Document:

Energy East Exhibit 10-26 2Q 2003

Exhibit 10-26

As Amended and

Restated Effective

June 13, 2003

 

Energy East Corporation

2000 Stock Option Plan

I.Plan Objective

The objective of the 2000 Stock Option Plan (the "Plan") is to provide executives and certain other key employees of Energy East Corporation (hereinafter referred to as the "Company") and its Affiliates with options to purchase shares of the Company's Common Stock.  The Plan also provides for the granting by the Company of stock appreciation rights to these employees.  These options and stock appreciation rights are intended to more closely align the financial interests of management with those of the Company's stockholders by providing long-term incentives to those individuals who can significantly affect the future growth and success of the Company.  In addition, the Plan will enhance the Company's ability to attract and retain executives and other key individuals of superior ability.

II.Definitions

"Affiliate" shall mean any company which qualifies as a "subsidiary corporation" or "parent corporation" of the Company under Section 424 of the Code, or any successor provision, or any other entity in which the Company owns, directly or indirectly, fifty percent (50%) or more of the equity.

"Award" shall mean an Option granted to a Participant pursuant to Article VI hereof, a Stock Appreciation Right granted to a Participant pursuant to Article VII hereof or any other award established by the Committee which is consistent with the purposes of the Plan.

"Award Agreement" shall mean a written agreement (including any amendment or supplement thereto) between the Company and a Participant which specifies the terms and conditions of an Award granted to such Participant.

"Board" shall mean the Board of Directors of Energy East Corporation.

"Cashless Exercise" shall mean the exercise of an Option by a Participant through the use of a brokerage firm to make payment to the Company of the exercise price either from the proceeds of a loan to the Participant from the brokerage firm or from the proceeds of the sale of the Company's Common Stock issued pursuant to the exercise of the Option, and whereby, upon receipt of such payment, the Company delivers the exercised shares to the brokerage firm.

"Chairman" shall mean the Chairman of Energy East Corporation.

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

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

"Fair Market Value" shall mean, with respect to any given date, the closing price of the Company's Common Stock on the New York Stock Exchange on the last trading day prior to that date, as reported by such responsible reporting service as the Committee may select.

"Incentive Stock Option" shall mean a stock option granted under Article VI hereof which is intended to qualify as an incentive stock option under Section 422 of the Code.

"Key Employee" shall mean an officer or other employee whose efforts and initiative have significantly contributed or are expected to significantly contribute to the future growth and success of the Company or its Affiliates.

"Non-Statutory Stock Option" shall mean a stock option granted under Article VI hereof which is not intended to qualify as an incentive stock option under Section 422 of the Code.

"Option" shall mean an Incentive Stock Option or a Non-Statutory Stock Option.

"Participant" shall mean an individual who is selected pursuant to Article IV hereof to receive an Award under the Plan.

"Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of the Exchange Act, or any successor provision, as amended from time to time.

"Section 162(m)" shall mean Section 162(m) of the Code, or any successor provision, as amended from time to time, and any regulations thereunder.

"Section 422" shall mean Section 422 of the Code, or any successor provision, as amended from time to time, and any regulations thereunder.

"Stock Appreciation Right" shall mean (i) in the case of a Stock Appreciation Right issued in tandem with an Option pursuant to Article VII hereof, the right to receive an amount equal to the excess of the Fair Market Value of a share of the Company's Common Stock (determined on the date of the exercise of the Stock Appreciation Right) over the exercise price of the related Option or (ii) in the case of a freestanding Stock Appreciation Right issued pursuant to Article VII hereof, the right to receive an amount equal to the excess of the Fair Market Value of a share of the Company's Common Stock (determined on the date of the exercise of the Stock Appreciation Right) over the Fair Market Value of a share of the Company's Common Stock determined on the date of the grant of the Stock Appreciation Right.

III.Administration

The Plan shall be administered by the Compensation and Management Succession Committee of the Board or such successor committee as may be appointed by the Board to administer the Plan (the "Committee").  The Committee shall be composed of at least two non-employee members of the Board who shall be qualified to administer the Plan as contemplated by both Rule 16b-3 and Section 162(m).  The Committee shall have the authority to exercise all of the powers and authorities specifically granted to it under the Plan or necessary or desirable in the administration of the Plan, including, without limitation, the authority to select the employees to be granted Awards, the authority to determine the size and terms of the Awards to be granted to each employee and the authority to prescribe the form of Award Agreement embodying the Awards granted under the Plan.  The Committee shall have the authority to interpret the Plan, to establish and revise rules and regulations relating to the Plan, and to make any other determinations that it believes necessary or advisable for the administration of the Plan.  Decisions and determinations by the Committee shall be final and binding upon all parties.

IV.Eligibility and Participation

Awards may be granted to such employees of the Company as the Committee may from time to time select.  In determining the individuals to whom Awards are to be granted and the number of such Awards, the Committee shall take into consideration the individual's present and potential contribution to the growth and success of the Company and such other factors as the Committee may deem proper and relevant.  The Committee may request recommendations for individual Awards from the Chairman.  The Committee may delegate to the Chairman the authority to make Awards to any employees of the Company who are not executive officers subject to Section 16 of the Exchange Act, subject to a fixed maximum Award amount for such a group and a fixed maximum Award amount for any one Participant, as determined by the Committee.  Determinations as to Awards made to executive officers who are subject to Section 16 of the Exchange Act shall be made solely by the Committee.  For purposes of participation in the Plan, the term "Company" includes the Company and its Affiliates.

V.Shares Available for Awards

A.Amount of Stock

Subject to adjustment as provided in Section C. of this Article V., the aggregate number of shares of the Company's Common Stock with respect to which Awards may be granted is 13,000,000 shares, less the total number of shares related to i) options and stock appreciation rights (including replacement awards) which have been granted under the Company's 1997 Stock Option Plan on or before the Effective Date (as defined in Article XI.) and which have been forfeited, and ii) replacement awards granted under the 1997 Stock Option Plan after the Effective Date.  Any shares which relate to awards under the 1997 Stock Option Plan which after the Effective Date terminate by expiration, forfeiture, cancellation or otherwise without the delivery of shares, or are settled in cash in lieu of the Company's Common Stock, will no longer be available for distribution under the 1997 Stock Option Plan, but will be available for distribution under the Plan.  Shares of Common Stock delivered by the Company pursuant to the Plan may be either authorized but unissued Common Stock or previously issued shares of Common Stock reacquired by the Company, including shares purchased by the Company in the open market and held as treasury shares, or both.  Awards may be made under the Plan in any combination of Incentive Stock Options, Non-Statutory Stock Options, Stock Appreciation Rights, or any other awards established by the Committee which are consistent with the purposes of the Plan.

For purposes of this Section A., shares of the Company's Common Stock that relate to (i) a Stock Appreciation Right which is exercised, or (ii) any Award which terminates by expiration, forfeiture, cancellation or otherwise without the delivery of shares, or is settled in cash in lieu of the Company's Common Stock, shall thereafter again be available for grant pursuant to the Plan.

B.Individual Limitations

Subject to adjustment as provided in Section C. of this Article V., no individual may be granted, during any one calendar year of the Plan, Awards, other than replacement awards, that relate in total to more than 400,000 shares of the Company's Common Stock.

C.Dilution and Other Adjustments

In the event of any change in corporate capitalization (including, but not limited to, a change in the number of shares of Common Stock outstanding), such as a stock split or a corporate transaction, such as a merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete liquidation of the Company, the Committee shall cause there to be made such adjustments as it determines, in its sole discretion, to be necessary or appropriate, to the number and kind of shares that may be issued under the Plan, or to any individual under the Plan, and to the number and kind of shares or other property subject to and the exercise price (if applicable) of any then outstanding Awards, and such adjustments shall be conclusive and binding for all purposes of the Plan.  If deemed necessary or appropriate by the Committee, provision may be made for the payment to a Participant who has an outstanding Option or other Award of a cash amount in cancellation of such Award equal to its then-value, as determined by the Committee; provided, that if such event takes place in connection with a Change in Control such value shall be based on the value received by holders of the outstanding Common Stock in connection with the Change in Control.  Notwithstanding the foregoing, the number of shares subject to any Award shall always be a whole number.

VI.Terms and Conditions of Options

A.Grant of Options

Subject to the provisions of the Plan, the Committee shall have sole authority to determine the employees to whom Options shall be granted, the time or times when Options shall be granted, the number of shares to be covered by each Option, the terms of each Option, the Option Price (as defined in Section B. of this Article VI.) therefore, and the conditions and limitations applicable to the exercise of each Option.  The Committee shall have the authority to grant Incentive Stock Options, or to grant Non-Statutory Stock Options, or to grant both types of Options.  In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422.

B.Option Price

The Committee shall, in its sole discretion, establish the exercise price per share of the Company's Common Stock covered by an Option ("Option Price") at the time each Option is granted, which exercise price shall not be less than 100% of the Fair Market Value of the Company's Common Stock determined on the date of grant.

C.Exercise of Options and Grant of Replacement Options

Each Option shall be exercisable at such time or times, upon such events, and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement; provided, however, that in no event may any Option granted hereunder be exercisable after the expiration of ten years from the date of such grant.  The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any conditions relating to the application of federal or state securities laws, as it may deem necessary or advisable.

Unless otherwise provided by the Committee, Options shall be exercised by the delivery of a written notice from the Participant to the Secretary of the Company in the form prescribed by the Committee which sets forth the number of shares with respect to which the Option is exercised and which is accompanied by full payment for the shares.  Unless otherwise provided by the Committee, no shares shall be delivered pursuant to any exercise of an Option until payment in full of the Option Price therefor is received by the Company.  Such payment may be made in cash, or its equivalent, or, if and to the extent permitted by the Committee, by tendering (either actually or by attestation) shares of the Company's Common Stock owned by the holder of the Option (which are not subject to any pledge or other security interest), or by combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Common Stock so tendered to the Company, valued as of the date of such tender, is at least equal to the Option Price times the number of shares with respect to which the Option is being exercised.  In addition, at the request of the Participant, and subject to applicable laws and regulations, the Company may (but shall not be required to) cooperate in a "Cashless Exercise" of the Option.  As soon as practicable after receipt of the written notice and payment, the Company shall deliver to the Participant stock certificates based upon the number of shares with respect to which the Option is exercised and which are issued in the Participant's name.  A Participant shall have the rights of a stockholder only with respect to shares for which such stock certificates have been issued to such Participant.

Unless otherwise provided by the Committee, to the extent that all or any portion of the Option Price, or taxes incurred in connection with the exercise of an Option, are paid by delivery of the common shares of the Company (or, in the case of the payment of taxes, by the withholding of shares) then, concurrently with such delivery or withholding, the Participant shall be granted, as additional Awards, replacement Options, subject to the other provisions of the Plan.  The replacement Options, to the extent permissible, shall cover the number of common shares surrendered to pay the Option Price plus the number of shares surrendered or withheld to satisfy the Participant's tax liability, shall have an exercise price equal to 100% of the Fair Market Value of such common shares determined on the date such replacement Option is granted, shall first be exercisable no earlier than six months from the date of the grant of the replacement Option, shall have an expiration date equal to the expiration date of the original Option and shall contain such other terms and conditions as determined by the Committee.  A replacement Option shall be granted in connection with the exercise of an Option which is itself a replacement Option.

The Committee, in its sole discretion, may, in lieu of delivering shares covered by an exercised Option, settle the exercise of the Option by means of a cash payment to the Participant equal to the difference between the Fair Market Value of the Company's Common Stock determined on the exercise date and the Option Price.  At the same time, the Committee shall return to the Participant the Participant's payment, if any, for the shares covered by the Option.

With the consent of the Committee, and subject to compliance with applicable laws and regulations, the Company, in its sole discretion, may lend money to a Participant, guarantee a loan to a Participant or otherwise assist a Participant to obtain the cash necessary to exercise all or any portion of an Option granted under the Plan, including the payment by a Participant of any or all applicable taxes due in connection with the exercise of an Option granted under the Plan.

VII.Stock Appreciation Rights

The Committee may, with sole and complete authority, grant Stock Appreciation Rights which are in tandem with an Option or which are freestanding and unrelated to an Option.  A Stock Appreciation Right granted in tandem with an Option shall be granted at the same time as the Option is granted.  Stock Appreciation Rights shall be exercisable, in whole or in part, at such time or times, and subject to such other terms and conditions, as shall be prescribed by the Committee, provided that Stock Appreciation Rights shall not be exercisable after the expiration of ten years from the date of grant.

Stock Appreciation Rights granted in tandem with Options shall entitle a Participant to receive from the Company, upon exercise of the right, an amount equal to the excess of the Fair Market Value of a share of the Company's Common Stock, determined on the date of the exercise of the right, over the exercise price of the related Option.  A freestanding Stock Appreciation Right shall entitle a Participant to receive from the Company, upon exercise of the right, an amount equal to the excess of the Fair Market Value of a share of the Company's Common Stock, determined on the date of the exercise of the right, over the Fair Market Value of a share of the Company's Common Stock, determined on the date of the grant of the Stock Appreciation Right.

The exercise of a Stock Appreciation Right granted in tandem with an Option shall result in a corresponding cancellation of the related Option to the extent of the number of shares of the Company's Common Stock as to which the Stock Appreciation Right is exercised.  In such case, the number of shares subject to such exercised Stock Appreciation Right and related cancelled Option shall become available for grant under Article V. Section A. hereof.  The exercise of an Option associated with a tandem Stock Appreciation Right shall result in a cancellation of the related Stock Appreciation Right to the extent of the number of shares of the Company's Common Stock as to which the Option is exercised.  Notwithstanding such cancellation, the number of shares subject to any such exercised Option and related Stock Appreciation Right shall not become available for grant under Article V. Section A. hereof.

VIII.Amendments and Termination

The Committee may, in its sole discretion, at any time terminate the Plan and from time to time modify or amend the Plan, or any part hereof, for any reason; provided, however:  (i) the Plan shall not be amended or modified without shareholder approval if and to the extent shareholder approval is required under the applicable regulations under Section 162(m) or Section 422; (ii) the Plan shall not be amended or modified without shareholder approval so as to increase the number of shares which may be issued under the Plan or to amend the provisions of Article X. Section D. hereof; and (iii) the termination, modification or amendment of the Plan shall not, without the consent of a Participant, adversely affect any rights under any Award previously granted to such Participant.  No Awards shall be granted pursuant to this Plan after May 18, 2010.

IX.Withholding Taxes

	Whenever the Company is to issue or transfer shares of Common Stock under the plan, the Company shall have the right to require the Participant to remit to the Company an amount sufficient to satisfy any federal, state and local withholding tax requirements prior to the delivery of any certificates for such shares.
	Whenever payments under the Plan are to be made in cash, such payments shall be net of an amount sufficient to satisfy any federal, state and local withholding tax requirements.
	The Committee, in its sole discretion, may provide that a Participant may satisfy, totally or in part, the Participant's obligations pursuant to Section A. hereof by electing to have shares withheld, to redeliver shares acquired under an Award, or to deliver previously owned shares having a Fair Market Value equal to the amount required to be withheld, provided that the election is made in writing on or prior to the date of exercise of the Option.  The Fair Market Value of any shares of Common Stock to be withheld or delivered shall be determined as of the date that the taxes are required to be withheld.

X.Miscellaneous Provisions

	Each Award hereunder shall be evidenced in writing by an Award Agreement.  The Committee shall provide in the Award Agreement the terms and conditions applicable to an award in the event of the Participant's termination of employment by reason of retirement, death, disability or any other reason and the effect thereon, if any, of a change in control (as determined by the Committee) of the Company.
	Nothing in the Plan or in any Award Agreement entered into pursuant to the Plan shall confer upon any Participant the right to continue in the employment of the Company or affect any right which the Company may have to terminate the employment of such Participant.
	No award shall be assignable or transferable otherwise than by will or the laws of descent and distribution, except that the Committee may provide in an Award Agreement for the transferability of an Award:

(a)  by gift to (i) a spouse or other family member, or (ii) a trust or an estate in which the original Participant or the Participant's spouse or other family member has a substantial interest; and

(b)  pursuant to a domestic relations order as defined in Section 414 of the Code, or any successor provision;

provided, however, that any Award so transferred shall continue to be subject to all terms and conditions contained in the Award Agreement.  If so permitted by the Committee, a Participant may designate a beneficiary or beneficiaries to exercise the rights of the Participant under the Plan upon the death of the Participant.

No right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant.
	Except for adjustments as provided in Section C. of Article V. hereof, the Option Price for any outstanding Option granted hereunder may not be decreased after its date of grant, nor may an outstanding Option granted under the Plan be surrendered to the Company as consideration for the grant of a new Option with a lower Option Price.
	The Plan shall be submitted to the common stockholders of the Company for approval.  Options may not be granted, and Shares may not be delivered, under the Plan unless and until such time as such approval and authorization has been received.  The common stockholders of the Company shall be deemed to have approved the Plan only if it is approved at a meeting of the common stockholders duly held by vote taken in the manner required by law.
	Notwithstanding anything to the contrary contained in the Plan or any Award Agreement, the Company shall not be required to issue shares of Common Stock until applicable legal, listing, registration and regulatory requirements or approvals relating to the issuance have been satisfied or obtained.
	The Plan and all Award Agreements entered into pursuant to Award grants shall be governed by the laws of the State of New York, other than its conflicts of laws provisions.  In the event of an inconsistency between any term of the Plan and any term of any Award Agreement, the terms of the Plan shall govern.
	It is the intent of the Company that this Plan comply in all respects with Rule 16b-3 in connection with any Award granted to a person who is subject to Section 16 of the Exchange Act.  Accordingly, if any provision of this Plan or any Award Agreement does not comply with the requirements of Rule 16b-3 as then applicable to any such person, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements with respect to such person.

XI.Effective Date

Subject to the approval of the common stockholders, the Plan shall be effective as of May 19, 2000 ("Effective Date").

XII.Change in Control

In order to preserve a Participant's rights under an Award in the event of a change in control (as determined by the Committee) of the Company, the Committee in its discretion may, at the time an Award is made or any time thereafter, take one or more of the following actions:  (i) provide for the acceleration of any time period relating to the exercise of the Award, (ii) provide for the purchase of the Award upon the Participant's request for an amount of cash or other property that could have been received upon the exercise or realization of the Award had the Award been currently exercisable or payable, (iii) adjust the terms of the Award in a manner determined by the Committee to reflect the change in control, or (iv) make such other provision as the Committee may consider equitable and in the best interests of the Company.NYSEG Exhibit 4-10 2Q 2003

Exhibit 4-10

 

 

______________________________________________________________________________

 

 

NEW YORK STATE ELECTRIC & GAS CORPORATION

AND

JPMORGAN CHASE BANK,

as Trustee

 

 

_________________

Third Supplemental Indenture

Dated as of May 9, 2003

To

Indenture

Dated as of November 18, 2002

_________________

53/4% Notes due May 1, 2023

 

 

______________________________________________________________________________

          THIRD SUPPLEMENTAL INDENTURE, dated as of May 9, 2003 (this "Third Supplemental Indenture"), between NEW YORK STATE ELECTRIC & GAS CORPORATION, a corporation duly organized and existing under the laws of the State of New York (the "Company"), having its principal office at P.O. Box 3287, Ithaca, New York 14852-3287 and JPMORGAN CHASE BANK, a New York banking corporation, as Trustee (the "Trustee") under the Indenture dated as of November 18, 2002 between the Company and the Trustee (the "Original Indenture").

Recitals of the Company 

          WHEREAS, the Company has executed and delivered the Original Indenture to the Trustee to provide for the issuance from time to time of its senior, unsecured debentures, notes or other evidences of indebtedness (the "Securities"), to be issued in one or more series as in the Original Indenture provided;

          WHEREAS, pursuant to the terms of the Original Indenture, the Company desires to make, execute and deliver to the Trustee this Third Supplemental Indenture to the Original Indenture in order to establish the form and terms of, and to provide for the creation and issue of a new series of its Securities designated as the 53/4% Notes due May 1, 2023 (herein called the "Notes"), under the Original Indenture in the aggregate principal amount of $200,000,000;

          WHEREAS, all things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee and issued upon the terms and subject to the conditions hereinafter and in the Original Indenture set forth, against payment therefor, the valid, binding and legal obligations of the Company and to make this Third Supplemental Indenture a valid, binding and legal agreement of the Company, have been done;

          Now, Therefore, This Third Supplemental Indenture Witnesseth that for, and in consideration of, the premises and covenants contained in the Original Indenture and this Third Supplemental Indenture and the purchase of the Notes by the Holders thereof, it is mutually agreed and covenanted, for the equal and proportionate benefit of all Holders of the Notes, as follows:

ARTICLE ONE

DEFINED TERMS

          Section 101.  Defined Terms.  Except as otherwise expressly provided in this Third Supplemental Indenture or in the form of Note set forth in Exhibit A hereto or otherwise clearly required by the context hereof or thereof, all capitalized terms used and not defined herein or in said form of Note that are defined in the Original Indenture shall have the meanings assigned to them in the Original Indenture.  The Original Indenture, as supplemented from time to time, including by this Third Supplemental Indenture, is hereafter referred to as the "Indenture."

ARTICLE TWO

TERMS OF THE NOTES

          Section 201.  Establishment of the Notes.  There is hereby authorized a series of Securities designated the 53/4% Notes due May 1, 2023, limited in aggregate principal amount to $200,000,000 (except as provided in Section 301(2) of the Indenture and as set forth in the next sentence). The Company may, without the consent of the Holders of the Notes, provided that no Event of Default with respect to the Notes shall have occurred and be continuing, issue additional Notes in such principal amount as shall be determined by or pursuant to a Board Resolution and having the same ranking and the same interest rate, maturity and other terms (except for the initial interest accrual date and the initial Interest Payment Date) as the Notes originally issued hereunder, which together with said additional Notes shall constitute a single series of Securities under the Indenture.  The Notes shall be substantially in the form of Note set forth in Exhibit A hereto. 

          Section 202.  Terms of the Notes. The terms and provisions of the Notes as set forth in Exhibit A are hereby incorporated in and expressly made part of this Third Supplemental Indenture.

          The Notes will mature and the principal thereof will be due and payable, together with all accrued and unpaid interest thereon, on May 1, 2023.

          The Notes shall bear interest at the rate of 53/4% per annum.

          The amount of interest payable on the Notes will be computed on the basis of a 360-day year consisting of twelve 30-day months.

          Payment of the principal of (and premium, if any) and interest on the Notes will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City and State of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts and in immediately available funds; provided, however, that at the option of the Company payment of interest may be made by wire transfer of immediately available funds to an account at a financial institution in the United States of the Person entitled thereto as such account shall be provided to the Security Registrar at least 10 days prior to the relevant payment date or by check in New York Clearinghouse Funds mailed to the address of the person entitled thereto as such address shall appear in the Security Register.

          Initially the Notes will be issued in global form registered in the name of Cede & Co. (as nominee for The Depository Trust Company ("DTC"), the initial securities depositary for the Notes), and may bear such legends as DTC may reasonably request.  So long as the Notes are held solely in global form, the Regular Record Date shall be the Business Day immediately preceding the relevant Interest Payment Date; if the Notes are registered in the names of additional Holders, the Company shall have the right to select a Regular Record Date for such Notes, which shall be at least one Business Day but not more than 60 Business Days prior to the relevant Interest Payment Date.  So long as the Notes are outstanding in global form registered in the name of DTC or its nominee, all payments of principal, premium, if any, and interest will be made by the Company in immediately available funds.

          No service charge shall be made for the registration of transfer or exchange of the Notes; provided, however, that the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange or transfer.

          The Notes shall not be superior in right of payment to, and shall rank pari passu with, all other unsecured and unsubordinated indebtedness of the Company.

          The Notes shall be issued in minimum denominations of $1,000 or any integral multiple of $1,000 over such denomination.

ARTICLE THREE

SUNDRY PROVISIONS

          Section 301.  Execution, Authentication and Delivery of the Notes.  Notes in the aggregate principal amount of $200,000,000, or in such greater principal amount as shall be permitted by Section 201, may, upon execution of this Third Supplemental Indenture, or from time to time thereafter, be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Notes upon a Company Order without any further action by the Company.

          Section 302.  Paying Agent and Security Registrar.  JPMorgan Chase Bank will be the Paying Agent and Security Registrar for the Notes.

          Section 303.  Trustee Not Responsible for Recitals.  The recitals contained in this Third Supplemental Indenture shall be taken as the statements of the Company and the Trustee assumes no responsibility for their correctness.  The Trustee makes no representations as to the validity or sufficiency of this Third Supplemental Indenture.

          Section 304. Incorporation of Indenture.  The Original Indenture, as supplemented by this Third Supplemental Indenture, is in all respects ratified and confirmed, and this Third Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided, except that the last paragraph of Section 301 of the Original Indenture, as deemed incorporated into this Third Supplemental Indenture and to the extent relating to the Notes, shall change to be read in its entirety as follows:

          "Unless otherwise provided, a series may be reopened, without the consent of the Holders, for increases in the aggregate principal amount of such series of Securities and issuances of additional Securities of such series."

          Section 305. Governing Law. This Third Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law except Section 5-1401 of the New York General Obligations Law.

          Section 306.  Counterparts.  This Third Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.

          In Witness Whereof, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the day and year first above written.

 
NEW YORK STATE ELECTRIC 

      & GAS CORPORATION

 

By:     /s/ JAMES P. LAURITO            

      Name: James P. Laurito

      Title:   President and Treasurer

 

JPMORGAN CHASE BANK,

      as Trustee

 

By:     /s/ KATHLEEN PERRY            

      Name:  Kathleen Perry

      Title:    Vice President

 

EXHIBIT A

 

 

          [This Certificate is a Global Security within the meaning of the Indenture and is registered in the name of a Depositary or a nominee of a Depositary.  This Certificate is exchangeable for Securities registered in the name of a Person other than a Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Certificate (other than a transfer of this Certificate as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in limited circumstances.

          Unless this Certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company (as defined herein) or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]*

NEW YORK STATE ELECTRIC & GAS CORPORATION

53/4% NOTE DUE MAY 1, 2023

CUSIP 649840 CM 5                                                                   $______________

No._____

          NEW YORK STATE ELECTRIC & GAS CORPORATION, a corporation duly organized and existing under the laws of the State of New York (hereinafter referred to as the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to [CEDE & CO.]* or registered assigns, the principal sum of __________________ Dollars ($___________) on May 1, 2023 (the "Maturity Date") and to pay interest thereon in the manner and on the Interest Payment Dates set forth below at the rate of 53/4% per annum, from and including the date of original issuance hereof, or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Except as provided in the Third Supplemental Indenture hereinafter referred to, "Regular Record Date" shall mean the April 15 and October 15 (whether or not a Business Day) next preceding such Interest Payment Date; "Interest Payment Date" shall mean May 1 and November 1 of each year, commencing November 1, 2003, to and including the Maturity Date.

          Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be

________________________

*For inclusion in Global Securities only.

paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

          Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City and State of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts and in immediately available funds; provided, however, that at the option of the Company payment of interest may be made by wire transfer of immediately available funds to an account at a financial institution in the United States of the Person entitled thereto as such account shall be provided to the Security Registrar at least 10 days prior to the relevant payment date or by check in New York Clearinghouse Funds mailed to the address of the person entitled thereto as such address shall appear in the Security Register.

          Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

          Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 

 

          IN WITNESS WHEREOF, New York State Electric & Gas Corporation has caused this instrument to be duly executed under its corporate seal. 

Dated: __________

NEW YORK STATE ELECTRIC 

     & GAS CORPORATION

 

By:________________________

Name:

Title:

Attest:

 

By:_________________________

     Name:

     Title:

 

 

TRUSTEE'S CERTIFICATE OF AUTHENTIFICATION

 

          This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture.

 

 
JPMORGAN CHASE BANK,

      as Trustee

 

By:___________________________

          Authorized Officer

 

 

NEW YORK STATE ELECTRIC & GAS CORPORATION

53/4% NOTE DUE MAY 1, 2023

 

     This Security is one of a duly authorized issue of securities of the Company (the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of November 18, 2002 (the "Original Indenture"), as supplemented by a First Supplemental Indenture dated as of November 18, 2002 (the "First Supplemental Indenture"), a Second Supplemental Indenture dated as November 18, 2002 (the "Second Supplemental Indenture") and a Third Supplemental Indenture dated as May 9, 2003 (the "Third Supplemental Indenture," and the Original Indenture, as so supplemented, the "Indenture"), between the Company and JPMorgan Chase Bank, a New York banking corporation, as Trustee (the "Trustee," which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders and of the terms upon which the Securities are, and are to be, authenticated and delivered. [This Security is a Global Security representing the aggregate principal amount of the Company's 53/4% Notes Due May 1, 2023 set forth on the face hereof.]* The Securities of this series [of which this Global Security is a part]* are limited in aggregate principal amount to $200,000,000, except as provided in the Third Supplemental Indenture.

     Optional Redemption.  The Securities of this series are redeemable, in whole or in part, at any time, at the option of the Company, at a Redemption Price equal to the greater of: 

	100% of the principal amount of the Securities of this series then Outstanding to be redeemed, or
	the sum of the present values of the remaining scheduled payments of principal and interest thereon from the Redemption Date to the Maturity Date computed by discounting such payments to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a rate equal to the sum of (1) 20 basis points plus (2) the Adjusted Treasury Rate on the third Business Day prior to the Redemption Date, as calculated by an Independent Investment Banker,

 

plus, in each case, accrued and unpaid interest, if any, to the Redemption Date. 

     "Adjusted Treasury Rate" means, with respect to any Redemption Date:

 

	the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release

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*For inclusion in Global Securities only.

 
designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Adjusted Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month); or

	if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

          "Business Day" means any day other than a Saturday or Sunday or a day in which banking institutions in New York City are authorized or obligated by law or executive order to close.

          "Comparable Treasury Issue" means the U.S. Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Securities ("Remaining Life") or, if, in the reasonable judgment of the Independent Investment Banker, there is no such security, then the Comparable Treasury Issue will mean the U.S. Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity or maturities comparable to the remaining term of the Securities.

          "Comparable Treasury Price" means (1) the average of the Reference Treasury Dealer Quotations for the applicable Redemption Date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

          "Independent Investment Banker" means one of the Reference Treasury Dealers selected by the Company, or if any such firm is unwilling or unable to serve as such, an independent investment and banking institution of national standing appointed by the Company.

          "Reference Treasury Dealer" means (i) each of Morgan Stanley & Co. Incorporated, UBS Warburg LLC, Banc One Capital Markets, Inc. and Citigroup Global Markets Inc. and their respective successors; provided that if either of the foregoing ceases to be, and has no affiliate that is, a U.S. Government securities dealer (a "Primary Treasury Dealer"), the Company will substitute for it another Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by the Company.

          "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

          The Company will mail notice of redemption at least 30 days but not more than 60 days before the applicable Redemption Date to each Holder of the Securities of this series to be redeemed.  If the Company elects to partially redeem the Securities of this series, the Trustee will select in a fair and appropriate manner the Securities to be redeemed.  Notwithstanding Section 1104 of the Indenture, the notice of such redemption need not set forth the Redemption Price but only the manner of calculation thereof.  The Company shall give the Trustee notice of such Redemption Price immediately after the calculation thereof.

          Upon the payment of the Redemption Price plus accrued and unpaid interest, if any, to the date of redemption, interest will cease to accrue on and after the applicable Redemption Date on the Securities or portions thereof called for redemption.

          Usury.  The interest rate on the Securities of this series shall in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general application.

          Defeasance. The Indenture contains provisions for defeasance of (a) the entire Indebtedness evidenced by this Security and (b) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

          Events of Default.  If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

          Amendment to Indenture; Waiver of Defaults. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture contains provisions permitting the Holders of not less than a majority in aggregate principal amount of the Securities of all series with respect to which a default under the Indenture shall have occurred and be continuing (voting as one class), on behalf of the Holders of all Securities of all such series, to waive certain past defaults under the Indenture and their consequences. The Indenture also permits the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of any series, on behalf of the Holders of all Securities of such series, to waive compliance with certain provisions of the Indenture.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

          Obligations Unconditional. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the times, place and rates, and in the coin or currency, herein prescribed.

          Transfer and Exchange.  [This Security shall be exchangeable for Securities registered in the names of Persons other than the Depositary with respect to such series or its nominee only as provided in Section 311 of the Original Indenture.  Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Depositary for such Global Security shall direct.]* As provided in the Indenture and subject to certain limitations therein set forth, the transfer of a Security of the series of which this Security is a part is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest, if any, on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

          The Securities of this series are issuable only in registered form without coupons in minimum denominations of $1,000 or any integral multiple of $1,000 over such minimum denomination. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

          No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

          Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

          Governing Law. This Security shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflict of law except Section 5-1401 of the New York General Obligations Law.

          All terms used in this Security which are defined in the Indenture and not otherwise defined herein shall have the meanings assigned to them in the Indenture.

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*For inclusion in Global Securities only.

 

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ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Security to:

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee)

and irrevocably appoints

agent to transfer this Security on the Security Register.  The agent may substitute another to act for him or her.

Date: _____________________
          Signature:                                              

          Signature Guarantee:                               

(Sign exactly as your name appears on the other side of this Security)

SIGNATURE GUARANTEE

Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

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