EXHIBIT 10-41
EMPLOYMENT AGREEMENT
AGREEMENT made this 1st day of March, 1998, between New York
State Electric & Gas Corporation, a New York corporation (the
"Company"), and Xxxxxxx X. German (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 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. 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 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, 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 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).
4. Position and Duties. The Executive shall serve as
Executive Vice President of the Company and shall have such
responsibilities, duties and authority that are consistent with
such position as may from time to time be assigned to the
Executive by the Board. The Executive shall devote substantially
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 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) 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
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 arrangements shall be on an
appropriate level, as determined by the Board.
If the Executive's service with 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 and the Company's Supplemental Executive Retirement
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 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 the Company during such period, until the
Executive's employment is terminated 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 required 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 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 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, 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, 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 the Company Without Cause.
If the Company 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
Xxxx 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 "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 the Company 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 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 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.
(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) 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 compensation during the
twelve (12) months immediately preceding the Date of
Termination and shall be deemed to be two (2) years older
than he is; provided that if the Executive does not have at
least ten (10) years of service credit under the Company's
Supplemental Executive Retirement Plan after such additional
two (2) years of service credit, the Executive shall be
deemed to have at least ten (10) years of service credit
under the Supplemental Executive Retirement Plan; such
benefits shall be determined without regard to any amendment
to the Supplemental Executive Retirement 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.
(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 the Company
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 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 the Company'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
the Company 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
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 the Company 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 the Company 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
the Company 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 the Company
(or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company 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 the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company 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),
the Company 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 xxx 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 the Company shall determine; provided, however, that
if the Company directs the Executive to pay such claim and xxx
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, the Company'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 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 the Company
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 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 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 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 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. 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 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 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 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, Retirement or death)
or the Company 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 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
within the "Restricted Territory," which is a major competitor of
the Company with respect to products which the Company is then
producing or services the Company is 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 the Company 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.
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 purchase, merger,
consolidation or otherwise) to all or substantially 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 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 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 the Company:
New York State Electric & Gas Corporation
0000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Secretary
To the Executive:
Xxxxxxx X. German
0 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
16. Miscellaneous. 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 officer as may be specifically 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 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 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 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 the
Company.
(D) "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 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 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.
(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 the Company
(not including in the securities beneficially owned by
such Person any securities acquired directly from the
Company or its affiliates) representing 25% or more of
the combined voting power of the Company'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 the Company 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 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 nomination
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 merger or consolidation
which would result in the voting securities of the
Company 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
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
consolidation 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 disposition by the Company of all or
substantially all the Company'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
15(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 15(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 (except in determining, under Section 20(E) hereof,
whether or not any Change-in-Control of the Company has occurred
in connection with such succession).
(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 the Company 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 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.
(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 the Company, or
failures by 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 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 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;
(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, 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 the Company, within seven (7) days of the
date such compensation is due;
(V) the failure by 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 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 the Company to continue to
provide the Executive with benefits substantially
similar to those enjoyed by the Executive under any of
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 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 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)
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 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 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 agreement, 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 constitute 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 Xxxx-Xxxxx-
Xxxxxx 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 combined
voting power of the Company'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 the Company or the Executive of the Executive's
employment if such employment is terminated in accordance with
the Company'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.
NEW YORK STATE ELECTRIC & GAS
CORPORATION
By Xxxxxx X. Xxx Xxxxxx
Name: XXXXXX X. XXX XXXXXX
Title: Chairman, President and
Chief Executive Officer
Xxxxxxx Xxxxxx
XXXXXXX X. GERMAN
