shall make an annual review of the
Executive's compensation.
Compensation of the Executive by Base Salary payments
shall not be deemed exclusive and shall not prevent the Executive
from participating in any other compensation or benefit plan of
Energy East or the Company. The Base Salary payments (including
any increased Base Salary payments) hereunder shall not in any
way limit or reduce any other obligation of Energy East or the
Company hereunder, and no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of the
Company to pay the Executive's Base Salary hereunder.
5.2 Benefit Plans. The Executive shall be entitled to
participate in or receive benefits under any "employee benefit
plan" (as defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended from time to time
("ERISA")) or employee benefit arrangement made available by
Energy East or the Company now or during the period of the
Executive's employment hereunder to their executives and key
management employees, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans
and arrangements; provided, however, that there shall be no
duplication of the benefits created by this Agreement. The
Executive's participation in such employee benefit plans and
arrangements shall be on an appropriate level, as determined by
the Board or the NYSEG Board, as appropriate.
If the Executive's service with Energy East or the
Company from April 29, 1998 exceeds five full years, the Company
shall pay to the Executive a monthly pension supplement that
results in the Executive receiving a total monthly pension based
upon two years of service for each of the Executive's first five
years of service. Specifically, the monthly pension supplement
shall be equal to the amount by which (i) the total monthly
payments that would be due to the Executive under the Company's
Retirement Benefit Plan (or any successor plan) and the Company's
Supplemental Executive Retirement Plan (or any successor plan) if
the Executive's monthly benefits under those two plans were
calculated by giving the Executive credit for two years of
service for each of the Executive's actual first five years of
service exceeds (ii) the actual total monthly amounts that are
due under those two plans.
5.3 Expenses. Upon presentation of reasonably
adequate documentation to the Company, the Executive shall
receive prompt reimbursement from the Company for all reasonable
and customary business expenses incurred by the Executive in
accordance with the Company policy in performing services
hereunder.
5.4 Vacation. The Executive shall be entitled to five
(5) weeks of vacation during each year of this Agreement, or such
greater period as the Board shall approve, without reduction in
salary or other benefits.
6. Compensation Related to Disability or Termination
(Other Than Certain Post-Termination Payments).
6.1 During the Term of this Agreement (or, if later,
at any time prior to the end of the Change-in-Control Protective
Period), during any period that the Executive fails to perform
the Executive's full-time duties with Energy East or the Company
as a result of incapacity due to physical or mental illness, the
Company shall pay the Executive's Base Salary to the Executive at
the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the
Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by Energy East or the Company
during such period, until the Executive's employment is
terminated by Energy East for Disability; provided, however, that
such Base Salary payments shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior to the time
of any such Base Salary payment under disability benefit plans of
Energy East or the Company or under the Social Security
disability insurance program, which amounts were not previously
applied to reduce any such Base Salary payment. Subject to
Sections 7, 8, 9 and 10 hereof, after completing the expense
<PAGE>
reimbursements required by Section 5.3 hereof and making the
payments and providing the benefits required by this Section 6.1,
Energy East and the Company shall have no further obligations to
the Executive under this Agreement.
6.2 If the Executive's employment shall be terminated
for any reason during the Term of this Agreement (or, if later,
prior to the end of the Change-in-Control Protective Period), the
Company shall pay the Executive's Base Salary (to the Executive
or in accordance with Section 14.2 if the Executive's employment
is terminated by his death) through the Date of Termination at
the rate in effect at the time the Notice of Termination is
given, together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of any
compensation or benefit plan, program or arrangement maintained
by Energy East or the Company during such period. Subject to
Sections 6.1, 7, 8, 9 and 10 hereof, after completing the expense
reimbursements required by Section 5.3 hereof and making the
payments and providing the benefits required by this Section 6.2,
Energy East and the Company shall have no further obligations to
the Executive under this Agreement.
7. Normal Post-Termination Payments Upon Termination of
Employment. If the Executive's employment shall be
terminated for any reason during the Term of this Agreement (or,
if later, prior to the end of the Change-in-Control Protective
Period), the Company shall pay the Executive's normal post-
termination compensation and benefits to the Executive as such
payments become due. Subject to Section 10.1 hereof and the
second paragraph of Section 5.2 hereof, such post-termination
compensation and benefits shall be determined under, and paid in
accordance with, Energy East's or the Company's retirement,
insurance and other compensation or benefit plans, programs and
arrangements (other than this Agreement).
8. Termination of Employment (During the Term and Prior to
a Change-in-Control) by Energy East Without Cause. If
Energy East shall terminate the Executive's employment during the
Term and prior to a Change-in-Control, without Cause (and not for
Disability or in connection with the Executive's Retirement or
the Executive's death), then in lieu of any further salary
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive, within the
five days immediately following the Date of Termination, a lump
sum amount equal to the present value (calculated using a
discount at the appropriate corresponding United States Treasury
Bill rate) of the aggregate Base Salary otherwise payable to the
Executive through the end of the Term.
9. Post-Termination Continuation of Welfare Benefit Plan
Coverage. If the termination of the Executive's
employment is described in Section 8 hereof, Energy East and the
Company shall maintain in full force and effect, for the
continued benefit of the Executive for the number of years
(including partial years) remaining in the Term, each "employee
welfare benefit plan" (as described in Section 3(1) of ERISA) in
which the Executive was entitled to participate immediately prior
to the Date of Termination, provided that the Executive's
continued participation is possible under the general terms and
provisions of such plans. In the event that the Executive's
participation in any such plan is barred, the Company shall
arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been
entitled to receive under the plan from which his continued
participation is barred.
10. Severance Payments.
10.1 The Company shall pay the Executive the payments
described in this Section 10.1 (the "Severance Payments") upon
the termination of the Executive's employment following a Change-
in-Control and prior to the end of the Change-in-Control
Protective Period, in addition to the payments and benefits
described in Sections 6 and 7 hereof, unless such termination is
(i) by Energy East for Cause, (ii) by reason of death, Disability
or Retirement, or (iii) by the Executive without Good Reason.
For purposes of the immediately preceding sentence, if a
termination of the Executive's employment occurs prior to a
Change-in-Control, but following a Potential Change-in-Control in
which a Person has entered into an agreement with Energy East the
consummation of which will constitute a Change-in-Control, such
termination shall be deemed to have followed a Change-in-Control
and to have been (i) by Energy East without Cause, if the
Executive's employment is terminated without Cause at the
direction of such Person, or (ii) by the Executive with Good
Reason, if the Executive terminates his employment with Good
Reason and the act (or failure to act) which constitutes Good
Reason occurs following such Potential Change-in-Control and at
the direction of such Person.
(A) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination,
in lieu of any lump sum payment with respect to aggregate
Base Salary otherwise payable pursuant to Section 8 hereof,
and in lieu of any severance benefit otherwise payable to
the Executive, the Company shall pay to the Executive a lump
sum severance payment, in cash, equal to three (3) times the
sum of:
<PAGE>
(i) the higher of the Executive's annual Base Salary
in effect immediately prior to the occurrence of
the event or circumstance upon which the Notice of
Termination is based or the Executive's annual
Base Salary in effect immediately prior to the
Change-in-Control, and
(ii) the incentive compensation award the Executive
would have received under the Annual Executive
Incentive Plan, or any successor annual executive
incentive compensation plan, for the year in which
the Date of Termination occurs, calculated in
accordance with Article XI (A) (iii) of the Annual
Executive Incentive Plan or any comparable
provision in any successor annual executive
incentive compensation plan, without, however,
giving effect to any pro-rata adjustments
contained in said provisions.
(B) Notwithstanding any provision of the Company's
Annual Executive Incentive Plan, or any successor annual
executive incentive compensation plan, the Company shall pay
to the Executive a lump sum amount, in cash, equal to the
sum of (i) any incentive compensation which has been
allocated or awarded to the Executive for a completed fiscal
year preceding the Date of Termination under the Annual
Executive Incentive Plan, or any successor annual executive
incentive compensation plan, but has not yet been either
(x) paid (pursuant to Section 6.2 hereof or otherwise) or
(y) deferred pursuant to the Deferred Compensation Plan for
Salaried Employees, and (ii) a pro-rata portion to the Date
of Termination of the aggregate value of any contingent
incentive compensation award to the Executive for any
uncompleted fiscal year under the Annual Executive Incentive
Plan or any successor annual executive incentive
compensation plan, calculated as to each such award in
accordance with Article XI (A) (iii) of the Annual Executive
Incentive Plan or any comparable provision in any successor
annual executive incentive compensation plan.
(C) The Company shall pay to the Executive the
retirement benefits to which the Executive is entitled under
the Company's Supplemental Executive Retirement Plan (or any
successor plan), and in determining such benefits, the
Executive shall be given an additional two (2) years of
service credit at the Executive's highest annual rate of
compensation during the twelve (12) months immediately
preceding the Date of Termination and shall be deemed to be
five (5) years older than he is and a "Key Person" as
defined in, and for all purposes under, the Company's
<PAGE>
Supplemental Executive Retirement Plan (or any successor
plan); provided that if the Executive does not have at least
ten (10) years of service credit and age eligibility under
the Company's Supplemental Executive Retirement Plan (or any
successor plan) after such additional service and age
credit, the Executive shall be deemed to have at least ten
(10) years of service credit and age eligibility under the
Company's Supplemental Executive Retirement Plan (or any
successor plan); such benefits shall be determined without
regard to any amendment to the Company's Supplemental
Executive Retirement Plan (or any successor plan) made
subsequent to a Change-in-Control and on or prior to the
Date of Termination, which amendment adversely affects in
any manner the computation of retirement benefits
thereunder.
Notwithstanding any provision in the Company's
Supplemental Executive Retirement Plan (or any successor
plan) that may be to the contrary, the benefits otherwise
payable to the Executive pursuant to this Section 10.1(C)
shall be paid to the Executive in a lump sum payment that is
equal in amount to the present value (calculated under
generally accepted actuarial methods that are consistent
with the actuarial methods used in producing the tables of
Appendix A of the Company's Retirement Benefit Plan (or any
successor plan)) of such benefits and such payment shall be
in lieu of any payments to which the Executive otherwise
would have been entitled under the Company's Supplemental
Executive Retirement Plan (or any successor plan) and shall
satisfy any obligations that the Company would otherwise
have to the Executive under the Company's Supplemental
Executive Retirement Plan (or any successor plan). Such
lump sum payment shall be paid to the Executive no later
than the due date of the first payment otherwise due to the
Executive under the Company's Supplemental Executive
Retirement Plan (or any successor plan).
Notwithstanding the immediately preceding paragraph of
this Section 10.1(C), the Executive may elect to have the
benefits otherwise payable to the Executive pursuant to this
Section 10.1(C) be paid to the Executive in the manner
provided for under the Company's Supplemental Executive
Retirement Plan (or any successor plan) and such method of
payment shall be in lieu of a lump sum payment. The
Executive shall make such election by sending a letter to
the Company in which he states that he has decided to make
such election. The election shall not be effective unless
the letter is received by the Company (i) at least 60 days
prior to the day (the "Change-in-Control Day") that the
Change-in-Control, or Potential Change-in-Control, that
<PAGE>
gives rise to the applicability of Section 10.1(C) occurs
and (ii) prior to the first day of the calendar year in
which the Change-in-Control Day occurs. The Executive shall
have the right to revoke any such election by sending a
letter to the Company in which he states that he has decided
to revoke such election. The revocation of such election
shall not be effective unless the letter is received by the
Company (i) at least 60 days prior to the Change-in-Control
Day and (ii) prior to the first day of the calendar year in
which the Change-in-Control Day occurs. If the Executive
revokes an election, he can make a new election (in the
manner, and subject to the timing requirements, set forth in
this paragraph), and he can revoke any such new election (in
the manner, and subject to the timing requirements, set
forth in this paragraph).
(D) For a thirty-six (36) month period after the Date
of Termination, the Company shall arrange to provide the
Executive with life, disability, accident and health
insurance benefits substantially similar to those which the
Executive is receiving immediately prior to the Notice of
Termination (without giving effect to any reduction in such
benefits subsequent to a Change-in-Control if the Executive
terminated his employment for Good Reason or was terminated
without Cause). Benefits otherwise receivable by the
Executive pursuant to this Section 10.1(D) shall be reduced
to the extent comparable benefits are actually received by
or made available to the Executive without cost during the
thirty-six (36) month period following the Executive's
termination of employment (and any such benefits actually
received by the Executive shall be reported to Energy East
by the Executive). If the benefits provided to the
Executive under this Section 10.1(D) shall result in a
Gross-Up Payment pursuant to Section 10.2, and these Section
10.1(D) benefits are thereafter reduced pursuant to the
immediately preceding sentence because of the receipt of
comparable benefits, the Gross-Up Payment shall be
recalculated so as to reflect that reduction, and the
Executive shall refund to the Company an amount equal to any
calculated reduction in the Gross-Up Payment, but only if,
and to the extent, the Executive receives a refund of any
Excise Tax previously paid by the Executive pursuant to
Section 10.2 hereof.
10.2 (A) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by Energy East or the Company to or for
the benefit of the Executive on account of a Change-in-Control,
whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise (a "Payment"), would
<PAGE>
be subject to the excise tax imposed by Section 4999 of the Code
or any interest or penalties 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 Executive shall be entitled to receive an additional
payment ("Gross-Up Payment") in an amount such that after payment
by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without
limitation, any income taxes and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(B) Subject to the provisions of Section 10.2(C)
hereof, all determinations required to be made under this Section
10.2, including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be used in
arriving at such determinations, shall be made by Energy East's
principal outside accounting firm (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Board
and the Executive within fifteen (15) business days of the Date
of Termination and/or such earlier date(s) as may be requested by
Energy East or the Executive (each such date and the Date of
Termination shall be referred to as a "Determination Date", for
purposes of this Section 10.2(B) and Section 10.3 hereof). All
fees and expenses of the Accounting Firm shall be borne solely by
the Company. The initial Gross-Up Payment, if any, as determined
pursuant to this Section 10.2(B), shall be paid by the Company to
the Executive within five (5) days of the receipt of the
Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure
to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the
Accounting Firm under this Section 10.2(B) shall be binding upon
Energy East, the Company and the Executive. 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 Energy East exhausts its
remedies pursuant to Section 10.2(C) and the Executive 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 Executive.
<PAGE>
(C) The Executive shall notify Energy East in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of an
Underpayment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the
Executive is informed in writing of such claim and shall apprise
Energy East of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the thirty (30) day period
following the date on which he gives such notice to Energy East
(or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If Energy East
notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive
shall:
(i) give Energy East any information reasonably
requested by Energy East relating to such claim,
(ii) take such action in connection with contesting
such claim as Energy East 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 Energy East,
(iii) cooperate with Energy East in good faith in order
effectively to contest such claim, and
(iv) permit Energy East to participate in any
proceeding 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 Executive 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 10.2(C),
Energy East 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 Executive to pay
the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
<PAGE>
courts, as Energy East shall determine; provided, however, that
if Energy East directs the Executive to pay such claim and sue
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive 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 Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Energy East's control of the
contest shall be limited to issues with respect to which a Gross-
Up Payment would be payable hereunder and the Executive 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 Executive of an
amount advanced by the Company pursuant to Section 10.2(C)
hereof, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to Energy
East's and the Company's complying with the requirements of
Section 10.2(C) hereof) 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
Executive of an amount advanced by the Company pursuant to
Section 10.2(C) hereof, a determination is made that the
Executive shall not be entitled to any refund with respect to
such claim and Energy East does not notify the Executive in
writing of its intent to contest such denial of refund prior to
the expiration of thirty (30) days after such determination, then
such advance shall be forgiven and shall not be required to be
repaid.
10.3 The payments provided for in Section 10.1 hereof
(other than Section 10.1(C) and (D)) shall be made not later than
the fifth day following each Determination Date, provided,
however, that if the amounts of such payments cannot be finally
determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined by the
Executive, of the minimum amount of such payments to which the
Executive is clearly entitled and shall pay the remainder of such
payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day
after each Determination Date. In the event that the amount of
the estimated payments exceeds the amount subsequently determined
<PAGE>
to have been due, such excess shall constitute a loan by the
Company to the Executive, payable on the fifth (5th) business day
after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
10.4 The Company also shall pay to the Executive all
legal fees and expenses incurred by the Executive as a result of
a termination which entitles the Executive to the Severance
Payments (including all such fees and expenses, if any, incurred
in disputing any such termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement
or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to
any payment or benefit provided hereunder). Such payments shall
be made within five (5) business days after delivery of the
Executive's written requests for payment accompanied with such
evidence of fees and expenses incurred as Energy East reasonably
may require.
11. Termination Procedures.
11.1 Notice of Termination. During the Term of this
Agreement (and, if longer, until the end of the Change-in-Control
Protective Period), any purported termination of the Executive's
employment (other than by reason of death) shall be communicated
by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board which
was called and held for the purpose of considering such
termination (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Executive was guilty of conduct
set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.
11.2 Date of Termination. "Date of Termination", with
respect to any purported termination of the Executive's
employment during the Term of this Agreement (or prior to the end
of the Change-in-Control Protective Period, if a Change-in-
Control shall have occurred), shall mean (i) if the Executive's
employment is terminated by his death, the date of his death,
<PAGE>
(ii) if the Executive's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day
period), and (iii) if the Executive's employment is terminated
for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination by Energy East,
shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days, respectively, from the date such Notice of
Termination is given).
12. No Mitigation. Energy East and the Company agree that,
if the Executive's employment hereunder is terminated during the
Term (or, if later, prior to the end of the Change-in-Control
Protective Period), the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable
to the Executive by Energy East or the Company hereunder.
Further, the amount of any payment or benefit provided for
hereunder (other than pursuant to Section 10.1(D) hereof) shall
not be reduced by any compensation earned by the Executive as the
result of employment by another employer, by retirement benefits,
by offset against any amount claimed to be owed by the Executive
to Energy East or the Company, or otherwise.
13. Confidentiality and Noncompetition.
13.1 The Executive will not, during or after the Term,
disclose to any entity or person any information which is treated
as confidential by Energy East or the Company and to which the
Executive gains access by reason of his position as an employee
or director of Energy East or the Company.
13.2 If, at any time prior to the end of the Term (or,
if later, the end of the Change-in-Control Protective Period),
the Executive terminates his own employment without Good Reason
(and not in connection with his Disability, Retirement or death)
or Energy East terminates his employment with Cause, then for a
twelve-month period immediately following his Date of
Termination, the Executive shall not, except as permitted by
Energy East upon its prior written consent, enter, directly or
indirectly, into the employ of or render or engage in, directly
or indirectly, any services to any person, firm or corporation
within the "Restricted Territory," which is a major competitor of
Energy East, the Company or any generation subsidiary of Energy
East with respect to products which Energy East, the Company or
any generation subsidiary of Energy East are then producing or
services Energy East, the Company or any generation subsidiary of
Energy East are then providing (a "Competitor"). However, it
<PAGE>
shall not be a violation of the immediately preceding sentence
for the Executive to be employed by, or render services to, a
Competitor, if the Executive renders those services only in lines
of business of the Competitor which are not directly competitive
with the primary lines of business of Energy East, the Company or
any generation subsidiary of Energy East or are outside of the
Restricted Territory. For purposes of this Section 13.2, the
"Restricted Territory" shall be the states of Maryland, New
Jersey, New York and Pennsylvania.
If, at any time following a Change-in-Control, or a
Potential Change-in-Control under the circumstances described in
the second sentence of Section 10.1 hereof, and prior to the end
of the Term (or, if later, the end of the Change-in-Control
Protective Period), the Executive terminates his own employment
with Good Reason (and not in connection with his Disability or
Retirement) or Energy East terminates his employment without
Cause, then for a twelve month period immediately following his
Date of Termination, the Executive shall not enter into the
employ of any person, firm or corporation or any affiliate
thereof (as such term is defined in Rule 12b-2 of the Exchange
Act) that caused the Change-in-Control, or the Potential Change-
in-Control under the circumstances described in the second
sentence of Section 10.1 hereof.
14. Successors; Binding Agreement.
14.1 In addition to any obligations imposed by law
upon any successor to Energy East or the Company, Energy East and
the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of Energy East
or the Company, as the case may be, to expressly assume and agree
to perform this Agreement in the same manner and to the same
extent that Energy East and the Company would be required to
perform it if no such succession had taken place. Failure of
Energy East or the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to
compensation from Energy East and the Company in the same amount
and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change-in-Control, except
that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the
Date of Termination.
14.2 This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
<PAGE>
distributees, devisees and legatees. If the Executive shall die
while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued
to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the
Executive's estate.
15. Notices. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be
effective only upon actual receipt:
To Energy East:
Energy East Corporation
Post Office Box 12904
Albany, NY 12212-2904
Attention: Corporate Secretary
To the Company:
New York State Electric & Gas Corporation
Post Office Box 3607
Binghamton, NY 13902-3607
Attention: Corporate Secretary
To the Executive:
Kenneth M. Jasinski
145 Corlies Avenue
Pelham, NY 10803
16. Miscellaneous.
16.1 No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and
such officers as may be specifically designated by the Board and
the NYSEG Board, respectively. No waiver by any party hereto at
any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at
<PAGE>
any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which are not
expressly set forth in this Agreement. This Agreement sets forth
the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York.
All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such
sections. There shall be withheld from any payments provided for
hereunder any amounts required to be withheld under federal,
state or local law and any additional withholding amounts to
which the Executive has agreed. The obligations under this
Agreement of Energy East, the Company or the Executive which by
their nature and terms require satisfaction after the end of the
Term (or after the end of the Change-in-Control Protective
Period) shall survive such event and shall remain binding upon
such party.
16.2 Notwithstanding any provision of this Agreement
to the contrary, Energy East and the Company shall be jointly and
severally liable to the Executive and his personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees or legatees for all payment obligations
under this Agreement.
17. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
18. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
19. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to
and determined by the Board and shall be in writing. Any denial
by the Board of a claim for benefits under this Agreement shall
be delivered to the Executive in writing and shall set forth the
specific reasons for the denial and the specific provisions of
this Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision denying
<PAGE>
a claim and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days after
notification by the Board that the Executive's claim has been
denied. To the extent permitted by applicable law, any further
dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in
Binghamton, New York in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction.
20. Definitions. For purposes of this Agreement, the
following terms shall have the meaning indicated below:
(A) "Base Salary" shall have the meaning stated in
Section 5.1 hereof.
(B) "Beneficial Owner" shall have the meaning defined
in Rule 13-d-3 under the Exchange Act.
(C) "Board" shall mean the Board of Directors of
Energy East.
(D) "Cause" for termination by Energy East of the
Executive's employment, for purposes of this Agreement, shall
mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with Energy East and
the Company (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to
Section 11.1) after a written demand for substantial performance
is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes
that the Executive has not substantially performed the
Executive's duties, or (ii) the willful engaging by the Executive
in conduct which is demonstrably and materially injurious to
Energy East or its subsidiaries, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful"
unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the Executive's act, or
failure to act, was in the best interest of Energy East.
(E) A "Change-in-Control" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied during the Term:
<PAGE>
(I) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of Energy
East (not including in the securities beneficially
owned by such Person any securities acquired directly
from Energy East or its affiliates) representing 25% or
more of the combined voting power of Energy East's then
outstanding securities; or
(II) during any period of two consecutive years
(not including any period prior to the date of this
Agreement), individuals who at the beginning of such
period constitute the Board and any new director (other
than a director designated by a Person who has entered
into an agreement with Energy East to effect a
transaction described in paragraph (I), (III) or (IV)
of this Change-in-Control definition or a director
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 solicitations of proxies or
consents by or on behalf of a Person other than the
Board) whose election by the Board or nomination for
election by Energy East's stockholders was approved by
a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination
for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(III) the shareholders of Energy East approve a
merger or consolidation of Energy East with any other
corporation, other than (i) a merger or consolidation
which would result in the voting securities of Energy
East outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an
employee benefit plan of Energy East or any of its
subsidiaries, at least 75% of the combined voting power
of the voting securities of Energy East or such
surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization
of Energy East (or similar transaction) in which no
Person acquires more than 50% of the combined voting
power of Energy East's then outstanding securities; or
(IV) the shareholders of Energy East approve a
plan of complete liquidation of Energy East or an
agreement for the sale or disposition by Energy East of
all or substantially all Energy East's assets.
(F) "Change-in-Control Protective Period" shall mean
the period from the occurrence of a Change-in-Control until the
later of (i) the second anniversary of such Change-in-Control or,
(ii) if such Change-in-Control shall be caused by the shareholder
approval of a merger or consolidation, as described in Section
20(E)(III) hereof, the second anniversary of the consummation of
such merger or consolidation, provided, however, that in the
event that the agreement providing for such merger or
consolidation, as described in Section 20(E)(III) hereof, is
terminated without consummation of such merger or consolidation,
the Change-in-Control Protective Period shall expire 90 days
following such termination, unless there has occurred another
event constituting a Change-in-Control, in which case the Change-
in-Control Protective Period shall expire upon the date described
herein with respect to such subsequent Change-in-Control.
(G) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(H) "Company" shall mean New York State Electric & Gas
Corporation and any successor to its business and/or assets which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
(I) "Date of Termination" shall have the meaning
stated in Section 11.2 hereof.
(J) "Disability" shall be deemed the reason for the
termination by Energy East of the Executive's employment, if, as
a result of the Executive's incapacity due to physical or mental
illness, the Executive shall have been absent from the full-time
performance of the Executive's duties with Energy East and the
Company for the maximum number of months applicable to the
Executive under the Company's Disability Policy for Salaried
Employees (or any successor policy) (but in no event for less
than six (6) consecutive months), Energy East shall have given
the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the
Executive shall not have returned to the full-time performance of
the Executive's duties.
(K) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended from time to time.
(L) "Excise Tax" shall have the meaning stated in
Section 10.2(A) hereof.
(M) "Executive" shall mean the individual named in the
first paragraph of this Agreement.
<PAGE>
(N) "Good Reason" for termination by the Executive of
the Executive's employment shall mean the occurrence (without the
Executive's express written consent) after any Change-in-Control,
or after any Potential Change-in-Control under the circumstances
described in the second sentence of Section 10.1 hereof (treating
all references in paragraphs (I) through (VII) below to a
"Change-in-Control" as references to a "Potential Change-in-
Control), of any one of the following acts by Energy East or the
Company, or failures by Energy East or the Company to act,
unless, in the case of any act or failure to act described in
paragraphs (I), (V), (VI) or (VII) below, such act or failure to
act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(I) the assignment to the Executive of any
duties inconsistent with the Executive's status as an
executive officer of Energy East or the Company or a
substantial alteration in the nature or status of the
Executive's responsibilities from those in effect
immediately prior to the Change-in-Control (including,
without limitation, any such alteration attributable to
the fact that Energy East or the Company may no longer
be a public company);
(II) a reduction by Energy East or the Company in
the Executive's annual base salary as in effect on the
date hereof or as the same may be increased from time
to time;
(III) the relocation of Energy East's principal
executive offices to a location more than fifty (50)
miles from the location of such offices immediately
prior to the Change-in-Control or Energy East's or the
Company's requiring the Executive to be based anywhere
other than Energy East's principal executive offices
except for required travel on Energy East's or the
Company's business to an extent substantially
consistent with the Executive's present business travel
obligations;
(IV) the failure by Energy East or the Company,
without the Executive's consent, to pay to the
Executive any portion of the Executive's current
compensation, or to pay to the Executive any portion of
an installment of deferred compensation under any
deferred compensation program of Energy East or the
Company, within seven (7) days of the date such
compensation is due;
<PAGE>
(V) the failure by Energy East or the Company to
continue in effect any compensation plan in which the
Executive participates immediately prior to the Change-
in-Control which is material to the Executive's total
compensation, including but not limited to the
Company's Annual Executive Incentive Plan, Long Term
Executive Incentive Share Plan, and Supplemental
Executive Retirement Plan, or any substitute plans
adopted prior to the Change-in-Control, unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with
respect to such plan, or the failure by Energy East or
the Company to continue the Executive's participation
therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of the
Executive's participation relative to other
participants, as existed at the time of the Change-in-
Control;
(VI) the failure by Energy East or the Company to
continue to provide the Executive with benefits
substantially similar to those enjoyed by the Executive
under any of Energy East's or the Company's pension,
life insurance, medical, health and accident, or
disability plans in which the Executive was
participating at the time of the Change-in-Control, the
taking of any action by Energy East or the Company
which would directly or indirectly materially reduce
any of such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the
time of the Change-in-Control, or the failure by Energy
East or the Company to provide the Executive with the
number of paid vacation days to which the Executive is
entitled to under Section 5.4 hereof, or the failure by
the Company to provide the Executive with the pension
supplement it agreed to provide pursuant to the second
paragraph of Section 5.2 hereof; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice
of Termination satisfying the requirements of Section
11.1; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the
Executive's incapacity due to physical or mental illness. The
Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(O) "Gross-Up Payment" shall have the meaning stated
in Section 10.2(A) hereof.
(P) "Notice of Termination" shall have the meaning
stated in Section 11.1 hereof.
(Q) "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; however, a Person shall not include
(i) Energy East or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan
of Energy East or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
by the stockholders of Energy East in substantially the same
proportions as their ownership of stock of Energy East.
(R) "Potential Change-in-Control" shall be deemed to
have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied during the Term:
(I) Energy East enters into an agreement, the
consummation of which would result in the occurrence of
a Change-in-Control;
(II) Energy East or any Person publicly announces
an intention to take or to consider taking actions
which, if consummated, would constitute a Change-in-
Control;
(III) any Person (x) is or becomes the Beneficial
Owner, directly or indirectly, (y) discloses directly
or indirectly to Energy East (or publicly) a plan or
intention to become the Beneficial Owner, directly or
indirectly, or (z) makes a filing under the Hart-Scott-
Rodino Anti-Trust Improvements Act of 1976, as amended,
with respect to securities to become the Beneficial
Owner, directly or indirectly, of securities of Energy
East representing 9.9% or more of the combined voting
power of Energy East's then outstanding securities; or
(IV) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential
Change-in-Control has occurred.
<PAGE>
(S) "Retirement" shall be deemed the reason for the
termination by Energy East or the Executive of the Executive's
employment if such employment is terminated in accordance with
Energy East's retirement policy, not including early retirement,
generally applicable to its salaried employees, as in effect
immediately prior to the Change-in-Control, or in accordance with
any retirement arrangement established with the Executive's
consent with respect to the Executive.
(T) "Severance Payments" shall mean those payments
described in Section 10.1 hereof.
(U) "Term" shall have the meaning stated in Section 3
hereof.
(V) "Energy East" shall mean Energy East Corporation
and any successor to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or
otherwise (except in determining, under Section 20(E) hereof,
whether or not any Change-in-Control of Energy East has occurred
in connection with such succession).
(W) "NYSEG Board" shall mean the Board of Directors of
the Company.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first above written.
ENERGY EAST CORPORATION
By Wesley W. von Schack
Wesley W. von Schack
Chairman, President, and Chief
Executive Officer
NEW YORK STATE ELECTRIC & GAS
CORPORATION
By Michael I. German
Michael I. German
Executive Vice President and
Chief Operating Officer
KENNETH M. JASINSKI
KENNETH M. JASINSKI
<TABLE> <S> <C>
<ARTICLE> UT EXHIBIT 27
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S FINANCIAL STATEMENTS INCLUDED IN ITS FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,784,098
<OTHER-PROPERTY-AND-INVEST> 98,005
<TOTAL-CURRENT-ASSETS> 332,627
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 548,408
<TOTAL-ASSETS> 3,763,138
<COMMON> 430,057
<CAPITAL-SURPLUS-PAID-IN> 429,740
<RETAINED-EARNINGS> 41,189
<TOTAL-COMMON-STOCKHOLDERS-EQ> 900,986
25,000
104,440
<LONG-TERM-DEBT-NET> 1,441,163
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 70,000
<LONG-TERM-DEBT-CURRENT-PORT> 2,023
30,000
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,189,526
<TOT-CAPITALIZATION-AND-LIAB> 3,763,138
<GROSS-OPERATING-REVENUE> 1,086,535
<INCOME-TAX-EXPENSE> 72,177
<OTHER-OPERATING-EXPENSES> 140,559
<TOTAL-OPERATING-EXPENSES> 836,058
<OPERATING-INCOME-LOSS> 250,477
<OTHER-INCOME-NET> (3,428)
<INCOME-BEFORE-INTEREST-EXPEN> 0
<TOTAL-INTEREST-EXPENSE> 60,266
<NET-INCOME> 114,606
4,529
<EARNINGS-AVAILABLE-FOR-COMM> 110,077
<COMMON-STOCK-DIVIDENDS> 120,391
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 305,433
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
