Exhibit 8
FORM OF SEVERANCE AGREEMENT
THIS AGREEMENT, dated _________, 199_, is made by and between New York
State Electric & Gas Corporation, a New York corporation (the "Company"), and
___________ (the "Executive").
WHEREAS the Company considers it essential to the best interests of its
shareholders to xxxxxx the continuous employment of key management personnel;
and
WHEREAS the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly-held corporations, the possibility of
a Change in Control (as defined in the last Section hereof) exists and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders; and
WHEREAS the Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of members
of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and the Executive hereby agree as follows:
1. Defined Terms. The definitions of capitalized terms used in this
Agreement are provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 1998; provided, however,
that commencing on January 1, 1999 and each January 1 thereafter, the term of
this Agreement shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Company (upon
authorization by the Board) or the Executive shall have given notice not to
extend this Agreement or a Change in Control shall have occurred prior to
such January 1; provided, however, if a Change in Control shall have occurred
during the term of this Agreement, this Agreement shall continue in effect
until at least the end of the Change-in-Control Protective Period.
3. Company's Covenants Summarized. In order to induce the Executive to
remain in the employ of the Company and in consideration of the Executive's
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions
described herein, to pay the Executive the "Severance Payments" described in
Section 6.1 hereof and the other payments and benefits described herein in
the event the Executive's employment with the Company is terminated following
a Change in Control and during the term of this Agreement. Except as provided
by the second sentence of Section 6.1 hereof or the last sentence of Section
9.1 hereof, no amount or benefit shall be payable under this Agreement unless
there shall have been a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed
as creating an express or implied contract of employment and, except as
otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the
Company.
4. The Executive's Covenants.
4.1. The Executive agrees that, subject to the terms and conditions
of this Agreement, in the event of a Potential Change in Control during the
term of this Agreement, the Executive will remain in the employ of the
Company until the earliest of (i) a date which is two (2) years from the date
of such Potential Change of Control, (ii) the date of a Change in Control,
(iii) the date of termination by the Executive of the Executive's employment
for Good Reason, by reason of death, Disability or Retirement, or (iv) the
termination by the Company of the Executive's employment for any reason.
4.2. The Executive agrees to comply with the provisions of Sections
2, 3, 4, 5, 6, 7, 8, and 9 of the Employee Invention and Confidentiality
Agreement in consideration for the rights and benefits set forth in this
Agreement; these Sections of the Employee Invention and Confidentiality
Agreement, along with definitions of defined terms used in such Sections, are
incorporated into this Agreement by reference.
5. Compensation Other Than Severance Payments.
5.1. Following a Change in Control and during the term of this
Agreement, 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
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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 payments.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control and during the term of this Agreement, the Company
shall pay the Executive's base salary to the Executive 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.
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control and during the term of this Agreement, the Company
shall pay the Executive's normal post-termination compensation and benefits to
the Executive as such payments become due. Subject to Section 6.1 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).
6. Severance Payments.
6.1. The Company shall pay the Executive the payments described in
this Section 6.1 (the "Severance Payments") upon the termination of the
Executive's employment following a Change in Control and during the term of this
Agreement, in addition to the payments and benefits described in Section 5
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
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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 two (2) times the
sum of (i) the higher of the Executive's annual base salary in effect
immediately prior to the occurrence of the event or circumstance upon which
the Notice of Termination is based or the Executive's annual base salary in
effect immediately prior to the Change in Control, and (ii) the higher of
(x) the amount paid to the Executive pursuant to the Company's Annual
Executive Incentive Compensation Plan, Annual Executive Incentive Plan, or
any successor annual executive incentive compensation plan, as the case may
be, for the fiscal year preceding that in which the Date of Termination
occurs, or (y) the average amount so paid for the three fiscal years
preceding that in which the Change in Control occurs.
(B) Notwithstanding any provision of the Company's Annual
Executive Incentive Plan or successor annual executive incentive
compensation plan (but provided that there shall be no duplication of the
benefits under any such plans), 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, as the case may be, but has not yet been either (x) paid
(pursuant to Section 5.2 hereof or otherwise) or (y) deferred pursuant to
the Deferred Compensation Plan for Salaried Employees, and (ii) a pro-rata
portion to the Date of Termination of the aggregate value of any contingent
incentive compensation award to the Executive for any uncompleted fiscal
year under the Annual Executive Incentive Plan or any successor annual
executive incentive compensation plan, calculated as to each such award in
accordance with Article XI(A)(iii) of the Annual Executive Incentive Plan
or any comparable provision in any successor annual executive incentive
compensation plan;
(C) In determining the retirement benefits to which the
Executive is entitled under the Company's Supplemental Executive Retirement
Plan, the Executive shall be given an additional two (2) years of service
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credit at the Executive's highest annual rate of compensation during the
twelve (12) months immediately preceding the Date of Termination and shall
be deemed to be two (2) years older than he is; such benefits shall be
determined without regard to any amendment to the Supplemental Executive
Retirement Plan made subsequent to a Change in Control and on or prior to
the Date of Termination, which amendment adversely affects in any manner
the computation of retirement benefits thereunder.
(D) For a twenty-four (24) 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 such reduction constitutes Good
Reason). Benefits otherwise receivable by the Executive pursuant to this
Section 6.1(D) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without cost during
the twenty-four (24) month period following the Executive's termination of
employment (and any such benefits actually received by the Executive shall
be reported to the Company by the Executive). If the benefits provided to
the Executive under this Section 6.1(D) shall result in a Gross-Up Payment
pursuant to Section 6.2, and these Section 6.1(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 6.2
hereof.
(E) For a period equal to the lesser of (i) the period from the Date
of Termination to the date on which the Executive commences employment with
another employer or (ii) the twenty-four (24) month period immediately
following the Date of Termination, the Company shall arrange to provide the
Executive with outplacement counseling; provided, however, that the
aggregate cost of such counseling shall not exceed five percent (5%) of the
Executive's annual base salary in effect immediately prior to the
occurrence of the event
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or circumstance upon which the Notice of Termination is based.
6.2 (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 6.2(C) hereof, all
determinations required to be made under this Section 6.2, 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 6.2(B) and Section 6.3 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 6.2(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 6.2(B) shall be binding upon
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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 6.2(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 twenty-four (24) 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;
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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 6.2(C), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and xxx for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(D) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 6.2(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
6.2(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
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by the Executive of an amount advanced by the Company pursuant to Section
6.2(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 twenty-four (24) days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid.
6.3 The payments provided for in Section 6.1 hereof (other than
Section 6.1(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).
6.4 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.
7. Termination Procedures.
7.1 Notice of Termination. After a Change in Control and during the
term of this Agreement, 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
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with Section 10 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.
7.2 Date of Termination. "Date of Termination", with respect to
any purported termination of the Executive's employment after a Change in
Control and during the term of this Agreement, 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).
8. No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement,
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 pursuant to
Section 6. Further, the amount of any payment or benefit provided for in
Section 6 (other than Section 6.1(D)) 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.
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9. Successors; Binding Agreement.
9.1. 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.
9.2. 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.
10. 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:
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To the Company:
New York State Electric & Gas Corporation
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Secretary
To the Executive:
_______________________________
_______________________________
_______________________________
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set forth in this Agreement. 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 of the
Company and the Executive under Sections 6 and 7 shall survive the expiration
of the term of this Agreement.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or same instrument.
enforceability of any other provision of this Agreement, which shall remain
in full force and effect.
13. 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.
14. Settlement of Disputes; Arbitration.
14.1. Subject to Section 14.2, all claims by the Executive for
benefits under this Agreement shall be directed to
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and determined by the Board and shall be in writing. Subject to Section
14.2, any denial by the Board of a claim for benefits under this Agreement
shall be delivered to the Executive in writing and shall set forth the
specific reasons for the denial and the specific provisions of this Agreement
relied upon. The Board shall afford a reasonable opportunity to the
Executive for a review of the decision denying a claim and shall further
allow the Executive to appeal to the Board a decision of the Board within
sixty (60) days after notification by the Board that the Executive's claim
has been denied. To the extent permitted by applicable law, any further
dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in Binghamton, New York in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
14.2. Section 14.1 and anything herein to the contrary
notwithstanding, the Executive agrees that any breach or violation of
Sections 2, 3, 4, 5, 6, 7, 8, and/or 9 of the Employee Invention and
Confidentiality Agreement will result in immediate and irreparable injury to
the Company in amounts difficult to ascertain. Therefore, upon any breach of
any of these Sections by the Executive, the Company shall be entitled to
proceed directly to court to obtain the remedies of specific performance and
injunctive relief (including but not limited to temporary restraining orders,
preliminary injunctions and permanent injunctions) without the necessity of
posting a bond or other undertaking, or otherwise first using the dispute
resolution and/or arbitration procedures set forth in Section 14.1 above.
15. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(A) Intentionally Omitted.
(B) "Beneficial Owner" shall have the meaning defined in Rule 13d3
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, after any Change in Control (or after any Potential Change in
Control under the circumstances described in the second sentence of Section
6.1 hereof), 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
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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 7.1) 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:
(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
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(III) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no Person acquires more than 50% of the combined voting power
of the Company's then outstanding securities; or
(IV) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets.
(F) "Change-in-Control Protective Period" shall mean the period
from the occurrence of a Change in Control until the later of (i) the second
anniversary of such Change in Control or, (ii) if such Change in Control
shall be caused by the shareholder approval of a merger or consolidation, as
described in Section 15(E)(III) hereof, the second anniversary of the
consummation of such merger or consolidation, provided, however, that in the
event that the agreement providing for such merger or consolidation, as
described in Section 15(E)(III) hereof, is terminated without consummation of
such merger or consolidation, the Change-in-Control Protective Period shall
expire 90 days following such termination, unless there has occurred another
event constituting a Change-in-Control, in which case the Change-in-Control
Protective Period shall expire upon the date described herein with respect to
such subsequent Change in Control.
(G) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(H) "Company" shall mean New York State Electric & Gas Corporation
and any successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise (except in
determining, under Section 15(E) hereof, whether or not any Change in Control
of the Company has occurred in connection with such succession).
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(I) "Date of Termination" shall have the meaning stated in Section
7.2 hereof.
(J) "Disability" shall be deemed the reason for the termination by
the Company of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for the maximum number of months applicable to the Executive under
the Company's Disability Policy for Salaried Employees (but in no event for
less than six (6) consecutive months), the Company shall have given the
Executive a Notice of Termination for Disability, and, within thirty (30)
days after such Notice of Termination is given, the Executive shall not have
returned to the full-time performance of the Executive's duties.
(K) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(L) "Excise Tax" shall have the meaning stated in Section 6.2(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 6.1 hereof (treating all references in paragraphs (I) through (VII)
below to a "Change in Control" as references to a "Potential Change in
Control"), of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (I), (V), (VI) or (VII) below, such act or failure to
act is corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(I) the assignment to the Executive of any duties inconsistent
with the Executive's status as an executive officer of the Company or
a substantial alteration in the nature or status of the Executive's
responsibilities from those in effect immediately prior to the
Change-in-Control (including, without limitation, any such alteration
attributable to the fact that the Company may no longer be a public
company);
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(II) a reduction by the Company in the Executive's annual base
salary as in effect on the date hereof or as the same may be increased
from time to time;
(III) the relocation of the Company's principal executive offices
to a location more than fifty (50) miles from the location of such
offices immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the
Company's business to an extent substantially consistent with the
Executive's present business travel obligations;
(IV) the failure by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(V) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately
prior to the Change in Control which is material to the Executive's
total compensation, including but not limited to the Company's Annual
Executive Incentive Plan, Long Term Executive Incentive Share Plan,
and Supplemental Executive Retirement Plan, or any substitute plans
adopted prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the Company
to continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the
level of the Executive's participation relative to other participants,
as existed at the time of the Change in Control;
(VI) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, life insurance, medical,
health and accident, or disability plans in which the Executive was
participating at the time of the Change in Control, the taking of any
action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any
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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 on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at the
time of the Change in Control; or
(VII) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 7.1; for purposes of this Agreement, no
such purported termination shall be effective. The Executive's right
to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental
illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure
to act constituting Good Reason hereunder.
(O) "Notice of Termination" shall have the meaning stated in Section
7.1 hereof.
(P) "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.
(Q) "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:
(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
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intention to become the Beneficial Owner, directly or indirectly, or
(z) makes a filing under the Xxxx Xxxxx Xxxxxx Antitrust 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.
(R) "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.
(S) "Severance Payments" shall mean those payments described in
Section 6.1 hereof.
(T) Intentionally Omitted.
(U) "Employee Invention and Confidentiality Agreement" means the
Employee Invention and Confidentiality Agreement between the Company and the
Executive attached hereto as "Appendix A."
NEW YORK STATE ELECTRIC &
GAS CORPORATION
By
------------------------------
Name:
Title:
--------------------------------
(the "Executive")
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Meeting Minutes _________________________________
Entered by: X.X. Xxxx Date: 06/06/97
Last modified by X.X. Xxxx on 06/06/97 at 10:39 AM
Major Category: Miscellaneous
Document Type: Severance Agreement
Date of Meeting: 01/01/97 - Vice President-eff. 1/1/97
(Includes Amendments Nos. 1 and 2)
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