Document:

<PAGE>

                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

      This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of February 16,
2001 (the "Agreement"), by and among Energy East Corporation, a New York
corporation ("Parent"), RGS Energy Group, Inc. (the "Company"), and Thomas S.
Richards (the "Executive"), amends and restates as of the Effective Time (as
defined below) the Severance Agreement by and between the Company and the
Executive effective as of April 26, 2000 (the "Prior Agreement").

      The Executive is currently serving as the President and Chief Executive
Officer of the Company, and the Company and Parent have entered into a Merger
Agreement (as defined below) which contemplates the merger of the Company with
and into Parent to be effective as of the Effective Time.

      The Board of Directors of Parent (the "Board") and the Board of Directors
of the Company (the "Company Board") desire to provide for the employment of the
Executive from and after the Effective Time, and the Executive is willing to
commit himself to serve Parent, the Company and their respective subsidiaries
and affiliates, on the terms and conditions herein provided.

      In order to effect the foregoing, Parent, the Company and the Executive
wish to enter into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

      1. DEFINED TERMS. The definitions of capitalized terms used in this
Agreement and not defined elsewhere herein are provided in the last Section
hereof.

      2. EMPLOYMENT. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve Parent, the Company and their respective
subsidiaries and affiliates, on the terms and conditions set forth herein,
during the term of this Agreement (the "Term").

      3. TERM OF AGREEMENT. The Term will commence on the Effective Time of the
Merger, as those terms are defined in the Agreement and Plan of Merger by and
among the Company, Parent and Eagle Merger Corp. dated as of February 16, 2001
(the "Merger Agreement"), and end on the third anniversary of the day on which
the Effective Time occurs (the "Effective Date"), unless further extended as
hereinafter provided. Commencing on the first anniversary of the Effective Time
and each succeeding anniversary thereafter, the Term shall automatically be
extended for one (1) additional year unless Parent or the Executive shall have
given the other 90 days' prior written notice not to extend the Term (a "Notice
of Non-Renewal"). Notwithstanding the foregoing, the Term shall end upon the
termination of the Executive's employment hereunder for any reason.

      4. POSITION AND DUTIES. During the Term, the Executive shall serve as (i)
Chairman, President and Chief Executive Officer of the Company, which shall
continue to comprise all of the utility and non-utility operations conducted by
the Company as of the date hereof,

<PAGE>

(ii) Chairman and CEO of Rochester Gas and Electric Corporation ("RG&E") and New
York State Electric & Gas Corporation ("NYSEG"), which shall each be included
within the Rochester Gas and Electric Group for organizational purposes, and
(iii) a member of the Board and an Executive Vice President of Parent. The
Executive shall devote substantially all his working time and efforts to the
business and affairs of Parent, the Company and their subsidiaries and
affiliates; PROVIDED, HOWEVER, that the Executive may also serve on the boards
of directors or trustees of other non-affiliated companies and organizations, as
long as such service does not interfere with the performance of his duties
hereunder or violate his obligations under Section 10 hereof.

      5. COMPENSATION AND RELATED MATTERS.

      5.1. BASE SALARY. During the Term, Parent shall pay, or cause to be paid,
to the Executive an annual base salary ("Base Salary") during the period of the
Executive's employment hereunder, which shall be at an initial annual rate of
not less than the Effective Date Salary (as defined below). The Base Salary
shall be paid in accordance with the normal payroll practices of Parent. During
the period of the Executive's employment hereunder, the Board shall make an
annual review of the Executive's compensation for possible increase, as the
Board deems appropriate in its business judgment (and, as so increased, shall
thereafter constitute "Base Salary" hereunder). The Base Salary in effect from
time to time shall not be decreased during the Term. Compensation of the
Executive by Base Salary payments shall not be deemed exclusive and shall not
prevent the Executive from participating in any other compensation or benefit
plan of Parent, the Company or its subsidiaries and affiliates. The Base Salary
payments (including any increased Base Salary payments) shall not in any way
limit or reduce any other obligation of Parent or the Company hereunder, and no
other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Company to pay the Executive's Base Salary. The
"Effective Date Salary" means $475,000, increased by a percentage equal to the
average percentage increase, if any, of the base salaries of the named executive
officers of Parent from the date hereof until the Effective Date.

      5.2. ANNUAL BONUS. During the Term, the Executive shall be eligible to
receive an annual cash bonus (the "Annual Bonus") under Parent's Annual
Executive Incentive Plan or any successor thereto, with the maximum Annual Bonus
being equal to 140% of Base Salary and the "threshold" Annual Bonus being equal
to 70% of Base Salary (the "Target Bonus").

      5.3. WELFARE BENEFIT PLANS. During the Term, the Executive shall be
entitled to participate in "employee welfare benefit plans" (as defined in
section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
from time to time ("ERISA")), other than severance plans, made available by
Parent, the Company, RG&E or NYSEG from time to time to their executives and key
management employees (the "Welfare Plans"), subject to and on a basis consistent
with the terms, conditions and overall administration of the Welfare Plans. The
Executive's participation in the Welfare Plans shall be on terms and conditions
no less favorable than those applicable to other senior executives of Parent,
the Company, RG&E and NYSEG (his "Peer Executives") as determined by the Board,
and in any event the benefits thereunder shall be not less favorable in the
aggregate than those provided to the Executive by the Company as of the date
hereof.

                                      -2-
<PAGE>

      5.4. PENSION BENEFITS. During the Term, the Executive shall be entitled to
participate in any qualified or non-qualified "pension plans," as defined in
Section 3(2) of ERISA, made available by Parent, the Company, RG&E or NYSEG from
time to time to their executives and key management employees (the "Pension
Plans"), subject to and on a basis consistent with the terms, conditions and
overall administration of the Pension Plans. The Executive's participation in
the Pension Plans shall be on terms and conditions no less favorable than those
applicable to his Peer Executives as determined by the Board, and in any event
the benefits thereunder shall be not less favorable in the aggregate than those
provided to the Executive by the Company as of the date hereof.

      5.5. INITIAL OPTION GRANT. Parent shall grant to the Executive, as of the
Effective Date, an option to purchase 150,000 shares of Parent's common stock
("Common Stock") (the "Initial Option Grant") pursuant to, and subject to the
terms and conditions of, the Energy East 2000 Stock Option Plan (the "Option
Plan"). Subject to the provisions of Section 7, the Initial Option Grant shall
vest and become exercisable with respect to the shares subject to the Initial
Option Grant as follows: (A) as to one third of the shares subject to the
Initial Option Grant on the first anniversary of the Effective Date, (B) as to
one-third of the shares subject to the Initial Option Grant on the second
anniversary of the Effective Date, and (C) as to the remaining shares subject to
the Initial Option Grant on the third anniversary of the Effective Date, in each
case, provided that the Executive remains employed hereunder on that date;
provided, that the Initial Option Grant will become vested and exercisable upon
a "change of control" of Parent (as defined in the Option Plan). The Initial
Option Grant shall have a per-share exercise price equal to the Fair Market
Value (as defined in the Option Plan) of the Common Stock on the Effective Date
and a scheduled term of 10 years from and after the Effective Date. Except as
specifically provided in this Section 5.5 and in Section 7, the Initial Option
Grant shall have the same terms and conditions as options granted under the
Option Plan to the Executive's Peer Executives.

      5.6. INCENTIVE COMPENSATION. Beginning in the first calendar year
following the Effective Date, the Executive shall be entitled to receive grants
of options under the Option Plan or any successor thereto made available by
Parent from time to time on a basis commensurate with his status and
responsibilities, as determined by the Board. In the event that Parent hereafter
adopts any other form of long-term incentive plan, the Executive shall be
entitled to participate therein on a basis commensurate with his status and
responsibilities.

      5.7. FRINGE BENEFITS. During the Term, the Executive shall be entitled to
receive any fringe benefits which are made available by Parent, the Company,
RG&E and NYSEG to their executives and key management employees on a basis no
less favorable than his Peer Executives.

      5.8. EXPENSES. Upon presentation of reasonably adequate documentation to
Parent, the Executive shall receive prompt reimbursement from Parent or a
subsidiary thereof for all reasonable and customary business expenses incurred
by the Executive during the Term in performing services hereunder in accordance
with Parent's policy.

      5.9. VACATION. The Executive shall be entitled to five (5) weeks of
vacation during each year of the Term, or such greater period as the Board shall
approve, without reduction in salary or other benefits.

                                      -3-
<PAGE>

      6. COMPENSATION RELATED TO DISABILITY. During the Term, during any period
that the Executive fails to perform the Executive's full-time duties hereunder
as a result of incapacity due to physical or mental illness, Parent shall pay,
or cause to be paid, to the Executive his Base Salary at the rate in effect at
the commencement of any such period, together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by Parent, the Company, RG&E or NYSEG during
such period, until the Executive's employment is terminated by Parent for
Disability; PROVIDED, HOWEVER, that such payments shall be reduced by the sum of
the amounts, if any, payable to the Executive at or prior to the time of any
such payment under disability benefit plans of Parent or the Company or under
the Social Security disability insurance program, which amounts were not
previously applied to reduce any such payment.

      7. TERMINATION COMPENSATION AND BENEFITS.

      7.1. If the Executive's employment shall be terminated for any reason
before the scheduled expiration of the Term, Parent shall pay or provide to the
Executive (or to the executors, personal representatives or administrators of
his estate in accordance with Section 11.2 if the Executive's employment is
terminated by his death) (i) the Executive's Base Salary through the Date of
Termination at the rate in effect immediately prior to the time the Notice of
Termination is given, (ii) all other compensation and benefits (other than
severance compensation and benefits) to which the Executive is entitled under
the terms of any compensation or benefit plan, program or arrangement maintained
by Parent, the Company, RG&E or NYSEG as then in effect, and (iii) any
unreimbursed expenses payable pursuant to Section 5.8 of the Agreement that were
incurred before the Date of Termination.

      7.2. In the event the Executive's employment is terminated before the
scheduled expiration of the Term by the Executive for Good Reason or by Parent
or the Company for reasons other than Cause, death or Disability of the
Executive, then (a) Parent shall provide the Executive, in addition to amounts
payable under Section 7.1, (i) a lump sum cash payment to be made within fifteen
(15) business days of the Date of Termination equal to three times the sum of
the Base Salary and the Incentive Compensation Amount (as defined below), (ii)
certain benefits as provided in Section 7.3, (iii) an amount equal to the
product of (A) the Target Bonus for the fiscal year including the Date of
Termination and (B) a fraction, the numerator of which is the number of days
from the beginning of the fiscal year through the Date of Termination and the
denominator of which is 365, and (iv) an amount equal to the excess of (X) the
actuarial present value of the benefits under the Pension Plans that are defined
benefit plans that he would have been entitled to receive if his employment had
continued for three years after the Date of Termination, assuming for this
purpose that the Executive's compensation in each of the three years would be
that required by Section 5, over (Y) the actuarial present value of the
Executive's actual vested benefits, if any, under such Pension Plans as of the
Date of Termination, and (b) the Initial Option Grant shall vest in full and
remain exercisable for one year following the Date of Termination. The Incentive
Compensation Amount shall mean the higher of (I) the Annual Bonus (if any)
earned by the Executive with respect to the fiscal year ended immediately prior
to the Date of Termination and (II) the average of the amounts of the Annual
Bonus earned by the Executive with respect to each of the lesser of (xx) the
number of years for which the Executive has been eligible to earn an Annual
Bonus hereunder and (yy) the three most recently completed fiscal years that
ended on or prior to the Date of Termination; PROVIDED, HOWEVER, that in the
event that the performance period for the first Annual Bonus that

                                      -4-
<PAGE>

the Executive is eligible to earn hereunder has not been completed as of the
Date of Termination, the Incentive Compensation Amount shall mean the Target
Bonus.

      7.3. The benefits referred to in clause (ii) of the first sentence of
Section 7.2 shall consist of: (A) continued participation by the Executive, for
a period of three years following the Date of Termination, in the health, life
insurance, and accidental death and dismemberment plans made available by
Parent, the Company, RG&E or NYSEG from time to time to their executives and key
management employees on the same basis as if he had remained employed hereunder;
provided, that to the extent such participation is not permitted by the terms of
such plans, Parent shall arrange for alternative coverage that is substantially
equivalent or, with respect to the health plans only, pay to the Executive an
amount equal, on a net after-tax basis, to the premiums charged under such plans
for such coverage to persons electing to receive it pursuant to the continuation
coverage requirements of Section 4680B of the Code; and (B) reimbursement of the
Executive for the expenses that the Executive incurs within two (2) years
following the Date of Termination for outplacement assistance or relocation
expenses in order to pursue other business opportunities, to the extent not
reimbursed by another employer.

      7.4. (a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment, benefit, or distribution by
Parent, the Company or their affiliates to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (a "Payment"), would be subject to the excise tax
imposed by Section 4999 of the Code, or any interest or penalties with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment ("Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.

      (b) Subject to the provisions of Section 7.4(c) hereof, all determinations
required to be made under this Section 7.4, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
used in arriving at such determinations, shall be made by Parent's principal
outside accounting firm (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Board and the Executive within thirty (30)
business days of the Date of Termination and/or such earlier date(s) as may be
requested by Parent or the Executive (each such date and the Date of Termination
shall be referred to as a "Determination Date" for purposes of this Section
7.4(b) and Section 7.5 hereof). All fees and expenses of the Accounting Firm
shall be borne solely by Parent. The initial Gross-Up Payment, if any, as
determined pursuant to this Section 7.4(b), shall be paid by Parent to the
Executive within fifteen (15) days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal income
tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm under this Section 7.4(b)
shall be binding upon Parent, the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have

                                      -5-
<PAGE>

been made by Parent should have been made ("Underpayment") consistent with the
calculations required to be made hereunder. In the event that Parent exhausts
its remedies pursuant to Section 7.4(c) and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by Parent to or for the benefit of the Executive.

      (c) The Executive shall notify Parent in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
Parent of an Underpayment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise Parent of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the thirty (30) day period
following the date on which he gives such notice to Parent (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If Parent notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive shall:

                        (i)   give Parent any information reasonably requested
                              by Parent relating to such claim;

                        (ii)  take such action in connection with contesting
                              such claim as Parent 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 Parent;

                        (iii) cooperate with Parent in good faith in order to
                              effectively contest such claim; and

                        (iv)  permit Parent to participate in any proceeding
                              relating to such claim;

PROVIDED, HOWEVER, that Parent shall bear and pay directly all costs and
expenses (including the legal fees and expenses of counsel to Parent, who shall
also represent the Executive, if he so requests, and additional interest and
penalties) incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 7.4(c), Parent 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
Parent shall determine; PROVIDED, HOWEVER, that if Parent directs the Executive
to pay such claim and sue for a refund, Parent shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with respect
to such advance or with respect to any

                                      -6-
<PAGE>

imputed income with respect to such advance; and PROVIDED, FURTHER 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,
Parent's control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

      (d) If, after the receipt by the Executive of an amount advanced by Parent
pursuant to Section 7.4(c) hereof, the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to Parent's and
the Company's complying with the requirements of Section 7.4(c) hereof) promptly
pay to Parent the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by Parent pursuant to Section 7.4(c) hereof, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and Parent does not notify the Executive in writing
of its intent to contest such denial of refund prior to the expiration of thirty
(30) days after such determination, then such advance shall be forgiven and
shall not be required to be repaid.

      7.5. The payments provided for in Section 7.4 hereof (other than Section
7.4(c) and (d)) shall be made not later than the fifth (5th) business day
following each Determination Date; PROVIDED, HOWEVER, that if the amounts of
such payments cannot be finally determined on or before such day, Parent shall
pay to the Executive on such day an estimate, as determined by the Executive, of
the minimum amount of such payments to which the Executive is clearly entitled
and shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can
be determined but in no event later than the thirtieth (30th) day after each
Determination Date. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess shall
constitute a loan by Parent to the Executive, payable on the fifth (5th)
business day after demand by Parent (together with interest at the rate provided
in Section 1274(b)(2)(B) of the Code).

      7.6. Parent also shall pay to the Executive all reasonable legal fees and
expenses incurred by the Executive in any dispute concerning the interpretation
or enforcement of this Agreement (including all such fees and expenses, if any,
incurred in disputing any termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in connection with
any tax audit or proceeding to the extent attributable to the application of
Section 4999 of the Code to any payment or benefit provided hereunder or
otherwise); PROVIDED, HOWEVER, Parent shall not be required to pay legal fees
and expenses incurred separately by the Executive in connection with a contest
controlled by Parent pursuant to Section 7.4(c) hereof in connection with which
Parent complied with its obligations under such Section 7.4(c). Such payments
shall be made within five (5) business days after delivery of the Executive's
written request for payment accompanied with such evidence of fees and expenses
incurred as Parent reasonably may require.

                                      -7-
<PAGE>

      8. TERMINATION PROCEDURES.

      8.1. NOTICE OF TERMINATION. (a) Any purported termination of the
Executive's employment before the scheduled expiration of the Term (other than
by reason of death) shall be communicated by written Notice of Termination from
one party hereto to the other party hereto in accordance with Section 12 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and, in the case of a termination by Parent or the Company for Cause or by
the Executive for Good Reason, shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of Termination
for Cause is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board which was called and held for the purpose
of considering such termination (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the Executive was guilty of conduct set forth in clause (i) or (ii) of the
definition of Cause herein, and specifying the particulars thereof in detail.

      (b) Notwithstanding any other provision of this Agreement, upon the
termination of the Executive's employment for any reason, unless otherwise
requested by the Board, the Executive shall immediately resign from the Board
and from all boards of directors of EE Entities (as defined in Section 10.1) of
which he may be a member. The Executive hereby agrees to execute any and all
documentation of such resignations upon request by Parent or the Company, but he
shall be treated for all purposes as having so resigned upon termination of his
employment, regardless of when or whether he executes any such documentation.

      8.2. DATE OF TERMINATION. "Date of Termination," with respect to any
purported termination of the Executive's employment before the scheduled
expiration of the Term, shall mean (i) if the Executive's employment is
terminated by his death, the date of his death, (ii) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full time performance of the Executive's duties during such thirty (30) day
period), and (iii) if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the case of a
termination by Parent, shall not be less than thirty (30) days (except in the
case of a termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than sixty (60)
days, respectively, from the date such Notice of Termination is given).

      9. NO MITIGATION. Parent and the Company agree that, if the Executive's
employment hereunder is terminated before the scheduled expiration of the Term,
the Executive is not required to seek other employment or to attempt in any way
to reduce any amounts payable to the Executive by Parent or the Company
hereunder. Further, the amount of any payment or benefit provided for hereunder
(other than pursuant to Section 7.4(d) hereof) shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to Parent or the Company, or otherwise.

                                      -8-
<PAGE>

      10. CONFIDENTIALITY AND NONCOMPETITION.

      10.1. The Executive will not, during or after the Term, without the prior
written consent of the Parent or as may otherwise be required by law or legal
process, disclose to any entity or person any information which is treated as
confidential by Parent, the Company, RG&E, NYSEG, or any of their subsidiaries
or affiliates (each, an "EE Entity"), and not generally known or available in
the marketplace, and to which the Executive gains access by reason of his
position as an employee or director of any EE Entity.

      10.2. Except as permitted by Parent upon its prior written consent, the
Executive shall not, during the Executive's employment with the EE Entities and
for the period ending one year after the Executive's employment with the EE
Entities terminates for any reason, other than a termination of employment by
Parent or the Company without Cause or a resignation by the Executive for Good
Reason, enter, directly or indirectly, into the employ of or render or engage
in, directly or indirectly, any services to any person, firm or corporation
within the "Restricted Territory," which is a major competitor of any EE Entity
with respect to products which any EE Entity is then producing or services which
any EE Entity is then providing (a "Competitor"). However, it shall not be a
violation of the immediately preceding sentence for the Executive to be employed
by, or render services to, a Competitor, if the Executive renders those services
only in lines of business of the Competitor which are not directly competitive
with a primary line of business of any EE Entity or are outside of the
Restricted Territory. For purposes of this Section 10.2, the "Restricted
Territory" shall be the states and/or commonwealths of Connecticut, Maine,
Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania,
Rhode Island, and Vermont.

      11. SUCCESSORS; BINDING AGREEMENT.

      11.1. In addition to any obligations imposed by law upon any successor to
Parent or the Company, Parent and the Company shall 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 Parent or the Company,
as the case may be, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that Parent and the Company would be
required to perform it if no such succession had taken place. Failure of Parent
or the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from Parent or the Company in the
same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason, except that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination.

      11.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.

                                      -9-
<PAGE>

      11.3. At the Effective Time, the Prior Agreement shall be terminated and
no longer in effect; and the Executive expressly waives his rights to any
payments under the Prior Agreement. Notwithstanding any other provision of this
Agreement, this Agreement shall be null and void and of no further force or
effect if the Merger Agreement is terminated without consummation of the Merger
or if the Executive's employment with the Company terminates for any reason
before the Effective Time.

      12. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addressees set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:

            (a)   To Parent:

                  Energy East Corporation
                  P.O. Box 12904
                  Albany, New York  12212-2904
                  Attention: Kenneth M. Jasinski, Esq.
                             Executive Vice President, General Counsel and
                             Secretary

                  Telephone: (607) 762-4315
                  Telecopy:  (607) 762-4005

                  with a copy to:

                  Wachtell, Lipton, Rosen & Katz
                  51 West 52nd Street
                  New York, New York  10019
                  Attention: Seth A. Kaplan, Esq.

                  Telephone: (212) 403-1000
                  Telecopy:  (212) 403-2000

            (b)   To the Company:

                  RGS Energy Group, Inc.
                  89 East Avenue
                  Rochester, New York 14649-0001
                  Attention: Michael T. Tomaino, Esq.
                             Senior Vice President and General Counsel

                  Telephone: (716) 771-4444
                  Telecopy:  (716) 724-8285

                                      -10-
<PAGE>

                  with a copy to:

                  Shearman & Sterling
                  599 Lexington Avenue
                  New York, New York  10022
                  Attention: John J. Cannon, III, Esq.

                  Telephone: (212) 848-8159
                  Telecopier: (212) 848-7179

            (c)   To the Executive:

                  At the Executive's residence address as maintained by the
                  Company in the regular course of its business for payroll
                  purposes.

      13. MISCELLANEOUS.

      13.1. No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by the Executive and such officers as may be specifically designated by the
Board. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by any party
which are not expressly set forth in this Agreement. This Agreement sets forth
the entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and canceled, except as otherwise provided in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York, without giving
effect to choice of law principles.

      All references to sections of the Code shall be deemed also to refer to
any successor provisions to such sections. There shall be withheld from any
payments provided for hereunder any amounts required to be withheld under
federal, state or local law and any additional withholding amounts to which the
Executive has agreed. The obligations under this Agreement of Parent, the
Company or the Executive which by their nature and terms require satisfaction
after the end of the Term shall survive such event and shall remain binding upon
such party.

      13.2. Notwithstanding any provision of this Agreement to the contrary,
Parent and the Company shall be jointly and severally liable to the Executive
and his personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees or legatees for all payment
obligations under this Agreement.

                                      -11-
<PAGE>

      14. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

      15. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

      16. SETTLEMENT OF DISPUTES; ARBITRATION. All claims by the Executive for
benefits under this Agreement shall be directed to and initially determined by
the Board and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board shall afford a reasonable opportunity
to the Executive for a review of the decision denying a claim and shall further
allow the Executive to appeal to the Board a decision of the Board within sixty
(60) days after notification by the Board that the Executive's claim has been
denied. To the extent permitted by applicable law, any further dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in New York, New York in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Parent or the Company shall bear all costs of such arbitration.

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

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

      (b) "Cause" for termination by Parent or the Company of the Executive's
employment, for purposes of this Agreement, shall mean (i) the willful and
continued failure by the Executive to substantially perform the Executive's
duties hereunder (other than any such failure resulting from the Executive's
incapacity due to physical or mental illness or any such actual or anticipated
failure after the issuance of a Notice of Termination for Good Reason by the
Executive pursuant to Section 8.1) after a written demand for substantial
performance is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's duties, or (ii) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to Parent or its subsidiaries, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, no act, or failure to act,
on the Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of Parent or the
Company.

      (c) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

      (d) "Date of Termination" shall have the meaning stated in Section 8.2
hereof.

                                      -12-
<PAGE>

      (e) "Disability" shall be deemed the reason for the termination by Parent
or the Company of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full time performance of the Executive's duties hereunder for
the maximum number of months applicable to the Executive under the Company's
Disability Policy for Salaried Employees (or any successor policy) (but in no
event for less than six (6) consecutive months), Parent shall have given the
Executive a Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not have returned
to the full time performance of the Executive's duties.

      (f) "Excise Tax" shall have the meaning stated in Section 7.4(a) hereof.

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

      (h) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express written
consent), of any one of the following acts by Parent or the Company, or failures
by Parent or the Company to act, unless, in the case of any act or failure to
act described in paragraphs (i) or (ii) below, such act or failure to act is
corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:

            (i)   the assignment to the Executive of any duties inconsistent
                  with the Executive's positions as set forth in Section 4 or a
                  substantial alteration in the nature of the Executive's
                  responsibilities such that they are no longer consistent with
                  such positions;

            (ii)  any material breach of any provision of this Agreement by
                  Parent or the Company (including, without limitation, any
                  failure to provide the compensation, benefits and perquisites
                  set forth in Section 5 hereof);

            (iii) the relocation of the Company's principal executive offices in
                  Rochester, New York to a location which is not within the
                  50-mile radius of the Company's principal executive offices or
                  Parent or the Company's requiring the Executive to be based
                  anywhere other than the Company's principal executive offices
                  except for required travel on the business of Parent or the
                  Company or its affiliates;

            (iv)  any purported termination of the Executive's employment which
                  is not effected pursuant to a Notice of Termination satisfying
                  the requirements of Section 8.1 (and for purposes of this
                  Agreement, no such purported termination shall be effective);
                  or

                                      -13-
<PAGE>

            (v)   the delivery by Parent to the Executive of a Notice of
                  Non-Renewal that results in the Term ending before the
                  Executive has attained age 65.

The Executive's right to terminate the Executive's employment for Good Reason
shall not be affected by the Executive's incapacity due to physical or mental
illness. The Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.

      (i) "Gross-Up Payment" shall have the meaning stated in Section 7.4(a)
hereof.

      (j) "Notice of Termination" shall have the meaning stated in Section 8.1
hereof.

      (k) "Severance Payments" shall mean those payments described in Section
7.2 hereof.

      (l) "Term" shall have the meaning stated in Section 3 hereof.

                                      -14-
<PAGE>

      IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.

                             ENERGY EAST CORPORATION

                             /s/ Kenneth M. Jasinski
                             ------------------------------------
                             By:    Kenneth M. Jasinski, Esq.
                             Title: Executive Vice President, General Counsel
                                    and Secretary

                             RGS ENERGY GROUP, INC.

                             /s/ Michael T. Tomaino
                             ------------------------------------
                             By:    Michael T. Tomaino
                             Title: Senior Vice President and General Counsel

                             EXECUTIVE

                             /s/ Thomas S. Richards
                             ------------------------------------
                             Thomas S. Richards

                                      -15-Prepared by MERRILL CORPORATION www.edgaradvantage.com

QuickLinks
 -- Click here to rapidly navigate through this document
  

Exhibit 10.17  

 
 

Product Sourcing Agreement    
  

by
and between 

NeoMagic International Corporation,
  a Cayman Island company, with offices c/o Caledonian Bank & Trust Ltd., Ground Floor,

Caledonian House, Mary Street, P.O. Box 1043, Georgetown, Grand Cayman, B.W.I.

(hereinafter "NMI") 

and 

Infineon Technologies AG,
  St. Martin-Street 53, 81669 Munich (hereinafter "Infineon") 

on
financial contributions to Infineon's investment of enlarged capacity 

Preamble  

    Infineon has developed and markets embedded DRAM Products. NMI is interested in the long-term procurement of supply with approximately 50.000
processed wafers from August 2001 through February 2004. Infineon is willing to make investments, to adapt its process to the specific requirements of NMI and to reserve capacity for
NMI. Parties intend to share the risks connected with such investment efforts and for this purpose NMI intends to contribute to the funding of Infineon's investment by way of an irrevocable Standby
Letter of Credit with the Bank of America in the name of Infineon in the amount of US $15.000.000 on which Infineon may draw on February, 27, 2004 if NMI has ordered less than 50.000 wafers. 

Article 1—Definitions  

    1.1 "Processed
Wafers" shall mean the customer-specific processed silicon wafers to be jointly developed and qualified by the parties, manufactured by Infineon and sold
to NMI under the separate wafer supply agreement. Processed Wafers will be manufactured by Infineon after parties have jointly developed and qualified the Product(s). 

    1.2. "Wafer
Supply Agreement" shall mean the agreement entered into by the parties on March, 15, 1999 and the General Amendment to the Wafer Supply Agreement to be
concluded between the Parties regulating the development and the volume purchase of Processed Wafers. 

Article 2—Infineon's Obligation  

	2.1
	Infineon
hereby agrees to make investments in her manufacturing site in Dresden to enlarge her capacity of wafer supply. 

Article 3—NMI's Obligation  

	3.1
	In
consideration of Infineon's investment efforts to adapt its production process to NMI's wish of enlarged supply, NMI agrees to establish an irrevocable Standby Letter of Credit
with the Bank of America in the name of Infineon Technologies AG, Munich, in the amount of US $15.000.000 (in words: fifteen million US dollars). Infineon shall be entitled to draw on the account of
US $15.000.000 on February 27, 2004.

	3.2
	The
draft of the irrevocable Standby Letter of Credit shall be provided to Infineon before the Agreement becomes effective and Infineon shall give its express consent to the wording
of the 

1

 

draft.
The irrevocable Standby Letter of Credit containing the same wording shall be delivered to Infineon within two weeks after the effective date of this Agreement or February 2, 2001
whichever is later. 

	3.3
	The
amount of the irrevocable Standby Letter of Credit will be reduced quarterly by the Bank of America on both Parties request by US $300 for every Processed Wafer actually
delivered to and paid by NMI. The Bank of America may only be entitled to reduce the sum on the irrevocable Standby Letter of Credit if both Parties have given their consent to the reducing sum in
writing. Infineon shall be obliged to give her consent to the reduction of US $300 for any Processed Wafer manufactured and delivered to NMI, if she has actually received the payment for the
respective Processed Wafer according to her invoice.

	3.4
	Infineon
shall be entitled to draw on the outstanding sum of the irrevocable Standby Letter of Credit, on February 27, 2004. If there is no remaining sum because the amount has by
both Parties' mutual consent been reduced to zero beforehand, then Infineon shall not be entitled to claim any payment under the Standby Letter of Credit. 

If,
for any reason, Infineon may not draw on the outstanding sum of the irrevocable Standby Letter of Credit and thus does not receive payment from the Bank of America hereunder, even though the sum
of US $15.000.000 has not by mutual consent been reduced to zero, then NMI shall himself be obliged to pay on his own account the corresponding sum which Infineon would have been entitled to receive
from the Bank of America under the irrevocable Standby Letter of Credit. In the event NeoMagic were to pay Infineon directly the outstanding sum, Infineon agrees to legally rescind all requirements
and rights associated with the above mentioned Letter of Credit. 

Article 4—Additional Obligations  

	4.1
	NMI
intends to order 50.000 Processed Wafers at a minimum within the 30 (in words: thirty) months following joint qualification of the process and start of production.

	4.2
	Infineon
hereby agrees to ramp up from 150 Processed Wafers at the start of production in August 2001.

	4.3
	Infineon
agrees to manufacture after the ramp up phase in August 2001 until December 2003 the number of Processed Wafers indicated by NMI's forecast, provided the
forecast does not exceed 400 Processed Wafers per week.

	4.4
	If
NMI's forecast exceeds the number of 400 Processed Wafers, NMI may request by giving written notice to Infineon that Infineon increases her capacity within 9 months after
such notice up to 800 Processed Wafers per week until December 2003. Infineon will then after the 9 months period be obliged to manufacture the number of Processed Wafers according to
NMI's forecasts until December 2003 provided the forecast does not exceed 800 Processed Wafers per week. If NMI's forecast exceeds such number, Infineon will be obliged to accept 800 Processed
Wafers per week. With respect to any additional number, Infineon will only apply reasonable efforts to manufacture the number of Processed Wafers indicated by the forecast.

	4.5
	Parties
hereby agree that the selling price for each Processed Wafer for the technologies C9DD1 (0,2μ) and C10DD0 (0,17μ) in the
Wafer Supply Agreement shall be as follows: 

	C9DD1 (0,2μ)	 	for the calendar year 2001: US $ 3250 per each Processed Wafer
	 	 	for the calendar year 2002: US $ 3200 per each Processed Wafer
	 	 	for the calendar year 2003: US $ 3100 per each Processed Wafer
	C10DD0 (0.17μ)	 	for the calendar year 2002: US $3400/wafer
	 	 	for the calendar year 2003: US $3300/wafer

2

 

Article 5—Confidentiality  

The
parties shall use all information, which they receive in connection with this Agreement and which has been marked as confidential, only for the purposes of this Agreement and they shall keep this
information confidential to third parties with the same degree of care as they use with respect to their own confidential information. This obligation shall not apply to information, which is or
becomes public knowledge or which is provably independently developed or lawfully received from a third party. 

Article 6—Limitation of Liability  

Both
parties disclaim any and all liability regardless of the cause in law, the liability for indirect, punitive or consequential damages including arising from interrupted operation, loss of profits,
loss of information data, unless liability is mandatory by law, except for damages for violation of Art. 3.5. 

Article 7—Miscellaneous  

	7.1
	This
Agreement becomes effective with its execution by both parties and shall terminate after all obligations stated hereunder have been completely fulfilled.

	7.2
	Sections
5, 6 and 7 shall survive any termination of this Agreement and remain in full effect.

	7.3
	This
Agreement shall be construed in accordance with the substantive law in force in Switzerland without reference to other laws.

	7.4
	All
disputes arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be finally settled by arbitration
under the Rules of Arbitration of the International Chamber of Commerce, Paris ("Rules") by three arbitrators in accordance with the said Rules. The seat of arbitration shall be Zurich, Switzerland.
The procedural law of this place shall apply where the Rules are silent.

	7.5
	All
changes and amendments to this Agreement must be in writing to be valid. This requirement of written form can only be waived in writing.

	7.6
	Should
individual provisions of this Agreement be legally ineffective or unfeasible for legal reasons then, unless the basic intentions of the parties under this Agreement are
substantially jeopardised, the validity of the remaining provisions of this Agreement shall not be affected thereby. In such a case the parties shall come to an agreement approximating as closely as
possible the arrangement originally envisaged in this Agreement. 

3

 

    In
witness hereof, the parties hereto have caused this Agreement to be executed by their duly authorised representatives on the dates specified below. 

	NMI International Corporation	 	Infineon Technologies AG
	

By:	
 	

 	
 	

By:	
 	

 
	 	 	
	 	 	 	

	

Name:	
 	

 	
 	

Name:	
 	

 
	 	 	
	 	 	 	

	

Title:	
 	

 	
 	

Title:	
 	

 
	 	 	
	 	 	 	

	

Date:	
 	

 	
 	

Date:	
 	

 
	 	 	
	 	 	 	

	

 	
 	

 	
 	

By:	
 	

 
	 	 	 	 	 	 	

	

 	
 	

 	
 	

Name:	
 	

 
	 	 	 	 	 	 	

	

 	
 	

 	
 	

Title:	
 	

 
	 	 	 	 	 	 	

	

 	
 	

 	
 	

Date:	
 	

 
	 	 	 	 	 	 	

4

   General Amendment of the Wafer Supply Agreement  

 Between  

 NeoMagic International Corporation, a Cayman Island company, with offices c/o Caledonian Bank & Trust Ltd., Ground Floor, Caledonian House, Mary Street, P.O. Box 1043, Georgetown,
Grand Cayman, B.W.I (hereinafter "NMI" or "Buyer")  

 and  

 Infineon Technologies Aktiengesellschaft ("Infineon" or "Seller"), Federal Republic of Germany (former Siemens Aktiengesellschaft Semiconductor Group)  

 ("General Amendment for future Products")  

    NMI and Infineon have concluded the Wafer Supply Agreement dated March 15, 1999. ("Original Agreement") 

    The
Parties wish to amend the Original Agreement as follows, to provide for the design, development, fabrication, qualification and supply for future Products. Capitalized terms used
in this Amendment and not otherwise defined shall have the same meanings herein as specified therefor in the Original Agreement. 

0.  Definition  

"Shrink
of an existing product" shall mean reduction of product cell size with a new technology in order to achieve smaller die size. 

1.  Delivery-Commitments  

Paragraph
3.10 (a), page 7 is completely replaced by the following new paragraph: 

Infineon
will deliver Wafers to the carrier for shipment, (i) within three (3) days plus the Fabrication Cycle Time from the date of purchase order for Prototype Production, and
(ii) within one (1) week plus the Fabrication Cycle Time from the date of purchase order for Volume Production, unless NMI requests a longer period. Infineon will use reasonable efforts to
distribute the manufacture of Wafers evenly throughout each month (i.e. start and complete Wafers linearly). 

The
Parties agree that lots already started in the production line of Infineon can only be temporarily stopped by NMI if a mask change ("Redesign") is required and only for the period of time until
this Redesign is done. The Parties will provide the changes necessary for the Redesign in a reasonable timeframe. 

2.  NRE-payments  

The
Parties agree that NMI will for each new future Product or Shrink of an existing Product pay a compensation for the Non Recurring Engineering Costs ("NRE's") to Infineon.
NRE-payment(s) to Infineon are partial compensation for the development work of Infineon involved. These NRE-payments will be mutually agreed by the Parties for each new
Product or Shrink of an existing Product before the joint development of a new Product or Shrink starts. Infineon agrees to support NMI with reasonable NRE pricing. Pricing is to be similar to the
methodology established in Infineon's September 22, 2000 proposal to NMI adjusted for inflation. NMI will place a Purchase Order for NRE's prior to the start of the development work of Infineon
involved. 

1

 

3.  New Products/Shrinks  

	3.1
	Infineon agrees to support the future development and production of further new Products and /or Shrinks of existing Products as long
as the total volume of new Products and/or Shrinks of existing Products is reasonable, as defined in Section 3.2, compared to the ordered amount. Parties hereby agree to add by mutual consent
new Products and/or Shrinks of existing Products to the Wafer Supply Agreement. The exact terms and conditions will be agreed in product/shrink specific amendments to the existing Wafer Supply
Agreement. Infineon will only give its consent to such amendments, if inter alia; a) the new Product and/or Shrink fits into Infineon's
eDRAM technology roadmap; and b) if the new Product and/or Shrink be manufactured using Infineon's DRAM based embedded DRAM technologies;
and c) if the Technical Information supplied by NMI are pure GDSII-interface-information or provided by Infineon according to Sec. 3.3.

	3.2
	Both parties agree that the minimum quantity of Forecast for one single Product or one single Shrink which may be acknowledged by
Infineon and the minimum quantity of a firm purchase order to be accepted by Infineon is 75 Processed Wafers per week and per Product or per Shrink. 

As
an exception, Infineon agrees to accept as the minimum quantity of 50 Processed Wafers per week and per Product or per Shrink for only one on-going product, NMI provided NMI accepts an
average memory yield ten percent (10%) lower than the typical reference yield (high volume) for this Product or Shrink. Infineon understands that there will be new product introduction ramp ups that
are below 75 processed wafers per week. Infineon agrees to support and deliver product for these ramp ups. NMI agrees to limit the ramp up phase to a reasonable period of time. 

	3.3
	On NMI's request, Infineon hereby agrees to grant NMI the limited, royalty-bearing license to internally use Infineon's technical
information (hereinafter "Infineon Modules") and to incorporate them into NMI's own Technical Information to be provided to Infineon in the course of the development of the Products. Infineon Modules
will be supplied to NMI on his request. 

The
royalties to be paid by NMI to Infineon shall be US $30 per Processed Wafer and shall be due within thirty (30) days after the date of invoice issued by Infineon. This royalty will only
apply where Infineon utilizes an Artisan library at NMI's request. This cost is subject to re-negotiation in the event the cost to Infineon changes. 

4.  Payment  

Paragraph 4.2,
page 10 will be amended insofar that the Parties agree that invoices shall be paid within thirty (30) days after the date of invoice issued by Infineon, instead of
45 days after receipt. 

5.  Cancellation  

Paragraph 3.9
(c), page 7 will be completed as follows: The Parties hereby agree on that this clause will not apply for Wafers ordered in prototype lots ("Prototype Production"). For the
cancellation of product purchase orders or any portion thereof for Wafers ordered in prototype lots ("Prototype Production") one hundred percent (100%) cancellation charge of the price stated in the
Purchase Order will be charged to NMI regardless of the status of the work in process for these wafers. 

6.  Prototype Lots  

Paragraph
3.9 (i), page 6 shall be replaced as follows: 

A
Prototype Production lot shall contain the number of Wafers specified in Exhibit B. NMI may order multiple Prototype Production lots of the same Wafer. The Parties agree that prototype lots
already started in the production line of Infineon can only be temporarily stopped by NMI if a mask change (Redesign) is required and only for the period of time until this mask change 

2

 

(Redesign) is done after successful first silicon review is complete. The Parties will provide the changes necessary for the redesign in a reasonable timeframe. During Prototype Production, Infineon
will provide "VTH" and "gate"..... 

7.0 Term and Termination  

Paragraph 7.2,
page 14: Both parties agree that this agreement will remain in force for a period of five years from the time the next product is released to production by NMI. All other terms
related to paragraph 7.2 remain in force. 

Except
as explicitly modified by this Amendment, all other Sections and Definitions of the Original Agreement shall remain in full force and effect. The Original Agreement, as modified by this
contains the entire understanding between the parties hereto regarding the subject matter hereof, and supersedes all prior communications, understandings or agreements with respect to this subject
matter. 

    IN WITNESS WHEREOF, the Parties have executed this Amendment effective as of the last signature date below. 

AGREED TO:  

	NeoMagic International Corporation	 	Infineon Technologies AG
	

By:	
 	

 	
 	

By:	
 	

 
	 	 	
	 	 	 	

	

Name:	
 	

Prakash Agarwal	
 	

Name:	
 	

 
	

Title:	
 	

President and CEO	
 	

Title:	
 	

 
	

Date:	
 	

 	
 	

Date:	
 	

 
	
NeoMagic International Corporation	
 	

Infineon Technologies AG
	

By:	
 	

 	
 	

By:	
 	

 
	 	 	
	 	 	 	

	

Name:	
 	

Stephen Lanza	
 	

Name:	
 	

 
	

Title:	
 	

Vice President and CFO	
 	

Title:	
 	

 
	

Date:	
 	

 	
 	

Date:	
 	

 
	

 	
 	

 	
 	

By:	
 	

 
	 	 	 	 	 	 	

	

 	
 	

 	
 	

Name:	
 	

 
	

 	
 	

 	
 	

Title:	
 	

 
	

 	
 	

 	
 	

Date:	
 	

 

3

QuickLinks

Product Sourcing Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}]]