EXHIBIT 10-46
EMPLOYMENT AGREEMENT
AGREEMENT made this 19th day of
January, 1994, between New York State Electric & Gas
Corporation, a New York corporation (the "Company"), and
James A. Carrigg (the "Executive").
The Board of Directors of the Company (the
"Board") desires to provide for the employment of the
Executive as a member of the Company's management, in the
best interest of the Company and its shareholders. The
Executive is willing to commit himself to serve the
Company, on the terms and conditions herein provided.
In order to effect the foregoing, the Company
and the Executive wish to enter into an employment agree-
ment on the terms and conditions set forth below. Ac-
cordingly, 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 capi-
talized terms used in this Agreement are provided in the
last Section hereof.
2. Employment. The Company hereby agrees to
employ the Executive, and the Executive hereby agrees to
serve 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 the date hereof and end on December 31, 1996, unless
further extended as hereinafter provided. Commencing on
January 1, 1996 and each January 1 thereafter, the term
of this Agreement shall automatically be extended for one
additional year unless, not later than September 30 of
the preceding year, the Company (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 6, 7 and 10 through 20 of this Agree-
ment 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).
4. Position and Duties. The Executive shall
serve as Chairman, President and Chief Executive Officer
of the Company and shall have such responsibilities,
duties and authority that are consistent with such posi-
tions as may from time to time be assigned to the Execu-
tive by the Board. The Executive shall devote substan-
tially all his working time and efforts to the business
and affairs of 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
Executive a base salary ("Base Salary") during the period
of the Executive's employment hereunder, which shall be
at an initial rate of Four Hundred Twenty-Five Thousand
Dollars ($425,000.00) per annum. The amount to be paid
from the first date of the Term through the immediately
following December 31 shall be the product of Four Hun-
dred Twenty-Five Thousand Dollars ($425,000.00) multi-
plied by a fraction, the numerator of which is the number
of calendar days from first date of the Term through such
December 31 and the denominator of which is 365. 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 compensa-
tion.
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 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 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 the Company now or during
the period of the Executive's employment hereunder to its
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 arrange-
ments shall be on an appropriate level, as determined by
the Board.
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.
6. Compensation Related to Disability or
Termination (Other Than 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 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 Execu-
tive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during
such period, until the Executive's employment is termi-
nated by the Company 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 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 re-
quired by Section 5.3 hereof and making the payments and
providing the benefits required by this Section 6.1, the
Company shall have no further obligations to the Execu-
tive under this Agreement.
6.2 If the Executive's employment shall be
terminated for any reason during the Term of this Agree-
ment (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 accor-
dance 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 Termina-
tion is given, together with all compensation and bene-
fits payable to the Executive through the Date of Termi-
nation under the terms of any compensation or benefit
plan, program or arrangement maintained by the Company
during such period. Subject to Sections 7, 8, 9 and 10
hereof, after completing the expense reimbursements re-
quired by Section 5.3 hereof and making the payments and
providing the benefits required by this Section 6.2, the
Company shall have no further obligations to the Execu-
tive 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, such post-termi-
nation compensation and benefits shall be determined
under, and paid in accordance with, the Company's retire-
ment, 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 the Company without
Cause. If the Company shall terminate the Executive's
employment during the Term and prior to a Change in Con-
trol, without Cause (and not for Disability or in con-
nection 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 Execu-
tive, 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, 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 "em-
ployee welfare benefit plan" (as defined 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 Exec-
utive would otherwise have been entitled to receive under
the plan from which his continued participation is barred.
10. Severance Payments.
10.1 Subject to Section 10.2 hereof, 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 the Company for Cause, (ii) by reason of death, Disabili-
ty 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
the Company 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 the
Company 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 follow-
ing 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 sever-
ance benefit otherwise payable to the Executive, the
Company shall pay to the Executive a lump sum severance
payment, in cash, equal two (2) 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 higher of (x) the amount paid to the
Executive pursuant to the Company's Annual
Executive Incentive Compensation Plan (or its
successor plan) in the fiscal year preceding
that in which the Date of Termination occurs,
or (y) the average amount so paid in the
three fiscal years preceding that in which
the Change in Control occurs.
(B) Notwithstanding any provision of the
Company's 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 Incen-
tive 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 por-
tion 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 Compensation Plan calculated
as to each such award by (i) assuming the Threshold
Measure of such plan has been met and (ii) using such
adjustments to the Variable Measure as the Committee
(as defined in such plan) may have provided and the
Board may have approved prior to the Change in Control,
in order to produce an appropriate pro-rata award for
such fiscal year;
(C) In determining the retirement benefits
to which the Executive is entitled under the Company's
Supplemental Executive Retirement Plan, the Executive
shall be given an additional two (2) years of service
credit at the Executive's highest annual rate of com-
pensation during the twelve (12) months immediately
preceding the Date of Termination and shall be deemed
to be two (2) years older than he is; such benefits
shall be determined without regard to any amendment to
the Supplemental Executive Retirement Plan made subse-
quent 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.
(D) For a twenty-four (24) month period
after the Date of Termination, the Company shall ar-
range 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 subse-
quent to a Change in Control if such reduction consti-
tutes Good Reason). 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 twenty-four (24) month period following
the Executive's termination of employment (and any such
benefits actually received by the Executive shall be
reported to the Company by the Executive). If the
benefits provided to the Executive under this Section
10.1(D) shall result in a decrease, pursuant to Section
10.2, in the Severance Payments and these Section
10.1(D) benefits are thereafter reduced pursuant to the
immediately preceding sentence because of the receipt
of comparable benefits, the Company shall, at the time
of such reduction, pay to the Executive the lesser of
(a) the amount of the decrease made in the Severance
Payments pursuant to Section 10.2, or (b) the maximum
amount which can be paid to the Executive without
being, or causing any other payment to be, nondeduct-
ible by reason of section 280G of the Code.
10.2 Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received
or to be received by the Executive in connection with a
Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Compa-
ny, any Person whose actions result in a Change in Control
or any Person affiliated with the Company or such Person)
(all such payments and benefits, including the Severance
Payments, being hereinafter called "Total Payments") would
be subject (in whole or part), to the Excise Tax, then the
Severance Payments shall be reduced to the extent necessary
so that no portion of the Total Payments is subject to the
Excise Tax (after taking into account any reduction in the
Total Payments provided by reason of section 280G of the
Code in such other plan, arrangement or agreement) if (A)
the net amount of such Total Payments, as so reduced, (and
after deduction of the net amount of federal, state and
local income tax on such reduced Total Payments) is greater
than (B) the excess of (i) the net amount of such Total
Payments, without reduction (but after deduction of the net
amount of federal, state and local income tax on such Total
Payments), over (ii) the amount of Excise Tax to which the
Executive would be subject in respect of such Total Pay-
ments. For purposes of determining whether and the extent
to which the Total Payments will be subject to the Excise
Tax, (i) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively
waived in writing prior to the Date of Termination shall be
taken into account, (ii) no portion of the Total Payments
shall be taken into account which in the opinion of tax
counsel selected by the Company does not constitute a "para-
chute payment" within the meaning of section 280G(b)(2) of
the Code (including by reason of section 280G(b)(4)(A) of
the Code), and, in calculating the Excise Tax, no portion of
such Total Payments shall be taken into account which con-
stitutes reasonable compensation for services actually
rendered, within the meaning of section 280G(b)(4)(B) of the
Code, in excess of the Base Amount allocable to such reason-
able compensation, and (iii) the value of any non-cash
benefit or any deferred payment or benefit included in the
Total Payments shall be determined by the Company in accor-
dance with the principles of sections 280G(d)(3) and (4) of
the Code. Prior to the payment date set forth in Section
10.3 hereof, the Company shall provide the Executive with
its calculation of the amounts referred to in this Section
and such supporting materials as are reasonably necessary
for the Executive to evaluate the Company's calculations.
If the Executive objects to the Company's calculations, the
Company shall pay to the Executive such portion of the
Severance Payments (up to 100% thereof) as the Executive
determines is necessary to result in the Executive receiving
the greater of clauses (A) and (B) of this Section.
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 the Date of Termina-
tion, provided, however, that if the amounts of such pay-
ments, and the limitation on such payments set forth in
Section 10.2 hereof, 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 pay-
ments (together with interest at the rate provided in sec-
tion 1274(b)(2)(B) of the Code) as soon as the amount there-
of can be determined but in no event later than the thirti-
eth (30th) day after the Date of Termination. 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 seek-
ing 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 appli-
cation 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 the Company 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 14 hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agree-
ment 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 provi-
sion 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 Execu-
tive, 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 Termina-
tion (which, in the case of a termination by the Company,
shall not be less than thirty (30) days (except in the case
of a termination for Cause) and, in the case of a termina-
tion 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. The Company agrees that, if
the Executive's employment by the Company 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 the Compa-
ny 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 the Compa-
ny, 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 the Company and to which the
Executive gains access by reason of his position as an
employee or director of 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, Re-
tirement or death) or the Company terminates his employment
with Cause, then for a twelve-month period immediately fol-
lowing his Date of Termination, the Executive shall not,
except as permitted by the Company 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 which is a major competi-
tor of the Company with respect to products which the Compa-
ny is then producing or services the Company is then provid-
ing (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 the Company. The current
Competitors of the Company are listed on Exhibit 1 hereto.
With the consent of the Executive, which shall not be unrea-
sonably withheld, additional Competitors may be listed on
Exhibit 1.
14. Successors; Binding Agreement.
14.1 In addition to any obligations imposed by
law upon any successor to the Company, the Company will
require any successor (whether direct or indirect, by pur-
chase, merger, consolidation or otherwise) to all or sub-
stantially all of the business and/or assets of the Company
to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company
would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such assump-
tion 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 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 Execu-
tive 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 the Company:
New York State Electric & Gas Corporation
Post Office Box 3607
Binghamton, NY 13902-3607
Attention: Corporate Secretary
To the Executive:
James A. Carrigg
3711 Maplehurst Drive
Endwell, New York 13760
16. Miscellaneous. No provision of this Agree-
ment may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing
and signed by the Executive and such officer as may be spe-
cifically designated by the Board. No waiver by either
party hereto at any time of any breach by the 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 either 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 supercedes all prior agreements,
promises, covenants, arrangements, communications, represen-
tations 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 Agree-
ment of either 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.
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 rea-
sons 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 aris-
ing 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 meanings indicated below:
(A) "Base Amount" shall have the meaning defined
in section 280G(b)(3) of the Code.
(B) "Base Salary" shall have the meaning stated
in Section 5.1 hereof.
(C) "Beneficial Owner" shall have the meaning de-
fined in Rule 13d-3 under the Exchange Act.
(D) "Board" shall mean the Board of Directors of
the Company.
(E) "Cause" for termination by the Company 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 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 sub-
stantial 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 substan-
tially performed the Executive's duties, or (ii) the willful
engaging by the Executive in conduct which is demonstrably
and materially injurious to the Company 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 the Company.
(F) 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 Bene-
ficial Owner, directly or indirectly, of securi-
ties of the Company (not including in the secu-
rities beneficially owned by such Person any secu-
rities acquired directly from the Company or its
affiliates) representing 25% or more of the com-
bined voting power of the Company's then outstand-
ing securities; or
(II) during any period of two consecu-
tive years (not including any period prior to the
execution of this Agreement), individuals who at
the beginning of such period constitute the Board
and any new director (other than a director desig-
nated by a Person who has entered into an agree-
ment with the Company to effect a transaction
described in paragraph (I), (III) or (IV) of this
Change in Control definition) whose election by
the Board or nomination for election by the
Company'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 nomi-
nation for election was previously so approved,
cease for any reason to constitute a majority
thereof; or
(III) the shareholders of the Company
approve a merger or consolidation of the Company
with any other corporation, other than (i) a merg-
er or consolidation which would result in the
voting securities of the Company outstanding imme-
diately prior thereto continuing to represent
(either by remaining outstanding or by being con-
verted 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 the Company, at
least 75% of the combined voting power of the
voting securities of the Company or such surviving
entity outstanding immediately after such merger
or consolidation, or (ii) a merger or consolida-
tion effected to implement a recapitalization of
the Company (or similar transaction) in which no
Person acquires more than 50% of the combined
voting power of the Company's then outstanding
securities; or
(IV) the shareholders of the Company
approve a plan of complete liquidation of the
Company or an agreement for the sale or disposi-
tion by the Company of all or substantially all
the Company's assets.
(G) "Change-in-Control Protective Period" shall
mean the period from the occurrence of a Change in Control
until the later of the second anniversary of such Change in
Control or, if such Change in Control shall be caused by the
shareholder approval of a merger or consolidation described
in Section 20(F)(III) hereof, the second anniversary of the
consummation of such merger or consolidation.
(H) "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
(I) "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 (except in determining, under
Section 20(F) hereof, whether or not any Change in Control
of the Company has occurred in connection with such succes-
sion).
(J) "Date of Termination" shall have the meaning
stated in Section 11.2 hereof.
(K) "Disability" shall be deemed the reason for
the termination by the Company of the Executive's employ-
ment, 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 the Company for the maximum number of months
applicable to the Executive under the Company's Disability
Policy for Salaried Employees (but in no event for less than
six (6) consecutive months), the Company 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.
(L) "Exchange Act" shall mean the Securities Ex-
change Act of 1934, as amended from time to time.
(M) "Excise Tax" shall mean any excise tax im-
posed under section 4999 of the Code.
(N) "Executive" shall mean the individual named
in the first paragraph of this Agreement.
(O) "Good Reason" for termination by the Execu-
tive 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 refer-
ences to a "Potential Change in Control"), of any one of the
following acts by the Company, or failures by the Company to
act, unless, in the case of any act or failure to act de-
scribed in paragraph (I), (V), (VI) or (VII) below, such act
or failure to act is corrected prior to the Date of Termina-
tion specified in the Notice of Termination given in respect
thereof:
(I) the assignment to the Executive of
any duties inconsistent with the Executive's sta-
tus as an executive officer of the Company or a
substantial adverse alteration in the nature or
status of the Executive's responsibilities from
those in effect immediately prior to the Change in
Control (other than any such alteration primarily
attributable to the fact that the Company may no
longer be a public company);
(II) a reduction by 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 (except for across-the-board salary
reductions which are made after the expiration of
the Term and which similarly affect all executives
of the Company and all executives of any Person in
control of the Company);
(III) the relocation of the Company'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 the Company's requiring the Executive to be
based anywhere other than the Company's principal
executive offices except for required travel on
the Company's business to an extent substantially
consistent with the Executive's present business
travel obligations;
(IV) the failure by the Company, with-
out the Executive's consent, to pay to the Execu-
tive any portion of the Executive's current com-
pensation (except pursuant to an across-the-board
compensation deferral similarly affecting all
executives of the Company and all executives of
any Person in control of the Company), or to pay
to the Executive any portion of an installment of
deferred compensation under any deferred compensa-
tion program of the Company, within seven (7) days
of the date such compensation is due;
(V) the failure by the Company to con-
tinue 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 Incen-
tive Compensation Plan, Performance 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 fail-
ure by 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 partici-
pation relative to other participants, as existed
at the time of the Change in Control;
(VI) the failure by the Company to con-
tinue to provide the Executive with benefits sub-
stantially similar to those enjoyed by the Execu-
tive under any of the Company's pension, life
insurance, medical, health and accident, or dis-
ability plans in which the Executive was partici-
pating at the time of the Change in Control, the
taking of any action by 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 fail-
ure by the Company to provide the Executive with
the number of paid vacation days to which the
Executive is entitled on the basis of years of
service with the Company in accordance with the
Company's normal vacation policy in effect at the
time of the Change in Control; or
(VII) any purported termination of the
Executive's employment which is not effected pur-
suant 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.
(P) "Notice of Termination" shall have the mean-
ing stated in Section 11.1 hereof.
(Q) "Person" shall have the meaning given in Sec-
tion 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) the Company or any of its subsidiaries, (ii)
a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsid-
iaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corpo-
ration owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company.
(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) the Company enters into an agree-
ment, the consummation of which would result in
the occurrence of a Change in Control;
(II) the Company or any Person publicly
announces an intention to take or to consider
taking actions which, if consummated, would con-
stitute a Change in Control;
(III) any Person (x) is or becomes the
Beneficial Owner, directly or indirectly, (y)
discloses directly or indirectly to the Company
(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
the Company representing 9.9% or more of the com-
bined voting power of the Company's then outstand-
ing 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 the Company or the Executive of the
Executive's employment if such employment is terminated in
accordance with the Company's retirement policy, not includ-
ing 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 pay-
ments described in Section 10.1 hereof.
(U) "Term" shall have the meaning stated in
Section 3 hereof.
(V) "Total Payments" shall mean those payments
so described in Section 10.2 hereof.
NEW YORK STATE ELECTRIC & GAS
CORPORATION
By Richard P. Fagan
Name: Richard P. Fagan
Title: Senior Vice
President - Management
Services Business Unit
James A. Carrigg
James A. Carrigg
EXHIBIT 1
COMPETITORS
(1) Central Hudson Gas & Electric Corporation
(2) Consolidated Edison Co. of NY, Inc.
(3) Long Island Lighting Company
(4) Niagara Mohawk Power Corporation
(5) Orange & Rockland Utilities, Inc.
(6) Rochester Gas and Electric Corporation