Exhibit 10-28

 

AMENDMENT NO. 2
to the
ANNUAL EXECUTIVE INCENTIVE PLAN
of
ENERGY EAST CORPORATION

 

          The Annual Executive Incentive Plan (the "Plan") of Energy East
Corporation is hereby amended as follows, effective as of June 15, 2001:

 1. Article XI, Section A.(iii) of the Plan is hereby amended to read in its
    entirety as follows:

(iii)     an incentive award with respect to the fiscal year of the Company in
which the Change in Control occurs which shall be calculated by (x) assuming
that the Threshold Earnings Level for such fiscal year has been achieved and
that a Participant's Level of Achievement for each individual objective is one
hundred percent, and (y) multiplying the result so obtained by a fraction the
numerator of which is the number of days elapsed from the beginning of such
fiscal year until the Change in Control and the denominator of which is three
hundred sixty-five (365). Notwithstanding anything contained herein to the
contrary, if, following a Change in Control, the Plan continues in full force
and effect for the remainder (if any) of the Performance Period in which the
Change in Control occurs, a Participant shall be entitled to receive an
additional incentive award with respect to such Performance Period, equal to the
excess (if any) of the amount of the incentive award for such year, determined
in accordance with Article VII hereof, over the amount paid pursuant to the
preceding provision of this paragraph (iii).

 2. Article XI, Section B of the Plan is hereby amended to read in its entirety
    as follows:

B.     Definition of a Change in Control.

A "Change in Control" shall be deemed to have occurred if the conditions set
forth in any of the following paragraphs shall have been satisfied:

(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 (l) 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 June 15, 2001, 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 B
of Article VI, that any individual who becomes a member of the Board subsequent
to June 15, 2001, 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.

 3. Article XII of the Plan is amended to read in its entirety as follows:

Plan Administration After a Change in Control

Notwithstanding any other provisions of the Plan (including, without limitation,
Articles VI(B) and X hereof), neither the Board, nor the Committee shall be
authorized to, and no termination, suspension, modification or amendment of the
Plan shall be permitted to, amend or modify the terms and provisions (including,
without limitation, the payment provisions) of any incentive awards made to
Participants in any way which adversely affects the rights of such Participants
before such action is taken, if such action is taken (i) upon or after a Change
in Control, or (ii) at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control.