Exhibit 16
THIRD AMENDMENT
TO EMPLOYEE BENEFIT TRUST AGREEMENT
Third Amendment to Employee Benefit Trust Agreement dated as of the
___ day of July, 1997 (the "Third Amendment") by and between New York State
Electric & Gas Corporation (the "Corporation") and Bankers Trust Company, a New
York Banking Corporation, as Trustee ("Trustee") amending certain provisions of
the Employee Benefit Trust Agreement, dated as of July 1, 1994, as amended, (the
"Trust Agreement") by and between the Corporation and the Trustee.
WHEREAS, the Employment Agreement, dated August 7, 1996, as amended,
previously entered into between the Corporation and Xxxxxx X. xxx Xxxxxx (the
"xxx Xxxxxx Employment Agreement"), which provides in Section 10.1(A), Section
10.1(B) and Section 10.2 thereof for certain cash payments to be made by the
Corporation to Xx. xxx Xxxxxx in the event of certain terminations of
employment, was further amended to clarify and to modify certain provisions.
WHEREAS, the Severance Agreements, as amended, previously entered into
between the Corporation and the Executive and Senior Vice Presidents and the
Vice Presidents of the Corporation (the "Officer Severance Agreements"), which
provide in Section 6.1(A) and Section 6.1(B) thereof for certain cash payments
to be made by the Corporation to the officers in the event of certain
terminations of employment, were further amended to provide for certain
additional payments in connection with such terminations of employment.
WHEREAS, the Corporation has entered into, and intends to enter into,
certain severance agreements, with certain key employees of the Corporation,
including Messrs. Xxxxxx, Xxxx and Rude (the "Key Employee Severance
Agreements"), which provide (or will provide) in Section 6.1(A), Section 6.1(B)
and Section 6.2 thereof for certain cash payments to be made by the Corporation
to the key employees in the event of certain terminations of employment.
WHEREAS, the Corporation has adopted, effective July 29, 1997, the
New York State Electric & Gas Corporation Selected Employee Retention Plan (the
"Retention Plan"), which provides (or will provide) for certain cash payments to
be made by the Corporation to certain selected employees in the event of certain
transactions involving the Corporation and certain terminations of employment.
WHEREAS, the parties hereto wish to amend the Trust Agreement to
reflect the amendments to the xxx Xxxxxx Employment Agreement and the Officer
Severance Agreements, the entering into by the Corporation of the Key Employee
Severance Agreements and the adoption of the Retention Plan, and to clarify the
assumptions used in Section 2.4 thereof and to modify the definition of Transfer
in Section 2.5(b) thereof.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The fifth WHEREAS clause of the Trust Agreement is hereby
amended to read in its entirety as follows:
"WHEREAS, the Corporation has entered into an Employment Agreement
dated August 7, 1996 with Xxxxxx X. xxx Xxxxxx (hereinafter, as
amended and as it may be amended from time to time, the "xxx
Xxxxxx Employment Agreement"), which provides in Section 10.1(A) and
Section 10.1(B) thereof for certain cash severance payments to be made
by the Corporation to Xx. xxx Xxxxxx in the event of certain
terminations of his employment and in Section 10.2 for a "Gross-Up
Payment" (as defined in the xxx Xxxxxx Employment Agreement) in
certain circumstances (such severance payments and Gross-Up Payment
are hereinafter referred to as the "xxx Xxxxxx Xxxxxxxxx Benefits");
and"
2. The sixth WHEREAS clause of the Trust Agreement is hereby amended
to read in its entirety as follows:
"WHEREAS, the Corporation has entered into, and intends to enter into,
certain severance agreements (hereinafter, as amended and as they
may be amended from time to time, the "Officer Severance Agreements")
with existing and future Senior Vice Presidents and Vice Presidents of
the Corporation and existing and future select key employees of the
Corporation (hereinafter, the "Key Employee Severance Agreements"),
which provide (or will provide) in Section 6.1(A) and Section 6.1(B)
for certain cash severance payments to be made by the Corporation to
the officers and the key employees in the event of certain
terminations of employment and in Section 6.2 for a "Gross-Up Payment"
(as defined in the Officer Severance Agreements and the Key Employee
Severance Agreements) in certain circumstances (such severance
payments and Gross-Up Payments are hereinafter, collectively with the
von Shack Severance Benefits, referred to as the "Severance
Benefits"); and"
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3. The following language is hereby added immediately after the
sixth WHEREAS clause of the Trust Agreement and is hereinafter considered to be
the seventh WHEREAS clause:
"WHEREAS, the Corporation has adopted, effective July __, 1997, the
New York State Gas & Electric Corporation Selected Employee Retention
Plan (the "Retention Plan"), which provides for certain cash payments
to be made by the Corporation to certain selected employees in the
event of certain transactions involving the Corporation and certain
terminations of employment (such retention payments are hereinafter
referred to as the "Retention Payments"); and"
4. The seventh WHEREAS clause of the Trust Agreement is
hereinafter considered to be the eighth WHEREAS clause and is amended to read
in its entirety as follows:
"WHEREAS, the Deferred Compensation Plan for Salaried Employees, the
Performance Share Deferred Compensation Plan, the LTEIS Deferred
Compensation Plan, the Deferred Compensation Agreements, the
Supplemental Executive Retirement Plan, the xxx Xxxxxx Employment
Agreement, the Officer Severance Agreements, the Key Employee
Severance Agreements and the Retention Plan (such plans and
agreements, each as amended and as may be amended from time to time,
being sometimes hereinafter called, collectively, the "Plans") provide
for the payment of certain deferred compensation, retirement benefits,
Severance Benefits and Retention Payments (together, hereinafter, the
"Benefits") to participating employees (or their beneficiaries in the
event of their death before full payment of the Benefits); and"
5. Section 2.2 of the Trust Agreement is hereby amended to read
in its entirety:
"Upon a Change in Control, the Corporation shall, as soon as possible,
but in no event later than forty-five (45) business days following the
Change in Control, make a contribution (which contribution shall be, except
as otherwise provided in Section 6.2 hereof, an irrevocable contribution)
to the Trust in an amount which (when aggregated with the assets then held
by the Trust, valued at their fair market value) is equal to (i) the
present value of the Benefits to which Participants or their beneficiaries
would be entitled pursuant to the terms of the Plans and Participant
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Designations as of the date on which the Change in Control occurred (which
in the case of the Severance Benefits, shall be deemed to be the Benefits
payable in the event of an assumed immediate qualifying termination of
employment), plus (ii) the aggregate maximum amount of Retention Payments
payable under the Retention Plan, plus (iii) a reasonable estimated amount
for the Trust's expenses during its term (such estimate not to exceed one
percent (1%) of the present value). The sum of the amounts described in
items (i), (ii) and (iii) of the immediately preceding sentence is
hereinafter called the "Required Funding Amount." The Corporation hereby
authorizes and directs its chief executive officer, and its chief financial
officer, or either of them acting alone, to contribute the Required Funding
Amount without the further approval of the Board of Directors (the
"Board"). Immediately after the Corporation makes such contribution, the
Corporation shall provide the Administrator with copies of all Plans and
Participant Designations, to the extent not previously provided, and other
information used in the Corporation's calculation of the Required Funding
Amount, as well as its worksheets for such calculations. In computing the
Required Funding Amount pursuant to this Section 2.2 with respect to the
Change in Control event occurring on July 15, 1997, the Administrator shall
take into account the amendments made by the Third Amendment to this
Agreement."
6. The first sentence of Section 2.4 of the Trust Agreement is
hereby amended to read as follows:
"For the purpose of determining the amount of the Corporation's
contributions under Section 2.2 and 2.3 hereof, the present value of the
Benefits under the Supplemental Executive Retirement Plan and Section 7 of
the Salaried Employee Deferred Compensation Agreements shall be determined
using the 1983 Group Annuity Mortality Table and an interest rate equal to
the after-tax yield on a 10-Year Treasury Constant Maturity Bond."
7. Paragraph (ii) of Section 2.5(b) of the Trust Agreement is
hereby amended to read as follows:
"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 the Corporation to effect a
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transaction described in paragraph (i), (iii) or (iv) of this Section
2.5(b) 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 the Corporation'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"
8. The first sentence of Section 6.1 of the Trust Agreement is
hereby amended to read as follows:
"Except as provided in this Article, and Articles V and XIII, after the
Trust has become irrevocable, the Corporation shall have no right to
receive, and no power to direct Trustee to return to the Corporation or to
divert to others, any of the Trust assets before the later to occur of (i)
the date on which payment of all Benefits under the Plans to Participants
and their beneficiaries has been completed pursuant to the terms of the
Plans and (ii) the date the "Change in Control Protective Period" (as
defined in the xxx Xxxxxx Employment Agreement, the Officer Severance
Agreements and the Key Employee Severance Agreements) expires."
9. The third sentence of Section 6.1 of the Trust Agreement is
hereby amended to read as follows:
"With respect to the calculation by the Administrator of the revised
Required Funding Amount as of the end of any year which occurs before the
expiration of the Change in Control Protective Period, if any Participant
whose employment with the Corporation was terminated during such year and
who had previously entered into an Officer Severance Agreement or Key
Employee Severance Agreement (or the xxx Xxxxxx Employment Agreement, in
the case of Xxxxxx X. xxx Xxxxxx) shall have confirmed to the Administrator
by a signed writing that such Participant no longer has any claim or right
to his or her Severance Benefits, the Administrator shall delete such
Severance Benefits from the calculation of the revised Required Funding
Amount."
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10. This Third Amendment is effective as of the date first above
written.
11. Except as expressly modified hereby, the terms and
provisions of the Trust Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to be duly executed by their respective duly authorized
representatives as of the date first above written.
NEW YORK STATE ELECTRIC & BANKERS TRUST COMPANY
GAS CORPORATION
By: __________________________ By: __________________________
