-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WOy1U3mHoZmuLPggBaBxYpr3VV89sch3xBfjKv+bamzdA1stHT6V4X7F9P6jOyTo FoP7pNg2YGOvmFJXNs4e0Q== 0001046861-99-000012.txt : 19990811 0001046861-99-000012.hdr.sgml : 19990811 ACCESSION NUMBER: 0001046861-99-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENERGY EAST CORP CENTRAL INDEX KEY: 0001046861 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 141798693 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14766 FILM NUMBER: 99682230 BUSINESS ADDRESS: STREET 1: PO BOX 12904 STREET 2: SUITE 2006A 20TH FLOOR CITY: ALBANY STATE: NY ZIP: 12212-2904 BUSINESS PHONE: 5184343014 MAIL ADDRESS: STREET 1: PO BOX 12904 STREET 2: SUITE 2006A 20TH FLOOR CITY: ALBANY STATE: NY ZIP: 12212-2904 FORMER COMPANY: FORMER CONFORMED NAME: NGE RESOURCES INC DATE OF NAME CHANGE: 19970924 10-Q 1 TEXT & FINANCIAL STMTS SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 June 30, 1999 For the quarterly period ended. . . . . . . .. . . . . . . . . . OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from. . . . . . . .to. . . . . . . . . 1-14766 Commission file number. . . . . . . . . . . .. . . . . . . . . . Energy East Corporation . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . (Exact name of registrant as specified in its charter) New York 14-1798693 . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 12904, Albany, NY 12212-2904 . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . (Address of principal executive offices) (Zip Code) (518) 434-3049 Registrant's telephone number, including area code . . . . . . . N/A . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] The number of shares of common stock (par value $.01 per share) outstanding as of July 31, 1999 was 114,407,028. TABLE OF CONTENTS PART I Page Item 1. Financial Statements . . . . . . . . . . . . . . 1 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (a) Liquidity and Capital Resources . . . . . 8 (b) Results of Operations . . . . . . . . . . 16 PART II Item 1. Legal Proceedings. . . . . . . . . . . . . . . . 18 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. . . . . . . . . . . . . . . . . 18 (b) Reports on Form 8-K . . . . . . . . . . . 18 Signature . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . 20 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements Energy East Corporation Consolidated Statements of Income - (Unaudited) Three Months Six Months Periods Ended June 30 1999 1998 1999 1998 (Thousands, except per share amounts) Operating Revenues Sales and Services . . . . . . . . . $507,927 $548,308 $1,162,365 $1,185,938 -------- -------- ---------- ---------- Operating Expenses Fuel used in electricity generation. 18,272 55,080 74,756 114,172 Electricity purchased. . . . . . . . 184,871 164,355 333,665 310,566 Natural gas purchased. . . . . . . . 35,317 31,251 101,529 88,388 Other operating expenses . . . . . . 64,401 83,096 153,019 167,377 Maintenance. . . . . . . . . . . . . 19,811 27,748 45,524 59,697 Depreciation and amortization. . . . 538,473 48,405 593,805 96,782 Other taxes. . . . . . . . . . . . . 56,579 50,556 110,640 105,495 Gain on sale of generation assets. . (674,572) - (674,572) - Writeoff of Nine Mile Point 2. . . . 69,930 - 69,930 - ------- ------- -------- -------- Total Operating Expenses. . . . . 313,082 460,491 808,296 942,477 ------- ------- -------- -------- Operating Income. . . . . . . . . . . 194,845 87,817 354,069 243,461 Other (Income) and Deductions . . . . (13,678) 163 (14,360) 1,388 Interest Charges, Net . . . . . . . . 32,718 30,289 64,901 60,924 Preferred Stock Dividends of Subsidiary.. . . . . . . . . . . . . 691 2,260 1,721 4,529 ------- ------- -------- -------- Income Before Federal Income Taxes. . 175,114 55,105 301,807 176,620 Federal Income Taxes. . . . . . . . . 119,618 25,752 159,276 71,096 ------- ------- -------- -------- Net Income. . . . . . . . . . . . . . $55,496 $29,353 $142,531 $105,524 ======= ======= ======== ======== Earnings Per Share, basic and diluted $.48 $.23 $1.19 $.81 Dividends Paid Per Share. . . . . . . $.21 $.20 $.42 $.38 Average Shares Outstanding. . . . . . 116,623 128,699 119,763 130,746 Per share amounts and number of shares outstanding have been restated to reflect the two-for-one common stock split effective April 1, 1999. The notes on pages 6 and 7 are an integral part of the financial statements. Item 1. Financial Statements (Cont'd) Energy East Corporation Consolidated Balance Sheets - (Unaudited) June 30, Dec. 31, 1999 1998 (Thousands) Assets Current Assets Cash and cash equivalents. . . . . . . . . . . . . . . $1,291,845 $48,068 Special deposits . . . . . . . . . . . . . . . . . . . 911 4,729 Accounts receivable, net . . . . . . . . . . . . . . . 133,094 148,712 Fuel, at average cost. . . . . . . . . . . . . . . . . 9,504 44,643 Materials and supplies, at average cost. . . . . . . . 7,702 38,040 Prepayments. . . . . . . . . . . . . . . . . . . . . . 156,610 111,082 ---------- ---------- Total Current Assets. . . . . . . . . . . . . . . . 1,599,666 395,274 Utility Plant, at Original Cost Electric . . . . . . . . . . . . . . . . . . . . . . . 3,377,253 5,299,604 Natural gas. . . . . . . . . . . . . . . . . . . . . . 613,951 602,904 Common . . . . . . . . . . . . . . . . . . . . . . . . 138,771 144,043 ---------- ---------- 4,129,975 6,046,551 Less accumulated depreciation. . . . . . . . . . . . . 1,983,423 2,211,608 ---------- ---------- Net Utility Plant in Service. . . . . . . . . . . . 2,146,552 3,834,943 Construction work in progress. . . . . . . . . . . . . 9,252 27,741 ---------- ---------- Total Utility Plant . . . . . . . . . . . . . . . . 2,155,804 3,862,684 Other Property and Investments, Net . . . . . . . . . . 99,328 129,088 Regulatory and Other Assets Regulatory assets Unfunded future federal income taxes. . . . . . . . . 29,164 136,404 Unamortized debt expense. . . . . . . . . . . . . . . 69,320 71,530 Demand-side management program costs. . . . . . . . . 58,558 64,466 Environmental remediation costs . . . . . . . . . . . 58,800 60,600 Other . . . . . . . . . . . . . . . . . . . . . . . . 33,191 125,604 ---------- ---------- Total regulatory assets . . . . . . . . . . . . . . 249,033 458,604 Other assets . . . . . . . . . . . . . . . . . . . . . 25,329 37,687 ---------- ---------- Total Regulatory and Other Assets . . . . . . . . . 274,362 496,291 ---------- ---------- Total Assets. . . . . . . . . . . . . . . . . . . . $4,129,160 $4,883,337 ========== ========== The notes on pages 6 and 7 are an integral part of the financial statements. Item 1. Financial Statements (Cont'd) Energy East Corporation Consolidated Balance Sheets - (Unaudited) June 30, Dec. 31, Liabilities 1999 1998 (Thousands) Current Liabilities Current portion of long-term debt. . . . . . . . . . . $2,018 $31,077 Current portion of preferred stock of subsidiary . . . - 75,000 Commercial paper . . . . . . . . . . . . . . . . . . . - 78,300 Accounts payable and accrued liabilities . . . . . . . 117,311 116,582 Interest accrued . . . . . . . . . . . . . . . . . . . 19,017 19,556 Taxes accrued. . . . . . . . . . . . . . . . . . . . . 298,215 587 Accumulated deferred federal income tax, net . . . . . 29,391 10,029 Other. . . . . . . . . . . . . . . . . . . . . . . . . 61,835 82,143 ---------- ---------- Total Current Liabilities . . . . . . . . . . . . . 527,787 413,274 Regulatory and Other Liabilities Regulatory liabilities Deferred income taxes . . . . . . . . . . . . . . . . 68,921 98,038 Deferred income taxes, unfunded future federal income taxes . . . . . . . . . . . . . . . . . . . . 14,238 60,896 Other . . . . . . . . . . . . . . . . . . . . . . . . 22,968 42,182 ---------- ---------- Total regulatory liabilities. . . . . . . . . . . . 106,127 201,116 Other liabilities Deferred income taxes . . . . . . . . . . . . . . . . 215,920 765,592 Other postretirement benefits . . . . . . . . . . . . 151,862 137,681 Environmental remediation costs . . . . . . . . . . . 78,800 80,600 Other . . . . . . . . . . . . . . . . . . . . . . . . 90,687 82,028 ---------- ---------- Total other liabilities . . . . . . . . . . . . . . 537,269 1,065,901 Long-term debt. . . . . . . . . . . . . . . . . . . . . 1,386,621 1,435,120 ---------- ---------- Total Liabilities . . . . . . . . . . . . . . . . . 2,557,804 3,115,411 Commitments . . . . . . . . . . . . . . . . . . . . . . - - Preferred Stock of Subsidiary Preferred stock redeemable solely at the option of subsidiary. . . . . . . . . . . . . . . . . 10,131 29,440 Preferred stock subject to mandatory redemption requirements . . . . . . . . . . . . . . . 25,000 25,000 Common Stock Equity Common stock . . . . . . . . . . . . . . . . . . . . . 1,174 631 Capital in excess of par value . . . . . . . . . . . . 819,960 1,057,904 Retained earnings. . . . . . . . . . . . . . . . . . . 754,088 662,562 Treasury stock, at cost. . . . . . . . . . . . . . . . (38,997) (7,611) ---------- ---------- Total Common Stock Equity . . . . . . . . . . . . . 1,536,225 1,713,486 ---------- ---------- Total Liabilities and Stockholders' Equity . . . . $4,129,160 $4,883,337 ========== ========== The notes on pages 6 and 7 are an integral part of the financial statements. Item 1. Financial Statements (Cont'd) Energy East Corporation Consolidated Statements of Cash Flows - (Unaudited) Six Months Periods Ended June 30 1999 1998 (Thousands) Operating Activities Net income . . . . . . . . . . . . . . . . . . . . $142,531 $105,524 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization. . . . . . . . . . 593,805 96,782 Federal income taxes and investment tax credits deferred, net. . . . . . . . . . . . . . . . . (444,342) (4,445) Gain on sale of generation assets. . . . . . . . (674,572) - Writeoff of Nine Mile Point 2. . . . . . . . . . 69,930 - Changes in current operating assets and liabilities Accounts receivable . . . . . . . . . . . . . . 15,618 38,121 Inventory. . . . . . . . . . . . . . . . . . . . 65,477 4,749 Prepayments. . . . . . . . . . . . . . . . . . . (45,528) (9,042) Accounts payable and accrued liabilities . . . . 729 17,050 Taxes accrued. . . . . . . . . . . . . . . . . . 297,628 32,696 Other, net . . . . . . . . . . . . . . . . . . . . (16,629) 14,353 ---------- -------- Net Cash Provided by Operating Activities . . . 4,647 295,788 ---------- -------- Investing Activities Sale of generation assets. . . . . . . . . . . . . 1,850,000 - Utility plant additions. . . . . . . . . . . . . . (29,904) (76,303) Other property and investments . . . . . . . . . . (10,829) 25,200 ---------- -------- Net Cash Provided by (Used in) Investing Activities. . . . . . . . . . . . . 1,809,267 (51,103) ---------- -------- Financing Activities Repurchase of common stock . . . . . . . . . . . . (237,559) (135,359) Treasury stock acquired, net . . . . . . . . . . . (31,386) - Repayments of preferred stock and first mortgage bonds . . . . . . . . . . . . . . (144,557) (30,000) Long-term notes, net . . . . . . . . . . . . . . . (27,330) 9,580 Commercial paper, net. . . . . . . . . . . . . . . (78,300) 12,000 Dividends on common stock. . . . . . . . . . . . . (51,005) (49,432) ---------- -------- Net Cash Used in Financing Activities . . . . . (570,137) (193,211) ---------- -------- Net Increase in Cash and Cash Equivalents . . . . . 1,243,777 51,474 Cash and Cash Equivalents, Beginning of Period. . . 48,068 8,168 ---------- -------- Cash and Cash Equivalents, End of Period. . . . . . $1,291,845 $59,642 ========== ======== Supplemental Disclosure of Cash Flows Information Cash paid during the period Interest, net of amounts capitalized. . . . . . . $55,929 $52,553 Income taxes (includes $262,500 related to gain on sale of generation assets). . . . . . . $320,422 $37,346 The notes on pages 6 and 7 are an integral part of the financial statements. Item 1. Financial Statements (Cont'd) Energy East Corporation Consolidated Statements of Retained Earnings - (Unaudited) Six Months Periods ended June 30 1999 1998 (Thousands) Balance, beginning of period. . . . . . . . . . $662,562 $568,844 Add net income. . . . . . . . . . . . . . . . . 142,531 105,524 Deduct dividends on common stock. . . . . . . . 51,005 49,432 -------- -------- Balance, end of period. . . . . . . . . . . . . $754,088 $624,936 ======== ======== The notes on pages 6 and 7 are an integral part of the financial statements. Item 1. Financial Statements (Cont'd) Note 1. Unaudited Consolidated Financial Statements The accompanying unaudited consolidated financial statements reflect all adjustments which are necessary, in the opinion of management, for a fair presentation of our consolidated results for the interim periods. All such adjustments, other than those related to the sale of our coal-fired generation stations and the writeoff of Nine Mile Point 2, are of a normal recurring nature. The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our annual report for the year ended December 31, 1998. Due to the seasonal nature of our operations, financial results for interim periods are not necessarily indicative of trends for a 12-month period. Note 2. Investment in Nine Mile Point nuclear generating unit No. 2 We wrote off our entire 18% investment in Nine Mile Point 2 during the second quarter of 1999. We completed the sale of our Homer City generation assets to Edison Mission Energy in March 1999, and the sale of our remaining coal-fired generation assets to The AES Corporation in May 1999. The proceeds from the sale of those assets, net of taxes and transaction costs, in excess of the net book value, less funded deferred taxes, were used to write down our investment in Nine Mile Point 2 by $384 million. This treatment was in accordance with our restructuring plan approved by the Public Service Commission of the State of New York in January 1998. We wrote down our investment an additional $104 million due to the required writeoff of funded deferred taxes related to Nine Mile Point 2. These writedowns are reflected in depreciation and amortization for the second quarter of 1999. We announced in June 1999 that we agreed to sell our 18% interest in Nine Mile Point 2 to AmerGen Energy Company, a joint venture of PECO Energy Company and British Energy. (See Item 2(a) - - Energy Distribution, Nine Mile Point nuclear generating unit No. 2.) Based on the sale agreement, we wrote off $70 million, our remaining investment in Nine Mile Point 2, in accordance with Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. Note 3. Common Stock Split In January 1999 we declared a two-for-one stock split on common stock outstanding. Shareholders of record at the close of business on March 12, 1999, were entitled to the shares effective April 1, 1999. All references to shares outstanding and per share information reflect the stock split. Note 4. Segment Information Selected financial information for each of our business segments is presented in the following table. "Energy Distribution" consists of our electricity distribution, transmission and generation operations in New York and our natural gas distribution, transportation and storage operations in New York. "Other" includes our energy services businesses, natural gas and propane air distribution operations outside of New York, corporate assets and intersegment eliminations. Energy Three Months Ended Distribution Other Total June 30, 1999 Operating Revenues $497,209 $10,718 $507,927 Net Income (Loss) $58,474 $(2,978) $55,496 June 30, 1998 Operating Revenues $540,412 $7,896 $548,308 Net Income $28,905 $448 $29,353 Six Months Ended June 30, 1999 Operating Revenues $1,134,244 $28,121 $1,162,365 Net Income (Loss) $148,649 $(6,118) $142,531 June 30, 1998 Operating Revenues $1,167,644 $18,294 $1,185,938 Net Income (Loss) $106,650 $(1,126) $105,524 Identifiable Assets June 30, 1999 $3,189,406 $939,754 $4,129,160 December 31, 1998 $4,807,657 $75,680 $4,883,337 Note 5. Reclassifications Certain amounts have been reclassified on the consolidated financial statements to conform with the 1999 presentation. Item 2. Management's discussion and analysis of financial condition and results of operations (a) Liquidity and Capital Resources Merger Agreements Connecticut Energy Merger: On April 23, 1999, we signed a definitive merger agreement with Connecticut Energy Corporation (CNE) under which CNE will become one of our wholly-owned subsidiaries. The transaction is valued at $617 million, including the assumption of approximately $181 million of debt. Under the agreement 50% of the common stock of CNE will be converted into our common stock with a value of $42.00 per CNE share, and 50% will be converted into $42.00 in cash per CNE share, subject to restrictions on the minimum and maximum number of shares to be issued. Shareholders will be able to specify the percentage of the consideration they wish to receive in stock and in cash, subject to proration. The transaction will be accounted for using the purchase method of accounting. The merger is subject to, among other things, the approvals of CNE shareholders and various regulatory agencies, including the Connecticut Department of Public Utility Control and the Securities and Exchange Commission. We expect the transaction to close by early 2000. CMP Group Merger: On June 14, 1999, we signed a definitive merger agreement with CMP Group, Inc. under which CMP Group will become one of our wholly-owned subsidiaries. We will acquire all of the common stock of CMP Group for $29.50 per share in cash. The transaction has an equity market value of approximately $957 million based on approximately 32.4 million CMP Group common shares outstanding. We will also assume approximately $271 million of CMP Group preferred stock and long-term debt. The transaction will be accounted for using the purchase method of accounting. The merger is subject to, among other things, the approvals of CMP Group shareholders and various regulatory agencies, including the Maine Public Utilities Commission, the Securities and Exchange Commission, the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission. We intend to register as a holding company with the SEC under the Public Utility Holding Company Act of 1935. We expect the transaction to close in the middle of the year 2000. CTG Resources Merger: On June 29, 1999, we signed a definitive merger agreement with CTG Resources, Inc. under which CTG Resources will become one of our wholly-owned subsidiaries. The transaction values CTG Resources' common equity at approximately $355 million, and we will assume approximately $220 million of CTG Resources' long-term debt. The transaction will be accounted for using the purchase method of accounting. Under the agreement, 45% of the common stock of CTG Resources will be converted into our common stock with a value of $41.00 per CTG Resources share, and 55% will be converted into $41.00 in cash per CTG Resources share, subject to restrictions on the minimum and maximum number of shares to be issued. Shareholders will be able to specify the percentage of the consideration they wish to receive in stock and in cash, subject to proration. The merger is subject to, among other things, the approvals of CTG Resources shareholders and various regulatory agencies, including the Connecticut Department of Public Utility Control and the Securities and Exchange Commission. We expect the transaction to close in the middle of the year 2000. Notes Payable: We expect to issue long-term debt prior to the closings of the merger transactions. The proceeds from the debt issuance, along with the proceeds from the sale of our generation assets and internally generated funds, will be used to help fund the cash portion of the consideration and to help fund our ongoing share repurchase program. Energy Distribution Sale of our Coal-fired Generation Assets: We accepted offers totaling $1.85 billion from The AES Corporation and Edison Mission Energy in August 1998 for our seven coal-fired stations and associated assets and liabilities, which were placed up for auction earlier in 1998. We completed the sale of our Homer City generation assets to Edison Mission Energy in March 1999, and the sale of our remaining coal-fired generation assets to AES in May 1999. (See Item 1 - Note 2 to the Consolidated Financial Statements.) Now that the sale of our coal-fired generation assets is complete, approximately 60% of our power requirements will be satisfied through generation from our nuclear and hydroelectric stations and by purchases under long-term contracts from nonutility generators and the New York Power Authority. For the remaining power requirements we have assumed the risk of market prices that are sometimes volatile, since we have capped the prices we can charge customers. We use electricity contracts to manage our exposure to fluctuations in the cost of electricity. These contracts allow us to fix margins on the majority of our retail electricity sales. The cost or benefit of electricity contracts is included in the cost of electricity purchased when the electricity is sold. Nine Mile Point nuclear generating unit No. 2: We announced in June 1999 that we agreed to sell our 18% interest in Nine Mile Point 2 to AmerGen Energy Company, a joint venture of PECO Energy Company and British Energy. In the same announcement, Niagara Mohawk Power Corporation, the operator and 41% owner of Nine Mile Point 2, announced the sale of its interest in Nine Mile Point 2 to AmerGen. At closing, we will receive $27.9 million in proceeds based on our 18% ownership share. (See Item 1 - Note 2 to the Consolidated Financial Statements.) We may be entitled to additional payments through 2012 under a financial sharing agreement. A power purchase agreement with AmerGen requires us to purchase 17.1% of all electricity from Nine Mile Point 2 at negotiated prices for three years. AmerGen will assume full responsibility for the decommissioning of its ownership share of Nine Mile Point 2. The decommissioning fund will be pre-funded to a fixed amount by the sellers, with all potential costs above the fixed amount paid by AmerGen. We expect the sale of Nine Mile Point 2 to be completed early next year. New York Power Pool Restructuring: The Federal Energy Regulatory Commission issued Orders 888 and 889 in 1996 to foster the development of competitive wholesale electricity markets by opening up transmission services and to address the resulting stranded costs. In subsequent orders, the FERC generally affirmed Orders 888 and 889. Various parties, including us, have appealed these orders in the United States Court of Appeals for the D.C. Circuit. In response to Order 888, the New York Power Pool members submitted filings to the FERC proposing, among other things, to restructure the power pool by establishing a New York Independent System Operator and a New York State Reliability Council. In a series of orders in June 1998, January 1999 and July 1999 the FERC conditionally authorized the formation of the system operator and reliability council and conditionally accepted the tariff and rates applicable to transmission service, and energy, capacity and ancillary services filed by the members. In February 1999 power pool members also filed the necessary applications to transfer control of transmission facilities to the system operator, which the FERC accepted in April 1999. On July 29, 1999, the FERC conditionally granted certain authorizations that would allow the system operator to become operational on September 1, 1999, and required an additional filing by the power pool members within 30 days to implement the restructuring proposal. We are currently awaiting the FERC's acceptance of the remaining power pool member filings. We do not expect the restructuring to have a material adverse effect on our financial position or results of operations. Electric Retail Access Program: Customers in certain sections of our service territory were eligible to choose their electricity supplier in mid-1998. All of our electricity customers were able to choose their electricity supplier by August 1, 1999. We are responsible for delivery of our customers' electricity on our transmission and distribution system. Rates charged for use of our transmission system are subject to FERC approval, while rates for the use of our distribution system are subject to PSC approval. The PSC approved our distribution rates in January 1998. Our transmission rate case, which was filed with the FERC in March 1997, has not yet been approved. On July 15, 1999, the PSC issued an Opinion and Order Concerning Retail Access Credit and Customer Identification Issues. This order addressed phase one unbundling issues related to our retail access credit (the amount backed out of a customer's transmission and distribution bill when that customer participates in retail access), suppliers' obligations and customer identification. As a result of the order, our retail access credit was maintained at its current value, retail access suppliers are responsible for energy and capacity for their own customers and we may require a deposit from customers who are not able to provide adequate identification. The PSC also concluded that costs for line losses, installed reserves and most ancillary services are being recovered through our delivery charge and are not part of the retail access credit. We are currently developing our response to this order and are unable to predict the effect of the order on our financial position or results of operations. Competitive Electric Metering: In May 1999 the PSC approved a plan to open up to competition electric metering services for certain customers in New York State. The services include installation and maintenance of electric meters, meter reading and meter data retrieval and storage. Competitive metering would initially be available to customers with peak electricity requirements at any given time of 50 kilowatts or more. Utilities will be required to file unbundled metering tariffs by October 1, 1999, that identify their metering costs as a component of existing electricity prices. Utilities will continue their provider of last resort responsibilities for metering. Stranded cost issues will be handled in individual utility proceedings. We are currently unable to predict the effect of this plan on our financial position or results of operations. Environmental Matters: Since we have completed the sale of our coal-fired generation assets, we will no longer be subject to certain regulation by the federal government and by state and local governments with respect to certain environmental matters and certain water quality, air quality and waste disposal requirements applicable to the coal-fired generation assets. (See Form 10-K for the fiscal year ended December 31, 1998, Item 1 - Business, Environmental matters.) Role of Natural Gas Local Distribution Companies: On November 3, 1998, the PSC issued a "Policy Statement Concerning the Future of the Natural Gas Industry in New York State and Order Terminating Capacity Assignment." The policy statement includes the PSC's vision for furthering competition in the natural gas industry in New York State. The PSC believes the most effective way to establish a competitive gas market is for natural gas utilities to exit the merchant function over a three to seven year period. The PSC also established guidelines and began several proceedings related to implementing its policy statement. We are participating in each of the proceedings and continue to believe the competitive marketplace should decide who will be the suppliers of natural gas. In compliance with the PSC's Order, effective April 1, 1999, we ceased assigning certain capacity costs to customers who switch from fully bundled sales service to transportation service. Any capacity costs that may be stranded as a result of terminating capacity assignment will be recovered from all applicable customers. Other Matters Year 2000 Readiness Disclosure Many of our computer systems, which include mainframe systems and special-purpose systems, refer to years in terms of their final two digits only. Such systems may interpret the year 2000 as the year 1900. If not corrected, those systems could cause us to, among other things, experience energy delivery problems, report inaccurate data or issue inaccurate bills. We have been working diligently to address this problem by reviewing all of our mainframe and special-purpose systems; identifying potentially affected software, hardware, and date- sensitive components, often referred to as embedded chips, of various equipment; determining and taking appropriate corrective action; and, when appropriate, testing our systems. Our mainframe systems consist of the hardware and software components of New York State Electric & Gas Corporation's information technology systems. We believe we have identified, taken appropriate corrective action and tested all of our mainframe systems. We believe those systems are now able to process year 2000 and beyond transactions. Our special-purpose systems consist of our non-information technology systems and the information technology systems of our subsidiaries other than NYSEG. We have identified approximately 6,000 items in our special-purpose systems that may be affected by the Year 2000 problem. Items identified include software, hardware and embedded chips in systems such as those that control the acquisition and the delivery of electricity and natural gas to customers and those in our communication systems. We believe we have fixed, eliminated, replaced or found no problem with all of the special-purpose items we have identified that affect our electricity and natural gas delivery systems and our communication systems. Even though we believe we have taken corrective action with respect to our own Year 2000 issues, the Year 2000 issue could adversely affect us if there are items in our mainframe or special- purpose systems that may be affected by the Year 2000 problem and that we have not identified in our review of those systems. The Year 2000 issue could also adversely affect us if third parties such as suppliers, customers, neighboring or interconnected utilities and other entities fail to correct any of their Year 2000 problems. We have contacted key third parties to determine the status of their Year 2000 readiness programs. Many have responded satisfactorily, some have not responded satisfactorily and some have not responded at all. We are following up with key third parties who have not responded satisfactorily or who have not responded at all. We have developed contingency plans, some of which are discussed below, for reasonably likely worst case scenarios based upon an assumption that we and those third parties will not be Year 2000 compliant. We believe we have taken all necessary steps to address the Year 2000 issue successfully. Through June 30, 1999, we have spent approximately $11.6 million and expect to spend an additional $1.1 million on Year 2000 readiness including contingency plan preparations. We believe this amount is adequate to address our Year 2000 issues. These amounts are being expensed as incurred and are being financed entirely with internally generated funds. Addressing the Year 2000 issue has not caused us to delay any significant information system projects. As part of our normal business practice we have plans in place for use during emergencies, some of which could arise from Year 2000 problems. We are also implementing an emergency preparedness plan which will help us to address customer emergencies and coordinate with other emergency service providers. Each of our 13 division offices will be open from 10:00 p.m. on December 31, 1999, to 2:00 a.m. on January 1, 2000. NYSEG personnel will be available to staff county emergency preparedness offices during this same time period. Other customer contact sites will also be established. Temporary local numbers will be established so customers can contact us should long distance telephone service fail. We have completed over 75 contingency plans to specifically address reasonably likely worst case scenarios that could arise as a result of the Year 2000 problem. The contingency plans address, among other scenarios, the interruption or failure of normal business activities or operations such as a partial electrical and/or natural gas system shutdown. If the interruption or failure is due to embedded chips in equipment such as automatic control devices, our contingency plan is to implement the normal system restoration procedures that we utilize during emergencies. If the interruption or failure is due to telecommunications not being available, we plan to use alternative communication devices such as radio systems and satellite phones. Another scenario addressed by our contingency plans is the failure of our customer information system. Should that occur, we plan to rely on customer information previously stored and make the appropriate adjustment to each customer's next bill after the system is restored. We are dependent on others for our supply of natural gas. In the event a supplier is not able to meet our needs, we plan to purchase the needed amount of natural gas from one of our many other suppliers on the same transmission line. Since the sale of our coal-fired generation assets has been completed, we will be buying from third parties, including nonutility generators and the New York Power Authority, instead of producing the majority of the electricity our customers need. If the electricity available in our region is not adequate for all of the customers on our system, we plan to operate at lower levels of power as outlined in our established emergency procedures. Should our mainframe hardware be disabled, we have a backup mainframe system that is capable of operating all of our business systems. All of our contingency plans are ready and have been tested. The PSC issued an Order on October 30, 1998, adopting a July 1, 1999, deadline for New York utilities to complete their Year 2000 readiness programs for "mission critical" systems and for contingency plans. Mission critical systems include those systems that control the acquisition and the delivery of electricity and natural gas to customers, emergency management systems and certain electricity generation plants. We completed our Year 2000 readiness program for mission critical systems and for contingency plans before the PSC's July 1, 1999, deadline. Investing and Financing Activities Investing Activities Capital spending for the first six months of 1999 was $41 million, primarily for extension of energy distribution service and necessary improvements to existing facilities. We estimate our capital spending for 1999 will be about $140 million, and it is expected to be paid for entirely with internally generated funds. Financing Activities On February 1, 1999, we redeemed, at par, $25 million of NYSEG's 7.40% preferred stock and $50 million of NYSEG's adjustable rate preferred stock. On April 1, 1999, we purchased, at a discount, shares of the following series of NYSEG's preferred stock: $7.2 million of 3.75%, $2.8 million of 4 1/2% (Series 1949), $1.4 million of 4.15%, $4.8 million of 4.40%, and $3.1 million of 4.15% (Series 1954). On April 1, 1999, the holders of a majority of the votes of shares of NYSEG's serial preferred stock consented to increase the amount of unsecured debt NYSEG may issue by up to an additional $1.2 billion. In June 1999 we redeemed, at a premium, $50 million of NYSEG's 7 5/8% Series first mortgage bonds. We repurchased 10 million shares of our common stock during the first six months of 1999. Forward-looking Statements This Form 10-Q contains certain forward-looking statements that are based upon management s current expectations and information that is currently available. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward- looking statements in certain circumstances. Whenever used in this report, the words "estimate," "expect," "believe," or similar expressions are intended to identify such forward-looking statements. In addition to the assumptions and other factors referred to specifically in connection with such statements, factors that could cause actual results to differ materially from those contemplated in any forward-looking statements include, among others, the risk that more Year 2000 problems may be found; the fact that despite all of our efforts, there can be no assurances that all of our Year 2000 issues have been remedied; the fact that there can be no assurances that all Year 2000 issues that could affect us can or will be totally eliminated by our suppliers, customers, neighboring or interconnected utilities and other entities; and the fact that our assessment of the effects of Year 2000 issues are based, in part, upon information received from our suppliers, customers, neighboring or interconnected utilities and other entities, our reasonable reliance upon this information and the risk that inaccurate or incomplete information may have been supplied to us. Some additional factors that could cause actual results to differ materially from those contemplated in any forward-looking statements include, among others, the deregulation and unbundling of energy services; our ability to compete in the rapidly changing and increasingly competitive electricity and natural gas utility markets; our ability to control nonutility generator and other costs; changes in fuel supply or cost and the success of our strategies to satisfy our power requirements now that all of our coal-fired generation assets have been sold; our ability to expand our products and services, including our energy distribution network in the Northeast; our ability to integrate the operations of Connecticut Energy, CMP Group and CTG Resources with our operations; the ability to obtain adequate and timely rate relief; nuclear or environmental incidents; legal or administrative proceedings; changes in the cost or availability of capital; growth in the areas in which we are doing business; weather variations affecting customer energy usage; and other considerations that may be disclosed from time to time in our publicly disseminated documents and filings. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. (b) Results of Operations Three Months Ended June 30, 1999 1998 Change (Thousands, except per share amounts) Total Operating Revenues $507,927 $548,308 (7%) Operating Income $194,845 $87,817 122% Net Income $55,496 $29,353 89% Average Shares Outstanding 116,623 128,699 (9%) Earnings Per Share, basic and diluted $.48 $.23 109% Dividends Paid Per Share $.21 $.20 5% Earnings per share increased 16 cents for the second quarter of 1999, exclusive of the nonrecurring benefit from the sale of our coal-fired generation assets and the writeoff of Nine Mile Point 2. That increase was primarily driven by investment income, fewer shares of common stock outstanding due to our share repurchase program, higher retail electricity deliveries, which were caused by warmer weather, and cost control efforts. Those increases were partially offset by higher purchased power costs and lower wholesale electricity deliveries due to the sale of our coal-fired generation assets. Six Months Ended June 30, 1999 1998 Change (Thousands, except per share amounts) Total Operating Revenues $1,162,365 $1,185,938 (2%) Operating Income $354,069 $243,461 45% Net Income $142,531 $105,524 35% Average Shares Outstanding 119,763 130,746 (8%) Earnings Per Share, basic and diluted $1.19 $.81 47% Dividends Paid Per Share $.42 $.38 11% Earnings per share increased 26 cents for the first half of 1999, exclusive of the nonrecurring benefit from the sale of our coal-fired generation assets and the writeoff of Nine Mile Point 2. That increase was primarily due to investment income, fewer shares of common stock outstanding due to our share repurchase program, higher retail electricity and natural gas deliveries, which were caused by weather, and cost control efforts. Those increases were partially offset by higher purchased power costs and lower wholesale electricity deliveries due to the sale of our generation assets and electricity price reductions provided to customers. Operating Results by Business Segment Energy Distribution Three Months Ended June 30, 1999 1998 Change (Thousands) Retail Deliveries Megawatt-hours 3,255 3,130 4% Dekatherms 9,953 9,305 7% Operating Revenues $497,209 $540,412 (8%) Operating Expenses $295,944 $450,210 (34%) Operating Income $201,265 $90,202 124% Operating revenues decreased $43 million for the quarter primarily due to lower wholesale electricity deliveries due to the sale of our generation assets. That decrease was partially offset by higher retail electricity deliveries caused by warmer weather this quarter. Operating expenses decreased $50 million after excluding the nonrecurring benefit from the sale of our coal-fired generation assets and the writeoff of Nine Mile Point 2. Operating expenses were reduced primarily by lower fuel costs and cost control efforts, partially offset by higher purchased power costs. Six Months Ended June 30, 1999 1998 Change (Thousands) Retail Deliveries Megawatt-hours 6,879 6,520 6% Dekatherms 34,840 30,584 14% Operating Revenues $1,134,244 $1,167,644 (3%) Operating Expenses $770,322 $920,301 (16%) Operating Income $363,922 $247,343 47% Operating revenues decreased $33 million for the six months primarily due to lower wholesale electricity deliveries due to the sale of our generation assets, and lower retail electricity and natural gas prices, partially offset by higher retail electricity and natural gas deliveries caused by weather. Operating expenses decreased $46 million for the six months after excluding the nonrecurring benefit from the sale of our coal-fired generation assets and the writeoff of Nine Mile Point 2. Operating expenses were reduced primarily by lower fuel costs and cost control efforts, partially offset by higher purchased power costs. PART II - OTHER INFORM ATION Item 1. Legal Proceedings (a) By letter dated January 21, 1992, the New York State Department of Environmental Conservation notified us that we had been identified as a potentially responsible party at the Peter Cooper Corporation's Landfill Site (Peter Cooper Site) in the village of Gowanda, New York. The Peter Cooper Site is listed on the National Priorities List and the New York State Registry. Three other PRPs were identified in the NYSDEC letter. We believe that remediation costs at the Peter Cooper Site might rise to $16 million. By letter dated May 12, 1992, we notified the NYSDEC that we believed we had no responsibility for the alleged contamination at the Peter Cooper Site, and we declined to conduct remediation or finance remediation costs. On July 2, 1996, the U.S. Environmental Protection Agency notified us of its concern regarding the stream bank erosion along a portion of the Peter Cooper Site that is located on our property. Without admitting to any liability or responsibility, on October 24, 1996, we entered into an Order on Consent with the EPA to stabilize the stream bank. This project was completed in January 1997 at a cost of $120,000. By letter dated June 30, 1999, the EPA notified us and 18 other companies that we are PRPs with respect to the Peter Cooper Site, and offered us the opportunity to perform a remedial investigation and feasibility study at the site. Although we are still evaluating the June 30 letter, we believe that the ultimate disposition of this matter will not have a material adverse effect on our financial position or results of operations. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - See Exhibit Index. (b) Reports on Form 8-K Three reports on Form 8-K, dated April 23, 1999, June 14, 1999, and June 29, 1999, were filed to report certain information under Item 5, "Other Events." Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ENERGY EAST CORPORATION (Registrant) By /s/ Wesley W. von Schack Wesley W. von Schack Chairman and Chief Financial Officer Date: August 10, 1999 EXHIBIT INDEX (a)(1) The following exhibits are delivered with this report: Exhibit No. (A)10-37 - Employment Agreement dated April 23, 1999, for W. W. von Schack. (A)10-38 - Employment Agreement dated April 23, 1999, for K. M. Jasinski. (A)10-39 - Amended and Restated Employment Agreement dated April 23, 1999, for M. I. German. 27 - Financial Data Schedule. (a)(2) The following exhibits are incorporated herein by reference: Exhibit No. Filed in As Exhibit No. 2-2 - Agreement and Plan of Merger, dated as of April 23, 1999, by and among Connecticut Energy Corporation, the Company and Merger Co., as amended by the First Amendment to Agreement and Plan of Merger, dated as of July 15, 1999 - Registration No. 333-83437 2.1 2-3 - Agreement and Plan of Merger, dated as of June 14, 1999, by and among CMP Group, Inc., the Company and EE Merger Corp. - Company's Current Report on Form 8-K dated June 14, 1999 - File No. 1-14766 2 2-4 - Agreement and Plan of Merger, dated as of June 29, 1999, by and among CTG Resources, Inc., the Company and Oak Merger Co. - Company's Current Report on Form 8-K dated June 29, 1999 - File No. 1-14766 2 ____________________________ (A) Management contract or compensatory plan or arrangement. EX-10.37 2 WVS EMPL. AGR. EXHIBIT 10-37 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, dated as of April 23, 1999 (the "Agreement"), by and between Energy East Corporation, a New York corporation (the "Company"), and Wesley W. von Schack (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 management of the Company, 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 April 23, 1999 and end on April 22, 2002, unless further extended as hereinafter provided. Commencing on April 23, 2000 and each April 23 thereafter, the Term of this Agreement shall automatically be extended for one (1) additional year unless, not later than the January 22 immediately preceding each such April 23, 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, 5.6, 6, 7 and 10 through 20 of this Agreement and the second and third paragraphs of Section 5.2 of this Agreement shall continue in effect until at least the end of the Change-in-Control Protective Period (whether or not the Term of the Agreement shall have expired for other purposes). 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 positions as may from time to time be assigned to the Executive by the Board. In addition, the Executive shall serve as Chairman of the NYSEG Board until removed or not re-elected. 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 Seven Hundred Thousand Dollars ($700,000.00) per annum. The Base Salary shall be paid in substantially equal bi-weekly installments, in arrears. The Base Salary may be discretionarily increased by the Board from time to time as the Board deems appropriate in its reasonable business judgment. The Base Salary in effect from time to time shall not be decreased during the Term. During the period of the Executive's employment hereunder, the Board shall make an annual review of the Executive's compensation. Compensation of the Executive by Base Salary payments shall not be deemed exclusive and shall not prevent the Executive from participating in any other compensation or benefit plan of 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 their executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements; provided, however, that there shall be no duplication of the benefits created by this Agreement. The Executive's participation in such employee benefit plans and arrangements shall be on an appropriate level, as determined by the Board. Notwithstanding any provision of NYSEG's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, if the Executive's service with the Company or NYSEG from September 9, 1996 exceeds five full years, there shall be paid to the Executive under NYSEG's Supplemental Executive Retirement Plan (or any successor plan) an amount that shall be determined by giving the Executive, for purposes of that plan, service credit for three years of service for each of the Executive's actual years of service. Notwithstanding the foregoing sentence of this Section 5.2, and any provision of NYSEG's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, if the Executive Retires from the Company subsequent to April 15, 2004, there shall instead be paid to the Executive under NYSEG's Supplemental Executive Retirement Plan (or any successor plan) an amount that shall be determined by (i) giving the Executive, for purposes of that plan, service credit for 40 years of service and (ii) deeming the Executive's "highest three years of earnings within the last ten years of employment" for purposes of that plan to be equal to the Executive's Base Salary at the rate in effect at the time he Retires. During the Term of this Agreement (or, if later, until the end of the Change-in-Control Protective Period), the Company will, on each January 5, beginning January 5, 2000, pay the premium on a Whole Life Insurance Policy issued by The Guardian Life Insurance Company of New York, Policy No. 3810692, on the life of the Executive (the "Life Insurance Policy"); provided that in no event shall the Company pay on any such date more than $96,000 toward payment of such premium and provided that the Company shall not pay such premium if the Executive's employment has been terminated for any reason prior to such January 5, except as otherwise provided in Sections 6.1 and 10.1(E) hereof. 5.3 Expenses. Upon presentation of reasonably adequate documentation to the Company, the Executive shall receive prompt reimbursement from the Company for all reasonable and customary business expenses incurred by the Executive in accordance with the Company policy in performing services hereunder. The Company agrees to reimburse the Executive for any expenses he incurs in moving himself and his family from Pittsburgh, PA to any state in the Northeast. 5.4 Vacation. The Executive shall be entitled to five (5) weeks of vacation during each year of this Agreement, or such greater period as the Board shall approve, without reduction in salary or other benefits. 5.5 Transition Payments. The Company agrees to make a payment to NYSEG in an amount not to exceed $327,780.00 in connection with the transfer of the Life Insurance Policy from NYSEG to the Company. 5.6 Bonuses. In recognition of the Executive's performance and for services rendered or to be rendered to the Company, the Company shall pay to the Executive a bonus of $2,400,000.00 payable in the following amounts and at the following times: $1,000,000.00 on April 30, 1999; $700,000.00 on April 30, 2000, provided that the Executive is employed by the Company on April 23, 2000; and $700,000.00 on April 30, 2001, provided that the Executive is employed by the Company on April 23, 2001. If at any time prior to April 23, 2001, the Executive's employment is terminated due to the Executive's death or Disability, or by the Company without Cause or by the Executive for Good Reason, the Company shall pay to the Executive, within five (5) days of the Date of Termination, any unpaid amounts due pursuant to this Section 5.6. 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; and provided further, however, that if the Executive's employment is terminated by the Company for Disability, the Company will pay through the end of the Term of this Agreement (or, if later, until the end of the Change-in-Control Protective Period), the amount the Company agreed to pay in connection with the Life Insurance Policy referred to in the third paragraph of Section 5.2 hereof and any unpaid amounts the Company agreed to pay pursuant to Section 5.6 hereof. Subject to Sections 7, 8, 9 and 10 hereof, after completing the expense reimbursements required by Section 5.3 hereof and making the payments and providing the benefits required by this Section 6.1, 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. If the Executive's employment is terminated in connection with the Executive's death, the Company shall pay any unpaid amounts it agreed to pay pursuant to Section 5.6 hereof. 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, or as otherwise contemplated by Section 10 hereof, severance payments equal to, and on terms analogous to, those that are due under Section 10 hereof upon a termination of the Executive's employment that results in payments being due under Section 10 hereof. If the Company gives notice to the Executive pursuant to Section 3 hereof not to extend this Agreement, it shall be deemed to be a termination of the Executive's employment without Cause. 9.Post-Termination Continuation of Welfare Benefit Plan Coverage. Except as otherwise provided in Section 10.1 hereof, 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. For purposes of this Section 9, the term "employee welfare benefit plan" shall be deemed not to include the payment by the Company of any amount referred to in the third paragraph of Section 5.2 hereof or Section 10.1(E) hereof with respect to the Life Insurance Policy. 10. Severance Payments. 10.1 The Company shall pay the Executive the payments described in this Section 10.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change- in-Control and prior to the end of the Change-in-Control Protective Period, in addition to the payments and benefits described in Sections 6 and 7 hereof and any unpaid amounts the Company agreed to pay pursuant to Section 5.6 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, 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 NYSEG's 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 NYSEG's Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year preceding the Date of Termination under the Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, but has not yet been either (x) paid (pursuant to Section 6.2 hereof or otherwise) or (y) deferred pursuant to the Deferred Compensation Plan for Salaried Employees, and (ii) a pro-rata portion to the Date of Termination of the aggregate value of any contingent incentive compensation award to the Executive for any uncompleted fiscal year under the Annual Executive Incentive Plan or any successor annual executive incentive compensation plan, calculated as to each such award in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan. (C) The second paragraph of Section 5.2 hereof shall be inapplicable, and notwithstanding any provision of NYSEG's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, the Company shall pay to the Executive under NYSEG's Supplemental Executive Retirement Plan (or any successor plan) an amount that shall be determined by (i) deeming the Executive (a) to have 40 years of service credit, for purposes of that plan, (b) to be at least 60 years of age and (c) to be a "Key Person" as defined in, and for all purposes under, that plan and (ii) deeming the Executive's "highest three years of earnings within the last ten years of employment" for purposes of that plan to be equal to the higher of the Executive's Base Salary as determined pursuant to Section 10.1(A)(i) hereof; and such benefits shall be determined without regard to any amendment to NYSEG's Supplemental Executive Retirement Plan (or any successor plan) made subsequent to a Change-in-Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of retirement benefits thereunder. Notwithstanding any provision in NYSEG's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) shall be paid to the Executive in a lump sum payment that is equal in amount to the present value (calculated under generally accepted actuarial methods that are consistent with the actuarial methods used in producing the tables of Appendix A of NYSEG's Retirement Benefit Plan (or any successor plan)) of such benefits and such payment shall be in lieu of any payments to which the Executive otherwise would have been entitled under NYSEG's Supplemental Executive Retirement Plan (or any successor plan) and shall satisfy any obligations that the Company would otherwise have to the Executive under NYSEG's Supplemental Executive Retirement Plan (or any successor plan). Such lump sum payment shall be paid to the Executive no later than the due date of the first payment otherwise due to the Executive under NYSEG's Supplemental Executive Retirement Plan (or any successor plan). Notwithstanding the immediately preceding paragraph of this Section 10.1(C), the Executive may elect to have the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) be paid to the Executive in the manner provided for under NYSEG's Supplemental Executive Retirement Plan (or any successor plan) and such method of payment shall be in lieu of a lump sum payment. The Executive shall make such election by sending a letter to the Company in which he states that he has decided to make such election. The election shall not be effective unless the letter is received by the Company (i) at least 60 days prior to the day (the "Change-in-Control Day") that the Change-in- Control, or Potential Change-in-Control, that gives rise to the applicability of Section 10.1(C) occurs and (ii) prior to the first day of the calendar year in which the Change- in-Control Day occurs. The Executive shall have the right to revoke any such election by sending a letter to the Company in which he states that he has decided to revoke such election. The revocation of such election shall not be effective unless the letter is received by the Company (i) at least 60 days prior to the Change-in-Control Day and (ii) prior to the first day of the calendar year in which the Change-in-Control Day occurs. If the Executive revokes an election, he can make a new election (in the manner, and subject to the timing requirements, set forth in this paragraph), and he can revoke any such new election (in the manner, and subject to the timing requirements, set forth in this paragraph). (D) For a thirty-six (36) month period after the Date of Termination, the Company shall arrange to provide the Executive with life (other than the Life Insurance Policy), disability, accident and health insurance benefits substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change-in-Control if the Executive terminated his employment for Good Reason or was terminated without Cause). Benefits otherwise receivable by the Executive pursuant to this Section 10.1(D) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the thirty-six (36) month period following the Executive's termination of employment (and any such benefits actually received by the Executive shall be reported to 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. (E) The Company shall pay to The Guardian Life Insurance Company of New York such lump-sum amount as is necessary to result in the Life Insurance Policy being a policy upon which no future premiums are due. 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 sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 or to The Guardian Life Insurance Company as applicable, on such day an estimate, as determined by the Executive, of the minimum amount of such payments to which the Executive or The Guardian Life Insurance Company, as applicable, 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 hereunder is terminated during the Term (or, if later, prior to the end of the Change-in-Control Protective Period), the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by 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 or NYSEG with respect to products which the Company or NYSEG are then producing or services the Company or NYSEG are then providing (a "Competitor"). However, it shall not be a violation of the immediately preceding sentence for the Executive to be employed by, or render services to, a Competitor, if the Executive renders those services only in lines of business of the Competitor which are not directly competitive with the primary lines of business of the Company or NYSEG or are outside of the Restricted Territory. For purposes of this Section 13.2, the "Restricted Territory" shall be the states of Maryland, New Jersey, New York and Pennsylvania. If, at any time following a Change-in-Control, or a Potential Change-in-Control under the circumstances described in the second sentence of Section 10.1 hereof, and prior to the end of the Term (or, if later, the end of the Change-in-Control Protective Period), the Executive terminates his own employment with Good Reason (and not in connection with his Disability or Retirement) or the Company terminates his employment without Cause, then for a twelve month period immediately following his Date of Termination, the Executive shall not enter into the employ of any person, firm or corporation or any affiliate thereof (as such term is defined in Rule 12b-2 of the Exchange Act) that caused the Change-in-Control, or the Potential Change- in-Control under the circumstances described in the second sentence of Section 10.1 hereof. 14. Successors; Binding Agreement. 14.1 In addition to any obligations imposed by law upon any successor to 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: Energy East Corporation Post Office Box 1196 Stamford, Connecticut 06904-1196 Attention: Corporate Secretary To the Executive: Wesley W. von Schack 404 Beaver Road Sewickly, PA 15143 16. Miscellaneous. 16.1 No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officers as may be specifically designated by the Board. No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by any party which are not expressly set forth in this Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. There shall be withheld from any payments provided for hereunder any amounts required to be withheld under federal, state or local law and any additional withholding amounts to which the Executive has agreed. The obligations under this Agreement of the Company or the Executive which by their nature and terms require satisfaction after the end of the Term (or after the end of the Change-in-Control Protective Period) shall survive such event and shall remain binding upon such party. 16.2 References in this Agreement to employee benefit plans, compensation plans, incentive plans, pension plans, disability policies or similar plans, programs or arrangements of the Company include such plans, programs or arrangements of NYSEG if maintained for the benefit of employees of the Company. 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 New York, 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 or any of its subsidiaries, 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) the sixtieth day after the Executive becomes sixty years of age. (G) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (H) "Company" shall mean Energy East Corporation and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise (except in determining, under Section 20(E) hereof, whether or not any Change-in-Control of 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 (or any successor policy) (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 (VIII) 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 failure by the Company to act: (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 Stamford, Connecticut 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 Stamford, Connecticut 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 (including compensation pursuant to Section 5.6 hereof), 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 NYSEG'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 benefit it agreed to provide pursuant to the second paragraph of Section 5.2 hereof, or the failure by the Company to pay the amount it agreed to pay in connection with the Life Insurance Policy referred to in the third paragraph of Section 5.2 hereof; (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; or (VIII) the failure of the Board to validly terminate a merger or consolidation described in Section 20(E)(III) hereof within sixty (60) days after shareholder approval of such merger or consolidation that provides for the election or appointment of a successor to the Executive as Chairman or Chief Executive Officer of the Company. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. The Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. (O) "Gross-Up Payment" shall have the meaning stated in Section 10.2(A) hereof. (P) "Life Insurance Policy" shall have the meaning stated in the third paragraph of Section 5.2 hereof. (Q) "Notice of Termination" shall have the meaning stated in Section 11.1 hereof. (R) "NYSEG" shall mean New York State Electric & Gas Corporation. (S) "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. (T) "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 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 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. (U) "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. (V) "Retires" shall, for purposes of the second paragraph of Section 5.2 hereof, refer to the termination of the Executive's employment in accordance with the Company's retirement policy, not including early retirement (except that, on April 15, 2004, and thereafter, the Executive shall be deemed to have satisfied any normal retirement age requirement of that retirement policy), generally applicable from time to time to its salaried employees, or in accordance with any retirement arrangement established with the Executive's consent with respect to the Executive. (W) "Severance Payments" shall mean those payments described in Section 10.1 hereof. (X) "Term" shall have the meaning stated in Section 3 hereof. (Y) "NYSEG Board" shall mean the Board of Directors of NYSEG. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written. ENERGY EAST CORPORATION By: /S/ Kenneth M. Jasinski Kenneth M. Jasinski Executive Vice President and General Counsel /S/ Wesley W. Von Schack WESLEY W. VON SCHACK F:\ATTY\BLUM\EEC\EMPLOWVS.WP EX-10.38 3 KMJ EMPL. AGR. EXHIBIT 10-38 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, dated as of April 23, 1999 (the "Agreement"), by and between Energy East Corporation, a New York corporation (the "Company"), and Kenneth M. Jasinski (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 management of the Company, 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 April 23, 1999, and end on April 22, 2002, unless further extended as hereinafter provided. Commencing on April 23, 2000 and each April 23, thereafter, the Term of this Agreement shall automatically be extended for one (1) additional year unless, not later than the January 22 immediately preceding each such April 23, 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 and General Counsel of the Company and shall have such responsibilities, duties and authority that are consistent with such positions as may from time to time be assigned to the Executive by the Board. 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 Four Hundred Twenty-Five Thousand Dollars ($425,000.00) per annum. The Base Salary shall be paid in substantially equal bi-weekly installments, in arrears. The Base Salary may be discretionarily increased by the Board from time to time as the Board deems appropriate in its reasonable business judgment. The Base Salary in effect from time to time shall not be decreased during the Term. During the period of the Executive's employment hereunder, the Board shall make an annual review of the Executive's compensation. Compensation of the Executive by Base Salary payments shall not be deemed exclusive and shall not prevent the Executive from participating in any other compensation or benefit plan of 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 their executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements; provided, however, that there shall be no duplication of the benefits created by this Agreement. The Executive's participation in such employee benefit plans and arrangements shall be on an appropriate level, as determined by the Board. Notwithstanding any provision of NYSEG's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, if the Executive's service with the Company or NYSEG from April 29, 1998 exceeds five full years, there shall be paid to the Executive under NYSEG's Supplemental Executive Retirement Plan (or any successor plan) an amount that shall be determined by giving the Executive, for purposes of that plan, service credit for three years of service for each of the Executive's actual years of service. Additionally, if the Executive Retires from the Company subsequent to October 15, 2008, the amount to be paid to the Executive under NYSEG's Supplemental Executive Retirement Plan (or any successor plan) shall be determined by deeming the Executive's "highest three years of earnings within the last ten years of employment" for purposes of that plan to be equal to the Executive's Base Salary at the rate in effect at the time he Retires. 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. The Company agrees to reimburse the Executive for any expenses he incurs in moving himself and his family from Pelham, New York to any state in the Northeast. 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, or as otherwise contemplated by Section 10 hereof, severance payments equal to, and on terms analogous to, those that are due under Section 10 hereof upon a termination of the Executive's employment that results in payments being due under Section 10 hereof. If the Company gives notice to the Executive pursuant to Section 3 hereof not to extend this Agreement, it shall be deemed to be a termination of the Executive's employment without Cause. 9. Post-Termination Continuation of Welfare Benefit Plan Coverage. Except as otherwise provided in Section 10.1 hereof, 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, 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 NYSEG's 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 NYSEG's Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year preceding the Date of Termination under the Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, but has not yet been either (x) paid (pursuant to Section 6.2 hereof or otherwise) or (y) deferred pursuant to the Deferred Compensation Plan for Salaried Employees, and (ii) a pro-rata portion to the Date of Termination of the aggregate value of any contingent incentive compensation award to the Executive for any uncompleted fiscal year under the Annual Executive Incentive Plan or any successor annual executive incentive compensation plan, calculated as to each such award in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan. (C) The second paragraph of Section 5.2 hereof shall be inapplicable, and notwithstanding any provision of NYSEG's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, the Company shall pay to the Executive under NYSEG's Supplemental Executive Retirement Plan (or any successor plan) an amount that shall be determined by (i) deeming the Executive (a) to have 40 years of service credit, for purposes of that plan, (b) to be at least 60 years of age and (c) to be a "Key Person" as defined in, and for all purposes under, that plan and (ii) deeming the Executive's "highest three years of earnings within the last ten years of employment" for purposes of that plan to be equal to the higher of the Executive's Base Salary as determined pursuant to Section 10.1(A)(i) hereof; and such benefits shall be determined without regard to any amendment to NYSEG's Supplemental Executive Retirement Plan (or any successor plan) made subsequent to a Change-in-Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of retirement benefits thereunder. Notwithstanding any provision in NYSEG's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) shall be paid to the Executive in a lump sum payment that is equal in amount to the present value (calculated under generally accepted actuarial methods that are consistent with the actuarial methods used in producing the tables of Appendix A of NYSEG's Retirement Benefit Plan (or any successor plan)) of such benefits and such payment shall be in lieu of any payments to which the Executive otherwise would have been entitled under NYSEG's Supplemental Executive Retirement Plan (or any successor plan) and shall satisfy any obligations that the Company would otherwise have to the Executive under NYSEG's Supplemental Executive Retirement Plan (or any successor plan). Such lump sum payment shall be paid to the Executive no later than the due date of the first payment otherwise due to the Executive under NYSEG's Supplemental Executive Retirement Plan (or any successor plan). Notwithstanding the immediately preceding paragraph of this Section 10.1(C), the Executive may elect to have the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) be paid to the Executive in the manner provided for under NYSEG's Supplemental Executive Retirement Plan (or any successor plan) and such method of payment shall be in lieu of a lump sum payment. The Executive shall make such election by sending a letter to the Company in which he states that he has decided to make such election. The election shall not be effective unless the letter is received by the Company (i) at least 60 days prior to the day (the "Change-in-Control Day") that the Change-in- Control, or Potential Change-in-Control, that gives rise to the applicability of Section 10.1(C) occurs and (ii) prior to the first day of the calendar year in which the Change- in-Control Day occurs. The Executive shall have the right to revoke any such election by sending a letter to the Company in which he states that he has decided to revoke such election. The revocation of such election shall not be effective unless the letter is received by the Company (i) at least 60 days prior to the Change-in-Control Day and (ii) prior to the first day of the calendar year in which the Change-in-Control Day occurs. If the Executive revokes an election, he can make a new election (in the manner, and subject to the timing requirements, set forth in this paragraph), and he can revoke any such new election (in the manner, and subject to the timing requirements, set forth in this paragraph). (D) For a thirty-six (36) month period after the Date of Termination, the Company shall arrange to provide the Executive with life, 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 sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 hereunder is terminated during the Term (or, if later, prior to the end of the Change-in-Control Protective Period), the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by 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 or NYSEG with respect to products which the Company or NYSEG are then producing or services the Company or NYSEG are then providing (a "Competitor"). However, it shall not be a violation of the immediately preceding sentence for the Executive to be employed by, or render services to, a Competitor, if the Executive renders those services only in lines of business of the Competitor which are not directly competitive with the primary lines of business of the Company or NYSEG or are outside of the Restricted Territory. For purposes of this Section 13.2, the "Restricted Territory" shall be the states of Maryland, New Jersey, New York and Pennsylvania. If, at any time following a Change-in-Control, or a Potential Change-in-Control under the circumstances described in the second sentence of Section 10.1 hereof, and prior to the end of the Term (or, if later, the end of the Change-in-Control Protective Period), the Executive terminates his own employment with Good Reason (and not in connection with his Disability or Retirement) or the Company terminates his employment without Cause, then for a twelve month period immediately following his Date of Termination, the Executive shall not enter into the employ of any person, firm or corporation or any affiliate thereof (as such term is defined in Rule 12b-2 of the Exchange Act) that caused the Change-in-Control, or the Potential Change- in-Control under the circumstances described in the second sentence of Section 10.1 hereof. 14. Successors; Binding Agreement. 14.1 In addition to any obligations imposed by law upon any successor to 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: Energy East Corporation Post Office Box 1196 Stamford, Connecticut 06904-1196 Attention: Corporate Secretary To the Executive: Kenneth M. Jasinski 145 Corlies Avenue Pelham, NY 10803 16. Miscellaneous. 16.1 No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officers as may be specifically designated by the Board. No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by any party which are not expressly set forth in this Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. There shall be withheld from any payments provided for hereunder any amounts required to be withheld under federal, state or local law and any additional withholding amounts to which the Executive has agreed. The obligations under this Agreement of the Company or the Executive which by their nature and terms require satisfaction after the end of the Term (or after the end of the Change-in-Control Protective Period) shall survive such event and shall remain binding upon such party. 16.2 References in this Agreement to employee benefit plans, compensation plans, incentive plans, pension plans, disability policies or similar plans, programs or arrangements of the Company include such plans, programs or arrangements of NYSEG if maintained for the benefit of employees of the Company. 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 New York, 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 or any of its subsidiaries, 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) the sixtieth day after the Executive becomes sixty years of age. (G) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (H) "Company" shall mean Energy East Corporation and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise (except in determining, under Section 20(E) hereof, whether or not any Change-in-Control of 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 (or any successor policy) (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 (VIII) 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 failure by the Company to act: (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 Stamford, Connecticut 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 Stamford, Connecticut 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 NYSEG'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 benefit it agreed to provide pursuant to the second paragraph of Section 5.2 hereof; (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; or (VIII) the failure of the Board to validly terminate a merger or consolidation described in Section 20(E)(III) hereof within sixty days after shareholder approval of such merger or consolidation that provides for the election or appointment of a successor to Wesley W. von Schack as Chairman or Chief Executive Officer of the Company. 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) "NYSEG" shall mean New York State Electric & Gas Corporation. (S) "Potential Change-in-Control" shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied during the Term: (I) 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 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 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. (T) "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. (U) "Retires" shall, for purposes of the second paragraph of Section 5.2 hereof, refer to the termination of the Executive's employment in accordance with the Company's retirement policy, not including early retirement (except that, on October 15, 2008, and thereafter, the Executive shall be deemed to have satisfied any normal retirement age requirement of that retirement policy), generally applicable from time to time to its salaried employees, or in accordance with any retirement arrangement established with the Executive's consent with respect to the Executive. (V) "Severance Payments" shall mean those payments described in Section 10.1 hereof. (W) "Term" shall have the meaning stated in Section 3 hereof. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written. ENERGY EAST CORPORATION By /S/ Wesley W. von Schack Wesley W. von Schack Chairman, President, and Chief Executive Officer /S/ Kenneth M. Jasinsky KENNETH M. JASINSKI F:\ATTY\BLUM\EEC\EMPLOKMJ.WP EX-10.39 4 MIG EMPL. AGR. EXHIBIT 10-39 EMPLOYMENT AGREEMENT This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of April 23, 1999 (the "Agreement"), by and among Energy East Corporation, a New York corporation ("Energy East"), New York State Electric & Gas Corporation, a New York corporation (the "Company") and Michael I. German (the "Executive"), amends and restates that certain Employment Agreement dated March 1, 1998, between the Company and the Executive, as previously amended and restated. The Board of Directors of Energy East and the Board of Directors of the Company desire to provide for the employment of the Executive as a member of the management of Energy East and the Company, in the best interest of Energy East and its shareholders. The Executive is willing to commit himself to serve Energy East and the Company, on the terms and conditions herein provided. In order to effect the foregoing, Energy East, the Company and the Executive wish to enter into an employment agreement on the terms and conditions set forth below. Accordingly, in consideration of the premises and the respective covenants and agreements of the parties herein contained, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Defined Terms. The definitions of capitalized terms used in this Agreement, unless otherwise defined herein, are provided in the last Section hereof. 2. Employment. Energy East and the Company hereby agree to employ the Executive, and the Executive hereby agrees to serve Energy East and the Company, on the terms and conditions set forth herein, during the term of this Agreement (the "Term"). 3. Term of Agreement. The Term will commence on March 1, 1998 and end on February 28, 2001, unless further extended as hereinafter provided. Commencing on March 1, 1999 and each March 1 thereafter, the Term of this Agreement shall automatically be extended for one (1) additional year unless, not later than the November 30 immediately preceding each such March 1, Energy East (upon authorization by the Board) or the Executive shall have given notice not to extend this Agreement; provided, however, if a Change-in-Control shall have occurred during the Term of this Agreement, Sections 5.4, 6, 7 and 10 through 20 of this Agreement and the second paragraph of Section 5.2 of this Agreement shall continue in effect until at least the end of the Change-in-Control Protective Period (whether or not the Term of the Agreement shall have expired for other purposes). 4. Position and Duties. The Executive shall serve as Senior Vice President of Energy East and as President and Chief Operating Officer of the Company and shall have such responsibilities, duties and authority that are consistent with such positions as may from time to time be assigned to the Executive by the Board or by the NYSEG Board. The Executive shall devote substantially all his working time and efforts to the business and affairs of Energy East and the Company; provided, however, that the Executive may also serve on the boards of directors or trustees of other companies and organizations, as long as such service does not substantially interfere with the performance of his duties hereunder. 5. Compensation and Related Matters. 5.1 Base Salary. The Company shall pay the Executive a base salary ("Base Salary") during the period of the Executive's employment hereunder, which shall be at an initial rate of Four Hundred Twenty-Five Thousand Dollars ($425,000.00) per annum. The Base Salary shall be paid in substantially equal bi-weekly installments, in arrears. The Base Salary may be discretionarily increased by the Board from time to time as the Board deems appropriate in its reasonable business judgment. The Base Salary in effect from time to time shall not be decreased during the Term. During the period of the Executive's employment hereunder, the Board shall make an annual review of the Executive's compensation. Compensation of the Executive by Base Salary payments shall not be deemed exclusive and shall not prevent the Executive from participating in any other compensation or benefit plan of Energy East or the Company. The Base Salary payments (including any increased Base Salary payments) hereunder shall not in any way limit or reduce any other obligation of Energy East or the Company hereunder, and no other compensation, benefit or payment hereunder shall in any way limit or reduce the obligation of the Company to pay the Executive's Base Salary hereunder. 5.2 Benefit Plans. The Executive shall be entitled to participate in or receive benefits under any "employee benefit plan" (as defined in section 3(3) of the Employee Retirement Income Security Act of 1974, as amended from time to time ("ERISA")) or employee benefit arrangement made available by Energy East or the Company now or during the period of the Executive's employment hereunder to their executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements; provided, however, that there shall be no duplication of the benefits created by this Agreement. The Executive's participation in such employee benefit plans and arrangements shall be on an appropriate level, as determined by the Board or the NYSEG Board, as appropriate. Notwithstanding any provision of the Company's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, if the Executive's service with Energy East or the Company from December 5, 1994 exceeds five full years, there shall be paid to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan) an amount that shall be determined by giving the Executive, for purposes of that plan, service credit for three years of service for each of the Executive's actual years of service. Additionally, if the Executive Retires from the Company or Energy East subsequent to July 13, 2010, the amount to be paid to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan) shall be determined by deeming the Executive's "highest three years of earnings within the last ten years of employment" for purposes of that plan to be equal to the Executive's Base Salary at the rate in effect at the time he Retires. 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. The Company agrees to reimburse the Executive for any expenses he incurs in moving himself and his family from Binghamton, New York to any state in the Northeast. 5.4 Vacation. The Executive shall be entitled to five (5) weeks of vacation during each year of this Agreement, or such greater period as the Board shall approve, without reduction in salary or other benefits. 6. Compensation Related to Disability or Termination (Other Than Certain Post-Termination Payments). 6.1 During the Term of this Agreement (or, if later, at any time prior to the end of the Change-in-Control Protective Period), during any period that the Executive fails to perform the Executive's full-time duties with Energy East or the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive's Base Salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by Energy East or the Company during such period, until the Executive's employment is terminated by Energy East for Disability; provided, however, that such Base Salary payments shall be reduced by the sum of the amounts, if any, payable to the Executive at or prior to the time of any such Base Salary payment under disability benefit plans of Energy East or the Company or under the Social Security disability insurance program, which amounts were not previously applied to reduce any such Base Salary payment. Subject to Sections 7, 8, 9 and 10 hereof, after completing the expense reimbursements required by Section 5.3 hereof and making the payments and providing the benefits required by this Section 6.1, Energy East and the Company shall have no further obligations to the Executive under this Agreement. 6.2 If the Executive's employment shall be terminated for any reason during the Term of this Agreement (or, if later, prior to the end of the Change-in-Control Protective Period), the Company shall pay the Executive's Base Salary (to the Executive or in accordance with Section 14.2 if the Executive's employment is terminated by his death) through the Date of Termination at the rate in effect at the time the Notice of Termination is given, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of any compensation or benefit plan, program or arrangement maintained by Energy East or the Company during such period. Subject to Sections 6.1, 7, 8, 9 and 10 hereof, after completing the expense reimbursements required by Section 5.3 hereof and making the payments and providing the benefits required by this Section 6.2, Energy East and the Company shall have no further obligations to the Executive under this Agreement. 7.Normal Post-Termination Payments Upon Termination of Employment. If the Executive's employment shall be terminated for any reason during the Term of this Agreement (or, if later, prior to the end of the Change-in-Control Protective Period), the Company shall pay the Executive's normal post- termination compensation and benefits to the Executive as such payments become due. Subject to Section 10.1 hereof and the second paragraph of Section 5.2 hereof, such post-termination compensation and benefits shall be determined under, and paid in accordance with, Energy East's or the Company's retirement, insurance and other compensation or benefit plans, programs and arrangements (other than this Agreement). 8.Termination of Employment (During the Term and Prior to a Change-in-Control) by Energy East Without Cause. If Energy East shall terminate the Executive's employment during the Term and prior to a Change-in- Control, without Cause (and not for Disability or in connection with the Executive's Retirement or the Executive's death), then in lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination, the Company shall pay to the Executive, within the five days immediately following the Date of Termination, or as otherwise contemplated by Section 10 hereof, severance payments equal to, and on terms analogous to, those that are due under Section 10 hereof upon a termination of the Executive's employment that results in payments being due under Section 10 hereof. If Energy East gives notice to the Executive pursuant to Section 3 hereof not to extend this Agreement, it shall be deemed to be a termination of the Executive's employment without Cause. 9.Post-Termination Continuation of Welfare Benefit Plan Coverage. Except as otherwise provided in Section 10.1 hereof, if the termination of the Executive's employment is described in Section 8 hereof, Energy East and the Company shall maintain in full force and effect, for the continued benefit of the Executive for the number of years (including partial years) remaining in the Term, each "employee welfare benefit plan" (as described in Section 3(1) of ERISA) in which the Executive was entitled to participate immediately prior to the Date of Termination, provided that the Executive's continued participation is possible under the general terms and provisions of such plans. In the event that the Executive's participation in any such plan is barred, the Company shall arrange to provide the Executive with benefits substantially similar to those which the Executive would otherwise have been entitled to receive under the plan from which his continued participation is barred. 10. Severance Payments. 10.1 The Company shall pay the Executive the payments described in this Section 10.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change-in-Control and prior to the end of the Change- in-Control Protective Period, in addition to the payments and benefits described in Sections 6 and 7 hereof, unless such termination is (i) by Energy East for Cause, (ii) by reason of death, Disability or Retirement, or (iii) by the Executive without Good Reason. For purposes of the immediately preceding sentence, if a termination of the Executive's employment occurs prior to a Change-in-Control, but following a Potential Change- in-Control in which a Person has entered into an agreement with Energy East the consummation of which will constitute a Change- in-Control, such termination shall be deemed to have followed a Change-in-Control and to have been (i) by Energy East without Cause, if the Executive's employment is terminated without Cause at the direction of such Person, or (ii) by the Executive with Good Reason, if the Executive terminates his employment with Good Reason and the act (or failure to act) which constitutes Good Reason occurs following such Potential Change-in-Control and at the direction of such Person. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination, 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) The second paragraph of Section 5.2 hereof shall be inapplicable, and notwithstanding any provision of the Company's Supplemental Executive Retirement Plan (or any successor Plan) that may be to the contrary, the Company shall pay to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan) an amount that shall be determined by (i) deeming the Executive (a) to have 40 years of service credit, for purposes of that plan, (b) to be at least 60 years of age and (c) to be a "Key Person" as defined in, and for all purposes under, that plan and (ii) deeming the Executive's "highest three years of earnings within the last ten years of employment" for purposes of that plan to be equal to the higher of the Executive's Base Salary as determined pursuant to Section 10.1(A)(i) hereof; and such benefits shall be determined without regard to any amendment to the Company's Supplemental Executive Retirement Plan (or any successor plan) made subsequent to a Change-in-Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of retirement benefits thereunder. Notwithstanding any provision in the Company's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) shall be paid to the Executive in a lump sum payment that is equal in amount to the present value (calculated under generally accepted actuarial methods that are consistent with the actuarial methods used in producing the tables of Appendix A of the Company's Retirement Benefit Plan (or any successor plan)) of such benefits and such payment shall be in lieu of any payments to which the Executive otherwise would have been entitled under the Company's Supplemental Executive Retirement Plan (or any successor plan) and shall satisfy any obligations that the Company would otherwise have to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan). Such lump sum payment shall be paid to the Executive no later than the due date of the first payment otherwise due to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan). Notwithstanding the immediately preceding paragraph of this Section 10.1(C), the Executive may elect to have the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) be paid to the Executive in the manner provided for under the Company's Supplemental Executive Retirement Plan (or any successor plan) and such method of payment shall be in lieu of a lump sum payment. The Executive shall make such election by sending a letter to the Company in which he states that he has decided to make such election. The election shall not be effective unless the letter is received by the Company (i) at least 60 days prior to the day (the "Change-in-Control Day") that the Change-in-Control, or Potential Change-in-Control, that gives rise to the applicability of Section 10.1(C) occurs and (ii) prior to the first day of the calendar year in which the Change-in-Control Day occurs. The Executive shall have the right to revoke any such election by sending a letter to the Company in which he states that he has decided to revoke such election. The revocation of such election shall not be effective unless the letter is received by the Company (i) at least 60 days prior to the Change-in-Control Day and (ii) prior to the first day of the calendar year in which the Change-in-Control Day occurs. If the Executive revokes an election, he can make a new election (in the manner, and subject to the timing requirements, set forth in this paragraph), and he can revoke any such new election (in the manner, and subject to the timing requirements, set forth in this paragraph). (D) For a thirty-six (36) month period after the Date of Termination, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change-in-Control if the Executive terminated his employment for Good Reason or was terminated without Cause). Benefits otherwise receivable by the Executive pursuant to this Section 10.1(D) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the thirty-six (36) month period following the Executive's termination of employment (and any such benefits actually received by the Executive shall be reported to Energy East by the Executive). If the benefits provided to the Executive under this Section 10.1(D) shall result in a Gross-Up Payment pursuant to Section 10.2, and these Section 10.1(D) benefits are thereafter reduced pursuant to the immediately preceding sentence because of the receipt of comparable benefits, the Gross-Up Payment shall be recalculated so as to reflect that reduction, and the Executive shall refund to the Company an amount equal to any calculated reduction in the Gross-Up Payment, but only if, and to the extent, the Executive receives a refund of any Excise Tax previously paid by the Executive pursuant to Section 10.2 hereof. 10.2 (A) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by Energy East or the Company to or for the benefit of the Executive on account of a Change-in- Control, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment ("Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (B) Subject to the provisions of Section 10.2(C) hereof, all determinations required to be made under this Section 10.2, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determinations, shall be made by Energy East's principal outside accounting firm (the "Accounting Firm") which shall provide detailed supporting calculations both to the Board and the Executive within fifteen (15) business days of the Date of Termination and/or such earlier date(s) as may be requested by Energy East or the Executive (each such date and the Date of Termination shall be referred to as a "Determination Date", for purposes of this Section 10.2(B) and Section 10.3 hereof). All fees and expenses of the Accounting Firm shall be borne solely by the Company. The initial Gross-Up Payment, if any, as determined pursuant to this Section 10.2(B), shall be paid by the Company to the Executive within five (5) days of the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm under this Section 10.2(B) shall be binding upon Energy East, the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that Energy East exhausts its remedies pursuant to Section 10.2(C) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. (C) The Executive shall notify Energy East in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of an Underpayment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive is informed in writing of such claim and shall apprise Energy East of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which he gives such notice to Energy East (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If Energy East notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give Energy East any information reasonably requested by Energy East relating to such claim, (ii) take such action in connection with contesting such claim as Energy East shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by Energy East, (iii) cooperate with Energy East in good faith in order effectively to contest such claim, and (iv) permit Energy East to participate in any proceeding relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10.2(C), Energy East shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as Energy East shall determine; provided, however, that if Energy East directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, Energy East's control of the contest shall be limited to issues with respect to which a Gross- Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (D) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 10.2(C) hereof, the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to Energy East's and the Company's complying with the requirements of Section 10.2(C) hereof) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 10.2(C) hereof, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and Energy East does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid. 10.3 The payments provided for in Section 10.1 hereof (other than Section 10.1(C) and (D)) shall be made not later than the fifth day following each Determination Date, provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined by the Executive, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after each Determination Date. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). 10.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive as a result of a termination which entitles the Executive to the Severance Payments (including all such fees and expenses, if any, incurred in disputing any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any payment or benefit provided hereunder). Such payments shall be made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as Energy East reasonably may require. 11. Termination Procedures. 11.1 Notice of Termination. During the Term of this Agreement (and, if longer, until the end of the Change- in-Control Protective Period), any purported termination of the Executive's employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 15 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. 11.2 Date of Termination. "Date of Termination", with respect to any purported termination of the Executive's employment during the Term of this Agreement (or prior to the end of the Change-in-Control Protective Period, if a Change-in-Control shall have occurred), shall mean (i) if the Executive's employment is terminated by his death, the date of his death, (ii) if the Executive's employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full- time performance of the Executive's duties during such thirty (30) day period), and (iii) if the Executive's employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by Energy East, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given). 12. No Mitigation. Energy East and the Company agree that, if the Executive's employment hereunder is terminated during the Term (or, if later, prior to the end of the Change-in- Control Protective Period), the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by Energy East or the Company hereunder. Further, the amount of any payment or benefit provided for hereunder (other than pursuant to Section 10.1(D) hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to Energy East or the Company, or otherwise. 13. Confidentiality and Noncompetition. 13.1 The Executive will not, during or after the Term, disclose to any entity or person any information which is treated as confidential by Energy East or the Company and to which the Executive gains access by reason of his position as an employee or director of Energy East or the Company. 13.2 If, at any time prior to the end of the Term (or, if later, the end of the Change-in-Control Protective Period), the Executive terminates his own employment without Good Reason (and not in connection with his Disability, Retirement or death) or Energy East terminates his employment with Cause, then for a twelve-month period immediately following his Date of Termination, the Executive shall not, except as permitted by Energy East upon its prior written consent, enter, directly or indirectly, into the employ of or render or engage in, directly or indirectly, any services to any person, firm or corporation within the "Restricted Territory," which is a major competitor of Energy East or the Company with respect to products which Energy East or the Company are then producing or services Energy East or the Company are then providing (a "Competitor"). However, it shall not be a violation of the immediately preceding sentence for the Executive to be employed by, or render services to, a Competitor, if the Executive renders those services only in lines of business of the Competitor which are not directly competitive with the primary lines of business of Energy East or 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. If, at any time following a Change-in-Control, or a Potential Change-in-Control under the circumstances described in the second sentence of Section 10.1 hereof, and prior to the end of the Term (or, if later, the end of the Change-in-Control Protective Period), the Executive terminates his own employment with Good Reason (and not in connection with his Disability or Retirement) or Energy East terminates his employment without Cause, then for a twelve month period immediately following his Date of Termination, the Executive shall not enter into the employ of any person, firm or corporation or any affiliate thereof (as such term is defined in Rule 12b-2 of the Exchange Act) that caused the Change-in- Control, or the Potential Change-in-Control under the circumstances described in the second sentence of Section 10.1 hereof. 14. Successors; Binding Agreement. 14.1 In addition to any obligations imposed by law upon any successor to Energy East or the Company, Energy East and the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Energy East or the Company, as the case may be, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Energy East and the Company would be required to perform it if no such succession had taken place. Failure of Energy East or the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from Energy East and the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason after a Change-in-Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. 14.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. 15. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To Energy East: Energy East Corporation Post Office Box 1196 Stamford, Connecticut 06904-1196 Attention: Corporate Secretary To the Company: New York State Electric & Gas Corporation Post Office Box 3607 Binghamton, NY 13902-3607 Attention: Corporate Secretary To the Executive: Michael I. German 8 Meadowood Lane Binghamton, NY 13901 16. Miscellaneous. 16.1 No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officers as may be specifically designated by the Board and the NYSEG Board, respectively. No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by any party which are not expressly set forth in this Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. There shall be withheld from any payments provided for hereunder any amounts required to be withheld under federal, state or local law and any additional withholding amounts to which the Executive has agreed. The obligations under this Agreement of Energy East, the Company or the Executive which by their nature and terms require satisfaction after the end of the Term (or after the end of the Change-in-Control Protective Period) shall survive such event and shall remain binding upon such party. 16.2 Notwithstanding any provision of this Agreement to the contrary, Energy East and the Company shall be jointly and severally liable to the Executive and his personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees or legatees for all payment obligations under this Agreement. 17. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 18. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 19. Settlement of Disputes; Arbitration. All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive's claim has been denied. To the extent permitted by applicable law, any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in New York, New York in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. 20. Definitions. For purposes of this Agreement, the following terms shall have the meaning indicated below: (A) "Base Salary" shall have the meaning stated in Section 5.1 hereof. (B) "Beneficial Owner" shall have the meaning defined in Rule 13-d-3 under the Exchange Act. (C) "Board" shall mean the Board of Directors of Energy East. (D) "Cause" for termination by Energy East of the Executive's employment, for purposes of this Agreement, shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive's duties with Energy East and the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 11.1) after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to Energy East or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of Energy East. (E) A "Change-in-Control" shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied during the Term: (I) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Energy East (not including in the securities beneficially owned by such Person any securities acquired directly from Energy East or its affiliates) representing 25% or more of the combined voting power of Energy East's then outstanding securities; or (II) during any period of two consecutive years (not including any period prior to the date of this Agreement), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a Person who has entered into an agreement with Energy East to effect a transaction described in paragraph (I), (III) or (IV) of this Change-in-Control definition or a director whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitations of proxies or consents by or on behalf of a Person other than the Board) whose election by the Board or nomination for election by Energy East's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (III) the shareholders of Energy East approve a merger or consolidation of Energy East with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of Energy East outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of Energy East or any of its subsidiaries, at least 75% of the combined voting power of the voting securities of Energy East or such surviving entity outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of Energy East (or similar transaction) in which no Person acquires more than 50% of the combined voting power of Energy East's then outstanding securities; or (IV) the shareholders of Energy East approve a plan of complete liquidation of Energy East or an agreement for the sale or disposition by Energy East of all or substantially all Energy East's assets. (F) "Change-in-Control Protective Period" shall mean the period from the occurrence of a Change-in-Control until the later of (i) the second anniversary of such Change-in- Control or, (ii) the sixtieth day after the Executive becomes sixty years of age. (G) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (H) "Company" shall mean New York State Electric & Gas Corporation and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. (I) "Date of Termination" shall have the meaning stated in Section 11.2 hereof. (J) "Disability" shall be deemed the reason for the termination by Energy East of the Executive's employment, if, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with Energy East and the Company for the maximum number of months applicable to the Executive under the Company's Disability Policy for Salaried Employees (or any successor policy) (but in no event for less than six (6) consecutive months), Energy East shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive's duties. (K) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (L) "Excise Tax" shall have the meaning stated in Section 10.2(A) hereof. (M) "Executive" shall mean the individual named in the first paragraph of this Agreement. (N) "Good Reason" for termination by the Executive of the Executive's employment shall mean the occurrence (without the Executive's express written consent) after any Change-in-Control, or after any Potential Change-in-Control under the circumstances described in the second sentence of Section 10.1 hereof (treating all references in paragraphs (I) through (VIII) below to a "Change-in-Control" as references to a "Potential Change-in-Control), of any one of the following acts by Energy East or the Company, or failures by Energy East or the Company to act: (I) the assignment to the Executive of any duties inconsistent with the Executive's status as an executive officer of Energy East or the Company or a substantial alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Change-in-Control (including, without limitation, any such alteration attributable to the fact that Energy East or the Company may no longer be a public company); (II) a reduction by Energy East or the Company in the Executive's annual base salary as in effect on the date hereof or as the same may be increased from time to time; (III) the relocation of Energy East's Stamford, Connecticut executive offices to a location more than fifty (50) miles from the location of such offices immediately prior to the Change-in-Control or Energy East's or the Company's requiring the Executive to be based anywhere other than Energy East's Stamford, Connecticut executive offices or the Company's principal executive offices except for required travel on Energy East's or the Company's business to an extent substantially consistent with the Executive's present business travel obligations; (IV) the failure by Energy East or the Company, without the Executive's consent, to pay to the Executive any portion of the Executive's current compensation, or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of Energy East or the Company, within seven (7) days of the date such compensation is due; (V) the failure by Energy East or the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change-in-Control which is material to the Executive's total compensation, including but not limited to the Company's Annual Executive Incentive Plan, Long Term Executive Incentive Share Plan, and Supplemental Executive Retirement Plan, or any substitute plans adopted prior to the Change-in-Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by Energy East or the Company to continue the Executive's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Executive's participation relative to other participants, as existed at the time of the Change-in- Control; (VI) the failure by Energy East or the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of Energy East's or the Company's pension, life insurance, medical, health and accident, or disability plans in which the Executive was participating at the time of the Change-in-Control, the taking of any action by Energy East or the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change-in-Control, or the failure by Energy East or the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled to under Section 5.4 hereof, or the failure by the Company to provide the Executive with the benefit it agreed to provide pursuant to the second paragraph of Section 5.2 hereof; (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; or (VIII) the failure of the Board to validly terminate a merger or consolidation described in Section 20(E)(III) hereof within sixty days after shareholder approval of such merger or consolidation that provides for the election or appointment of a successor to Wesley W. von Schack as Chairman or Chief Executive Officer of Energy East. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. The Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. (O) "Gross-Up Payment" shall have the meaning stated in Section 10.2(A) hereof. (P) "Notice of Termination" shall have the meaning stated in Section 11.1 hereof. (Q) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall not include (i) Energy East or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of Energy East or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of Energy East in substantially the same proportions as their ownership of stock of Energy East. (R) "Potential Change-in-Control" shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied during the Term: (I) Energy East enters into an agreement, the consummation of which would result in the occurrence of a Change-in-Control; (II) Energy East or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change-in-Control; (III) any Person (x) is or becomes the Beneficial Owner, directly or indirectly, (y) discloses directly or indirectly to Energy East (or publicly) a plan or intention to become the Beneficial Owner, directly or indirectly, or (z) makes a filing under the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended, with respect to securities to become the Beneficial Owner, directly or indirectly, of securities of Energy East representing 9.9% or more of the combined voting power of Energy East's then outstanding securities; or (IV) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change-in-Control has occurred. (S) "Retirement" shall be deemed the reason for the termination by Energy East or the Executive of the Executive's employment if such employment is terminated in accordance with Energy East's retirement policy, not including early retirement, generally applicable to its salaried employees, as in effect immediately prior to the Change-in-Control, or in accordance with any retirement arrangement established with the Executive's consent with respect to the Executive. (T) "Retires" shall, for purposes of the second paragraph of Section 5.2 hereof, refer to the termination of the Executive's employment in accordance with the Company's retirement policy, not including early retirement (except that, on July 13, 2010, and thereafter, the Executive shall be deemed to have satisfied any normal retirement age requirement of that retirement policy), generally applicable from time to time to its salaried employees, or in accordance with any retirement arrangement established with the Executive's consent with respect to the Executive. (U) "Severance Payments" shall mean those payments described in Section 10.1 hereof. (V) "Term" shall have the meaning stated in Section 3 hereof. (W) "Energy East" shall mean Energy East Corporation and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise (except in determining, under Section 20(E) hereof, whether or not any Change-in-Control of Energy East has occurred in connection with such succession). (X) "NYSEG Board" shall mean the Board of Directors of the Company. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written. ENERGY EAST CORPORATION By: /S/ Wesley W. von Schack Wesley W. von Schack Chairman, President and Chief Executive Officer NEW YORK STATE ELECTRIC & GAS CORPORATION By: /S/ Daniel W. Farley Name: Title: /S/ Michael I. German MICHAEL I. GERMAN F:\ATTY\BLUM\EEC\EMPLOMIG.WP EX-27 5 EXH. 27
UT EXHIBIT 27 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS INCLUDED IN ITS FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 3-MOS DEC-31-1999 JUN-30-1999 PER-BOOK 2,155,804 99,328 1,599,666 0 274,362 4,129,160 1,174 819,960 754,088 1,536,225 25,000 10,131 1,386,621 0 0 0 2,018 0 0 0 1,169,165 4,129,160 1,162,365 159,276 153,019 808,296 354,069 14,360 0 64,901 142,531 1,721 0 51,005 0 4,647 1.19 1.19
-----END PRIVACY-ENHANCED MESSAGE-----