EXHIBIT NO. 10-44
NEW YORK STATE ELECTRIC & GAS CORPORATION
1998 STOCK OPTION AWARD AGREEMENT
1. Pursuant to the provisions of the 1997 Stock Option
Plan, as it may be amended from time to time (hereinafter called
the "Plan"), of New York State Electric & Gas Corporation
(hereinafter called the "Company"), the Company hereby grants to
________________ (hereinafter called the "Optionee"), subject in
all respects to the terms and conditions of the Plan and subject
further to the terms and conditions herein set forth, the right
and option to purchase from the Company all or any part of an
aggregate of _______ shares of Common Stock ($6.66 2/3 Par Value)
of the Company at the purchase price of $_____ per share
(hereinafter called the "Option"). Capitalized terms not
defined herein shall have the same definitions as in the Plan.
2. The Option is a Non-Statutory Stock Option and is
intended not to qualify as an Incentive Stock Option under
Section 422 of the Code.
3. Except as otherwise provided herein, the Option is not
exercisable in any part between the time of its grant, February
5, 1998 ("Option Grant Date") and January 1, 1999. Upon the
expiration of this period of time and subject to the provisions
for termination and acceleration provided herein, the Option will
become exercisable in installments as follows: The Option may be
exercised on and after January 1, 1999 in aggregate as to no more
than 33 1/3% of the total number of shares originally optioned,
rounded to the next whole number; on and after January 1, 2000 in
aggregate as to no more than 66 2/3% of the total number of
shares originally optioned, rounded to the next whole number; and
on January 1, 2001 as to all optioned shares which have not
previously been exercised. Partial exercises of the Option shall
be made only with respect to whole shares of the Company's Common
Stock. In no event may the Option granted hereunder be exercised
after February 5, 2008 ("Option Expiration Date").
4. In addition to the grant of the Option hereunder, the
Optionee is hereby granted Stock Appreciation Rights in tandem
with the Option which entitle the Optionee to receive from the
Company, upon the exercise of such Stock Appreciation Rights, an
amount equal to the excess of the Fair Market Value of a share of
the Company's Common Stock, determined on the date of the
exercise, over the exercise price of the Option. Stock
Appreciation Rights shall be exercisable under the same terms and
conditions contained in Article 3 herein and shall expire on the
Option Expiration Date. Upon their exercise, Stock Appreciation
Rights shall be settled in cash. The exercise of Stock
Appreciation Rights granted shall result in the corresponding
cancellation of the Option to the extent of the number of shares
of the Company's Common Stock as to which Stock Appreciation
Rights are exercised. The exercise of the Option shall result in
the corresponding cancellation of the Stock Appreciation Rights
to the extent of the number of shares of the Company's Common
Stock as to which the Option is exercised. The Option and the
Stock Appreciation Rights are collectively referred to
hereinafter as "Awards".
5. Neither the Option nor any right hereunder shall be
assignable or transferrable by the Optionee or be subject to any
lien, obligation or liability of the Optionee, except that the
Option may be transferred:
(a) by the Optionee by will or the laws of descent and
distribution;
(b) by the Optionee, with the prior written consent of
the committee administering the Plan
("Committee"), by gift to (i) the Optionee's
spouse or a child or grandchild of the Optionee or
of the Optionee's spouse, or (ii) a trust or an
estate in which the Optionee or the Optionee's
spouse or a child or grandchild of the Optionee or
of the Optionee's spouse has a substantial
interest; and
(c) by the Optionee, with the prior written consent of
the Committee, pursuant to a domestic relations
order as defined in Section 414 of the Code, or
any successor provision.
In the event of a transfer, the Option shall continue to be
subject to all the terms and conditions contained herein and the
Optionee shall remain obligated to pay to the Company, upon the
exercise of the Option by the Optionee's transferee, amounts
sufficient to satisfy any applicable federal, state and local
withholding tax requirements. The Option may not be further
transferred by the Optionee's transferee, except by will or the
laws of descent and distribution. Moreover, the Committee may
require a transferee who acquires the Option pursuant to
Subsections (b) or (c) above to furnish to the Company, as a
condition to the issuance of shares upon the exercise of the
Option, an agreement (in such form as the Committee may specify)
that is executed by the transferee and that contains such
provisions, including representations and restrictions as to the
transferability of the shares, as are required by the Committee.
In the event of the termination of the employment of the
Optionee, the Option shall be exercisable by the Optionee's
transferee only to the extent specified, and during the
applicable periods set forth, in Section 11 hereof.
A transfer of all or any portion of the Option shall result
in the concurrent transfer of the related tandem Stock
Appreciation Rights. Stock Appreciation Rights may not be
transferred by themselves.
6. Unless otherwise provided by the Committee, the Option,
or any portion thereof, shall be exercised by a written notice
(in such form as the Committee may specify) that is addressed to
the Secretary of the Company and that specifies the number of
shares with respect to which it is being exercised and the total
exercise price. The written notice shall be accompanied by the
payment of the exercise price in cash or the equivalent payable
to the Company, or, unless otherwise provided by the Committee,
by tendering (either actually or by delivery of a Committee-
approved form attesting to stock ownership) previously acquired
shares of the Company's Common Stock which are owned by the
Optionee (or the Optionee's transferee) and which are not subject
to any pledge or other security interest, or by any combination
of the foregoing. With respect to shares tendered in lieu of the
payment of cash or cash equivalents, such shares shall be valued
on the basis of their Fair Market Value on the date of exercise.
Unless otherwise provided by the Committee, an Option shall not
be deemed exercised until the date ("Exercise Date") that both a
written notice of exercise and the payment of the exercise price
in the form required herein is provided to the Company in
accordance with the provisions of Section 10 hereof.
The Committee, in its sole discretion, may, in lieu of
delivering shares covered by the exercised Option, settle the
exercise of the Option by means of a cash payment to the Optionee
(or the Optionee's transferee) equal to the difference between
the Fair Market Value of the Company's Common Stock determined on
the Exercise Date and the Option Price. The Committee shall at
the same time return to the Optionee (or the Optionee's
transferee) any payment for the shares covered by the Option.
Unless otherwise provided by the Committee, (i) the Stock
Appreciation Rights shall be exercised by delivery of a written
notice that is addressed to the Secretary of the Company and that
specifies the number of shares with respect to which the Stock
Appreciation Right is being exercised, and (ii) the Exercise Date
with respect to a Stock Appreciation Right shall be the date the
written notice of exercise of the Stock Appreciation Right is
provided to the Company in accordance with the provisions of
Section 10 hereof.
7. As a condition to the issuance of shares of Common
Stock of the Company under the Option, the Optionee shall remit
(or cause to be remitted) to the Company an amount sufficient to
satisfy any applicable federal, state and local withholding tax
requirements. An Optionee may, totally or in part, satisfy this
obligation by electing to have shares withheld (with the consent
of the Optionee's transferee, in the event the Option is
exercised by a transferee) or by delivering other shares having a
Fair Market Value equal to the amount required to be withheld,
provided that this election is made in writing on or prior to the
date of the exercise of the Option. The Fair Market Value of any
shares so withheld or delivered shall be determined as of the
date the taxes are required to be withheld.
8. Except as otherwise provided herein, to the extent that
all or any portion of the exercise price, or taxes incurred in
connection with the exercise of the Option, are paid by the
Optionee by surrendering shares of the Company's Common Stock
(or, in the case of the payment of taxes, by the withholding of
shares) then, concurrently with such surrender or withholding,
the Optionee shall be granted as an additional option a
replacement option, subject in all respects to the provisions of
the Plan, including but not limited to Article V thereof. The
replacement option, to the extent permissible, shall cover the
number of shares of the Company's Common Stock surrendered to pay
the exercise price plus the number of shares surrendered or
withheld to satisfy the Optionee's tax liability and shall have
an exercise price equal to 100% of the Fair Market Value of the
Company's Common Stock determined on the date such replacement
option is granted. The replacement option shall not be
exercisable for six months from the date of its grant and shall
expire on the Option Expiration Date. No replacement option
shall be issued after August 5, 2007. Replacement options shall
be issued with respect to options which are themselves
replacement options. Notwithstanding the foregoing, neither the
surrender of shares in connection with the exercise of the Option
(or a replacement option) by the Optionee's transferee, nor the
surrender or withholding of shares in connection with the payment
of any taxes incurred with respect to such an exercise, shall
result in the grant of a replacement option to any party.
9. The Company shall, on or as soon as practicable after
the date of the exercise of all or a portion of the Option,
deliver to the Optionee (or the Optionee's transferee) a
certificate or certificates for the appropriate number of shares
of the Company's Common Stock (or in the event that the Company
is using a book entry system, make the appropriate book entry).
Notwithstanding anything to the contrary contained in the Plan or
this Agreement, the Company shall not be required to issue shares
of Common Stock until all applicable legal, listing, registration
and regulatory requirements or approvals relating to the issuance
have been satisfied or obtained. The shares of the Company's
Common Stock issued upon the exercise of an Option may not be
transferred except in accordance with all applicable federal and
state securities laws, rules and regulations. Certificates
issued to transferees of the Optionee may contain legends
reflecting any restrictions on transferability imposed by the
Company in order to comply with such laws, rules and regulations.
The Company shall not be required to register any shares issued
to any transferees of the Optionee.
10. All notices under this Agreement shall be in writing.
Notices, other communications and payments provided for in this
Agreement shall be deemed to have been duly given or made when
delivered in person or when mailed by United States registered
mail, return receipt requested, postage prepaid, addressed to the
Company at the address set forth below or to the Optionee at the
address set forth on the signature page of this Agreement or to
such substitute 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:
Corporate Secretary
New York State Electric & Gas Corporation
0000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
11. Termination of Employment.
(a) In the event that the Optionee ceases to be an
employee of the Company by reason of death,
retirement, or permanent disability, the Awards
may be exercised by the Optionee or by the
Optionee's legal representative or representatives
or by the persons entitled to do so under the
Optionee's will or the laws of descent and
distribution, to the extent the Awards are then
otherwise exercisable, during the one-year period
following the date the Optionee ceases to be an
employee of the Company, but not after the
expiration of such period.
(b) In the event that the Optionee ceases to be an
employee of the Company by reason of termination
by the Company of the Optionee's employment for
cause (as determined in the sole discretion of the
Committee), the Awards shall expire to the extent
that they are unexercised at the time of such
termination of employment.
(c) In the event that the Optionee ceases to be an
employee of the Company for any reason other than
death, retirement, permanent disability or
termination of employment by the Company for
cause, the Awards shall expire to the extent that
they are unexercised at the time such Optionee
ceases to be an employee of the Company unless
otherwise determined by the Committee in its sole
discretion.
12. In the event of any change in the number of outstanding
shares of the Company's Common Stock or the Common Stock price by
reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination, exchange of
shares or other similar corporate change, then in any such event
the number and kind of shares subject to the Awards and the
exercise price per share may be appropriately adjusted consistent
with such change in such manner as the Committee in its sole
discretion may deem equitable. Any adjustments made by the
Committee shall be conclusive and binding for all purposes of the
Plan.
In the event of the dissolution or complete liquidation of
the Company, or upon a reorganization, merger or consolidation of
the Company which results in the outstanding shares of the
Company's Common Stock subject to this Option being changed into
or exchanged for property (including cash), rights or securities
not issued by the Company, or any combination thereof, or the
sale of all or substantially all of the Company's assets to, or
the acquisition of shares of the Company representing more than
seventy-five percent (75%) of the voting power of the stock of
the Company then outstanding by, another corporation or person,
the Awards shall terminate, unless provision is made in writing
in connection with such transaction for the assumption of the
Awards, or the substitution for the Awards of an award covering
the shares of a successor employer corporation, or a parent or a
subsidiary thereof, with appropriate adjustments in accordance
with the provisions hereinabove as to the number and kind of
shares awarded and their exercise price, in which event the
Awards shall continue in the manner and under the terms so
provided.
Notwithstanding anything to the contrary contained herein,
in the event of the formation of a holding company ("Holding
Company") over New York State Electric & Gas Corporation pursuant
to a binding share exchange, the Awards shall, without further
action, be deemed to be converted into awards covering the
equivalent number of shares of the Holding Company, with the same
terms and conditions as set forth herein.
In such event, the references to "Company" in Sections 11
and 13 hereof shall be to the "Holding Company and its
affiliates" and the references to "Company" in the other sections
of this Agreement shall be to the "Holding Company".
13. The Awards shall not confer upon the Optionee any right
with respect to the continuance of employment with the Company,
nor shall it affect any right which the Company may have to
terminate the employment of the Optionee.
14. The Optionee (or Optionee's transferee) shall not be
entitled to the rights of a stockholder with respect to any
shares of the Company's Common Stock subject to the Option prior
to the date of issuance of a certificate or certificates for such
shares (or in the event that the Company is using a book entry
system, the date the Company makes the appropriate book entry).
No adjustment shall be made for dividends or distributions or
other rights with respect to such shares for which the record
date is prior to the date the stock certificate or certificates
are issued (or appropriate book entry is made).
15. A copy of the Plan has been delivered to the Optionee
prior to the execution hereof and is on file at the Company's
corporate offices in Binghamton and Ithaca, New York.
16. This Agreement shall be governed by the laws of the
State of New York, other than its conflicts of laws provisions.
In the event of an inconsistency between any term of the Plan and
any term of this Agreement, the terms of the Plan shall govern.
17. Notwithstanding anything to the contrary contained in
any other Section of this Agreement, the Options and Stock
Appreciation Rights granted hereunder shall become immediately
exercisable upon the occurrence of a Potential Change in Control.
For purposes of this Section 17, the following terms shall
have the meanings indicated below:
(a) "Beneficial Owner" shall have the meaning defined
in Rule 13d-3 of the Exchange Act.
(b) 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
(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 out-
standing 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.
(c) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended from time to time.
(d) A "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.
(e) A "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 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 Committee adopts a resolution to the
effect that, for purposes of this Agreement,
a Potential Change in Control has occurred.
NEW YORK STATE ELECTRIC & GAS CORPORATION
By:_____________________________________
Vice President and Secretary
Dated: February 5, 1998
ACCEPTED AND AGREED TO:
Optionee acknowledges receipt of a copy of the Plan and
represents that Optionee is familiar with the terms and
provisions contained therein. Optionee hereby accepts the Awards
subject to all of the terms and provisions of the Plan. Optionee
hereby agrees to accept as binding, conclusive and final all
decisions and interpretations of the Committee as to any
questions arising under the Plan, the Option and the Stock
Appreciation Rights.
__________________________
