Exhibit 10-21

EMPLOYMENT AGREEMENT

            This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of
July 1, 2004 (the "Agreement"), by and among Energy East Corporation, a New York
corporation (the "Company"), Energy East Management Corporation, a Delaware
corporation ("EEMC"), and Wesley W. von Schack (the "Executive"), amends and
restates that certain Employment Agreement dated as of May 19, 2000, as amended
by Agreement dated as of August 1, 2001, and as amended and restated by
Agreement dated February 8, 2002, between the Company and the Executive.

            The Executive has reached retirement age under the terms of the
Employment Agreement dated as of May 19, 2000, as amended by Agreement dated as
of August 1, 2001, and as amended and restated by Agreement dated
February 8, 2002. The independent members of the Board of Directors of the
Company (the "Board") and the Board of Directors of EEMC have determined that it
is in the best interests of the Company and the shareholders that the Executive
continue his employment as a member of the management of the Company and of
EEMC. The Board and the Board of EEMC have also determined that in order to
retain the Executive it is necessary to enhance certain elements of the
Executive's compensation.

            The Executive is willing to commit himself to serve the Company and
EEMC, on the terms and conditions herein provided.

            In order to effect the foregoing, the Company, EEMC 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.  EEMC hereby agrees to employ the Executive,
and the Executive hereby agrees to serve the Company and EEMC, 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
July 1, 2004 and end on June 30, 2007, unless further extended as hereinafter
provided. Commencing on July 1, 2005 and each July 1, thereafter, the Term of
this Agreement shall automatically be extended for one (1) additional year
unless, not later than the May 1, immediately preceding each such July 1, the
Company (upon authorization by the Board) or the Executive shall have given
notice not to extend this Agreement.

            4.         Position and Duties.  The Executive shall serve as
Chairman, President and Chief Executive Officer of the Company and President and
Chief Executive Officer of EEMC 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 and its subsidiaries; 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, and are consistent with
the Company's Corporate Governance Guidelines.

            5.         Compensation and Related Matters.

                        5.1       Base Salary.  EEMC 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 Nine Hundred Thousand Dollars
($900,000.00) 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 conduct 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 or EEMC
hereunder, and no other compensation, benefit or payment hereunder shall in any
way limit or reduce the obligation of EEMC to pay the Executive's Base Salary
hereunder.

                        5.2       Benefit and Incentive Plans.  The Executive
shall be entitled to participate in or receive compensation and/or benefits, as
applicable, under all "employee benefit plans" (as defined in section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended from time to
time ("ERISA")), all incentive compensation plans, and all employee benefit
arrangements made available by the Company now or during the period of the
Executive's employment hereunder to its executives and key management employees
of its subsidiaries, 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 compensation and benefits
created by this Agreement. The Executive's participation in such plans and
arrangements shall be on an appropriate level, as determined by the Board.

                        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 employment with the Company and EEMC terminates
for any reason subsequent to July 1, 2004, there shall instead be paid to the
Executive under Section 6 of the Company'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, (ii) deeming the Executive to be a "Key Person" as defined in, and for
all purposes under, that plan and (iii) deeming the Executive's "highest three
consecutive years of earnings within the last five 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 his employment terminates plus the average of the highest
three consecutive incentive compensation awards earned by the Executive within
the last five years of employment under the AEIP (as hereinafter defined), or
any successor annual executive incentive compensation plan.

                        If the Executive elects to receive the lump sum benefit
payable under Section 6(C) of the Company's Supplemental Executive Retirement
Plan (or any successor plan):

(A)       The lump sum benefit under Section 6(C) of the Company's Supplemental
Executive Retirement Plan (or any successor plan) shall be determined by
employing the annual rate of interest on 30-year Treasury securities in effect
as of (i) December 31, 2003 (i.e. 5.07%), or (ii) the last day of the year
preceding the year of distribution, whichever is lower.

(B)       The sum of (x) the lump sum the Executive is eligible to receive under
any defined benefit plan adopted or sponsored by NYSEG, as determined pursuant
to the terms of that plan, (y) the present value of any Social Security benefits
which the Executive is eligible or expected to become eligible to receive
(calculated by employing the interest rate set forth in paragraph A, above), and
(z) the lump sum benefit under Section 6(C) of the Company's Supplemental
Executive Retirement Plan (or any successor plan) (calculated by employing the
interest rate set forth in paragraph A, above) at the time of termination of
employment shall be no less than the sum of the amounts described in (x), (y)
and (z) that the Executive would have received had he retired on May 1, 2004.

(C)       Should the Executive die while an active employee of the Company, his
estate will receive a lump sum amount under Section 6(C) of the Company's
Supplemental Executive Retirement Plan (or any successor plan) equal to the lump
sum amount he would have received under the Company's Supplemental Executive
Retirement Plan (or any successor plan) if he had retired from the Company on
the day prior to his death (calculated by employing the interest rate set forth
in paragraph A, above). This benefit shall be in lieu of any benefits that would
otherwise be payable to the Executive's surviving spouse pursuant to Section 6
(B) of the Company's Supplemental Executive Retirement Plan (or any successor
plan).

                        5.3       Expenses.  Upon presentation of reasonably
adequate documentation to EEMC, the Executive shall receive prompt reimbursement
from EEMC for all reasonable and customary business expenses incurred by the
Executive in accordance with EEMC policy in performing services hereunder. EEMC
agrees to reimburse the Executive for any expenses he incurs in moving himself
and his family from New York, NY 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       Restricted Stock Plan.  If the Executive is an
active employee of the Company on the dates set forth on the schedule included
as part of this Section 5.5, he will receive shares of restricted stock under
the Company's Restricted Stock Plan (or any successor plan) as described in the
schedule. The shares received by the Executive pursuant to this Section 5.5 will
be governed by the terms of the Company's Restricted Stock Plan (or any
successor plan), including but not limited to the vesting and transfer of such
shares.

Date

Number of Shares

July 1, 2005
July 1, 2006
July 1, 2007
July 1, 2008
July 1, 2009

23,913
23,913
47,826
47,826
95,652

            6.         Compensation Related to Disability.  During the Term of
this Agreement, during any period that the Executive fails to perform the
Executive's full-time duties with the Company and EEMC as a result of incapacity
due to physical or mental illness, EEMC 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 8 and 9 and the second and third paragraphs of
Section 5.2 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, the Company and EEMC shall have no further obligations to the
Executive under this Agreement.

            7.         Compensation Related to Termination.  If the Executive's
employment shall be terminated for any reason during the Term of this Agreement,
EEMC shall pay the Executive's Base Salary (to the Executive or in accordance
with Section 13.2 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, 8, 9 and the second and third paragraphs of
Section 5.2 hereof, after completing the expense reimbursements required by
Section 5.3 hereof and making the payments and providing the benefits required
by this Section 7, the Company and EEMC shall have no further obligations to the
Executive under this Agreement.

            8.         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, EEMC shall pay the Executive's normal
post-termination compensation and benefits to the Executive as such payments
become due. Subject to Section 9.1 hereof and the second and third paragraphs 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).

            9.         Severance and Gross-Up Payments.

                        9.1       EEMC shall pay the Executive the payments
described in this Section 9.1 (the "Severance Payments") upon the termination of
the Executive's employment prior to the end of the Term, in addition to the
payments and benefits described in Sections 7 and 8 and the second and third
paragraphs of Section 5.2 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.

(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, EEMC shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) times the sum of:

(i)         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, and

(ii)        the average of the highest three consecutive incentive compensation
awards earned by the Executive within the last five years of employment under
the Company's Annual Executive Incentive Plan (the "AEIP"), or any successor
annual executive incentive compensation plan, before the Date of Termination.

(B)       Notwithstanding any provision of the AEIP or any successor annual
executive incentive compensation plan, EEMC 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 AEIP, or any successor annual
executive incentive compensation plan, but has not yet been either (x) paid
(pursuant to Section 7 hereof or otherwise) or (y) deferred pursuant to the
Company's 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 AEIP or any successor annual executive incentive compensation plan,
calculated by assuming that the Maximum Earnings Level (as defined in the AEIP)
had been achieved and that the Executive's Level of Achievement (as defined in
the AEIP) were one hundred percent (or in the case of any such successor plan,
that maximum performance with respect to all applicable performance goals had
been achieved), with such pro-rata amount being reduced (but not below zero) by
any amounts paid to the Executive with respect to such uncompleted fiscal year
pursuant to Article XI(A)(iii) of the AEIP, or any comparable provision of any
such successor plan, as a result of a Change-in-Control that occurs during such
uncompleted fiscal year.

(C)       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 constituting a basis for a termination
by the Executive of his employment for Good Reason). Benefits otherwise
receivable by the Executive pursuant to this Section 9.1(C) 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 and EEMC by the Executive). If
the benefits provided to the Executive under this Section 9.1(C) shall result in
a Gross-Up Payment pursuant to Section 9.2, and these Section 9.1(C) 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 EEMC 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 9.2 hereof.

9.2

(A)       Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by EEMC to or for
the benefit of the Executive, 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 EEMC shall pay to or on behalf of the
Executive 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 9.2(C) hereof, all determinations
required to be made under this Section 9.2, 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 9.2(B) and Section 9.3 hereof). All fees and expenses
of the Accounting Firm shall be borne solely by EEMC. The initial Gross-Up
Payment, if any, as determined pursuant to this Section 9.2(B), shall be paid by
EEMC 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 9.2(B)
shall be binding upon the Company, EEMC 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 EEMC should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that EEMC exhausts its remedies pursuant to Section
9.2(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 EEMC to or for the
benefit of the Executive.

(C)       The Executive shall notify the Company and EEMC in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by EEMC 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 and EEMC 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
and EEMC (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 and EEMC any information reasonably requested by
the Company or EEMC relating to such claim,

(ii)        take such action in connection with contesting such claim as the
Company or EEMC 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 and EEMC in good faith in order
effectively to contest such claim, and

(iv)       permit the Company or EEMC to participate in any proceeding relating
to such claim;

provided, however, that EEMC 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
9.2(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, EEMC 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 EEMC
pursuant to Section 9.2(C) hereof, the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to EEMC's
complying with the requirements of Section 9.2(C) hereof) promptly pay to EEMC
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 EEMC pursuant to Section 9.2(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.

                        9.3       Except as otherwise specifically provided in
Sections 9.1 and 9.2, the payments provided for in Sections 9.1 and 9.2 hereof
shall be made not later than the fifth (5th) day following the relevant
Determination Date, provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, EEMC 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 the
relevant Determination Date. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, EEMC may
demand repayment of such excess, and such excess shall be payable on the fifth
(5th) business day after demand by EEMC (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).

                        9.4       EEMC also shall pay to the Executive all legal
fees and expenses incurred by the Executive as a result of an event which
entitles the Executive to the Severance Payments or any Gross-Up 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 or EEMC reasonably may require.

            10.        Termination Procedures.

                       10.1       Notice of Termination.  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 parties hereto in accordance with Section 14
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 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.

                       10.2       Date of Termination.  "Date of Termination,"
with respect to any purported termination of the Executive's employment 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).

            11.        No Mitigation.  The Company and EEMC agree that, if the
Executive's employment hereunder is terminated during the Term, the Executive is
not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by EEMC hereunder. Further, the amount of any
payment or benefit provided for hereunder (other than pursuant to Section 9.1(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 EEMC,
or otherwise.

            12.        Confidentiality, Noncompetition, and Nonsolicitation.

                       12.1       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 or any of its subsidiaries or affiliates and is not
generally known or available in the marketplace, and to which the Executive
gains access by reason of his position as an employee or director of the Company
or any of its subsidiaries or affiliates (each, an "EE Entity").

                       12.2       If, at any time prior to the end of the Term,
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 any EE Entity with respect to products which any EE Entity is then
producing or services any EE Entity is then providing (a "Competitor"). However,
it shall not be a violation of the immediately preceding sentence for the
Executive to be employed by, or render services to, a Competitor, if the
Executive renders those services only in lines of business of the Competitor
which are not directly competitive with the primary lines of business of any EE
Entity, or are outside of the Restricted Territory. For purposes of this Section
12.2, the "Restricted Territory" shall be the states of Connecticut, Maine,
Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania,
Rhode Island and Vermont. If, at any time in connection with or following a
Change-in-Control, and prior to the end of the Term, 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.

                       12.3       If the Executive's employment is terminated
for any reason, then for the twelve month period immediately following his Date
of Termination the Executive shall not, except as permitted by the Company upon
its previous written consent, solicit on his own behalf or on behalf of another
person or entity any EE Entity employee for hire or retention as an employee,
consultant, or service provider.

            13.        Successors; Binding Agreement.

                       13.1       In addition to any obligations imposed by law
upon any successor to the Company or EEMC, the Company or EEMC 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 or EEMC, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company or EEMC would be required to
perform it if no such succession had taken place. Failure of the Company or EEMC
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 or EEMC 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, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.

                       13.2       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.

            14.        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 and EEMC:

Energy East Corporation
Energy East Management Corporation
One Commerce Plaza
99 Washington Street
Albany, New York 12260
Attention:  Vice-President-Human Resources

To the Executive:

Wesley W. von Schack
217 Commercial Street
Portland, Maine 04101

            15.        Miscellaneous.

                       15.1       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, including without limitation the Employment Agreement between
the Company and the Executive dated as of May 19, 2000, as amended by Agreement
dated as of August 1, 2001, and as amended and restated by Agreement dated
February 8, 2002, 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, EEMC or the Executive which by
their nature and terms require satisfaction after the end of the Term shall
survive such event and shall remain binding upon such party.

                       15.2       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 and EEMC if maintained for the benefit
of the Company's executives or employees of EEMC.

                       15.3       Notwithstanding any provision of this
Agreement to the contrary, in the event EEMC does not make any payment required
to be made by it under this Agreement, the Company shall be liable to the
Executive and his personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees for all payment
obligations of EEMC under this Agreement.

            16.        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.

            17.        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.

            18.        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.

            19.        Definitions.  For purposes of this Agreement, the
following terms shall have the meaning indicated below:

(A)       "AEIP" shall have the meaning stated in Section 9.1(A)(ii) hereof.

(B)       "Base Salary" shall have the meaning stated in Section 5.1 hereof.

(C)       "Beneficial Owner" shall have the meaning defined in Rule 13-d-3 under
the Exchange Act.

(D)       "Board" shall mean the independent members of the Board of Directors
of the Company, except that with respect to Section 19(F)(ii) hereof Board shall
mean the entire Board of Directors of the Company.

(E)       "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 and EEMC (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 10.1) 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.

(F)       "Change-in-Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs (i), (ii), (iii) or (iv) shall
have been satisfied during the Term:

(i)         an acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of either (1) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (2) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); excluding, however, the following: (1) any
acquisition directly from the Company, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any entity controlled by the Company,
or (4) any acquisition pursuant to a transaction which complies with clauses
(1), (2) and (3) of subsection (iii) of this definition; or

(ii)        a change in the composition of the Board such that the individuals
who, as of July 1, 2004, constitute the Board (such Board shall be hereinafter
referred to as the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, for purposes of this Section
19(F), that any individual who becomes a member of the Board subsequent to
July 1, 2004, whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds of those individuals
who are members of the Board and who were also members of the Incumbent Board
(or deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board, but, provided, further,
that any such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be so considered as a member of the
Incumbent Board; or

(iii)        consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company
("Corporate Transaction"); excluding, however, such a Corporate Transaction
pursuant to which (1) all or substantially all of the individuals and entities
who are the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or indirectly, more than
60% of, respectively, the outstanding shares of common stock, and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be, (2)
no Person (other than the Company, any employee benefit plan (or related trust)
of the Company or any entity controlled by the Company or such corporation
resulting from such Corporate Transaction) will beneficially own, directly or
indirectly, 25% or more of, respectively, the outstanding shares of common stock
of the Company resulting from such Corporate Transaction or the combined voting
power of the outstanding voting securities of such corporation entitled to vote
generally in the election of directors except to the extent that such ownership
existed prior to the Corporate Transaction, and (3) individuals who were members
of the Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate Transaction;
or

(iv)        the approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

(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 19(F)
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 10.2
hereof.

(J)       "Determination Date" shall have the meaning stated in Section 9.2(B)
hereof.

(K)       "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
and EEMC 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.

(L)       "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

(M)      "Excise Tax" shall have the meaning stated in Section 9.2(A) hereof.

(N)       "Executive" shall mean the individual named in the first paragraph of
this Agreement.

(O)       "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express written
consent) of any one of the following:

(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 on the date hereof (including, without limitation, any such
alteration after a Change-in-Control 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 failure by EEMC, without the Executive's consent, to pay to the
Executive any portion of the Executive's 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;

(iv)    any other material breach of this Agreement by the Company or EEMC;

(v)    after a Change-in-Control, the failure by the Company to continue the
Executive's participation in any compensation plan in which the Executive
participates on the date of the Change-in-Control which is material to the
Executive's total compensation, including but not limited to the AEIP, and the
Company's Supplemental Executive Retirement Plan, or any successor plan, unless
an equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such 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 on the date
of the Change-in-Control;

(vi)    after a Change-in-Control, the failure by the Company to continue to
provide the Executive with benefits not less favorable in the aggregate than
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 on the date of the Change-in-Control, or the taking
of any action by the Company or EEMC which would directly or indirectly
materially reduce any of such benefits;

(vii)    the giving by the Company to the Executive of a notice pursuant to
Section 3 hereof that the Term shall not be extended; or

(viii)    any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 10.1; 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. In addition, a termination of the Executive's employment
by the Executive, regardless of the reason, during the 30-day period immediately
following the first anniversary of a Change-in-Control shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.

          (P)       "Gross-Up Payment" shall have the meaning stated in Section
9.2(A) hereof.

          (Q)       "Notice of Termination" shall have the meaning stated in
Section 10.1 hereof.

          (R)       "NYSEG" shall mean New York State Electric & Gas
Corporation.

          (S)       "NYSEG Board" shall mean the Board of Directors of NYSEG.

          (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, generally
applicable to its salaried employees, or in accordance with any retirement
arrangement established with the Executive's consent with respect to the
Executive. For purposes of this Agreement, termination by the Company without
Cause or by the Executive for Good Reason shall not constitute Retirement.

          (U)       "Severance Payments" shall mean those payments described in
Section 9.1 hereof.

          (V)       "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/Robert D. Kump                                
            Robert D. Kump
            Vice-President,
            Treasurer and Secretary

 

By:  /s/Joseph J. Castiglia                            
           Joseph J. Castiglia
           Chairman, Energy East Corporation
           Compensation and Management
           Succession Committee

 

 

ENERGY EAST MANAGEMENT CORPORATION

By:  /s/Richard R. Benson                            
           Richard R. Benson
           Vice President - Human Resources

       /s/Wesley W. von Schack                      
           Wesley W. von Schack