Document:

Exhibit (10)(iii)31 

CH ENERGY GROUP, INC. 

DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN

          The
Company adopted the CH Energy Group, Inc. Directors and Executives Deferred
Compensation Plan (the “Plan”), effective September 26, 2003. The Plan is
hereby amended and restated, as set forth below, to comply with the
restrictions imposed by Section 409A of the Code. 

          In
order to comply with section 409A of the Code, effective immediately before
January 1, 2008, the Plan is divided into two parts, one of which shall be
named “Part One” and the other of which shall be named “Part Two”. Part One of
the Plan shall be governed by the terms and conditions of the Plan as in effect
on October 3, 2004. Part Two of the Plan shall be governed by the terms and
conditions set forth herein. Any “amounts deferred” in taxable years beginning
before January 1, 2005 (within the meaning of Section 409A of the Code) and any
earnings thereon shall be governed by the terms of Part One of the Plan, and it
is intended that such amounts and the earnings thereon shall be exempt from the
application of Section 409A of the Code. Any “amount deferred” in taxable years
beginning on or after January 1, 2005 (within the meaning of Section 409A of
the Code) and any earnings thereon shall be governed by the terms and
conditions of Part Two of the Plan, and it is intended that such amounts and
the earnings thereon shall be subject to and comply with the payment
restrictions imposed under Section 409A of the Code. 

ARTICLE I 

DEFINITIONS

          For
purposes of the Plan, the following words and phrases shall have the meanings
set forth below, unless their context clearly requires a different meaning: 

          “Account” means the bookkeeping account
maintained by the Committee on behalf of each Participant pursuant to this
Plan. The sum of each Participant’s Sub-Accounts, in the aggregate, shall
constitute his Account. The Account and each and every Sub-Account shall be a
bookkeeping entry only and shall be used solely as a device to measure and
determine the amounts, if any, to be paid to a Participant or his Beneficiary
under the Plan. 

          “Affiliated
Group” means (i) the Company,
and (ii) all entities with whom the Company would be considered a single
employer under Sections 414(b) and 414(c) of the Code, provided that in
applying Section 1563(a)(1), (2), and (3) for purposes of determining a
controlled group of corporations under Section 414(b) of the Code, the language
“at least 50 percent” is used instead of “at least 80 percent” each place it
appears in Section 1563(a)(1), (2), and (3), and in applying Treasury
Regulation Section 1.414(c)-2 for purposes of determining trades or businesses
(whether or not incorporated) that are under common control for purposes of Section
414(c), “at least 50 percent” is used instead of “at least 80 percent” each
place it appears in that regulation. Such term shall be interpreted in a manner
consistent with the definition of “service recipient” contained in Section 409A
of the Code. 

          “Annual
Valuation Date” has the meaning
given to such term in Section 4.2(a). 

          “Base
Salary” means the annual base rate of
cash compensation payable by the Affiliated Group to an Eligible Employee
during a calendar year, excluding Incentive Compensation, bonuses,
special/overtime pay bonuses, commissions, severance payments, Company
Contributions, qualified plan contributions or benefits, expense
reimbursements, fringe benefits and all other payments, and prior to reduction
for any deferrals under this Plan or any other plan of the Affiliated Groups
under Sections 125 or 401(k) of the Code. For purposes of this Plan, Base
Salary payable after the last day of a calendar year solely for services
performed during the final payroll period described in Section 3401(b) of the
Code containing December 31 of such year shall be treated as earned during the
subsequent calendar year. 

          “Beneficiary” or “Beneficiaries”
means the person or persons, including one or
more trusts, designated by a Participant in accordance with the Plan to receive
payment of the remaining balance of the Participant’s Account in the event of
the death of the Participant prior to the Participant’s receipt of the entire
vested amount credited to his Account. 

          “Beneficiary
Designation Form” means the
form established from time to time by the Committee (in a paper or electronic
format) that a Participant completes, signs and returns to the Committee to
designate one or more Beneficiaries. 

          “Board” means the Board of Directors of the
Company. 

          “Change in
Control” means the occurrence of
a “change in the ownership,” a “change in the effective control” or a “change
in the ownership of a substantial portion of the assets” of the Company as defined
under Section 409A of the Code. 

          “Change in
Control Termination” means a
Separation from Service with the Affiliated Group due to Retirement or
Disability during the twenty-four month period that begins on the date of a
Change in Control and ends on the second anniversary of such Change in Control.

          “Code” means the Internal Revenue Code of
1986, as amended. 

          “Commencement Date” has the meaning given to
such term in Section 2.3 hereof. 

          “Committee” means the committee appointed to
administer the Plan. Unless and until otherwise specified, the Committee under
the Plan shall be the Compensation Committee, or its designee. 

          “Company” means CH Energy Group, Inc. and
its successors, including, without limitation, the surviving corporation
resulting from any merger or consolidation of CH Energy Group, Inc. with any
other corporation, limited liability company, joint venture, partnership or
other entity or entities. 

          “Company
Contribution Commencement Date” has
the meaning given to such term in Section 2.3 hereof. 

          “Company
Contribution” has the meaning given
to such term in Section 4.1 hereof. 

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          “Company
Contribution Sub-Account” means the
bookkeeping Company Contribution Sub-Account maintained by the Committee on
behalf of each Participant pursuant to Section 2.4 hereof. 

          “Deferral
Commencement Date” has the meaning
given to such term in Section 2.3. 

          “Deferral
Election” means the Participant’s
election on a form approved by the Committee to defer a portion of his Base
Salary, Incentive Compensation or Director Fees in accordance with the
provisions of Article III. 

          “Director” means any individual who is a
member of the Board and who is not an employee of the Company or its Affiliated
Group. 

          “Director
Fees” means the annual cash
retainer for Board and committee service, special assignment fees, meeting
fees, committee chair or lead director fees, and other cash amounts payable to
a Participant for service to the Company as a Director. 

          “Director
Stock Contribution” has the
meaning given to such term in Section 4.2 hereof. 

          “Director
Stock Sub-Account” means the
bookkeeping Director Stock Sub-Account maintained by the Committee on behalf of
each Director pursuant to Section 4.2 hereof. 

          “Disability” means that the Participant
meets one of the following requirements: (a) the Participant is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months; or (b) the Participant is, by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Participant’s employer. Such
term shall be interpreted in a manner consistent with the definition of
“disability” contained in Treasury Regulation Section 1.409A-3(i)(4). 

          “Effective
Date” has the meaning given to
such term in Section 10.1 hereof. 

          “Eligible
Employee” has the meaning given to
such term in Section 2.1 hereof. 

          “ERISA” means the Employee Retirement Income
Security Act of 1974, as amended. 

          “Incentive
Compensation” means cash or
equity compensation payable pursuant to an incentive compensation or retention
plan in which an Eligible Employee participates, including but not limited to
an annual or long-term incentive compensation plan, whether such plan is now in
effect or hereafter established by the Affiliated Group, which the Committee
may designate from time to time. 

          “Installment
Calculation Date” has the
meaning given to such term in Section 6.1(d). 

3

          “In-Service
Sub-Account” means each
bookkeeping In-Service Sub-Account maintained by the Committee on behalf of
each Eligible Employee pursuant to Section 2.4 hereof. 

          “Newly
Eligible Participant” means any
Eligible Employee or Director who has not previously participated in the Plan
or an “aggregated plan” and is not currently a participant of an “aggregated
plan”. For purposes of this definition, an “aggregated plan” is any plan that
is required to be aggregated with the Plan under Section 409A of the Code. For
purposes of clarity, the portion of the Plan consisting of the right to defer
Base Salary, Incentive Compensation and Director Fees shall be treated as
separate and apart from, and shall not aggregated with, the portion of the Plan
consisting of the right to receive credits of Company Contributions. 

          “Participant” means any Eligible Employee or
Director who (i) at any time elected to defer the receipt of Base Salary,
Incentive Compensation or Director Fees in accordance with the Plan (including
an amount treated as a Transferred Amount) or received a credit to his Account
pursuant to Section 4.1 or Section 4.2 hereof (including an amount treated as a
Transferred Amount) and (ii) in conjunction with his Beneficiary, has not
received a complete payment of the vested amount credited to his Account. 

          “Part
One” has the meaning given to such
term in Section 10.1 hereof. 

          “Part
Two” has the meaning given to such
term in Section 10.1 hereof. 

          “Payment
Election” means the Participant’s
election on a form approved by the Committee that sets forth the form of
payment of the Company Contribution Sub-Account and the Director Stock
Sub-Account as provided in Section 4.3. 

          “Performance-Based Compensation” means
Incentive Compensation that is based on services performed over a period of at
least twelve (12) months and that constitutes “performance-based compensation”
within the meaning of Section 409A of the Code. Where a portion of an amount of
Incentive Compensation would qualify as Performance-Based Compensation if the
portion were the sole amount available under a designated incentive plan, that
portion of the award will not fail to qualify as Performance-Based Compensation
if that portion is designated separately by the Committee on the Deferral
Election or is otherwise separately identifiable under the terms of the
designated incentive plan, and the amount of each portion is determined
independently of the other. 

          “Performance
Period” means, with respect to
any Incentive Compensation, the period of time during which such Incentive
Compensation is earned. 

          “Phantom
Share” means a hypothetical share
of CH Energy Group, Inc. common stock. A Participant shall not possess any
incidents of ownership (including, without limitation, dividend and voting
rights) in any shares of CH Energy Group, Inc. common stock represented by the
Phantom Shares. 

          “Phantom
Share
Fund” shall mean a fund consisting solely of Phantom Shares. At the
end of each calendar quarter, the number of Phantom Shares deemed to be held by
a Participant’s Account shall be increased by any dividends paid on shares of
CH Energy Group, Inc. common stock for that calendar quarter. The number of
additional Phantom Shares credited to a 

4

Participant’s
Account as a result of such increase shall be determined by (i) multiplying the
total number of Phantom Shares (excluding fractional Phantom Shares) credited
to the Participant’s Account as of the end of that calendar quarter by the
amount of the dividend paid with respect to a share of CH Energy Group, Inc.
common stock during that calendar quarter, and (ii) dividing the product so
determined by the closing price of a share of CH Energy Group, Inc. common
stock on the New York Stock Exchange on the last business day of the calendar
quarter. In the event of any merger, reorganization consolidation,
recapitalization, liquidation, stock dividend, split-up, spin-off, stock split,
reverse stock split, share combination, share exchange, extraordinary dividend,
or any change in the corporate structure affecting the CH Energy Group, Inc.
common stock, the number of Phantom Shares credited to the Phantom Share Fund
and/or the kind or class of shares in that fund shall be adjusted in such
manner as may be determined to be appropriate and equitable by the Board, in
its sole discretion, to prevent dilution or enlargement of benefits or
potential benefits intended to be made available under the Plan. 

          “Plan” means this deferred compensation
plan, which shall be known as the CH Energy Group, Inc. Directors and
Executives Deferred Compensation Plan. 

          “Retirement” means with respect to an
Eligible Employee, his Separation from Service on or after the date he attains
age 55 and with respect to a Director, his Separation from Service. 

          “Retirement
Sub-Account” means the
bookkeeping Retirement Sub-Account maintained by the Committee on behalf of
each Participant pursuant to Section 2.4 hereof. 

          “Separation
from Service” means a
termination of employment or service with the Affiliated Group in such a manner
as to constitute a “separation from service” as defined under Section 409A of
the Code. Upon a sale or other disposition of the assets of the Company or any
member of the Affiliated Group to an unrelated purchaser, the Committee reserves
the right, to the extent permitted by Section 409A of the Code, to determine
whether Participants providing services to the purchaser after and in
connection with the purchase transaction have experienced a Separation from
Service. 

          “Specified
Employee” means a “specified
employee”, as defined in Section 409A of the Code (with such classification to
be determined in accordance with the methodology established by the Committee
from time to time in its sole discretion) of the Company or any entity which
would be considered to be a single employer with the Company under Section
414(b) or Section 414(c) of the Code. 

          “Sub-Account” means each bookkeeping
In-Service Sub-Account, Retirement Sub-Account, Company Contribution
Sub-Account and Director Stock Sub-Account maintained by the Committee on
behalf of each Participant pursuant to the Plan. 

          “Subsequent
Payment Election” has the
meaning given to such term in Section 6.1(c) hereof. 

          “Transferred
Amounts” shall have the meaning
provided in Section 10.1(b). 

          “Unforeseeable Emergency” means an
“unforeseeable emergency” as defined under Section 409A of the Code. 

5

ARTICLE II 

ELIGIBILITY; SUB-ACCOUNTS

          2.1.          Selection
by Committee. Participation in the Plan is limited to
(a) those employees of the Affiliated Group who are (i) expressly selected by
the Committee, in its sole discretion, to participate in the Plan, and (ii) a
member of a “select group of management or highly compensated employees,”
within the meaning of Sections 201, 301 and 401 of ERISA (the “Eligible
Employees”), and (b) Directors. In lieu of expressly selecting Eligible
Employees for Plan participation, the Committee may establish eligibility
criteria (consistent with the requirements of paragraph (a)(ii) of this
Section) providing for participation of all Eligible Employees who satisfy such
criteria. The Committee may at any time, in its sole discretion, change the
eligibility criteria for Eligible Employees, or determine that one or more
Participants will cease to be an Eligible Employee. 

          2.2.          Enrollment
Requirements. As a condition to participation, each
selected Eligible Employee and each Director shall complete, execute and return
to the Committee a Deferral Election, Payment Election (if applicable) and
Beneficiary Designation Form no later than the date or dates specified by the
Committee. In addition, the Committee may establish from time to time such
other enrollment requirements as it determines in its sole discretion are
necessary. 

          2.3.          Commencement
Date 

                          (a)          Each
Eligible Employee and each Director shall commence participation on the date
designated by the Committee (the “Commencement Date”). For each Eligible
Employee and Director, the Committee shall assign one Commencement Date that
relates to the right to defer Base Salary, Incentive Compensation or Director
Fees (a “Deferral Commencement Date”) and a separate Commencement Date that
applies to the right to receive credits of Company Contributions or Director
Stock Contributions (a “Company Contribution Commencement Date”). If an
Eligible Employee or Director has not satisfied the applicable enrollment
requirements of Section 2.2 within thirty (30) days of his Deferral
Commencement Date (or such earlier date as specified by the Committee), such
individual’s Deferral Commencement Date shall instead be the first day of the
calendar year next following the date that he or she satisfies such enrollment
requirements. 

                          (b)          A
Participant shall have no right to defer Base Salary, Incentive Compensation or
Director Fees under the Plan prior to his Deferral Commencement Date and shall
have no right to receive credits of Company Contributions or Director Stock
Contributions under the Plan prior his Company Contribution Commencement Date. 

                          (c)          Any
Eligible Employee as of the Effective Date with respect to whom Transferred
Amounts are credited hereunder shall have a Deferral Commencement Date and a
Company Contribution Commencement Date of January 1, 2008. 

          2.4.          Sub-Accounts.

                          (a)          Establishment.
The Committee shall establish and maintain separate Retirement Sub-Accounts,
Company Contribution Sub-Accounts, Director Stock Sub-Accounts 

6

and In-Service
Sub-Accounts for each Participant, as applicable, for each year in which the
Participant allocates Base Salary, Incentive Compensation, or Director Fees to
such Sub-Accounts and for each year in which the Company makes a Company
Contribution or Director Stock Contribution to such Sub-Accounts on behalf of a
Participant. Amounts credited to a Retirement Sub-Account, Company Contribution
Sub-Account or Director Stock Sub-Account shall commence to be paid following
the Participant’s Separation from Service, death or Disability as provided in
Article VI. Amounts credited to an In-Service Sub-Account shall commence to be
paid in a year specified by the Participant as provided in Section 3.4(a) and
Article VI below that occurs before the Participant’s Separation from Service. 

                          (b)          Adjustments.

                                         (i)          A
Participant’s Retirement Sub-Account and In-Service Sub-Account shall be
credited with deferrals of Base Salary, Incentive Compensation or Director
Fees, if any, in accordance with Article III hereof. Base Salary, Incentive
Compensation or Director Fees that a Participant elects to defer shall be
treated as if they were set aside in a Retirement Sub-Account or an In-Service
Sub-Account on the date the Base Salary, Incentive Compensation or Director
Fees would otherwise have been paid to the Participant. 

                                         (ii)          A
Participant’s Company Contribution Sub-Account shall be credited with Company
Contributions, if any, in accordance with Section 4.1 hereof. Company
Contributions shall be treated as if they were set aside in a Company
Contribution Sub-Account on the date specified by the Committee in its sole
discretion. A Participant’s Director Stock Sub-Account shall be credited with
Director Stock Contributions of Phantom Shares, if any, in accordance with
Section 4.2 hereof. Director Stock Contributions shall be treated as if they
were set aside in a Director Stock Sub-Account on the dates set forth in
Section 4.2. 

                                         (iii)          A
Participant’s Sub-Accounts shall be credited with gains, losses and earnings as
provided in Article V hereof and shall be debited for any payments made to the
Participant as provided in Article VI hereof. 

          2.5.          Termination.

                          (a)          Deferrals.
An individual’s right to defer Base Salary or Director Fees shall cease with
respect to the calendar year following the calendar year in which he ceases to
be an Eligible Employee or Director, although such individual shall continue to
be subject to all of the terms and conditions of the Plan for as long as he
remains a Participant. A Participant’s right to defer payment of Incentive
Compensation shall cease as of the date of his Separation from Service. 

                          (b)          Company
Contributions and Director Stock Contributions. An individual’s right to
receive credits of Company Contributions and Director Stock Contributions, as
the case may be, shall cease on the date provided by the Committee in its sole
discretion. 

7

ARTICLE III 

DEFERRAL ELECTIONS

          3.1.          New
Participants. 

                          (a)          Application.
This Section 3.1 applies to each Eligible Employee or Director who is a Newly
Eligible Participant in the portion of the Plan relating to the right to defer
Base Salary or Director Fees and whose Deferral Commencement Date occurs after
the first day of a calendar year but prior to December 1 of such calendar year (or such earlier date as specified
by the Committee from time to time). 

                          (b)          Deferral
Election. An Eligible Employee described in Section 3.1(a) may elect to defer
his Base Salary earned during such calendar year and a Director described in
Section 3.1(a) may elect to defer his Director Fees earned during such calendar
year, as the case may be, by filing a Deferral Election with the Committee in
accordance with the following rules: 

                                         (i)          Timing;
Irrevocability. The Deferral
Election must be filed with the Committee by, and shall become irrevocable as
of, the thirtieth (30th) day following the Participant’s Deferral Commencement
Date (or such earlier date as specified by the Committee on the Deferral
Election). 

                                         (ii)          Base
Salary. The Deferral Election shall
only apply to Base Salary earned during such calendar year beginning with the
first payroll period that begins immediately after the date that the Deferral
Election becomes irrevocable in accordance with Section 3.1(b)(i) hereof. 

                                         (iii)          Director
Fees. The Deferral Election shall
only apply to Director Fees earned after the date that the Deferral Election
becomes irrevocable in accordance with Section 3.1(b)(i) hereof. 

                          (c)          Incentive
Compensation. Newly Eligible Participants may elect to defer Incentive
Compensation only in accordance with Section 3.2 

          3.2.          Annual
Deferral Elections. Unless Section 3.1 applies, an
Eligible Employee may elect to defer his Base Salary and Incentive Compensation
earned during a calendar year and a Director may elect to defer his Director
Fees earned during a calendar year, as the case may be, by filing a Deferral
Election with the Committee in accordance with the following rules: 

                          (a)          Base
Salary. The Deferral Election with respect to Base Salary must be filed
with the Committee by, and shall become irrevocable as of, December 31 (or such
earlier date as specified by the Committee on the Deferral Election) of the
calendar year next preceding the calendar year for which such Base Salary would
otherwise be earned. 

                          (b)          Incentive
Compensation. The Deferral Election with respect to Incentive Compensation
must be filed with the Committee by, and shall become irrevocable as of,
December 31 (or such earlier date as specified by the Committee on the Deferral
Election) of the calendar year next preceding the first day of the Performance
Period for which such Incentive Compensation would otherwise be earned. 

8

                          (c)          Performance-Based
Compensation. 

                                         (i)          Notwithstanding
anything contained in this Section 3.2 to the contrary, and only to the extent
permitted by the Committee, the Deferral Election with respect to Incentive
Compensation that constitutes Performance-Based Compensation must be filed with
the Committee by, and shall become irrevocable as of, the date that is six
months before the end of the applicable Performance Period (or such earlier
date as specified by the Committee on the Deferral Election), provided that in
no event may such Deferral Election be made after such Incentive Compensation
has become “readily ascertainable” within the meaning of Section 409A of the
Code. 

                                         (ii)          In
order to make a Deferral Election under this Section 3.2(c), the Participant
must perform services continuously from the later of the beginning of the
Performance Period or the date the performance criteria are established through
the date a Deferral Election becomes irrevocable under this Section 3.2(c). 

                                         (iii)          A
Deferral Election made under this Section 3.2(c) shall not apply to any portion
of the Performance-Based Compensation that is actually earned by a Participant
regardless of satisfaction of the performance criteria. 

                                         (iv)          To
the extent permitted by the Committee, an Eligible Employee described in
Section 3.1(a) hereof shall be permitted to make a Deferral Election with
respect to Performance-Based Compensation in accordance with this Section
3.2(c) provided that the Eligible Employee satisfies all of the other
requirements of this Section. 

                          (d)          Director
Fees. The Deferral Election with respect to Director Fees must be filed
with the Committee by, and shall become irrevocable as of, December 31 (or such
earlier date as specified by the Committee on the Deferral Election) of the
calendar year next preceding the calendar year for which such Director Fees
would otherwise be earned. 

          3.3.          Amount
Deferred. A Participant shall designate on the
Deferral Election the portion of his Base Salary, Incentive Compensation or, if
applicable, Director Fees that is to be deferred in accordance with this
Article III. Unless otherwise determined by the Committee, a Participant may
defer (in 1% increments) up to 50% of his Base Salary, up to 100% of his
Director Fees and up to 100% of his Incentive Compensation for any calendar
year; provided, however, that the Participant shall not be
permitted to defer less than 1% of each of his Base Salary, Director Fees or
Incentive Compensation during any one calendar year or Performance Period, as
the case may be, and any such attempted deferral shall not be effective. 

          3.4.          Elections
as to Time and Form of Payment. The Deferral Election
for each year shall contain the Participant’s allocation of deferrals of Base
Salary, Incentive Compensation and/or Director Fees among a Retirement
Sub-Account and, to the extent permitted by the Committee from time to time,
one or more In-Service Sub-Accounts. Such Retirement Sub-Account and In-Service
Sub-Account shall be paid at such time and in such form as set forth below: 

9

                          (a)          Time
of Payment. 

                                         (i)          Retirement
Sub-Account. Amounts allocated
to a Retirement Sub-Account shall be paid on the Participant’s Separation from
Service, death or Disability in accordance with Article VI.

                                         (ii)          In-Service
Sub-Account. A Participant
shall designate the year in which payments will commence to be paid from an
In-Service Sub-Account, which date must be at least two years after the date in
which such Deferral Election becomes irrevocable. The specified date designated
on the Deferral Election will apply to all amounts deferred under the Plan for
that year unless the Participant modifies the time and/or form of payment of
the amounts allocated to the Sub-Account in accordance with the rules of
Section 6.1(c). 

                                         (iii)          Default.
To the extent that a Participant
does not designate the Sub-Account to which deferrals of Base Salary, Incentive
Compensation or Director Fees shall be credited on a Deferral Election for a
year as provided in this Section 3.4 (or such designation does not comply with
the terms of the Plan), such deferrals for that year shall be credited to the
Participant’s Retirement Sub-Account. 

                          (b)          Form
of Payment. 

                                         (i)          Retirement
Sub-Account. Pursuant to the
Deferral Election filed by a Participant under Sections 3.1 or 3.2 for a year,
a Participant shall elect the form of payment for the amounts credited to his
Retirement Sub-Account. The Participant shall make one election that applies to
amounts payable due to Retirement or Disability, and one election that applies
to amounts payable due to a Change in Control Termination. In each case, the
Participant may select payment in a single lump sum or in a number of
approximately equal quarterly installments over a five, ten or fifteen year
period. Such payment elections will apply to all amounts credited to the
Retirement Sub-Account under the Plan for the year unless the Participant
modifies such payment elections in accordance with the rules of Section 6.1(c).
In the event a Participant fails to designate a payment form of a Retirement
Sub-Account on his Deferral Election (or such designation does not comply with
the terms of the Plan) for a year, the amounts allocated to the Retirement
Sub-Account for that year shall be paid in a single-lump sum payment. 

                                         (ii)          In-Service
Sub-Account. Amounts allocated
to an In-Service Sub-Account shall be paid in cash in a single lump-sum. 

          3.5.          Duration
and Cancellation of Deferral Elections. 

                          (a)          Duration.
Once irrevocable, a Deferral Election shall only be effective for the calendar
year or Performance Period with respect to which such election was timely filed
with the Committee. Except as provided in Section 3.5(b) hereof, a Deferral
Election, once irrevocable, cannot be cancelled during a calendar year or
Performance Period. 

                          (b)          Cancellation.

10

                                         (i)          The
Committee may, in its sole discretion, cancel a Participant’s Deferral Election
where such cancellation occurs by the later of the end of the Participant’s
taxable year or the 15th day of the third month following the date the
Participant incurs a “disability.” For purposes of this Section 3.5(b)(i), a
disability refers to any medically determinable physical or mental impairment
resulting in the Participant’s inability to perform the duties of his or her
position or any substantially similar position, where such impairment can be
expected to result in death or can be expected to last for a continuous period
of not less than six months. 

                                         (ii)          The
Committee may, in its sole discretion, cancel a Participant’s Deferral Election
due to an Unforeseeable Emergency or a hardship distribution pursuant to
Treasury Regulation Section 1.401(k)-1(d)(3). 

                                         (iii)          If
a Participant’s Deferral Election is cancelled with respect to a particular
calendar year or Performance Period in accordance with this Section 3.5(b), he
may make a new Deferral Election for a subsequent calendar year or Performance Period,
as the case may be, only in accordance with Section 3.2 hereof. 

          3.6.          Vested
Interest in Deferrals. Each Participant shall at all
times have a fully vested and nonforfeitable interest in his Retirement
Sub-Account and his In-Service Sub-Account balance. 

ARTICLE IV 

COMPANY CONTRIBUTIONS

          4.1.          Company
Contributions. For each calendar year, any entity in
the Affiliated Group, in its sole discretion, may, but is not required to,
credit any amount it desires to any Eligible Employee’s Company Contribution
Sub-Account. The amount so credited to an Eligible Employee may be smaller or
larger than an amount credited to any other Eligible Employee, and the amount
credited to any Employee for a year may be zero even though one or more
Eligible Employees receive a Company Contribution for that year. No credits of
Company Contributions may be allocated to a Retirement Sub-Account or an
In-Service Sub-Account. 

          4.2.          Director
Stock Contributions. The Company shall establish and
maintain a Director Stock Sub-Account for each Director. Except as otherwise
provided under Section 4.3, the Company shall credit each Director’s Director
Stock Sub-Account in accordance with the following rules: 

                          (a)          Current
Directors. Except as provided in Section 4.2(c) hereof, on the fifth
business day following the Annual Valuation Date of a year and on the first
business day of each calendar quarter thereafter during such year (each a
“Crediting Date”), the Company shall credit to the Director Stock Sub-Account
of each currently serving Director a number of Phantom Shares calculated by:
(x) dividing $55,000 (or such other amount established by the Board) by the
closing price of a share of CH Energy Group, Inc. common stock on the New York
Stock Exchange on the Annual Valuation Date, and (y) dividing the result so
determined by four (and then rounding to the nearest tenth). For purposes of
this Section 4.2(a), the first Monday following the first Tuesday in January of
each year shall be the Annual Valuation Date. 

11

                          (b)          Newly
Appointed Directors. Notwithstanding anything contained in Section 4.2(a),
and except as provided in Section 4.2(c) hereof, the number of Phantom Shares
to be credited during any calendar year to the Director Stock Sub-Account of a
person who first becomes a Director on a date during such year after the fifth
business day following the Annual Valuation Date shall be pro-rated and shall
be calculated on the basis of the closing price of a share of CH Energy Group,
Inc. common stock on the New York Stock Exchange on the first business day
following the date on which the person first becomes a Director. A Director
whose Company Contribution Commencement Date begins after January 1 of a year
shall be deemed to have elected to receive payment of his Director Stock
Sub-Account credit for such year in a lump-sum upon his Separation from
Service. 

                          (c)          Directors
Who Satisfy Ownership Guidelines. No later than the end of each calendar
year (or with respect to a newly-appointed Director described in Section 4.2(b)
hereof, no later than the date of his appointment), the Committee shall
determine, in its sole discretion but after consulting with each Director,
whether any Director satisfies the then-applicable Director stock ownership
guidelines for that year, or whether any Director will satisfy the
then-applicable Director stock ownership guidelines for the immediately following
calendar year based on the anticipated credits of Phantom Shares to the
Director Stock Sub-Account for that year as set forth in Sections 4.2(a) or (b)
hereof. If the Committee determines, in its sole discretion, that a Director
either satisfies or will satisfy the then-applicable Director stock ownership
guidelines, then that Director shall receive a cash payment in lieu of the
Phantom Shares that would have otherwise been credited to his Director Stock
Sub-Account for any Crediting Date that occurs after the date on which the
Director satisfies the then-applicable Director stock ownership guidelines
(which date shall be set forth by the Committee in writing, after consulting
with the Director, no later than the end of the applicable time period set forth
in the first sentence of this Section 4.2(c)). The cash payment in lieu of
Phantom Shares for any Crediting Date shall equal $13,750 (or such other amount
established by the Board or as required by Section 4.2(b) hereof) and shall be
treated as a Director Fee for all purposes of the Plan. The Director may elect
to defer the cash payments described in this Section 4.2(c) to a Retirement
Sub-Account or an In-Service Sub-Account pursuant to the rules applicable to
the deferral of Director Fees in Article III hereof and may invest the
deferrals in any permitted investment option of the Plan as provided in Section
5.2 hereof. To the extent that all or any portion of a cash payment described
in this Section 4.2(c) for any Crediting Date is not deferred under this Plan,
it shall be paid to the Director within 10 days after the applicable Crediting
Date. 

          4.3.          Payment
Elections. A Participant shall file a Payment Election
for his Company Contribution Sub-Account or Director Stock Sub-Account, as the
case may be, for a year in accordance with the following rules: 

                          (a)          Timing;
Irrevocability. Each Newly
Eligible Participant shall file with the Committee a Payment Election with
respect to Company Contributions and Director Stock Contributions, as the case
may be, by, and such Payment Election shall become irrevocable as of, the
thirtieth (30th) day following the Participant’s Company Contribution
Commencement Date (or such earlier date as specified by the Committee on the
Payment Election). Each other Eligible Employee or Director shall file a
Payment Election with the Committee with respect to Company Contributions or
Director Stock Contributions for a year by, and such Payment Election shall
become irrevocable as of, December 31 (or such earlier date as specified by the

12

Committee on
the Deferral Election) of the year that precedes the year in which the Company
Contribution or Director Stock Contribution is to be made by the Company to the
Company Contribution Sub-Account or Director Stock Sub-Account. Once
irrevocable, a Payment Election with respect to a Company Contribution
Sub-Account or a Director Stock Sub-Account for a year may only be changed in
accordance with Section 6.1(c) hereof. 

                          (b)          Form
of Payment. The Participant shall
designate on the Payment Election that he files with the Committee for a year
the form of payment of the Company Contribution Sub-Account or Director Stock
Sub-Account. The Participant shall make one election that applies to amounts
payable due to Retirement or Disability, and one election that applies to
amounts payable due to a Change in Control Termination. In each case, the
Participant may select payment in a single lump sum or in a number of approximately
equal quarterly installments over a five, ten or fifteen year period. Such
Payment Election will apply to all amounts credited to the Company Contribution
Sub-Account or the Director Stock Sub-Account under the Plan for the year
unless the Participant modifies such Payment Election in accordance with the
rules of Section 6.1(c). In the event that a Participant does not designate the
form of payment of a Company Contribution Sub-Account or Director Stock
Sub-Account on a Payment Election as provided in this Section 4.3(b) (or such
designation does not comply with the terms of the Plan), such Sub-Account shall
be paid in a single lump-sum payment. 

                          (c)          Time
of Payment. Company Contribution
Sub-Accounts and Director Stock Sub-Accounts shall be paid upon a Participant’s
Separation from Service, death or Disability in accordance with Article VI. 

          4.4.          Vesting. Each
Participant’s Company Contribution
Sub-Account shall be subject to such vesting schedule as may be determined by
the Company or other member of the Affiliated Group from time to time. The
vesting schedule need not be the same for each Participant. Amounts credited to
a Director’s Director Stock Sub-Account shall be fully vested at all times. 

ARTICLE V 

CREDITING OF GAINS, LOSSES AND EARNINGS TO ACCOUNTS

          5.1.          Director
Stock Sub-Account. The amounts credited to the
Director Stock Sub-Account will be credited with gains, losses and earnings
based on the performance of the Phantom Share Fund for all periods prior to a
Director’s Separation from Service. Immediately following a Director’s
Separation from Service, the amounts credited to his Director Stock Sub-Account
may be invested in any investment option available under the Plan, subject to
the rules set forth in Section 5.2 hereof. 

          5.2.          Retirement
Sub-Account, In-Service Sub-Account and Company Contribution Sub-Account. To
the extent provided by the Committee in its sole discretion, and except as
provided in Section 5.1 hereof, each Participant’s Sub-Accounts will be
credited with gains, losses and earnings based on investment directions made by
the Participant in accordance with investment deferral crediting options and
procedures established from time to time by the Committee. Subject to the
investment procedures established by the Committee, Participants may elect to
invest amounts allocated to a Sub-Account in the Phantom Share Fund. The 

13

Committee
specifically retains the right in its sole discretion to change the investment
deferral crediting options and procedures from time to time. 

          5.3.          Limitation
of Rights with Respect to Investments. By electing to
defer any amount under the Plan (or by receiving or accepting any benefit under
the Plan), each Participant acknowledges and agrees that the Affiliated Group
is not and shall not be required to make any investment in connection with the
Plan, nor is it required to follow the Participant’s investment directions in
any actual investment it may make or acquire in connection with the Plan or in
determining the amount of any actual or contingent liability or obligation of
the Company or any other member of the Affiliated Group thereunder or relating
thereto. Any amounts credited to a Participant’s Sub-Accounts (other than the
Director Stock Sub-Account) with respect to which a Participant does not
provide investment direction shall be credited with gains, losses and earnings
as if such amounts were invested in an investment option to be selected by the
Committee in its sole discretion. 

ARTICLE VI 

PAYMENTS

          6.1.          Date
of Payment of Sub-Accounts. Except as otherwise
provided in this Article VI, a Participant’s Sub-Accounts shall commence to be
paid as follows:

                          (a)          Retirement
Sub-Account; Company Contribution Sub-Account and Director Stock Sub-Account.
The vested amounts credited to a Participant’s Retirement Sub-Account, Company
Contribution Sub-Account and Director Stock Sub-Account shall commence to be
paid within 30 days of the last day of the calendar quarter in which the
Participant’s Retirement, Disability or Change in Control Termination occurs,
or such later date required by Section 6.2. In the event of the Participant’s
Retirement, Disability or Change in Control Termination, the Participant’s
Retirement Sub-Accounts shall be paid in the form selected by the Participant
in accordance with Section 3.4(b) and the Company Contribution Sub-Accounts and
the Director Stock Sub-Accounts, as applicable, shall be paid in the form
selected by the Participant in accordance with Section 4.3(b). In the event a
Participant incurs a Separation from Service other than due to Retirement,
Disability or Change in Control Termination, the Participant’s Retirement
Sub-Account and Company Contribution Sub-Account shall be paid in a single lump
sum. 

                          (b)          In-Service
Sub-Account. 

                                         (i)          In
general, the vested amounts credited to a Participant’s In-Service Sub-Account
shall commence to be paid in a single lump sum in January of the year specified
by the Participant for such Sub-Account in accordance with Section 3.4(a)
hereof. 

                                         (ii)          If
a Participant’s Separation from Service occurs prior to the commencement of one
or more In-Service Sub-Accounts, the amounts credited to such In-Service
Sub-Accounts shall immediately be transferred to the Participant’s Retirement
Sub-Account of the same year and payment of the transferred amounts shall
thereafter be governed by the terms and conditions applicable to the Retirement
Sub-Account of the same year, including, without limitation, Section 6.2
hereof. 

14

                          (c)          Subsequent
Payment Elections. A Participant may elect on a form provided by the
Committee to change the time and or form of payment with respect to one or more
of his Sub-Accounts (a “Subsequent Payment Election”). The Subsequent Payment
Election shall become irrevocable upon receipt by the Committee and shall be
made in accordance with the following rules: 

                                         (i)          In
General. The Subsequent Payment
Election may not take effect until at least twelve (12) months after the date
on which it is accepted by the Committee. The Subsequent Payment Election most
recently accepted by the Committee and that satisfies the requirements of this
Section 6.1(c) shall govern the payout of the Sub-Accounts notwithstanding
anything contained in Section 6.1(a) or (b) hereof to the contrary. 

                                         (ii)          Retirement
Sub-Account; Company Contribution
Sub-Account; Director Stock Sub-Account. A Participant may make an
election (to the extent permitted by the Committee in its sole discretion) to
change the form of payment for each of his Retirement Sub-Accounts, Company
Contribution Sub-Accounts and Director Stock Sub-Accounts to a form otherwise
permitted under the Plan. Except in the event of the death or Unforeseeable
Emergency of the Participant, the payment of such Sub-Account will be delayed
until the fifth (5th) anniversary of the first day of the month that the
Sub-Account would otherwise have been paid under the Plan if such Subsequent
Payment Election had not been made (or, in the case of installment payments,
which are treated as a single payment for purposes of this Section, on the
fifth (5th) anniversary of the first day of the month that the first
installment payment was scheduled to be made). 

                                         (iii)          In-Service
Sub-Account. A Participant may
make one or more elections to delay the payment date of one or more In-Service
Sub-Account(s) to a payment date permitted for In-Service Sub-Accounts under
the Plan. Such Subsequent Payment Election must be filed with the Committee at
least twelve (12) months before the first day of the month the amount would
have otherwise been paid under the Plan. On such Subsequent Payment Election,
the Participant must delay the payment date for a period of at least five (5)
years after the first day of the month that the Sub-Account would otherwise
have been paid under the Plan. 

                                         (iv)          Acceleration
Prohibited. The Committee
shall disregard any Subsequent Payment Election by a Participant to the extent
such election would result in an acceleration of the time or schedule of any
payment or amount scheduled to be paid under the Plan within the meaning of
Section 409A of the Code. 

                          (d)          Calculation
of Installment Payments. In the event that a Sub-Account is paid in
installments: (i) the first installment shall commence on the date specified in
Section 6.1 (subject to Section 6.2), and each subsequent installment shall be
paid quarterly until the Sub-Account has been fully paid; (ii) the amount of
each installment shall equal the quotient obtained by dividing the
Participant’s vested Sub-Account balance as of the end of the month immediately
preceding the month of such installment payment (the “Installment Calculation
Date”) by the number of installment payments remaining to be paid at the time
of the calculation; and (iii) the amount of such Sub-Account remaining unpaid
shall continue to be credited with gains, losses and earnings as provided in
Article V hereof. By way of example, if the Participant elects to receive
payments of a Sub-Account in equal quarterly installments over a period of five
(5) 

15

years, the
first payment shall equal 1/20th of the vested Sub-Account balance, calculated
as described in this Section 6.1(d). The following quarter, the payment shall
be 1/19 of the vested Sub-Account balance, calculated as described in this
Section 6.1(d). 

          6.2.          Mandatory
Six-Month Delay. Except as otherwise provided in
Sections 6.5(a), (b) and (c), and to the extent required in order to comply
with Section 409A of the Code, all payments under this Agreement that are made
as a result of the Separation from Service of a Specified Employee (including a
Disability termination that occurs at the same time as the Separation from
Service) and that would otherwise be paid during the first six months following
such Separation from Service shall be accumulated through and paid within 30
days after the first business day of the seventh month following the
Participant’s Separation from Service (or if earlier, upon the Participant’s
death). 

          6.3.          Death
of Participant. 

                          (a)          Each
Participant shall file a Beneficiary Designation Form with the Committee at the
time the Participant files an initial Deferral Election or Payment Election. A
Participant’s Beneficiary Designation Form may be changed at any time prior to
his death by the execution and delivery of a new Beneficiary Designation Form.
The Beneficiary Designation Form on file with the Committee that bears the
latest date at the time of the Participant’s death shall govern. If a
Participant fails to properly designate a Beneficiary in accordance with this
Section 6.3(a), then his Beneficiary shall be his estate. 

                          (b)          In
the event of the Participant’s death, the remaining amount of the Participant’s
vested Sub-Accounts shall be paid to the Beneficiary or Beneficiaries
designated on a Beneficiary Designation Form in a single lump sum within 30
days of the Participant’s death. 

          6.4.          Withdrawal
Due to Unforeseeable Emergency. A Participant shall
have the right to request, on a form provided by the Committee, an accelerated
payment of all or a portion of his Account in a lump sum if he experiences an
Unforeseeable Emergency. The Committee shall have the sole discretion to
determine whether to grant such a request and the amount to be paid pursuant to
such request. 

                          (a)          Determination
of Unforeseeable Emergency. Whether a Participant is faced with an
unforeseeable emergency permitting a payment under this Section 6.4 is to be
determined based on the relevant facts and circumstances of each case, but, in
any case, a payment on account of an Unforeseeable Emergency may not be made to
the extent that such emergency is or may be relieved through reimbursement or
compensation from insurance or otherwise, by liquidation of the Participant’s
assets, to the extent the liquidation of such assets would not cause severe
financial hardship, or by cessation of deferrals under the Plan. Payments
because of an Unforeseeable Emergency must be limited to the amount reasonably
necessary to satisfy the emergency need (which may include amounts necessary to
pay any Federal, state, local, or foreign income taxes or penalties reasonably
anticipated to result from the payment). Determinations of amounts reasonably
necessary to satisfy the emergency need must take into account any additional
compensation that is available if the Plan provides for cancellation of a
Deferral Election upon a payment due to an Unforeseeable Emergency. However,
the determination of amounts reasonably necessary to satisfy the emergency need
is not required to 

16

take into
account any additional compensation that is available from a qualified plan of
the Company as defined in Section 409A of the Code (including any amount
available by obtaining a loan under such plan), or that due to the
Unforeseeable Emergency is available under another nonqualified deferred
compensation plan but has not actually been paid (including a plan that would
provide for deferred compensation except due to the application of the
effective date provisions of Section 409A of the Code). 

                          (b)          Payment
of Account. Payment shall be made within 30 days following the
determination by the Committee that a withdrawal will be permitted under this Section
6.4, or such later date as may be required under Section 6.2 hereof. 

          6.5.          Discretionary
Acceleration of Payments. To the extent permitted by
Section 409A of the Code, the Committee may, in its sole discretion, accelerate
the time or schedule of a payment under the Plan as provided in this Section.
The provisions of this Section are intended to comply with the exception to
accelerated payments under Treasury Regulation Section 1.409A-3(j) and shall be
interpreted and administered accordingly. 

                          (a)          Domestic
Relations Orders. The Committee may, in its sole discretion, accelerate the
time or schedule of a payment under the Plan to an individual other than the
Participant as may be necessary to fulfill a domestic relations order (as
defined in Section 414(p)(1)(B) of the Code). 

                          (b)          Conflicts
of Interest. The Committee may, in its sole discretion, provide for the
acceleration of the time or schedule of a payment under the Plan to the extent
necessary for any Federal officer or employee in the executive branch to comply
with an ethics agreement with the Federal government. Additionally, the
Committee may, in its sole discretion, provide for the acceleration of the time
or schedule of a payment under the Plan the to the extent reasonably necessary
to avoid the violation of an applicable Federal, state, local, or foreign
ethics law or conflicts of interest law (including where such payment is
reasonably necessary to permit the Participant to participate in activities in
the normal course of his or her position in which the Participant would
otherwise not be able to participate under an applicable rule). 

                          (c)          Employment
Taxes. The Committee may, in its sole discretion, provide for the
acceleration of the time or schedule of a payment under the Plan to pay the
Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101,
3121(a), and 3121(v)(2) of the Code, or the Railroad Retirement Act (RRTA) tax
imposed under Sections 3201, 3211, 3231(e)(1), and 3231(e)(8) of the Code,
where applicable, on compensation deferred under the Plan (the FICA or RRTA
amount). Additionally, the Committee may, in its sole discretion, provide for
the acceleration of the time or schedule of a payment, to pay the income tax at
source on wages imposed under Section 3401 of the Code or the corresponding
withholding provisions of applicable state, local, or foreign tax laws as a
result of the payment of the FICA or RRTA amount, and to pay the additional
income tax at source on wages attributable to the pyramiding Section 3401 of
the Code wages and taxes. However, the total payment under this acceleration
provision must not exceed the aggregate of the FICA or RRTA amount, and the
income tax withholding related to such FICA or RRTA amount. 

17

                          (d)          Limited
Cash-Outs. Subject to Section 6.2 hereof, the Committee may, in its sole
discretion, require a mandatory lump sum payment of amounts deferred under the
Plan that do not exceed the applicable dollar amount under Section 402(g)(1)(B)
of the Code, provided that the payment results in the termination and
liquidation of the entirety of the Participant’s interest under the Plan, including
all agreements, methods, programs, or other arrangements with respect to which
deferrals of compensation are treated as having been deferred under a single
nonqualified deferred compensation plan under Section 409A of the Code. 

                          (e)          Payment
Upon Income Inclusion Under Section 409A. Subject to Section 6.2 hereof,
the Committee may, in its sole discretion, provide for the acceleration of the
time or schedule of a payment under the Plan at any time the Plan fails to meet
the requirements of Section 409A of the Code. The payment may not exceed the
amount required to be included in income as a result of the failure to comply
with the requirements of Section 409A of the Code. 

                          (f)          Certain
Payments to Avoid a Nonallocation Year under Section 409(p). Subject to
Section 6.2 hereof, the Committee may, in its sole discretion, provide for the
acceleration of the time or schedule of a payment under the Plan to prevent the
occurrence of a nonallocation year (within the meaning of Section 409(p)(3) of
the Code) in the plan year of an employee stock ownership plan next following
the plan year in which such payment is made, provided that the amount paid may
not exceed 125 percent of the minimum amount of payment necessary to avoid the
occurrence of a nonallocation year. 

                          (g)          Payment
of State, Local, or Foreign Taxes. Subject to Section 6.2 hereof, the
Committee may, in its sole discretion, provide for the acceleration of the time
or schedule of a payment under the Plan to reflect payment of state, local, or
foreign tax obligations arising from participation in the Plan that apply to an
amount deferred under the Plan before the amount is paid or made available to
the Participant (the state, local, or foreign tax amount). Such payment may not
exceed the amount of such taxes due as a result of participation in the Plan.
The payment may be made in the form of withholding pursuant to provisions of
applicable state, local, or foreign law or by payment directly to the
Participant. Additionally, the Committee may, in its sole discretion, provide
for the acceleration of the time or schedule of a payment under the Plan to pay
the income tax at source on wages imposed under Section 3401 of the Code as a
result of such payment and to pay the additional income tax at source on wages
imposed under Section 3401 of the Code attributable to such additional wages
and taxes. However, the total payment under this acceleration provision must not
exceed the aggregate of the state, local, and foreign tax amount, and the
income tax withholding related to such state, local, and foreign tax amount. 

                          (h)          Certain
Offsets. Subject to Section 6.2 hereof, the Committee may, in its sole
discretion, provide for the acceleration of the time or schedule of a payment
under the Plan as satisfaction of a debt of the Participant to the Company (or
any entity which would be considered to be a single employer with the Company under
Section 414(b) or Section 414(c) of the Code), where such debt is incurred in
the ordinary course of the service relationship between the Company (or any
entity which would be considered to be a single employer with the Company under
Section 414(b) or Section 414(c) of the Code) and the Participant, the entire
amount of reduction in any of the taxable years of the Company (or any entity
which would be 

18

considered to
be a single employer with the Company under Section 414(b) or Section 414(c) of
the Code) does not exceed $5,000, and the reduction is made at the same time
and in the same amount as the debt otherwise would have been due and collected
from the Participant. 

                          (i)          Bona
Fide Disputes as to a Right to a Payment. Subject to Section 6.2 hereof,
the Committee may, in its sole discretion, provide for the acceleration of the
time or schedule of a payment under the Plan where such payments occur as part
of a settlement between the Participant and the Company (or any entity which
would be considered to be a single employer with the Company under Section
414(b) or Section 414(c) of the Code) of an arm’s length, bona fide dispute as
to the Participant’s right to the deferred amount. 

                          (j)          Plan
Terminations and Liquidations. Subject to Section 6.2 hereof, the Committee
may, in its sole discretion, provide for the acceleration of the time or
schedule of a payment under the Plan as provided in Section 8.2 hereof. 

                          (k)          Other
Events and Conditions. Subject to Section 6.2 hereof, a payment may be
accelerated upon such other events and conditions as the Internal Revenue
Service may prescribe in generally applicable guidance published in the
Internal Revenue Bulletin. 

Except as
otherwise specifically provided in this Plan, including but not limited to
Section 3.5(b), this Section 6.5 and Section 8.2 hereof, the Committee may not
accelerate the time or schedule of any payment or amount scheduled to be paid
under the Plan within the meaning of Section 409A of the Code. 

          6.6.          Delay
of Payments. To
the extent permitted under Section 409A of the Code, the Committee may, in its
sole discretion, delay payment under any of the following circumstances,
provided that the Committee treats all payments to similarly situated
Participants on a reasonably consistent basis: 

                          (a)          Federal
Securities Laws or Other Applicable Law. A Payment may be delayed where the
Committee reasonably anticipates that the making of the payment will violate
Federal securities laws or other applicable law; provided that the delayed
payment is made at the earliest date at which the Committee reasonably
anticipates that the making of the payment will not cause such violation. For
purposes of the preceding sentence, the making of a payment that would cause
inclusion in gross income or the application of any penalty provision or other
provision of the Code is not treated as a violation of applicable law. 

                          (b)          Other
Events and Conditions. A payment may be delayed upon such other events and
conditions as the Internal Revenue Service may prescribe in generally
applicable guidance published in the Internal Revenue Bulletin. 

          6.7.          Actual
Date of Payment. To
the extent permitted by Section 409A of the Code, the Committee may delay
payment in the event that it is not administratively possible to make payment
on the date (or within the periods) specified in this Article VI, or the making
of the payment would jeopardize the ability of the Company (or any entity which
would be considered to be a single employer with the Company under Section
414(b) or Section 414(c) of the Code) to continue as a going concern. Notwithstanding
the foregoing, payment must be made no later than the latest possible date
permitted under Section 409A of the Code. 

19

          6.8.          Discharge
of Obligations. The payment to a Participant or his
Beneficiary of a his Sub-Account in a single lump sum or the number of
installments elected by the Participant pursuant to this Article VI shall
discharge all obligations of the Affiliated Group to such Participant or
Beneficiary under the Plan with respect to that Sub-Account. 

ARTICLE VII 

ADMINISTRATION

          7.1.          General.
The Company, through the Committee, shall be responsible for the general
administration of the Plan and for carrying out the provisions hereof. In
general, the Committee shall have the full power, discretion and authority to
carry out the provisions of the Plan; in particular, the Committee shall have
full discretion to (a) interpret all provisions of the Plan, (b) resolve all
questions relating to eligibility for participation in the Plan and the amount
in the Account of any Participant and all questions pertaining to claims for
benefits and procedures for claim review, (c) resolve all other questions
arising under the Plan, including any factual questions and questions of
construction, (d) determine all claims for benefits, and (e) take such further
action as the Company shall deem advisable in the administration of the Plan.
The actions taken and the decisions made by the Committee hereunder shall be
final, conclusive, and binding on all persons, including the Company, its
shareholders, the other members of the Affiliated Group, employees,
Participants, and their estates and Beneficiaries. 

          7.2.          Compliance
with Section 409A of the Code. 

                          (a)          It
is intended that the Plan comply with the provisions of Section 409A of the
Code, so as to prevent the inclusion in gross income of any amounts deferred
hereunder in a taxable year that is prior to the taxable year or years in which
such amounts would otherwise actually be paid or made available to Participants
or Beneficiaries. This Plan shall be construed, administered, and governed in a
manner that effects such intent, and the Committee shall not take any action
that would be inconsistent with such intent. 

                          (b)          Although
the Committee shall use its best efforts to avoid the imposition of taxation,
interest and penalties under Section 409A of the Code, the tax treatment of
deferrals under this Plan is not warranted or guaranteed. Neither the Company,
the other members of the Affiliated Group, the Board, nor the Committee (nor
its designee) shall be held liable for any taxes, interest, penalties or other
monetary amounts owed by any Participant, Beneficiary or other taxpayer as a result
of the Plan. 

                          (c)          Any
reference in this Plan to Section 409A of the Code will also include any
proposed, temporary or final regulations, or any other guidance, promulgated
with respect to such Section 409A by the U.S. Department of Treasury or the
Internal Revenue Service. For purposes of the Plan, the phrase “permitted by
Section 409A of the Code,” or words or phrases of similar import, shall mean
that the event or circumstance shall only be permitted to the extent it would
not cause an amount deferred or payable under the Plan to be includible in the
gross income of a Participant or Beneficiary under Section 409A(a)(1) of the
Code. 

          7.3.          Claims
Procedure. If a Participant (including a Director) or his
Beneficiary, as the case may be, disagrees with a decision made regarding his
Account or payment from his 

20

Account, the
Participant or his Beneficiary, as the case may be, should outline his claim in
a letter and submit it to the Committee. A claim must be signed by the
Participant, the Participant’s Beneficiary, or the Participant’s authorized
representative (the “Claimant”). In the event that a Claimant’s claim is wholly
or in part denied by the Committee (or its designee), the Committee (or its designee)
will provide written notice of the denial within 90 calendar days (or within
180 days if special circumstances exist) after it received the claim. This
notice will state, in a manner designed to be understood by the Claimant, the
following: 

	
 

	
 

	
 

	
 

	
•

	
the specific
 reason or reasons for the denial,

	
 

	
 

	
 

	
 

	
•

	
specific
 reference to the Plan provision(s) on which the denial is based,

	
 

	
 

	
 

	
 

	
•

	
a
 description of any additional material or information which the Claimant may
 need to perfect the claim with an explanation as to why such material or
 information is necessary,

	
 

	
 

	
 

	
 

	
•

	
a statement
 that the Claimant has the right, upon request and free of charge, to review
 and obtain copies of records and documents relating to his claim which are
 held by the Committee (or its designee), and

	
 

	
 

	
 

	
 

	
•

	
an
 explanation of the appeal right and procedure described in the next
 paragraph, including timelines and a statement of the Claimant’s right to
 file suit under ERISA §502(a) if the Claimant’s claim is denied on review.

If a Claimant’s
claim is denied, wholly or in part, the Claimant has the right of an appeal to
the Committee for review of the denial. The following provisions apply to such
right of appeal. 

	
 

	
 

	
 

	
 

	
•

	
The request
 for review must be filed with the Committee within 60 calendar days following
 the Claimant’s receipt of written notice of denial of the claim.

	
 

	
 

	
 

	
 

	
•

	
The request
 must be in writing from the Claimant and must state the specific portions of
 the claim denial that the Committee is asked to review.

	
 

	
 

	
 

	
 

	
•

	
The Claimant
 has the right, upon request and free of charge, to review and obtain copies
 of records and documents relating to the Claimant’s claim that are held by
 the Committee (or its designee).

	
 

	
 

	
 

	
 

	
•

	
The Claimant
 may submit issues, arguments, and other comments in writing to the Committee
 with any documentary evidence in support of his claim.

	
 

	
 

	
 

	
 

	
•

	
The
 Committee’s review will take into account all information submitted by the
 Claimant, without regard to whether the information was submitted or considered
 in the initial benefit determination.

21

	
 

	
 

	
 

	
 

	
•

	
Written
 notice of the Committee’s decision will be given to the Claimant within 60
 calendar days of receipt of the Claimant’s request for review (or within 120
 calendar days if special circumstances exist). This notice will state
 specific reasons for the decision, including specific reference to the Plan
 provision(s) on which the decision is based in language designed to be
 understood by the Claimant. It will also include a statement that the
 Claimant is entitled to receive, free of charge and upon request, copies of
 documents and other information relevant to his claim, and that the Claimant
 has the right to bring a civil action under ERISA §502(a) if the Committee’s
 decision on review is adverse to the Claimant.

No lawsuit by
a Claimant may be filed prior to exhausting the Plan’s administrative appeal
process. Any lawsuit must be filed no later than the earlier of one year after
the Claimant’s claim for benefit was denied or the date the cause of action
first arose. 

ARTICLE VIII 

AMENDMENT AND TERMINATION

          8.1.          Amendment.
The Company reserves the right to amend, terminate or freeze the Plan, in whole
or in part, at any time by action of the Board. Moreover, the Committee may
amend the Plan at any time in its sole discretion to ensure that the Plan
complies with the requirements of Section 409A of the Code or other applicable
law; provided, however, that such amendments, in the aggregate, may not
materially increase the benefit costs of the Plan to the Company. In no event
shall any such action by the Board or Committee adversely affect any
Participant or Beneficiary who has an Account, or result in any change in the
timing or manner of payment of the amount of any Account (except as otherwise
permitted under the Plan), without the consent of the Participant or
Beneficiary, unless the Board or the Committee, as the case may be, determines
in good faith that such action is necessary to ensure compliance with Section
409A of the Code. To the extent permitted by Section 409A of the Code, the
Committee may, in its sole discretion, modify the rules applicable to Deferral
Elections, Payment Elections and Subsequent Payment Elections to the extent
necessary to satisfy the requirements of the Uniformed Service Employment and
Reemployment Rights Act of 1994, as amended, 38 U.S.C. 4301-4334.  

          8.2.          Payments
Upon Termination of Plan. In the event that the Plan
is terminated, the amounts allocated to a Participant’s Sub-Accounts shall be
paid to the Participant or his Beneficiary on the dates on which the
Participant or his Beneficiary would otherwise receive payments hereunder
without regard to the termination of the Plan. Notwithstanding the preceding
sentence, and subject to Section 6.2 hereof: 

                          (a)          Liquidation;
Bankruptcy. The Board shall have the authority, in its sole discretion, to
terminate the Plan and pay each Participant’s entire Account to the Participant
or, if applicable, his Beneficiary within twelve (12) months of a corporate
dissolution taxed under Section 331 of the Code or with the approval of a
bankruptcy court pursuant to 11 U.S.C. 503(b)(1)(A), provided that the amounts
are included in the Participant’s gross income in the latest of the following
years (or, if earlier, the taxable year in which the amount is actually or 

22

constructively
received): (i) the calendar year in which the Plan termination and liquidation
occurs; (ii) the first calendar year in which the amount is no longer subject
to a substantial risk of forfeiture as defined under Section 409A of the Code;
or (iii) the first calendar year in which the payment is administratively
practicable. 

                          (b)          Change
in Control. The Board shall have the authority, in its sole discretion, to
terminate the Plan and pay each Participant’s entire Account to the Participant
or, if applicable, his Beneficiary pursuant to an irrevocable action taken by
the Board within the 30 days preceding or the 12 months following a Change in
Control, provided that this paragraph will only apply if all agreements,
methods, programs, and other arrangements sponsored by the Company (or any
entity which would be considered to be a single employer with the Company under
Section 414(b) or Section 414(c) of the Code) immediately after the time of the
Change in Control event with respect to which deferrals of compensation are
treated as having been deferred under a single plan under Section 409A of the
Code are terminated and paid with respect to each Participant that experienced
the Change in Control event, so that under the terms of the termination and
payment all such Participants are required to receive all amounts of
compensation deferred under the terminated agreements, methods, programs, and
other arrangements within 12 months of the date the Company (or any entity
which would be considered to be a single employer with the Company under
Section 414(b) or Section 414(c) of the Code) irrevocably takes all necessary
action to terminate and liquidate the agreements, methods, programs, and other
arrangements. 

                          (c)          Discretionary
Terminations. The Board shall have the authority, in its sole discretion,
to terminate the Plan and pay each Participant’s entire Account to the
Participant or, if applicable, his Beneficiary, provided that: (i) the
termination and liquidation does not occur proximate to a downturn in the
financial health of the Company (or any entity which would be considered to be
a single employer with the Company under Section 414(b) or Section 414(c) of
the Code); (ii) The Company (or any entity which would be considered to be a
single employer with the Company under Section 414(b) or Section 414(c) of the
Code) terminates and liquidates all agreements, methods, programs, and other
arrangements sponsored by the Company (or any entity which would be considered
to be a single employer with the Company under Section 414(b) or Section 414(c)
of the Code) that would be aggregated with any terminated and liquidated
agreements, methods, programs, and other arrangements under Section 409A of the
Code if the same Participant had deferrals of compensation under all of the
agreements, methods, programs, and other arrangements that are terminated and
liquidated; (iii) no payments in liquidation of the Plan are made within 12
months of the date the Board takes all necessary action to irrevocably
terminate and liquidate the Plan other than payments that would be payable
under the terms of the Plan if the action to terminate and liquidate the Plan
had not occurred; (iv) all payments are made within 24 months of the date the
Board takes all necessary action to irrevocably terminate and liquidate the
Plan; and (v) the Company (or any entity which would be considered to be a
single employer with the Company under Section 414(b) or Section 414(c) of the
Code) does not adopt a new plan that would be aggregated with any terminated
and liquidated plan under Section 409A of the Code if the same Participant participated
in both plans, at any time within three years following the date the Board
takes all necessary action to irrevocably terminate and liquidate the Plan. 

23

                          (d)          Other
Events. The Board shall have the authority, in its sole discretion, to
terminate the Plan and pay each Participant’s entire Account to the Participant
or, if applicable, his Beneficiary upon such other events and conditions as the
Internal Revenue Service may prescribe in generally applicable guidance published
in the Internal Revenue Bulletin. 

ARTICLE IX 

MISCELLANEOUS

          9.1.          Non-alienation
of Deferred Compensation. Except as permitted by the
Plan, no right or interest under the Plan of any Participant or Beneficiary
shall, without the written consent of the Company, be (i) assignable or
transferable in any manner, (ii) subject to alienation, anticipation, sale,
pledge, encumbrance, attachment, garnishment or other legal process or (iii) in
any manner liable for or subject to the debts or liabilities of the Participant
or Beneficiary. Notwithstanding the foregoing, to the extent permitted by
Section 409A of the Code and subject to Section 6.5(a) hereof, the Committee
shall honor a judgment, order or decree from a state domestic relations court
which requires the payment of part or all of a Participant’s or Beneficiary’s
interest under this Plan to an “alternate payee” as defined in Section 414(p)
of the Code. 

          9.2.          Participation
by Employees of Affiliated Group Members. Any member
of the Affiliated Group may, by action of its board of directors or equivalent
governing body and with the consent of the Board, adopt the Plan; provided that
the Board may waive the requirement that such board of directors or equivalent
governing body effect such adoption. By its adoption of or participation in the
Plan, the adopting member of the Affiliated Group shall be deemed to appoint
the Company its exclusive agent to exercise on its behalf all of the power and
authority conferred by the Plan upon the Company and accept the delegation to
the Committee of all the power and authority conferred upon it by the Plan. The
authority of the Company to act as such agent shall continue until the Plan is
terminated as to the participating affiliate. An Eligible Employee who is
employed by a member of the Affiliated Group and who elects to participate in
the Plan shall participate on the same basis as an Eligible Employee of the
Company. The Account of a Participant employed by a participating member of the
Affiliated Group shall be paid in accordance with the Plan solely by such
member to the extent attributable to Base Salary, Incentive Compensation or
Director Fees that would have been paid by such participating member in the
absence of deferral pursuant to the Plan, unless the Board otherwise determines
that the Company shall be the obligor. 

          9.3.          Interest
of Participant.

                          (a)          The
obligation of the Company and any other participating member of the Affiliated
Group under the Plan to make payment of amounts reflected in an Account merely
constitutes the unsecured promise of the Company (or, if applicable, the
participating members of the Affiliated Group) to make payments from their
general assets and no Participant or Beneficiary shall have any interest in, or
a lien or prior claim upon, any property of the Affiliated Group. Nothing in
the Plan shall be construed as guaranteeing future employment to Eligible
Employees. It is the intention of the Affiliated Group that the Plan be
unfunded for tax purposes and for purposes of Title I of ERISA. The Company may
create a trust to hold funds to be used in payment of its and the Affiliated
Group’s obligations under the Plan, and may fund such trust; 

24

provided,
however, that any funds contained therein shall remain liable for the claims of
the general creditors of the Company and the other participating members of the
Affiliated Group. 

                          (b)          In
the event that, in the sole discretion of the Committee, the Company and/or the
other members of the Affiliated Group purchases an insurance policy or policies
insuring the life of any Participant (or any other property) to allow the
Company and/or the other members of the Affiliated Group to recover the cost of
providing the benefits, in whole or in part, hereunder, neither the
Participants nor their Beneficiaries or other distributees shall have nor
acquire any rights whatsoever therein or in the proceeds therefrom. The Company
and/or the other members of the Affiliated Group shall be the sole owner and
beneficiary of any such policy or policies and, as such, shall possess and may
exercise all incidents of ownership therein. A Participant’s participation in
the underwriting or other steps necessary to acquire such policy or policies
may be required by the Company and, if required, shall not be a suggestion of
any beneficial interest in such policy or policies to such Participant or any
other person. 

          9.4.          Claims
of Other Persons. The provisions of the Plan shall in
no event be construed as giving any other person, firm or corporation any legal
or equitable right as against the Affiliated Group or the officers, employees
or directors of the Affiliated Group, except any such rights as are
specifically provided for in the Plan or are hereafter created in accordance
with the terms and provisions of the Plan. 

          9.5.          Severability.
The invalidity and unenforceability of any particular provision of the Plan
shall not affect any other provision hereof, and the Plan shall be construed in
all respects as if such invalid or unenforceable provision were omitted. 

          9.6.          Governing
Law. Except to the extent preempted by federal law,
the provisions of the Plan shall be governed and construed in accordance with
the laws of the State of New York. 

          9.7.          Relationship
to Other Plans. The Plan is intended to serve the
purposes of and to be consistent with any incentive compensation plan approved
by the Committee for purposes of the Plan. 

          9.8.          Successors.
The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume this Plan. This Plan shall be binding upon and inure to the benefit of
the Company and any successor of or to the Company, including without
limitation any persons acquiring directly or indirectly all or substantially
all of the business and/or assets of the Company whether by sale, merger,
consolidation, reorganization or otherwise (and such successor shall thereafter
be deemed the “Company” for the purposes of this Plan), and the heirs, beneficiaries,
executors and administrators of each Participant. 

          9.9.          Withholding
of Taxes. Subject to Section 6.5 hereof, to the extent
required by the law in effect at the time payments are made, the Affiliated
Group may withhold or cause to be withheld from any amounts deferred or payable
under the Plan all Federal, state, local and other taxes as shall be legally
required. The Affiliated Group shall have the right in its sole discretion to
(i) require a Participant to pay or provide for payment of the amount of any
taxes 

25

that the
Affiliated Group may be required to withhold with respect to amounts that the
Company credits to a Participant’s Account or (ii) deduct from any amount of
salary, bonus, incentive compensation or other payment otherwise payable in
cash to the Participant the amount of any taxes that the Company may be
required to withhold with respect to amounts that the Company credits to a
Participant’s Account. 

          9.10.          Electronic
or Other Media. Notwithstanding any other provision of
the Plan to the contrary, including any provision that requires the use of a
written instrument, the Committee may establish procedures for the use of
electronic or other media in communications and transactions between the Plan
or the Committee and Participants and Beneficiaries. Electronic or other media
may include, but are not limited to, e-mail, the Internet, intranet systems and
automated telephonic response systems. 

          9.11.          Headings;
Interpretation. Headings in this Plan are inserted for
convenience of reference only and are not to be considered in the construction
of the provisions hereof. Unless the context clearly requires otherwise, the
masculine pronoun wherever used herein shall be construed to include the
feminine pronoun. 

          9.12.          Participants
Deemed to Accept Plan. By accepting any benefit under
the Plan, each Participant and each person claiming under or through any such
Participant shall be conclusively deemed to have indicated his acceptance and
ratification of, and consent to, all of the terms and conditions of the Plan
and any action taken under the Plan by the Board, the Committee or the Company
or the other members of the Affiliated Group, in any case in accordance with
the terms and conditions of the Plan. 

ARTICLE X 

EFFECTIVE DATE AND TRANSITION RULES

          10.1.          Effective
Date. This amendment and restatement of the Plan is
effective as of January 1, 2008 (the “Effective Date”). In order to comply with
section 409A of the Code, effective immediately before January 1, 2008, the
Plan is divided into two parts, one of which shall be named “Part One” and the
other of which shall be named “Part Two”. Part One of the Plan shall be
governed by the terms and conditions of the Plan as in effect on October 3,
2004. Part Two of the Plan shall be governed by the terms and conditions set
forth herein. 

                            (a)          Pre-2005
Deferrals. Any “amounts deferred” in taxable years beginning before January
1, 2005 (within the meaning of Section 409A of the Code) and any earnings
thereon shall be governed by the terms of Part One of the Plan, and it is
intended that such amounts and the earnings thereon shall be exempt from the
application of Section 409A of the Code. Nothing contained herein is intended
to materially enhance a benefit or right existing under Part One of the Plan as
of October 3, 2004, or add a new material benefit or right to Part One of the
Plan. As of January 1, 2008, Part One of the Plan is frozen, and neither the
Company, its affiliates nor any individual shall make or permit to be made any
additional contributions or deferrals under Part One of the Plan (other than
earnings) on or after that date. 

                            (b)          Post-2004
Deferrals. Any “amounts deferred” in taxable years beginning on or after
January 1, 2005 (within the meaning of Section 409A of the Code) and any
earnings 

26

thereon shall
be governed by the terms and conditions of Part Two of the Plan. To the extent
that any of those amounts were deferred under the Plan prior to the Effective
Date (the “Transferred Amounts”), then the Committee shall transfer the
Transferred Amounts from Part One of the Plan to Part Two of this Plan and
credit those amounts to the appropriate Sub-Accounts under Part Two of this
Plan, as selected by the Committee in its sole discretion. As a result of such
transfer and crediting, all of the Company’s obligations and Participant’s
rights with respect to the Transferred Amounts under Part One of the Plan, if
any, shall automatically be extinguished and become obligations and rights
under Part Two of this Plan without further action. 

          10.2.          Transition
Relief for Payment Elections. A Participant designated
by the Committee may, no later than a date specified by the Committee (provided
that such date occurs no later than December 31, 2008) elect on a form provided
by the Committee to (i) change the date of payment of his Sub-Accounts to a
date otherwise permitted for that Sub-Account under the Plan; or (ii) change
the form of payment of his Sub-Accounts to a form of payment otherwise
permitted for that Sub-Account under the Plan, without complying with the
special timing requirements of Section 6.1(c). A Participant designated by the
Committee may, no later than a date specified by the Committee (provided that
such date occurs no later than December 31, 2008) elect on a form provided by
the Committee to defer any Incentive Compensation designated by the Committee
in its sole discretion without complying with the special timing requirements
for Deferral Elections under Article III. Any such change or election shall be
subject to such terms and conditions as the Committee may specify in its sole
discretion. This Section 10.2 is intended to comply with the requirements of
Notice 2007-86 and the applicable proposed and final Treasury Regulations
issued under Section 409A of the Code and shall be interpreted in a manner
consistent with such intent. 

          IN
WITNESS WHEREOF, CH Energy Group, Inc. has caused this instrument to be
executed by its duly authorized officer on this ___ day of December, 2007. 

	
 

	
 

	
 

	
 

	
CH ENERGY
 GROUP, INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/Steven V.
 Lant

	
 

	
 

	

	
 

	
 

	
Steven V. Lant,
Chairman, President and

	
 

	
 

	
Chief Executive
Officer of CH Energy

	
 

	
 

	
Group,
Inc.

27Exhibit (10)(iii)32

AMENDED
AND RESTATED

EMPLOYMENT AGREEMENT

          AGREEMENT
by and between CH Energy Group Inc. (“Energy Group”), a New York corporation,
and Steven V. Lant (the “Executive”), dated as of the 1st day of January, 2008.

          The
Board of Directors of Energy Group (the “Board”) has determined that it is in
the best interests of Energy Group and its shareholders to assure that Energy
Group will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
Energy Group. The Board believes it is impeto diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to Energy Group currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused Energy
Group to enter into this Agreement with the Executive.

          NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

          1.          This
Employment Agreement shall be between Energy Group and the Executive named
above for all periods during which the Executive serves in the capacity as an
officer of Energy Group or any of its affiliated companies. Energy Group and
the Executive are parties to an Employment Agreement dated as of July 31, 2005
(the “Original Agreement”). Energy Group and the Executive hereby amend and restate
the Original Agreement so that this Agreement replaces and supersedes the
Original Agreement in its entirety. 

          2.          Certain
Definitions.

                       (a)          As
used in this Agreement, “Energy Group” shall mean CH Energy Group, Inc. as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

                       (b)          As
used in this Agreement, the term “affiliated companies” shall include any
company controlled by, controlling or under common control with Energy Group.

                       (c)          The
“Effective Date” shall mean the first date during the Change of Control Period
(as defined in Section 2(d)) on which a Change of Control (as defined in
Section 3) occurs. Anything in this Agreement to the contrary notwithstanding,
if a Change of Control occurs and if the Executive’s employment with Energy
Group or any of its affiliated companies is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control
or (ii)

otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes of this Agreement the “Effective Date” shall mean the date immediately
prior to the date of such termination of employment, and the Executive shall be
entitled to all payments and benefits under this Agreement as though the
Executive had terminated his employment for Good Reason. For purposes of the
immediately preceding sentence, a Change of Control means a Change of Control
that also constitutes a “change in the ownership,” a “change in the effective
control” or a “change in the ownership of a substantial portion of the assets”
of Energy Group within the meaning of Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”). For purposes of determining the timing of
payments and benefits to Executive under Section 7, the date of the actual
Change of Control (as defined in the immediately preceding sentence) shall be
treated as Executive’s Date of Termination (in lieu of the date set forth in
Section 6(e)). 

                       (d)          The
“Change of Control Period” shall mean the period commencing on the date hereof
and ending on the following July 31, which July 31 and each annual anniversary
thereof shall be hereinafter referred to as the “Renewal Date”. Unless
previously terminated, the Change of Control Period shall be automatically
extended so as to terminate one year from such Renewal Date. Notwithstanding
the foregoing, this Agreement may be terminated by either the Executive or
Energy Group or any of its affiliated companies at any time prior to the
Effective Date by providing 60 days’ written notice to the other party, in
which case the Executive shall have no further rights under this Agreement; provided,
that such a notice shall be null and void if it is reasonably demonstrated by
the Executive that such notice was given (i) at the request of a third party
who has taken steps reasonably calculated to effect a Change of Control or (ii)
otherwise in connection with or anticipation of a Change of Control.

                       (e)          The
“Multiple” shall mean (i) three if the Executive’s Date of Termination (as
defined herein) occurs on or prior to the first anniversary of the Effective
Date, (ii) two if the Executive’s Date of Termination occurs after the first
anniversary of the Effective Date but on or prior to the second anniversary of
the Effective Date, and (iii) one if the Executive’s Date of Termination occurs
after the second anniversary of the Effective Date but on or prior to the third
anniversary of the Effective Date.

          3.          Change
of Control. For the purpose of this Agreement, a “Change of Control” shall
mean:

                       (a)          The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (x) the
then outstanding shares of common stock of Energy Group (the “Outstanding
Energy Group Common Stock”) or (y) the combined voting power of the then
outstanding voting securities of Energy Group entitled to vote generally in the
election of directors (the “Outstanding Energy Group Voting Securities”);
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from Energy Group, (ii) any acquisition by Energy Group, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by Energy Group or its affiliated companies or (iv) any acquisition
by any 

2

corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 3; or

                      (b)          Individuals
who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by Energy Group’s shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual 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 solicitation of proxies or consents by or on behalf of a
Person other than the Board; or

                       (c)          Consummation
of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of Energy Group (a “Business
Combination”), in each case, unless, following such Business Combination, (i)
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Energy Group Common Stock and
Outstanding Energy Group Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of,
respectively, the then 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 Business Combination (including, without limitation, a
corporation which as a result of such transaction owns Energy Group or all or
substantially all of Energy Group’s assets either directly or through one or
more of its affiliated companies) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Common Stock and Outstanding Energy Group Voting Securities, as the
case may be, (ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of Energy
Group or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business combination; or 

                       (d)          Approval
by the shareholders of Energy Group of a complete liquidation or dissolution of
Energy Group. 

          4.          Employment
Period. Energy Group hereby agrees to continue, or cause to be continued,
the Executive in its employ, or in the employ of any of its affiliated
companies, and the Executive hereby agrees to remain in the employ of Energy
Group or any of its affiliated companies subject to the terms and conditions of
this Agreement, for the period commencing on the Effective Date and ending on
the third anniversary of such date (the “Employment Period”). 

3

          5.          Terms of Employment.

                      (a)          Position
and Duties.

                                    (i)          During
the Employment Period, the Executive’s authority, duties and responsibilities
shall, in the aggregate, be at least commensurate in all material respects with
the most significant of those exercised and assigned at any time during the
120-day period immediately preceding the Effective Date, and neither a reduced
scope of the Executive’s responsibilities resulting from the fact that the
Change of Control has created a larger organization, nor a change in the
Executive’s position (including status, offices, titles and reporting
requirements) shall be the sole basis for determining whether the requirements
of this Section 5(a)(i) are met.

                                    (ii)          During
the Employment Period, the Executive’s services shall be performed at the location
where the Executive was employed immediately preceding the Effective Date or
any office or location less than 50 miles from such location.

                                    (iii)          During
the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and affairs of
Energy Group or any of its affiliated companies and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to serve on civic or charitable boards or
committees, so long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an employee of Energy Group
or any of its affiliated companies in accordance with this Agreement. It is
expressly understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Effective Date shall not thereafter be deemed
to interfere with the performance of the Executive’s responsibilities to Energy
Group or any of its affiliated companies.

                      (b)          Compensation.

                                    (i)          Base
Salary. During the Employment Period, the Executive shall receive an annual
base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at
least equal to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the Executive
by Energy Group or any of its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base Salary shall be reviewed
no more than 12 months after the last salary increase awarded to the Executive
prior to the Effective Date and thereafter at least annually. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as used in this
Agreement shall refer to Annual Base Salary as so increased. 

4

                                  (ii)          Annual
Bonus. In addition to Annual Base Salary, the Executive shall be awarded,
for each fiscal year ending during the Employment Period, an annual bonus (the
“Annual Bonus”) in cash at least equal to the average of the bonuses payable
under Energy Group’s Executive Annual Incentive Plan, if applicable, or any
comparable annual bonus under any predecessor or successor plan, for the last
three full fiscal years prior to the Effective Date, or if the Executive was
eligible to earn such a bonus for less than the last three full fiscal years,
for the fiscal years during which the Executive was eligible to earn such a
bonus immediately prior to the Effective Date (annualized in the event that the
Executive was not employed by Energy Group or its affiliated companies (or was
not eligible to earn such a bonus) for the whole of each such fiscal year) (the
“Average Annual Bonus”). If the Executive was not eligible to earn such an
annual bonus for any fiscal year ending on or before the Effective Date, then
the Average Annual Bonus shall be deemed to equal the Executive’s target annual
bonus as in effect immediately prior to the Effective Date. Each
such Annual Bonus shall be paid no later than two and one-half months after the
end of the fiscal year next following the fiscal year for which the Annual
Bonus is awarded. 

                                 (iii)          Incentive,
Savings and Retirement Plans. During the Employment Period, the Executive
shall be entitled to participate in all incentive, savings and retirement
plans, practices, policies and programs applicable generally to other peer
executives of Energy Group or its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in
each case, less favorable, in the aggregate, than the most favorable of those
provided by Energy Group or its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during
the 120-day period immediately preceding the Effective Date or if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of Energy Group or its affiliated
companies.

                                 (iv)          Welfare
Benefit Plans. During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices, policies
and programs provided by Energy Group or its affiliated companies (including,
without limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and programs)
to the extent applicable generally to other peer executives of Energy Group or
its affiliated companies, but in no event shall such plans, practices, policies
and programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of Energy Group or its affiliated companies.

                                  (v)          Expenses.
During the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of Energy
Group or any 

5

of its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of Energy Group or any of its affiliated companies.

                                 (vi)          Fringe
Benefits. During the Employment Period, the Executive shall be entitled to
fringe benefits, including, without limitation, use of an automobile and
payment of related expenses, in accordance with the most favorable plans,
practices, programs and policies of Energy Group or any of its affiliated
companies in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of Energy Group or any of its affiliated companies.

                                 (vii)          Vacation.
During the Employment Period, the Executive shall be entitled to paid vacation
in accordance with the most favorable plans, policies, programs and practices
of Energy Group or any of its affiliated companies as in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer executives of Energy Group or
any of its affiliated companies.

                                 (viii)          Certain
Exclusions. In determining the benefits provided in subclauses (i) through
and including (viii) of this paragraph (b), there shall be excluded from
consideration any such benefits provided by any of the affiliated companies
during the measuring periods, if any, referred to in such subclauses if Energy
Group has elected not to enter into Employment Agreements (of this Type) with
executives of such affiliated companies. 

          6.          Termination
of Employment.

                      (a)       Death
or Disability. The Executive’s employment shall terminate automatically
upon the Executive’s death during the Employment Period. If Energy Group or any
of its affiliated companies determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may give to the Executive written notice in
accordance with Section 16(b) of this Agreement of its intention to terminate
the Executive’s employment; provided that such notice is provided no later than
9 months following the Executive’s first day of Disability. In such event, the Executive’s
employment with Energy Group or any of its affiliated companies shall terminate
effective on the 30th day after receipt of such notice by the Executive (the
“Disability Effective Date”), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement, “Disability” shall mean the
absence of the Executive from the Executive’s duties with Energy Group or any
of its affiliated companies on a full-time basis for at least 180 consecutive
business days as a result of any medically determinable physical or mental
impairment resulting in the Executive’s inability to perform the duties of his
position or any substantially similar position, where such impairment can be
expected to result in death or can be expected to last for a continuous period
of not less than six months. The determination of Disability shall be made by a
physician 

6

selected by
Energy Group or its insurers and acceptable to the Executive or the Executive’s
legal representative.

                     (b)        Cause.
The Executive’s employment during the Employment Period may be terminated for
Cause. For purposes of this Agreement, “Cause” shall mean:

	
 

	
 

	
 

	
                         (i)          the
 willful and continued failure of the Executive to perform substantially the
 Executive’s duties with Energy Group or any of its affiliated companies (other
 than any such failure resulting from incapacity due to physical or mental
 illness), after a written demand for substantial performance is delivered to
 the Executive by the Board or the Chief Executive Officer of Energy Group
 which specifically identifies the manner in which the Board or Chief
 Executive Officer believes that the Executive has not substantially performed
 the Executive’s duties;

	
 

	
 

	
 

	
                         (ii)          the
 willful engaging by the Executive in illegal conduct or gross misconduct
 which is materially and demonstrably injurious to Energy Group or any of its
 affiliated companies;

	
 

	
 

	
 

	
                         (iii)          the
 repeated use of alcohol by the Executive that materially interferes with
 Executive’s duties, use of illegal drugs by the Executive, or a violation by
 the Executive of the drug and/or alcohol policies of Energy Group or any of
 its affiliated companies;

	
 

	
 

	
 

	
                         (iv)          a
 conviction, guilty plea or plea of nolo
 contendere of the Executive for any crime involving moral
 turpitude or for any felony; 

	
 

	
 

	
 

	
                         (v)          a
 breach by the Executive of his fiduciary duties of loyalty or care to Energy
 Group or any of its affiliated companies or a material violation of the Code
 of Business Conduct and Ethics, or similar policies, of Energy Group or any
 of its affiliated companies; or

	
 

	
 

	
 

	
                         (vi)          the
 breach by the Executive of the confidentiality provision set forth in Section
 11(a) hereof.

          For
purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of Energy Group or any
of its affiliated companies. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of Energy Group
or any of its affiliated companies based upon the advice of counsel for Energy
Group shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of Energy Group or any of its
affiliated companies. The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after 

7

reasonable
notice is provided to the Executive and the Executive is given an opportunity,
together with counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) through and including (vi) above, and specifying the
particulars thereof in detail.

          (c)        Good
Reason. The Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

	
 

	
 

	
 

	
                         (i)          any
 material reduction in the Executive’s authority, duties or responsibilities
 that is not permitted by Section 5(a)(i) of this Agreement, without the
 Executive’s written consent, excluding for this purpose an action not taken
 in bad faith and which is remedied by Energy Group or any of its affiliated
 companies promptly after receipt of notice thereof given by the Executive;

	
 

	
 

	
 

	
                         (ii)          any
 failure by Energy Group or any of its affiliated companies to comply with any
 of the provisions of Section 5(b) of this Agreement, other than a failure not
 occurring in bad faith and which is remedied by Energy Group or any of its affiliated
 companies promptly after receipt of notice thereof given by the Executive;

	
 

	
 

	
 

	
                         (iii)          Energy
 Group or any of its affiliated companies requiring the Executive to be based
 at any office or location other than as provided in Section 5(a)(ii) of this
 Agreement;

	
 

	
 

	
 

	
                         (iv)          any
 purported termination by Energy Group or any of its affiliated companies of
 the Executive’s employment otherwise than as expressly permitted by this
 Agreement; or

	
 

	
 

	
 

	
                         (v)          any
 failure by Energy Group or any of its affiliated companies to comply with and
 satisfy Section 12(c) of this Agreement.

          For
purposes of this Section 6(c), any claim by the Executive that Good Reason exists
shall be presumed to be correct unless Energy Group establishes by clear and
convincing evidence that Good Reason does not exist. 

                      (d)       Notice
of Termination. Any termination by Energy Group or any of its affiliated
companies for Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in accordance with
Section 16(b) of this Agreement. For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets 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 and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days after the giving of such
notice). The failure by the Executive or Energy Group or any of its affiliated
companies to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or Energy Group or any of its affiliated companies,
respectively, hereunder or preclude the Executive or Energy Group or any of its

8

affiliated
companies, respectively, from asserting such fact or circumstance in enforcing
the Executive’s or Energy Group’s or any of its affiliated company’s rights
hereunder.

                      (e)        Date
of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by Energy Group or any of its affiliated companies for
Cause, or by the Executive for Good Reason, the date of receipt of the Notice
of Termination or any later date specified therein, as the case may be, (ii) if
the Executive’s employment is terminated by Energy Group or any of its
affiliated companies other than for Cause or Disability, the Date of
Termination shall be the date on which Energy Group or any of its affiliated
companies notifies the Executive of such termination and (iii) if the
Executive’s employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be. Energy Group and the Executive shall take
all steps necessary (including with regard to any post-termination services by
the Executive) to ensure that any termination described in this Section 6(e)
constitutes a “separation from service” within the meaning of Section 409A of
the Code, and the date on which such separation from service takes place shall
be the “Date of Termination.” 

          7.          Obligations
of Energy Group and its Affiliated Companies upon Termination. (a) Good
Reason; Other Than for Cause, Death or Disability. If, during the
Employment Period, Energy Group or any of its affiliated companies shall
terminate the Executive’s employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason: 

	
 

	
 

	
 

	
                         (i)          Energy
 Group shall pay, or cause to be paid, to the Executive in a lump sum in cash
 the sum of: (A) the Executive’s Annual Base Salary through the Date of
 Termination to the extent not theretofore paid, (B) the product of (x) the
 Average Annual Bonus and (y) a fraction, the numerator of which is the number
 of days in the current fiscal year through the Date of Termination, and the
 denominator of which is 365 and (C) any accrued vacation pay, in each case to
 the extent not theretofore paid (the sum of the amounts described in clauses
 (A), (B), and (C) shall be hereinafter referred to as the “Accrued
 Obligations”). The amounts described in clauses (A) and (C) shall be paid
 within 30 days after the Date of Termination. The amounts described in clause
 (B) shall be paid within the 30-day period commencing on the 60th day
 following the Date of Termination, or such later date set forth in Section
 17(a). 

	
 

	
 

	
 

	
                         (ii)          Energy
 Group shall pay, or cause to be paid, to the Executive in twelve (12) equal
 monthly installments, the product of (1) the Multiple and (2) the sum of (x)
 the Executive’s Annual Base Salary and (y) the Average Annual Bonus. The
 first installment shall commence within the 30 day period commencing on the
 60th day following the Date of Termination, or such later date set forth in
 Section 17(a).

	
 

	
 

	
 

	
                         (iii)          For
 a number of years after the Executive’s Date of Termination equal to the
 Multiple, or such longer period as may be provided by the terms of the
 appropriate plan, program, practice or policy, Energy Group or any of its
 affiliated companies shall continue benefits to the Executive and/or the
 Executive’s family at least equal to those which would have been provided to
 them in accordance with the plans, 

9

	
 

	
 

	
 

	
programs,
 practices and policies described in Section 5(b)(iv) of this Agreement if the
 Executive’s employment had not been terminated or, if more favorable to the
 Executive, as in effect generally at any time thereafter with respect to
 other peer executives of Energy Group or any of its affiliated companies and
 their families, provided, however, that if the Executive becomes reemployed
 with another employer and is eligible to receive medical or other welfare
 benefits under another employer provided plan, the medical and other welfare
 benefits described herein shall be secondary to those provided under such
 other plan during such applicable period of eligibility. For purposes of
 determining eligibility (but not the time of commencement of benefits) of the
 Executive for retiree benefits pursuant to such plans, practices, programs
 and policies, the Executive shall be considered to have remained employed
 until the expiration of a number of years after the Date of Termination equal
 to the Multiple and to have retired on the last day of such period. The
 continued benefits described in this Section 7(a)(iii) that are taxable
 benefits (and that are not disability pay or death benefit plans within the
 meaning of Section 409A of the Code) are intended to comply, to the maximum
 extent possible, with the exception to Section 409A of the Code set forth in Section
 1.409A-1(b)(9)(v) of the Treasury Regulations. To the extent that any of
 those benefits either do not qualify for that exception, or are provided
 beyond the applicable time periods set forth in Section 1.409A-1(b)(9)(v) of
 the Treasury Regulations, then they shall be subject to the following
 additional rules: (A) any reimbursement of eligible expenses shall be paid
 within 10 calendar days following Executive’s written request for
 reimbursement, or such later date set forth in Section 17(a); provided that
 the Executive provides written notice no later than 15 calendar days prior to
 the last day of the calendar year following the calendar year in which the
 expense was incurred; (B) the amount of expenses eligible for reimbursement,
 or in-kind benefits provided, during any calendar year shall not affect the
 amount of expenses eligible for reimbursement, or in-kind benefits to be
 provided, during any other calendar year; and (C) the right to reimbursement
 or in-kind benefits shall not be subject to liquidation or exchange for
 another benefit.

	
 

	
 

	
 

	
                         (iv)        Energy
 Group or any of its affiliated companies shall, at its sole expense as
 incurred, provide the Executive with outplacement services from a recognized
 outplacement service provider, the scope of which shall be selected by the
 Executive in his sole discretion; provided that (i) the cost to Energy Group
 shall not exceed $30,000, and (ii) in no event shall the outplacement
 services be provided beyond the end of the second calendar year after the
 calendar year in which the Date of Termination occurs.

	
 

	
 

	
 

	
                         (v)        To
 the extent not theretofore paid or provided, Energy Group or any of its
 affiliated companies shall timely pay or provide to the Executive any other
 amounts or benefits required to be paid or provided or which the Executive is
 eligible to receive under any plan, program, policy or practice or contract
 or agreement of Energy Group or any of its affiliated companies (such other
 amounts and benefits shall be hereinafter referred to as the “Other
 Benefits”).

Notwithstanding
the foregoing, except with respect to payments and benefits under Sections
7(a)(i)(A), 7(a)(i)(C) and 7(a)(v), all payments and benefits shall cease in
the event Executive breaches any of his obligations under Section 11 hereof.

10

                      (b)          Death.
If the Executive’s employment is terminated by reason of the Executive’s death
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive’s legal representatives under this Agreement,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 7(b) shall
include, without limitation, and the Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by Energy Group or any of its affiliated companies to the
estates and beneficiaries of peer executives of Energy Group and any such
affiliated companies under such plans, programs, practices and policies
relating to death benefits, if any, as in effect with respect to other peer
executives and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive’s estate and/or the Executive’s beneficiaries, as in effect on the
date of the Executive’s death with respect to other peer executives of Energy
Group or any of its affiliated companies and their beneficiaries. 

                      (c)          Disability.
If the Executive’s employment is terminated by reason of the Executive’s
Disability during the Employment Period, this Agreement shall terminate as of
the Disability Effective Date, without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the Executive
in a lump sum in cash at the same time as set forth in Section 7(a)(i). With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 7(c) shall include, and the Executive shall be entitled after
the Disability Effective Date to receive, disability and other benefits at
least equal to the most favorable of those generally provided by Energy Group
or any of its affiliated companies to disabled executives and/or their families
in accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive and/or the
Executive’s family, as in effect at any time thereafter generally with respect
to other peer executives of Energy Group or any of its affiliated companies and
their families. 

                      (d)          Cause;
Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the
obligation to pay to the Executive (x) his Annual Base Salary through the Date
of Termination, and (y) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than for
Accrued Obligations and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump sum
in cash at the same time as set forth in Section 7(a)(i). 

          8.         Non-exclusivity
of Rights. Nothing in this Agreement shall prevent or limit the Executive’s
continuing or future participation in any plan, program, policy or practice
provided 

11

by Energy
Group or any of its affiliated companies and for which the Executive may
qualify, nor, subject to Section 16(f), shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with Energy Group or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with Energy Group or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. 

          9.          Full
Settlement. 

                       (a)          Except
as otherwise provided in Section 7(a) hereof, Energy Group’s obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which Energy Group or any
of its affiliated companies may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment. 

                      
(b)          Except as
otherwise provided in this Section 9 or Section 11 of this Agreement, Energy
Group agrees to pay as incurred (within 10 calendar days following Energy
Group’s receipt of an invoice from the Executive), to the full extent permitted
by law, all legal fees and expenses which the Executive may reasonably incur at
any time from the date of this Agreement through the Executive’s remaining
lifetime or, if longer, through the 20th anniversary of the date of the Change
of Control, including the legal fees and expenses of any arbitration
proceeding, as a result of any contest (regardless of the outcome thereof) by
Energy Group or any of its affiliated companies, the Executive or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided, that
the Executive shall have submitted an invoice for such fees and expenses at
least 15 calendar days before the end of the calendar year next following the
calendar year in which such fees and expenses were incurred. Notwithstanding
the foregoing, Energy Group shall not be obligated to pay any legal fees or
expenses incurred by the Executive in any contest in which the trier of fact
determines that the Executive’s position was frivolous or maintained in bad
faith. The amount of such legal fees and expenses that Energy Group is
obligated to pay in any given calendar year shall not affect the legal fees and
expenses that Energy Group is obligated to pay in any other calendar year, and
the Executive’s right to have Energy Group pay such legal fees and expenses may
not be liquidated or exchanged for any other benefit. Energy Group’s obligation
to pay Executive’s eligible legal fees and expenses under this Section 9(b)
shall not be conditioned upon Executive’s termination of employment. 

12

          10.          Certain
Additional Payments by Energy Group or its Affiliated Companies. 

                         (a)          Anything
in this Agreement to the contrary notwithstanding and except as set forth
below, in the event it shall be determined that any payment or distribution by
Energy Group or any of its affiliated companies 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, but determined without regard to any
additional payments required under this Section 10) (a “Payment”) would be
subject to the excise tax imposed by Section 4999 of the Code or any interest
or penalties are incurred by the Executive 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 (a “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 any interest and penalties imposed with
respect thereto) 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. Notwithstanding the foregoing provisions of this
Section 10(a), if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Payments do not exceed 110% of the greatest
amount (the “Reduced Amount”) that could be paid to the Executive such that the
receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the aggregate,
shall be reduced to the Reduced Amount. If a reduction in Payments is necessary
pursuant to the immediately preceding sentence, then the reduction shall occur
in the following order: (i) cash payments; (ii) cancellation of accelerated
vesting of performance-based equity awards (based on the reverse order of the
date of grant); (iii) cancellation of accelerated vesting of other equity
awards (based on the reverse order of the date of grant); (iv) reduction in
retirement benefits under the Supplemental Executive Retirement Plan; and (v)
reduction of welfare benefits. Energy Group’s obligation to make Gross-Up
Payments under this Section 10 shall not be conditioned upon Executive’s
termination of employment.

                         (b)          Subject
to the provisions of Section 10(c), all determinations required to be made
under this Section 10, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment, whether and in what amount
any Payments are to be reduced pursuant to the second sentence of Section
10(a), and the assumptions to be utilized in arriving at such determination, shall
be made by a major accounting firm with expertise in such matters designated by
the Executive (the “Accounting Firm”) which shall provide detailed supporting
calculations both to Energy Group and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by Energy Group. Any determination by the
Accounting Firm shall be binding upon Energy Group 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 Energy Group
should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder. In the event that Energy Group exhausts its
remedies pursuant to Section 10(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

13

promptly paid,
or caused to be paid, by Energy Group to or for the benefit of the Executive,
as provided in Section 10(e).

                         (c)       The
Executive shall notify Energy Group in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by Energy Group
of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise Energy Group 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 30-day period following
the date on which it gives such notice to Energy Group (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If Energy Group notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive shall:

	
 

	
 

	
 

	
                           (i)          give
 Energy Group any information reasonably requested by Energy Group relating to
 such claim, 

	
 

	
 

	
 

	
                           (ii)          take
 such action in connection with contesting such claim as Energy Group shall
 reasonably request in writing from time to time, including, without
 limitation, accepting legal representation with respect to such claim by an
 attorney reasonably selected by Energy Group, 

	
 

	
 

	
 

	
                           (iii)          cooperate
 with Energy Group in good faith in order effectively to contest such claim,
 and 

	
 

	
 

	
 

	
                           (iv)          permit
 Energy Group to participate in any proceedings relating to such claim;

provided,
however, that Energy Group shall bear and pay, or cause to be paid, 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 as provided in Section 10(e).
Without limitation on the foregoing provisions of this Section 10(c), Energy
Group shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as Energy Group shall determine; provided,
however, that if Energy Group directs the Executive to pay such claim and sue
for a refund, Energy Group shall advance, or cause to be advanced, 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, as provided in Section 10(e); and further provided 

14

that any
extension of the statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which such contested amount is claimed to
be due is limited solely to such contested amount. Furthermore, Energy Group’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, or caused to be
advanced, by Energy Group pursuant to Section 10(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to Energy Group’s complying with the requirements of
Section 10(c)) promptly pay to Energy Group 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, or
caused to be advanced, by Energy Group pursuant to Section 10(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and Energy Group does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

                         (e)          Any
Gross-Up Payment shall be paid by Energy Group within 5 calendar days of
receipt of the Accounting Firm’s determination as described in this Section 10,
or such later date as provided in Section 17(a), provided that Executive
submits written notice of a Payment no later than 30 calendar days prior to the
end of the calendar year next following the calendar year in which the Excise
Tax on a Payment is remitted to the Internal Revenue Service or any other
applicable taxing authority. The Gross-Up Payment, if any, shall be paid to the
Executive; provided that Energy Group, in its sole discretion, may withhold and
pay over to the Internal Revenue Service or any other applicable taxing
authority, for the benefit of the Executive, all or any portion of any Gross-Up
Payment, and the Executive hereby consents to such withholding. Any
reimbursement or payment by Energy Group of expenses incurred by the Executive
in connection with a tax audit or litigation relating to the Excise Tax, as
provided for in this Section 10, shall be paid within 5 calendar days of
written request by the Executive, or such later date as provided in Section
17(a), provided that Executive submits the written request no later than 30
calendar days prior to the end of the calendar year following the calendar year
in which the Excise Taxes that are subject to the audit or litigation are
remitted to the Internal Revenue Service or any other applicable taxing
authority, or where as a result of the audit or litigation, no Excise Taxes are
remitted, the end of the calendar year next following the calendar year in
which the audit is completed or there is a final and nonappealable settlement
or other resolution of the litigation.

                         (f)          All
fees and expenses of the Accounting Firm for services performed pursuant to
this Section 10 at any time from the date of this Agreement through the
Executive’s remaining lifetime or, if longer, through the 20th anniversary of
the date of the Change of Control, shall be borne solely by Energy Group.
Energy Group shall pay such fees and expenses not later than the end of the
calendar year following the calendar year in which the related work is
performed or the expenses are incurred by the Accounting Firm, subject to
Section 17(a). The 

15

amount of such
fees and expenses that Energy Group is obligated to pay in any given calendar
year shall not affect the fees and expenses that Energy Group is obligated to
pay in any other calendar year, and the Executive’s right to have Energy Group
pay such fees and expenses may not be liquidated or exchanged for any other
benefit.

          11.          Restrictive
Covenants.

                         (a)          The
Executive shall hold in a fiduciary capacity for the benefit of Energy Group or
any of its affiliated companies all secret or confidential information,
knowledge or data relating to Energy Group or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive’s employment by Energy Group or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). The Executive hereby covenants and agrees that during the
Employment Period and thereafter, the Executive shall not, without the prior
written consent of Energy Group, communicate or divulge any such information,
knowledge or data to anyone other than Energy Group and those designated by it.
Notwithstanding the foregoing, the Executive or his representatives may
disclose any such information if such disclosure is compelled by subpoena or
other legal process, provided that if the Executive is so compelled, he shall provide
Energy Group prompt written notice of such subpoena or legal process in order
to permit Energy Group to seek appropriate protective orders. The Executive
agrees to contact Energy Group for written clarification if the Executive has
any question regarding what information, knowledge or data would be considered
by Energy Group to be confidential and subject to this provision. The
Executive’s obligations under this Section 11(a) are in addition to, and not in
limitation of or preemption of, all other obligations of confidentiality which
the Executive may have to Energy Group or any of its affiliated companies under
general legal or equitable principles, and federal, state or local law.

                         (b)          The
Executive agrees that for a period of one year after his Date of Termination he
will not, directly or indirectly, induce, attempt to induce, or assist others
in inducing or attempting to induce, any employee of Energy Group or any of its
affiliated companies to terminate such person’s employment relationship with
Energy Group or any of its affiliated companies. 

                         (c)          The
Executive acknowledges and agrees that any breach or threatened breach of this
Section 11 by him will cause injury to Energy Group and its affiliated
companies for which money damages alone will not provide an adequate remedy;
that if he commits or threatens to commit any such breach, Energy Group or any
of its affiliated companies should have the right to have the provisions of
this Section 11 specifically enforced by any court having jurisdiction. The
Executive agrees that he will not assert in any such enforcement action that
Energy Group or any of its affiliated companies have an adequate remedy in
damages; and that such rights and remedies will be in addition to and not in
lieu of any other rights or remedies available to Energy Group or any of its
affiliated companies at law or in equity. The Executive agrees that if any
court determines that he has breached this Section 11, he shall be liable to
and will pay Energy Group its reasonable legal fees and expenses incurred in
connection with such proceedings, including appeals therefrom, and Energy Group
shall not be obligated to reimburse 

16

the Executive
for the legal fees and expenses incurred by the Executive in connection with
such proceedings, including appeals therefrom. In addition, while the duration
of the covenants contained in this Section 11 will be determined generally in
accordance with their terms, if the Executive violates any of these covenants,
he agrees to an extension of such covenant on the same terms and conditions for
an additional period of time equal to the time that elapses from the
commencement of such violation to the later of (i) the termination of such violation
or (ii) the final resolution of any litigation stemming from such violation. 

                         (d)          If
any covenant contained in this Section 11, or any portion of such covenant, is
found by a court of competent jurisdiction to be invalid or unenforceable for
any reason, the Executive hereby authorizes and requests such court to exercise
its discretion to reform such covenant to the end that he will be subject to
covenants that are reasonable under the circumstances and enforceable by Energy
Group or any of its affiliated companies. In any event, if any provision is
found to be unenforceable for any reason, such provision shall remain in force
and effect to the maximum extent allowable, all non-affected provisions shall
remain fully valid and enforceable, and such finding shall in no way affect the
subsequent enforceability of any such provision against a different employee of
Energy Group.

                         (e)          The
Executive agrees that the promises and obligations made by Energy Group in this
Agreement (specifically including, but not limited to, the payments and
benefits provided for under Section 7(a) hereof (other than payments and
benefits under Sections 7(a)(i)(A), 7(a)(i)(C) and 7(a)(v)) constitute
sufficient consideration for the covenants contained in this Section 11. The
Executive further acknowledges that it is not Energy Group’s intention to
interfere in any way with his employment opportunities, except in such
situations where the same conflict with the legitimate business interests of
Energy Group or any of its affiliated companies. The Executive agrees that he
will notify Energy Group in writing if he has, or reasonably should have, any
questions regarding the applicability of this Section 11. 

          12.          Successors.

                         (a)          This
Agreement is personal to the Executive and without the prior written consent of
Energy Group shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by the Executive’s legal representatives.

                         (b)          This
Agreement shall inure to the benefit of and be binding upon Energy Group and
its successors and assigns.

                         (c)          Energy
Group will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of Energy Group to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that Energy Group would be
required to perform it if no such succession had taken place. 

          13.          Early
Termination. This agreement shall terminate as of the date Executive
becomes employed by any of the affiliated companies to which Energy Group has
elected not to 

17

enter into
employment agreements (of this Type) with executives of such affiliated
companies; provided such employment becomes effective prior to a Change of
Control.

          14.          Arbitration.
Except as otherwise provided herein, any dispute, controversy or claim between
the parties arising out of or relating to this Agreement (or any subsequent
amendments thereof or waivers thereto) (hereinafter, a “Claim” or “Claims”)
shall be submitted to final and binding arbitration. Claims which are subject
to this section include, but are not limited to, the following: (i) claims
relating to this Agreement’s existence, enforceability, validity, interpretation,
performance or breach, (ii) claims for compensation or benefits, and (iii)
claims of wrongful or discriminatory termination based on any federal, state or
local statute, regulation, ordinance, tort, public policy, contract or
promissory estoppel theory, including any dispute as to the cause or reason for
termination. All Claims submitted to arbitration pursuant to this Section 14
shall be subject to the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association, effective January 1, 2004,
except as hereinafter provided:

          (a)          A
request to arbitrate a Claim must be made within 180 days of the date the Claim
arose;

          (b)          Energy
Group shall pay any and all fees and expenses of the arbitrator; 

          (c)          The
arbitration hearing shall be held in Poughkeepsie, New York, unless the parties
mutually agree to another location;

          (d)          Each
party shall exchange documents to be utilized as exhibits in the arbitration
hearing and each party shall be limited to five (5) pre-hearing depositions of
no more than ten hours each, unless the arbitrator orders additional discovery;

          (e)          The
arbitrator shall be appointed in accordance with Rule 12 of the
above-referenced Rules of the American Arbitration Association, except that if,
for any reason, an arbitrator cannot be selected by the process described in
Rule 12, subparts (i) through (iii), the American Arbitration Association shall
submit the names of seven (7) additional arbitrators from its roster and the
parties shall select the arbitrator by alternately striking names with the
party requesting arbitration first striking; and

          (f)          Either
party shall be entitled to seek and obtain injunctive or other appropriate
equitable relief in any federal or state court having jurisdiction in order to
enforce the arbitration provisions of this Agreement; and Energy Group shall be
entitled to seek and obtain such injunctive or other appropriate equitable
relief in order to prevent (pending arbitration) any breach of the Restrictive
Covenants set forth in Section 11 of this Agreement in any federal or state
court having jurisdiction. 

Subject to
paragraph (f) of this Section 14, above, it is the intention of the parties to
avoid litigation in any court of any and all Claims concerning this Agreement,
or otherwise arising from the Executive’s employment with Energy Group or its
affiliate entities, and that all such claims will be subject to this arbitration
agreement. Neither party shall commence or pursue any 

18

litigation on
any claim that is or was the subject of arbitration under this Agreement. Each
party agrees that this agreement to arbitrate, and any award arising out of any
arbitration contemplated by this Agreement, are enforceable under, and subject
to, the Federal Arbitration Act, 11 U.S.C. § I, et seq. Both parties consent that judgment upon any
arbitration award may be entered in any federal or state court having
jurisdiction. 

          15.          Release.
Notwithstanding anything contained herein to the contrary, Energy Group shall
only be obligated to make the payments or provide any benefit under Section
7(a) hereof (other than payments and benefits under Sections 7(a)(i)(A), 7(a)(i)(C)
and 7(a)(v)) if: (a) within the 50-day period after the Date of Termination,
the Executive executes a release, in a form provided by Energy Group, of all
current or future claims, known or unknown, against Energy Group, its
affiliated companies, its officers, directors, shareholders, employees and
agents arising on or before the date of the release, including but not limited
to all claims arising out of the Executive’s employment with Energy Group or
its affiliated companies or the termination of such employment, and (b) the
Executive does not revoke the release during the seven-day revocation period
prescribed by the Age Discrimination in Employment Act of 1967, as amended, or
any similar revocation period, if applicable. Energy Group shall be obligated
to provide such release to the Executive promptly following the Date of
Termination. 

          16.          Miscellaneous.

                         (a)          This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

                         (b)          All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

	
 

	
 

	
 

	
 

	
If to the
 Executive:

	
 

	
 

	
 

	
 

	
Steven V.
 Lant

	
 

	
 

	
59 Colburn
 Drive

	
 

	
 

	
Poughkeepsie,
 NY 12603

	
 

	
 

	
 

	
 

	
If to Energy
 Group:

	
 

	
 

	
 

	
 

	
CH Energy
 Group, Inc. 

	
 

	
 

	
284 South Avenue

	
 

	
 

	
Poughkeepsie,
 New York 12601-4879

	
 

	
 

	
 

	
 

	
 

	
Attention:
 Chief Executive Officer

19

or to such
other address as either party shall have furnished to the other in writing in
accordance herewith. Notice and communications shall be effective when actually
received by the addressee.

                         (c)          The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

                         (d)          Energy
Group may withhold from any amounts payable under this Agreement such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.

                         (e)          The
Executive’s or Energy Group’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or
Energy Group may have hereunder, including, without limitation, the right of
the Executive to terminate employment for Good Reason pursuant to
Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.

                         (f)          The
Executive and Energy Group acknowledge that, except as may otherwise be
provided under any other written agreement between the Executive and Energy
Group, or any of its affiliated companies, the employment of the Executive by
Energy Group or any of its affiliated companies is “at will” and, subject to
Section 2(c) hereof, the Executive’s employment may be terminated at any
time prior to the Effective Date by either the Executive or Energy Group or any
of its affiliated companies, in which case the Executive shall have no further
rights under this Agreement. From and after the Effective Date, this Agreement
shall supersede any other agreement between the parties with respect to the
subject matter hereof.

          17.          Compliance
with Section 409A of the Code.

                         (a)          Notwithstanding
anything contained in this Agreement to the contrary, if the Executive is a
“specified employee,” as determined under Energy Group’s policy for determining
specified employees on the Date of Termination, then to the extent required in
order to comply with Section 409A of the Code, all payments, benefits or
reimbursements paid or provided under this Agreement that constitute a
“deferral of compensation” within the meaning of Section 409A of the Code, that
are provided as a result of a “separation from service” within the meaning of
Section 409A and that would otherwise be paid or provided during the first six
months following such Date of Termination shall be accumulated through and paid
or provided (together with interest at the applicable federal rate under
Section 7872(f)(2)(A) of the Code in effect on the Date of Termination) within
30 days after the first business day following the six month anniversary of
such Date of Termination (or, if the Executive dies during such six-month
period, within 30 days after the Executive’s death). 

                         (b)          It
is intended that the payments and benefits provided under this Agreement shall
either be exempt from the application of, or comply with, the requirements of
Section 409A of the Code. This Agreement shall be construed, administered, and
governed in a manner that effects such intent, and Energy Group shall not take
any action that would be 

20

inconsistent
with such intent. Without limiting the foregoing, the payments and benefits
provided under this Agreement may not be deferred, accelerated, extended, paid
out or modified in a manner that would result in the imposition of an
additional tax under Section 409A of the Code upon Executive. Although Energy
Group shall use its best efforts to avoid the imposition of taxation, interest
and penalties under Section 409A of the Code, the tax treatment of the benefits
provided under this Agreement is not warranted or guaranteed. Neither Energy
Group, its affiliates, directors, officers, employees nor its advisers shall be
held liable for any taxes, interest, penalties or other monetary amounts owed
by the Executive or other taxpayer as a result of the Agreement. Any reference
in this Agreement to Section 409A of the Code will also include any proposed,
temporary or final regulations, or any other guidance, promulgated with respect
to such Section 409A by the U.S. Department of Treasury or the Internal Revenue
Service.

          IN
WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from its Board of Directors, Energy Group has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
Steven V. Lant

	
 

	
 

	
 

	
 

	
 

	
CH Energy
 Group, Inc.

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
Christopher
 M. Capone 

	
 

	
 

	
 

	
EVP and CFO

21

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