Exhibit 10.1(1)

 

Consolidated Edison, Inc.

 

 

 

Long Term Incentive Plan

 

 

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Consolidated Edison, Inc.

 

Long Term Incentive Plan

 

ARTICLE 1.    INTRODUCTION

 

Section 1.1    Establishment.    Consolidated Edison, Inc. (the “Company”)
terminated the Consolidated Edison Company of New York, Inc. Retirement Plan for
Trustees (“Retirement Plan”) and the Consolidated Edison Inc. Restricted Stock
Plan for Non-Employee Directors effective June 30, 2002, and, effective July 1,
2002, established the Consolidated Edison Inc. Deferred Stock Compensation Plan
for Non-Officer Directors (“Deferred Stock Plan”) for those Directors of the
Company who were not employees or officers of the Company. Effective as of the
Stockholders’ Approval Date, the Deferred Stock Plan is merged into the
Consolidated Edison Long Term Incentive Plan (the “Long Term Incentive Plan” or
“Plan”). Each of the plans, other than the Long Term Incentive Plan, referred to
in this paragraph is a “Prior Plan.” Benefits provided under the Retirement Plan
to a director who was retired prior to June 30, 2002, and awards under a Prior
Plan or pursuant to an agreement between an Officer and the Company remain
effective unless the content herein explicitly states otherwise.

 

Section 1.2    Purpose.    The Long Term Incentive Plan is intended to advance
the interests of the Company, and its shareholders by providing long-term
incentives to those persons with significant responsibility for the success and
growth of the Company; by strengthening the Company’s ability to attract and
retain qualified persons of superior talent, ability and achievement to serve as
Directors, Officers, and in other management positions and to promote their
ownership of a greater equity interest in the Company, thereby aligning their
interests more closely with the interests of the Company’s stockholders. The
Plan also provides the ability to award long-term incentives that qualify for
federal income tax deduction.

 

Section 1.3    Effective Date.    The Long Term Incentive Plan is effective as
of the Stockholders’ Approval Date.

 

ARTICLE 2.    DEFINITIONS

 

“Adjusted EBIT” means EBIT after giving effect to any adjustments applicable
pursuant to Section 11.1(d) at the time Business Criteria and Performance
Target(s) are established for any Year or Years.

 

“Adjusted EPS” means EPS after giving effect to any adjustments applicable
pursuant to Section 11.1(d) at the time Business Criteria and Performance
Target(s) are established for any Year or Years.

 

“Adjusted Net Income” means Net Income after giving effect to any adjustments
applicable pursuant to Section 11.1(d) at the time Business Criteria and
Performance Target(s) are established for any Year or Years.

 

“Adjusted Operating Income” means Operating Income after giving effect to any
adjustments applicable pursuant to Section 11.1(d) at the time Business Criteria
and Performance Target(s) are established for any Year or Years.

 

“Adjusted Operating Revenues” means Operating Revenues after giving effect to
any adjustments applicable pursuant to Section 11.1(d) at the time Business
Criteria and Performance Target(s) are established for any Year or Years.

 

“Adjusted Return on Assets” means Return on Assets after giving effect to any
adjustments applicable pursuant to Section 11.1(d) at the time Business Criteria
and Performance Target(s) are established for any Year or Years.

 

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“Adjusted Return on Equity” means Return on Equity after giving effect to any
adjustments applicable pursuant to Section 11.1(d) at the time Business Criteria
and Performance Target(s) are established for any Year or Years.

 

“Affiliate” means any company which is a member of a controlled group of
corporations (as defined in Code Section 414(b)) which also includes as a member
the Company; any trade or business under common control (as defined in Code
Section 414(c)) with the Company; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Code Section
414(m)) which includes the Company; and any other entity required to be
aggregated with the Company pursuant to regulations under Code Section 414(o).

 

“Annual Meeting” means the annual meeting of the stockholders of the Company.

 

“Award” means individually or collectively, Stock Units, Restricted Stock, Stock
Options, Performance Units, Performance-Based Restricted Stock, Stock
Appreciation Rights, or Dividend Equivalents, granted under this Plan.

 

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

 

“Business Criteria” means any one or any combination of Net Income, Adjusted Net
Income, Return on Equity, Adjusted Return on Equity, Return on Assets, Adjusted
Return on Assets, Total Shareholder Return, Common Stock Fair Market Value,
EBIT, Adjusted EBIT, EPS, Adjusted EPS, Operating Revenue, Adjusted Operating
Revenue, Operating Income or Adjusted Operating Income.

 

“CECONY” means Consolidated Edison Company of New York, Inc.

 

“Change in Control” means the occurrence of any of the following events:

 

(i)    any “person” (within the meaning of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes the
beneficial owner within the meaning of Rule 13d-3 under the Exchange Act (a
“Beneficial Owner”), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person any securities
acquired directly from the Company or its Affiliates) representing 20% or more
of the combined voting power of the Company’s then outstanding securities,
excluding any person who becomes such a Beneficial Owner in connection with a
transaction described in clause (A) of paragraph (iii) below; or

 

(ii)    the following individuals cease for any reason to constitute a majority
of the numbers of directors of the Company then serving: individuals who, on the
effective date of this Plan, constitute the Board and any new director (other
than a director whose initial assumption of office was as a result of an actual
or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the effective
date of this Plan or whose appointment, election or nomination for election was
previously so approved or recommended; or

 

(iii)    there is consummated a merger or consolidation of the Company or any
direct or indirect wholly-owned subsidiary of the Company with any other
corporation, other than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 65% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a merger or

 

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consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company’s then outstanding securities; or

 

(iv)    the shareholders of the Company approve a plan of complete liquidation
or dissolution of the Company or there is consummated an agreement for the sale
or disposition by the Company of all or substantially all of the Company’s
assets, other than a sale or disposition by the Company of all or substantially
all of the Company’s assets to an entity, at least 75% of the combined voting
power of the voting securities of which are owned by stockholders of the Company
in substantially the same proportions as their ownership of the Company
immediately prior to such sale.

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the Beneficial Owners of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.
Reference in the Plan to any section of the Code will be deemed to include any
amendments or successor provisions to such section and any regulations
promulgated thereunder.

 

“Committee” means either the Executive Personnel and Pension Committee with
respect to Employee Participants and Officer Participants or the Corporate
Governance and Nominating Committee with respect to Director Participants.

 

“Company” means Consolidated Edison, Inc., its successors or assigns.

 

“company” means the Company and/or its Affiliates.

 

“Common Stock” means the Company’s common shares, $.10 par value per share.

 

“Corporate Governance and Nominating Committee” means the Corporate Governance
and Nominating Committee of the Board, or such other committee as may be
appointed by the Board to administer the Plan with respect to Directors.

 

“Date of Grant” means the date on which the Committee authorizes the granting of
an Award or such later date as may be specified by the Committee in such
authorization.

 

“Deferral Election Form” means a written election to defer cash distribution of
dividend equivalents, and/or to defer Director’s Compensation pursuant to the
terms of the Plan.

 

“Deferred Stock Plan” means the Consolidated Edison, Inc. Deferred Stock
Compensation Plan for Non-Officer Directors.

 

“Director” means a member of the Board or of the board of directors or analogous
governing body of an Affiliate, who is not also an officer or employee of the
Company or any of its Affiliates.

 

“Director Participant” means a person who was a Director of the Company on July
1, 2002 or who becomes a Director thereafter, until his or her termination of
service.

 

“Director’s Compensation” means all or part of any board and committee chair
retainer, and board and committee meeting fees payable to a Director in his or
her capacity as a Director. Director’s Compensation shall not include any
expenses paid directly to the Director through reimbursement.

 

“Disability” means an inability to work in any gainful occupation for which the
person is reasonably qualified by education, training or experience, because of
a sickness or injury for which the person is under a doctor’s care.

 

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“Distribution Election Form” means a written election to distribute Stock Units
pursuant to the terms of the Plan.

 

“Dividend Equivalent” means an Award granted under Section 7.7 or Article 13.

 

“Dividend Payment Date” means any date on which the Company pays any dividend on
outstanding Shares.

 

“EBIT” for any Year means the consolidated earnings before income taxes of a
company, as reported in the consolidated financial statements of a company for
the Year.

 

“Effective Date” means the Stockholders’ Approval Date.

 

“Eligible Employee” means an employee of the Company or an Affiliate who is not
an Officer and is designated an Eligible Person by the Committee.

 

“Eligible Person” means any person who satisfies all of the requirements of
Article 5.

 

“Employee Participant” means an Eligible Employee who is a Participant in the
Plan.

 

“EPS” for any Year means diluted earnings per share of a company, as reported in
a company’s consolidated financial statements for the Year.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time and the rules and regulations promulgated thereunder.

 

“Executive Personnel and Pension Committee” means the Executive Personnel and
Pension Committee of the Board or such other Committee as may be appointed by
the Board to administer the Plan with respect to Officers and Eligible
Employees. It is the intent of the Company that the Executive Personnel and
Pension Committee shall consist of not less than the minimum number of persons
from time to time required by Rule 16b-3 under the Exchange Act and Section
162(m) of the Code, each of whom, to the extent necessary to comply with Rule
16b-3 and Section 162(m), is a “Non-Employee Director” and an “Outside Director”
within the meaning of such Rule 16b-3 and Section 162(m), respectively; provided
that the failure of any member of the Committee to meet such qualifications will
not invalidate any action, decision or determination of the Committee.

 

“Exercise Period” means the period or periods during which a Stock Appreciation
Right is exercisable as described in Article 12.

 

“Fair Market Value” means, as of any specified date, the closing price of a
Share in the Consolidated Reporting System as reported in the Wall Street
Journal or in a similarly readily available public source for the trading day
immediately prior to the applicable transaction date under the Plan. If no
trading of Shares occurred on such date, the closing price of a Share in such
System as reported for the preceding day on which sales of Shares occurred shall
be used.

 

“Grant” means a grant of an Award under this Plan.

 

“Immediate Relative” means a spouse, child, parent or sibling, including
adoptive relationships.

 

“Incentive Stock Option” means an incentive stock option within the meaning of
Section 422 of the Code.

 

“Net Income” for any Year means the consolidated net income of a company, as
reported in the consolidated financial statements of a company for the Year.

 

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“Non-Qualified Option” means an option granted under the Plan to purchase Shares
and which is not intended to qualify as an Incentive Stock Option.

 

“Officer” means an employee of the Company or an Affiliate who is designated an
“officer” of that company.

 

“Officer Participant” means an Officer who is a Participant in the Plan.

 

“Operating Income” for any Year means the consolidated operating income of a
company, as reported in the consolidated financial statements of a company for
the Year.

 

“Operating Revenues” for any Year means the consolidated operating revenues of a
company, as reported in the consolidated financial statements of a company for
the Year.

 

“Option” or “Stock Option” means collectively a Non-Qualified Option or an
Incentive Stock Option granted under Article 9.

 

“Option Period” or “Option Periods” means the period or periods during which an
Option is exercisable as described in Article 9.

 

“Participant” means an Eligible Person who has been granted an Award under this
Plan.

 

“Pension Plan” means the Consolidated Edison, Inc. Retirement Plan as it may be
amended from time to time.

 

“Performance-Based Restricted Stock” means a Restricted Stock Award for which
the Committee, in determining the amount of payout, will take into account the
Performance Targets.

 

“Performance Period” means the fiscal year of a company or any other period
designated by the Committee with respect to which an Award may be granted.

 

“Performance Target(s)” means the specific objective goal or goals that are
timely set in writing by the Committee pursuant to Section 11.1(b) for each
Participant for the applicable Performance Period in respect of any one or more
of the Business Criteria.

 

“Performance Unit” means a unit of measurement equivalent to such amount or
measure as defined by the Committee, which may include, but is not limited to,
dollars, market value shares, or book value shares.

 

“Plan” means the Consolidated Edison, Inc. Long Term Incentive Plan, as it may
be amended from time to time.

 

“Plan Administrator” means, as set forth in Article 4, the Committee.

 

“Restricted Stock” means Shares issued in the name of a Participant that bears a
restrictive legend, or otherwise are subject to restrictions, prohibiting sale,
transfer, pledge or hypothecation of the Shares until the expiration of the
Restriction Period.

 

“Restriction Period” means the period during which a Participant is prohibited
from selling, transferring, pledging or assigning Restricted Stock.

 

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“Retirement” means, for Officers and Eligible Employees, resignation on or after
age 55 with at least 10 years of service; for Directors, resignation after at
least 10 years of service.

 

“Return on Assets” means Net Income divided by the total assets of a company at
the end of the 12-month period, as reported by a company in its consolidated
financial statements.

 

“Return on Equity” means Net Income divided by the average of the common
shareholders’ equity of a company during the 12-month period, as reported by a
company in its consolidated financial statements.

 

“Securities Act” means the Securities Act of 1933 as amended from time to time
and the rules and regulations promulgated thereunder.

 

“Service” means a Director’s service on the Board and an Officer’s or Eligible
Employee’s period of accredited service as defined in the Pension Plan for
employees of CECONY.

 

“Shares” means a share of Common Stock.

 

“Stock Appreciation Rights” mean rights to the settlement in cash, Shares or a
combination thereof, of the excess of the Fair Market Value of Shares subject to
such rights on the date of exercise over their Fair Market Value on the date of
the Grant granted pursuant to an Award under Article 12.

 

“Stockholders’ Approval Date” is the date of the Annual Meeting at which the
Company’s stockholders approve the Plan.

 

“Stock Option Plan” means the Consolidated Edison Inc. 1996 Stock Option Plan as
amended and restated on February 24, 1998.

 

“Stock Units” means an unsecured obligation of the Company that is intended to
represent the economic equivalent of one Share and is the units in which a
“Stock Unit Account” is denominated.

 

“Stock Unit Account” means the bookkeeping accounts established by the Company
pursuant to Article 7 or Article 8.

 

“Substitute Award” means an Award granted in connection with a corporate
transaction, such as a merger, combination, consolidation or acquisition of
property or stock, upon assumption of, or in substitution for, outstanding
awards previously granted by a corporation or other entity.

 

“Termination” means resignation or discharge from employment for an Officer
Participant or Employee Participant, except in the event of death, Disability,
or Retirement or termination of Service for a Director Participant.

 

“Total Shareholder Return” means the sum of the change in the Fair Market Value
of the Common Stock plus the value of reinvested dividends and cash equivalents,
over a Performance Period.

 

“Voluntary Deferral of Director’s Compensation” means the Stock Units resulting
from deferrals of Director’s Compensation as further defined in Article 7.

 

“Year” means a fiscal year of a company commencing on or after January 1, 2003
that constitutes all or part of an applicable Performance Period.

 

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ARTICLE 3.    STOCKHOLDER APPROVAL AND DURATION

 

Section 3.1    Stockholder Approval.    The Plan will be submitted for approval
by the Company’s stockholders at the 2003 Annual Meeting. Approval of the Plan
by a majority of the Shares voting on the proposal shall constitute Stockholder
Approval.

 

Section 3.2    Period for Grants of Awards.    Awards may be made as provided
herein for up to a period of 10 years after the Stockholders’ Approval Date.

 

Section 3.3    Termination.    The Plan will continue in effect until all
matters relating to the payment of outstanding Awards and administration of the
Plan have been settled.

 

ARTICLE 4.    ADMINISTRATION

 

Section 4.1    Plan Administrator.    The Executive Personnel and Pension
Committee of the Board shall be the Plan Administrator for Officers and Eligible
Employees, unless the Board designates itself or another committee to administer
the Plan with respect to Officers and Eligible Employees. The Corporate
Governance and Nominating Committee of the Board shall be the Plan Administrator
for Directors, unless the Board designates itself or another committee to
administer the Plan with respect to Directors.

 

Section 4.2    Duties of the Plan Administrator.    Except as may be limited by
law, the Company’s Certificate of Incorporation, the Company’s by-laws or the
Plan, the Plan Administrator shall have full and final power and authority
(except as specified otherwise herein) to determine all questions, and to
interpret and apply the terms and conditions of the Plan pursuant to which
Awards are granted, exercised or forfeited under the Grant or Plan provisions,
and, in general, to make all rules, regulations and other determinations which
may be necessary or advisable for the administration of the Plan to achieve its
stated purpose. Without limiting the generality of the foregoing, the Plan
Administrator may modify, amend, extend or renew outstanding Awards, or accept
the surrender of outstanding Awards and substitute new Awards (provided,
however, that, except as provided in Section 6.4 of the Plan, any modification
that would materially adversely affect any outstanding Award shall not be made
without the consent of the Participant, and provided, further, that no
modification, amendment or substitution that results in repricing a Stock Option
to a lower exercise price, other than to reflect an adjustment made pursuant to
Section 6.4, shall be made without prior stockholder approval). The Plan
Administrator may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Awards in the manner and to the extent the
Plan Administrator deems necessary or desirable to carry it into effect. In no
event, however, shall the Plan Administrator have the right to cancel
outstanding Options for the purpose of replacing or regranting such Options with
an exercise price that is less than the exercise price of the original Option.

 

Section 4.3    Decisions Binding.    The Plan Administrator’s determinations
under the Plan (including without limitation, determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and any agreements evidencing such Awards) need not be
uniform and may be made selectively among persons who receive, or are eligible
to receive, Awards under the Plan, whether or not such persons are similarly
situated. All determinations of the Plan Administrator shall be final,
conclusive and binding on all parties including the Company, its stockholders,
Participants, their respective estates and beneficiaries and not subject to
further appeal.

 

Section 4.4    Delegation.    To the extent permitted by law, the Committee
shall have the authority to delegate its administrative duties under the Plan as
it may deem advisable to one or more of its members or to any Officers or
Directors of the Company or its Affiliates; provided that the Plan Administrator
may not delegate its authority to amend or terminate the Plan. The selection,
grant and establishment of the terms of Awards remain the duties of the
Committee, except that the full Board must approve any Awards to Directors.

 

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ARTICLE 5.    ELIGIBILITY AND PARTICIPATION

 

Section 5.1    Officer or Eligible Employee.    Each Officer or Eligible
Employee of the Company and its Affiliates may be designated by the Executive
Personnel and Pension Committee as an Eligible Person, from time to time, with
respect to one or more Awards subject to the limitations set forth in Sections
6.1 and 6.2. An Eligible Person who is an Officer or Eligible Employee becomes a
Participant on the date of the granting of an Award; provided, however, that an
Eligible Person is actively employed on the date of the Grant. The Committee may
also grant Awards to individuals in connection with hiring as an officer or
employee, retention or otherwise, prior to the date the individual first
performs services for the Company or an Affiliate; provided, however, that such
Awards shall not become vested or exercisable prior to the date the individual
first commences performance of such services.

 

Section 5.2    Director.    Any person who was a Director of the Company on July
1, 2002, or who becomes one thereafter shall be eligible to receive a benefit
under the Plan. Any non-employee Director of the Company’s Affiliates may also
be designated by the Corporate Governance and Nominating Committee to receive an
Award under the Plan. An Eligible Person who is a Director becomes a Participant
on the date of the granting of an Award, provided he or she is providing Service
on the date of the Grant as a member of the Board.

 

Section 5.3    General.    In determining the Eligible Persons to whom Awards
are to be granted and the number of Shares subject to each Award, the Committee
shall take into consideration the Eligible Person’s present and potential
contribution to the success of the Company or an Affiliate and such other
factors as the Executive Personnel and Pension Committee may deem proper and
relevant.

 

ARTICLE 6.    SHARES SUBJECT TO PLAN

 

Section 6.1    Grant of Awards and Limitation of Number of Shares
Awarded.    The Committee may, from time to time, grant Awards to one or more
Eligible Persons, provided that subject to any adjustment pursuant to this
Article 6, the aggregate number of Shares subject to Awards that may be
delivered under this Plan may not exceed ten million (10,000,000) Shares. The
maximum number of Shares that may be issued in conjunction with Stock Units
under Articles 7 or 8, Restricted Stock Awards under Article 10 and
Performance-Based Restricted Stock or Performance Unit Awards under Article 11
shall in the aggregate be four million (4,000,000).

 

Section 6.2    Individual Limitations.    The aggregate number of Shares that
may be covered by Awards granted to an individual Eligible Person shall not
exceed 1,500,000 Shares.

 

Section 6.3    Type of Shares.    Shares delivered by the Company may include,
in whole or in part, authorized and unissued Shares, reacquired Shares, treasury
Shares, or Shares that the Company may cause to be purchased on the open market
(including private purchases) to satisfy its obligations under the Plan in
accordance with applicable securities laws.

 

Section 6.4    Dilution and Other Adjustments.    In the event of any change in
the number of outstanding Shares or Share price by reason of any stock split,
stock dividend, recapitalization, merger, consolidation, reorganization,
combination or exchange of equity securities or other distribution (other than
normal cash dividends) of Company assets to stockholders, or any other similar
change or corporate transaction or event that affects Shares, if the Committee
shall determine, in its sole discretion, that such change equitably requires an
adjustment to the limitations on the number of Shares that may be delivered
under the Plan as set forth in Section 6.1, in the number or kind of Shares that
may be delivered under the Plan, or in the number or kind of Shares which are
subject to outstanding Awards and in the exercise price per Share relating
thereto, such adjustment to prevent dilution or enlargement of Participants’
rights under the Plan shall be made by the Committee in a manner that is
proportionate to the change to the Shares and is otherwise equitable, and shall
be conclusive and

 

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binding for all purposes of the Plan. Additional Shares issued to a Participant
as the result of any such change shall bear the same restriction as the Shares
to which they relate.

 

Section 6.5    Adjustment to Maximum for Forfeited, Cancelled, Terminated or
Expired Shares.    Any Shares covered by an Award (or portion of an Award)
granted under the Plan that is forfeited, cancelled, terminated or expired
without being exercised in whole or in part, or settled in cash, including
settlement of tax withholding obligations using Shares shall be deemed not to
have been delivered for purposes of determining the maximum number of Shares
available for delivery under the Plan and new Awards may be granted covering the
Shares under such forfeited, cancelled, terminated, expired, or settled in cash
Award. Likewise, if any Option granted under the Plan is exercised by tendering
Shares to the Company as full or partial payment for such exercise under the
Plan, only the number of Shares issued net of the Shares tendered shall be
deemed delivered for purposes of determining the maximum number of Shares
available for delivery under the Plan. In addition, any Shares underlying
Substitute Awards shall not be counted in determining the number of Shares that
remain available for delivery under the Plan.

 

Section 6.6    Deferral of Award.    The Plan Administrator may permit or
require a recipient of an Award to defer all or part of such individual’s
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such individual by virtue of the exercise of, payment of, or lapse or
waiver of restrictions respecting, any Award. If such payment deferral is
required or permitted, the Plan Administrator shall, in its sole discretion,
establish rules and procedures for such payment deferrals.

 

ARTICLE 7.    STOCK UNIT GRANTS TO DIRECTOR PARTICIPANTS

 

Section 7.1    In General.    This Article 7 only applies to Director
Participants who are members of the Board of Consolidated Edison Inc., at the
time the grant is made.

 

Section 7.2    Initial Account Balance.    The Retirement Plan was terminated
effective June 30, 2002. Each Director who was a participant in the Retirement
Plan prior to June 30, 2002, and who became a Participant in the Deferred Stock
Plan on July 1, 2002, was granted Stock Units equal to the net accrued value of
his or her benefit under the Retirement Plan as of June 30, 2002, as determined
by the Company and an additional grant of 400 Stock Units. As of the Effective
Date, these Directors became Director Participants in this Plan and these
Director Participants have no rights or entitlements whatsoever to any benefits
under the Retirement Plan and their rights under the Deferred Stock Plan are
incorporated into this Plan.

 

Section 7.3    Annual Grants.    Each Director Participant will be granted 1,300
Stock Units on the first business day after each Annual Meeting. If a Director
Participant is first appointed as a member of the Board after the Annual
Meeting, his or her first annual grant of Stock Units (rounded to the nearest
one hundred Stock Units) will be determined by multiplying 1,300 by the result
from dividing the number of months before the next Annual Meeting by twelve;
provided that for the purpose of this calculation the numerator shall exclude
the month in which the effective date of the Director’s appointment occurs and
shall include the month in which the Annual Meeting occurs. The Board upon
recommendation of the Corporate Governance and Nominating Committee may from
time-to-time change the annual grant.

 

Section 7.4    Automatic Deferral.    The Stock Units granted pursuant to
Section 7.2 and 7.3 shall be deferred automatically until the Director
Participant’s Termination of Service as a Board member.

 

Section 7.5    Stock Unit Accounts.    The Company will create and maintain on
its books one or more Stock Unit Accounts for each Director Participant. Each
Stock Unit Account will be credited with all Stock Units that may be attributed
to such Director Participant from time to time in connection with (i) Grants of
Stock Units, (ii) deferrals of Director’s Compensation by such Director
Participant pursuant to Section 7.9 (Voluntary Deferrals of Director’s
Compensation), or (iii) dividend equivalents pursuant to Section 7.7. Stock Unit
Accounts are

 

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maintained solely for accounting purposes and do not require a segregation of
any assets of the Company or its Affiliates.

 

Section 7.6    Vesting.    The initial Stock Units granted upon the termination
of the Retirement Plan, the 400 Stock Units granted on July 1, 2002, and the
annual grants pursuant to Section 7.3 become fully vested upon the date of the
Grant. Stock Units credited to a Director Participant’s Account by reason of his
or her election to defer Director’s Compensation pursuant to Section 7.9
(Voluntary Deferrals of Director’s Compensation) become vested as of the date
the Director’s Compensation would have been paid to him or her. Stock Units
resulting from the crediting of Dividend Equivalents to a Director Participant’s
Account pursuant to Section 7.7 shall be vested on the Dividend Payment Date.

 

Section 7.7    Dividend Equivalents.    (a) Dividend Equivalents will be earned
on Stock Units and credited to a Director Participant’s Account as of any
Dividend Payment Date. Such Dividend Equivalents shall be expressed as a number
of Stock Units equal to:

 

  (i)   The number of Stock Units credited to a Director Participant’s Account
as of the record date for such dividend multiplied by the value of the per share
cash amount of the dividend (or as determined by the Corporate Governance and
Nominating Committee in the case of dividends paid other than in cash),

 

divided by:

 

  (ii)   The Fair Market Value of a Share as of the Dividend Payment Date.

 

(b) All Dividend Equivalents earned on Stock Units whether resulting from Stock
Unit Grants pursuant to Sections 7.2 or 7.3 or resulting from Voluntary
Deferrals of Director’s Compensation pursuant to Section 7.9 shall be
automatically deferred until the Director Participant’s Termination of Service
to the Company, unless an election pursuant to Section 7.7(c) is timely made to
receive some or all of the Dividend Equivalents in cash payments.

 

(c) An election to receive some or all of the Dividend Equivalents in cash
payments must be made by December 31 of a calendar year by written notice filed
with the Secretary of the Company on a form (“Deferral Election Form”) furnished
by the Company. The election is valid for the following calendar year and
remains in effect until modified or revoked by a new Deferral Election Form
filed with the Secretary of the Company, which new Deferral Election Form shall
take effect in the year following the year of receipt of the form by the
Secretary of the Company.

 

Section 7.8    Timing and Method of Payment.    (a) All payments on account of
Stock Units pursuant to this Article 7 shall be made in Shares.

 

(b) The Stock Units granted pursuant to Section 7.2 and 7.3 shall be paid in
Shares to a Director Participant in a single one-time payment of Shares (rounded
to the nearest whole Share as determined under Section 23.12) as soon as
practicable following his or her Termination of Service as a member of the
Board, except that the Director Participant may elect to be paid his or her
Shares in equal quarterly distributions for up to 10 years following the
Termination of his or her Service by filing with the Secretary of the Company a
form (“Distribution Election Form”) no later than December 31 of the year
preceding such Director Participant’s Termination of Service as a member of the
Board. If this election is made, Dividend Equivalents shall continue to be
earned on the remaining Stock Units in the Director Participant’s Account until
all Shares have been distributed. The Dividend Equivalents that are earned
during this payment period shall be distributed as cash payments, regardless of
any prior election to have Dividend Equivalents deferred and reinvested in Stock
Units.

 

(c) Stock Units resulting from Voluntary Deferrals of Director’s Compensation
shall be deferred until the Director’s Termination of Service except that the
Director Participant may elect to defer receipt of his or her

 

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Shares to the January 1 that is at least five years from the date on which the
Stock Units were deferred by filing a Deferral Election Form in accordance with
the procedures set forth in Section 7.9. However, no deferral can extend longer
than the Director Participant’s date of Termination of Service. Stock Units
resulting from Voluntary Deferrals of Director’s Compensation will be paid in
Shares to a Director Participant in a single one-time payment of Shares (rounded
to the nearest whole Share) as soon as practicable following the date specified
in the Deferral Election Form or the date of his or her Termination of Service.
If, however, a Director Participant has elected to defer receipt until his or
her Termination of Service, he or she may elect to be paid his or her Shares in
equal quarterly distributions for up to 10 years following the Termination of
Service by filing with the Secretary of the Company a Distribution Election Form
no later than December 31 of the year preceding such Director Participant’s
Termination of Service. If this election is made, Dividend Equivalents shall
continue to be earned on the remaining Stock Units in the Director Participant’s
Stock Unit Account until all Shares have been distributed. The Dividend
Equivalents that are earned during this payment period shall be distributed as
cash payments regardless of any prior election to have Dividend Equivalents
deferred and reinvested in Stock Units.

 

(d) The Stock Units resulting from Dividend Equivalent deferrals pursuant to
Section 7.7 shall be paid in Shares (rounded to the nearest whole Share) to a
Director Participant in accordance with Section 7.7(b) above.

 

(e) The Corporate Governance and Nominating Committee may, in its discretion and
to the extent consistent with laws and regulations, give effect to a Deferral
Election Form or a Distribution Election Form that is not timely made.

 

Section 7.9    Voluntary Deferrals of Director’s Compensation.

 

(a) Deferral Election.    A Director Participant may elect to defer receipt of
all or any specified portion of any Director’s Compensation that may become
payable to him or her and to have such amounts credited to his or her Stock Unit
Account in accordance with Section 7.5 of this Plan.

 

(b) Deferrals Credited to Account.    Any Director’s Compensation deferred by a
Director Participant pursuant to this Section 7.9 shall be allocated to his or
her Stock Unit Account and deemed to be invested in a number of Stock Units
equal to (i) the amount of such Director’s Compensation divided by (ii) the Fair
Market Value of a Share on the date the Director’s Compensation would otherwise
have been paid.

 

(c) Payment and Distribution of Deferrals.    The timing and method of payment
and distribution of the Stock Units resulting from the Voluntary Deferral of
Director’s Compensation will be in accordance with Section 7.8(c).

 

(d) Timing of Deferral Election.

 

1. A deferral election may be made by written notice filed with the Secretary of
the Company on a Deferral Election Form:

 

  (i)   no more than 30 days after a person is first elected or appointed to the
Board (covering Director’s Compensation to be earned for the remainder of the
year); or

 

  (ii)   on or before the end of any calendar year (covering Director’s
Compensation to be earned the following calendar year); or

 

  (iii)   on or before such other date or dates as may be approved in advance by
the Corporate Governance and Nominating Committee (covering Director’s
Compensation earned for such period or periods commencing after such other date
as may be specified by the Corporate Governance and Nominating Committee).

 

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2. Any deferral election shall continue in effect until revoked or modified by a
new Deferral Election Form filed with the Secretary of the Company. A Director
Participant who has revoked a deferral election may file a new Deferral Election
Form to defer Director’s Compensation but it shall only relate to Director’s
Compensation for Service to be rendered beginning with the calendar year
following the year in which such new Deferral Election Form is filed with the
Secretary of the Company. Amounts credited to a Director Participant’s Stock
Unit Account prior to the effective date of any revocation or modification of a
deferral election shall not be affected by such revocation or modification.

 

ARTICLE 8.    STOCK UNIT GRANTS

 

Section 8.1    Grants of Stock Units.    One or more Stock Units may be granted
to any Eligible Person, other than to a Director of the Company, at the sole
discretion of the Committee. The Stock Units may be granted without the payment
of consideration by the Participant.

 

Section 8.2    Nontransferability.    No Stock Unit Award granted under this
Article of the Plan shall be transferable by the Participant otherwise than by
will or by the laws of descent and distribution or to the extent permitted by
the Committee.

 

Section 8.3    Terms and Conditions.    The Committee may grant or impose such
other terms and conditions on the Stock Units as, in its sole discretion, it
deems appropriate including the vesting of such units, the timing and method of
payment and the right to grant Dividend Equivalents.

 

Section 8.4    Stock Unit Accounts.    The Company will create and maintain on
its books one or more Stock Unit Accounts for each Participant evidencing the
grant of Stock Units. Each Stock Unit Account will be credited with all Stock
Units that may be attributed to such Participant from time to time in connection
with (i) Grants of Stock Units, or (ii) Dividend Equivalents, if granted
pursuant to Section 8.3. Stock Unit Accounts are maintained solely for
accounting purposes and do not require a segregation of any assets of the
Company or its Affiliates.

 

ARTICLE 9.    STOCK OPTIONS

 

Section 9.1    Grant of Options.    Options may be granted to an Eligible
Person, other than a Director of the Company, as the Committee may from time to
time select without the payment of consideration. Any Eligible Person shall be
eligible to receive one or more Options, subject to the limitations set forth in
Sections 6.1 and 6.2.

 

Section 9.2    Terms and Conditions.    An Option granted under the Plan shall
be in such form as the Committee may from time to time approve. Each Option
shall be subject to the terms and conditions provided in this Article 9 and
shall contain such other or additional terms, conditions or restrictions as the
Committee, in its sole discretion, may deem desirable, but in no event shall
such terms and conditions be inconsistent with the Plan and, in the case of
Incentive Stock Options, with the provisions of the Code applicable to
“Incentive Stock Options” as described in Code Section 422.

 

Section 9.3    Exercise Price.    The exercise price per Share under an Option
shall be determined by the Committee, but may not be less than 100 percent of
the Fair Market Value of a Share on the date the Option is granted.
Notwithstanding the foregoing, the exercise price per share of an Option that is
a Substitute Award may be less than the Fair Market Value of a Share on the date
the Option is granted provided that the excess of:

 

(i) the aggregate Fair Market Value (as of the date such Substitute Award is
granted) of the Shares subject to the Substitute Award, over

 

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(ii) the aggregate exercise price thereof,

 

does not exceed the excess of:

 

(i) the aggregate fair market value (as of the time immediately preceding the
transaction giving rise to the Substitute Award, such fair market value to be
determined by the Plan Administrator) of the shares of the predecessor entity
that were subject to the award assumed or substituted for by the Company, over

 

(ii) the aggregate exercise price of such shares.

 

Section 9.4    Option Period.    The period during which and the manner in which
an Option may be exercised shall be fixed by the Committee; provided, that no
Option shall be exercisable after the expiration of ten years from the date such
Option is granted.

 

Section 9.5    Stock Option Agreement.    Each Option granted will be evidenced
by a “Stock Option Agreement” between the Company and the Participant containing
provisions determined by the Committee, including, without limitation,
provisions to qualify Incentive Stock Options as such under Section 422 of the
Code if directed by the Committee at the Date of Grant.

 

Section 9.6    Exercise of Option.    (a) An Option may be exercised in whole or
in part from time to time during the Option Period (or, if determined by the
Committee, in specified installments during the Option Period) by giving written
notice of exercise to the Secretary of the Company specifying the number of
Shares to be purchased. Notice of exercise of an Option must be accompanied by
payment in full of the exercise price either by cash or such other method as may
be permitted by the Committee, including but not limited to (i) check, (ii)
tendering (either actually or by attestation) Shares owned by the Participant
having a Fair Market Value at the date of exercise equal to such exercise price,
(iii) a third-party exercise procedure, or (iv) a combination of the foregoing.
The Committee, in its sole discretion, may, in lieu of delivering Shares covered
by an Option upon its exercise, settle the exercise of the Option by means of a
cash payment to the Participant equal to the positive difference between the
Fair Market Value on the exercise date and the exercise price, or by delivering
Shares having an aggregate Fair Market Value equal to such a payment, or by a
combination of both.

 

(b) No Shares shall be delivered in connection with the exercise of an Option
until full payment therefor has been made, including satisfaction of any
applicable tax withholding obligations as set forth in Article 15. A Participant
shall have the rights of a shareholder only with respect to Shares for which
certificates have been issued to such person.

 

Section 9.7    Nontransferability of Options.    No Option granted under the
Plan shall be transferable by the Participant otherwise than by will or by the
laws of descent and distribution and will be exercisable during the
Participant’s lifetime only by the Participant or by the Participant’s guardian
or legal representative, except that the Committee may provide for the
transferability of an Option:

 

(a) by gift or other transfer to (i) an Immediate Relative, or (ii) a trust or
an estate in which the original Participant or the Participant’s Immediate
Relative has a substantial interest;

 

(b) pursuant to a domestic relations order; and

 

(c) as may be otherwise permitted by Form S-8 under the Securities Act;
provided, however, that any Option so transferred shall continue to be subject
to all the terms and conditions contained in the Option 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 pursuant to Article 19.

 

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Section 9.8    Consequences of Termination of Employment or Service.    The
Committee shall have full discretion and authority to establish in the Stock
Option Agreement the terms and conditions applicable to the Option in the event
of the Participant’s Termination, including a termination by reason of
retirement, death or Disability.

 

ARTICLE 10.    RESTRICTED STOCK AWARDS

 

Section 10.1    Grants of Restricted Shares.    One or more shares of Restricted
Stock may be granted to any Eligible Person, other than a Director of the
Company. At the sole discretion of the Committee, the Restricted Stock will be
issued to the Participant on the Date of Grant without the payment of
consideration by the Participant. The Committee may also impose such other
restrictions and conditions on the Restricted Stock as, in its sole discretion,
it deems appropriate. Upon issuance to the Participant of the Restricted Stock,
the Participant will have the right to vote the Restricted Stock, and may,
subject to the Committee’s discretion, receive the cash dividends distributable
with respect to such Shares. The Committee, in its sole discretion, may direct
the accumulation and payment of distributable dividends to the Participant at
such times, and in such form and manner, as determined by the Committee.

 

Section 10.2    Restriction Period.    At the time a Restricted Stock Award is
granted, the Committee will establish a Restriction Period applicable to such
Award which will be not less than one and not more than ten years. Each
Restricted Stock Award may have a different Restriction Period, at the
discretion of the Committee.

 

Section 10.3    Forfeiture or Payout of Award.    (a) In the event of a
Termination by a Participant during a Restriction Period, including a
termination due to Retirement, Disability or death, an Award of Restricted Stock
is subject to forfeiture or payout (i.e., removal of restrictions) as follows:
(i) Termination—the Restricted Stock Award is completely forfeited; or (ii)
Retirement, Disability or death—payout of the Restricted Stock Award is prorated
for service during the period; provided, however, that the Committee may modify
the above if it determines at its sole discretion that special circumstances
warrant such modification.

 

(b) Any shares of Restricted Stock, which are forfeited, will be transferred to
the Company. Upon completion of the Restriction Period, all Award restrictions
will expire and new certificates representing the Award will be issued without
the restrictive legend described in Section 10.1.

 

Section 10.4    Waiver of Section 83(b) Election.    Unless otherwise directed
by the Committee, as a condition of receiving an Award of Restricted Stock, a
Participant must waive in writing the right to make an election under Section
83(b) of the Code to report the value of the Restricted Stock as income on the
Date of Grant.

 

ARTICLE 11.    PERFORMANCE-BASED RESTRICTED STOCK/PERFORMANCE UNITS.

 

Section 11.1    Provision for Awards. (a) General.    For Awards under this
Article 11, the Committee will establish (i) Performance Target(s) relative to
the applicable Business Criteria, (ii) the applicable Performance Period and
(iii) the applicable number of shares of Performance Based Restricted Stock or
Performance Units that are the subject of the Award. The applicable Performance
Period and Performance Target(s) will be determined by the Committee consistent
with the terms of the Plan and Code Section 162(m). Notwithstanding the fact
that the Performance Target(s) have been attained, the Committee may pay an
Award under this Article 11 of less than the amount determined by the formula or
standard established pursuant to Section 11.1 (b) or may pay no Award at all.
The maximum number of Shares of Performance Based Restricted Stock or
Performance Units that any participant may earn, in the aggregate, during any
Performance Period is 1,000,000.

 

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(b) Selection of Performance Target(s).    The specific Performance Target(s)
with respect to the Business Criteria must be established by the Committee in
advance of the deadlines applicable under Code Section 162(m) and while the
performance relating to the Performance Target(s) remains substantially
uncertain within the meaning of Code Section 162(m). The Performance Target(s)
with respect to any Performance Period may be established on a corporate-wide
basis or established with respect to one or more operating units, divisions,
acquired businesses, minority investments, partnerships or joint ventures, and
may be measured on an absolute basis or relative to selected peer companies or a
market index. At the time the Performance Target(s) are selected, the Committee
shall provide, in terms of an objective formula or standard for each
Participant, the method of computing the specific amount that will represent the
maximum amount of the Award payable to the Participant if the Performance
Target(s) are attained. The objective formula or standard shall preclude the use
of discretion to increase the amount of any Award earned pursuant to the terms
of the Award.

 

(c) Effect of Mid-Year Commencement of Service.    If Service as an Officer or
Eligible Employee commences after the adoption of the Plan and the Performance
Target(s) are established for a Performance Period, the Committee may grant an
Award and establish Performance Target(s) for a Performance Period that is
proportionately adjusted based on the period of actual Service during the Year.

 

(d) Adjustments.    To preserve the intended incentives and benefits of an Award
based on Adjusted EBIT, Adjusted EPS, Adjusted Net Income, Adjusted Operating
Income, Adjusted Operating Revenues, Adjusted Return on Assets or Adjusted
Return on Equity, the Committee may determine at the time the Performance
Targets are established that certain adjustments shall apply to the objective
formula or standard with respect to the applicable Performance Target to take
into account, in whole or in part, in any manner specified by the Committee, any
one or more of the following with respect to the Performance Period:

 

  (i)   the gain, loss, income or expense resulting from changes in accounting
principles that become effective during the Performance Period;

 

  (ii)   the gain, loss, income or expense reported publicly by the Company with
respect to the Performance Period that are extraordinary or unusual in nature or
infrequent in occurrence, excluding gains or losses on the early extinguishment
of debt;

 

  (iii)   the gains or losses resulting from, and the direct expenses incurred
in connection with, the disposition of a business, in whole or in part, or the
sale of investments or non-core assets;

 

  (iv)   the gain or loss from all or certain claims, litigation and/or
regulatory proceedings and all or certain insurance recoveries relating to
claims or litigation;

 

  (v)   the impact of impairment of tangible or intangible assets;

 

  (vi)   the impact of restructuring or business recharacterization activities,
including but not limited to reductions in force, that are reported publicly by
the Company; and

 

  (vii)   the impact of investments or acquisitions made during the year or, to
the extent provided by the Committee, any prior year.

 

Each of the adjustments described in this Section 11.1(d) may relate to the
Company as a whole or any part of the Company’s business or operations, as
determined by the Committee at the time the Performance Targets are established.
The adjustments are to be determined in accordance with generally accepted
accounting principles, unless another objective method of measurement is
designated by the Committee. In addition to the foregoing, the Committee shall
adjust any Business Criteria, Performance Targets or other features of an Award
that relate to or are wholly or partially based on the number of, or the value
of, any stock of the Company, to reflect any stock dividend or split,
recapitalization, combination or exchange of shares or other similar changes in
such stock.

 

(e) Committee Discretion to Determine Award.    The Committee has the sole
discretion to determine the standard or formula pursuant to which each
Participant’s Award shall be calculated, whether all or any portion of

 

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the amount so calculated will be paid, and the specific amount (if any) to be
paid to each Participant, subject in all cases to the terms, conditions and
limits of the Plan. To this same extent, the Committee may at any time establish
(and, once established, rescind, waive or amend) additional conditions and terms
of payment of Awards (including but not limited to the achievement of other
financial, strategic or individual goals, which may be objective or subjective)
as it may deem desirable in carrying out the purposes of the Plan. The Committee
may not, however, increase the maximum amount permitted to be paid to any
individual under the Plan or pay Awards under this Article 11 if the applicable
performance targets have not been met.

 

Section 11.2    Performance-Based Restricted Stock Awards. (a) Grants of
Performance-Based Restricted Stock.    Subject to Section 11.1, one or more
shares of Performance-Based Restricted Stock may be granted to any Eligible
Person, other than a Director of the Company, based on the achievements of
pre-established Performance Targets during the Performance Period. The
Performance-Based Restricted Stock will be issued to the Participant on the Date
of Grant without the payment of consideration by the Participant. The
Performance-Based Restricted Stock will be issued in the name of the Participant
and will bear a restrictive legend prohibiting sale, transfer, pledge or
hypothecation of the Performance-Based Restricted Stock until the expiration of
the Restriction Period. The Committee may also impose such other restrictions
and conditions on the Performance-Based Restricted Stock, as it deems
appropriate.

 

(b) Upon issuance to the Participant of the Performance-Based Restricted Stock,
the Participant will have the right to vote the Performance-Based Restricted
Stock, and may, subject to the Committee’s discretion, receive the cash
dividends distributable with respect to such Shares. The Committee, in its sole
discretion, may direct the accumulation and payment of distributable dividends
to the Participant at such times, and in such form and manner, as determined by
the Committee.

 

(c) Restriction Period.    At the time a Performance-Based Restricted Stock
Award is granted, the Committee will establish a Restriction Period applicable
to such Award, which will be no less than one nor more than ten years. Each
Performance-Based Restricted Stock Award may have a different Restriction
Period, at the discretion of the Committee.

 

(d) Waiver of Section 83(b) Election.    Unless otherwise directed by the
Committee, as a condition of receiving an Award of Performance-Based Restricted
Stock, a Participant must waive in writing the right to make an election under
Code Section 83(b) to report the value of the Performance-Based Restricted Stock
as income on the Date of Grant.

 

Section 11.3    Performance Units.    (a) Subject to Section 11.1, one or more
Performance Units may be granted to an eligible person, other than a Director of
the Company, based on the achievement of preestablished Performance Targets
during a Performance Period.

 

(b) Upon issuance to the Participant of a Performance Unit, the Participant may,
subject to the Committee’s discretion, have the right to receive Dividend
Equivalents with respect to such Performance Units, with such Dividend
Equivalents treated as compensation to the Participant. The Committee, in its
sole discretion, may direct the accumulation and payment of Dividend Equivalents
to the Participant at such times, and in such form and manner, as determined by
the Committee.

 

Section 11.4    Forfeiture or Payout of Award.    (a) As soon as practicable
after the end of each Performance Period, the Committee will determine whether
the Performance Targets and other material terms of the Award were satisfied.
The Committee’s determination of all such matters will be final and conclusive.

 

(b) As soon as practicable after the date the Committee makes the above
determination, the Committee will determine the Award payment, if any, for each
Participant. Before any payments are made under this Article 11, the Committee
will be responsible for certifying in writing to the Company that the applicable
Performance

 

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Targets have been met. For this purpose, approved minutes of the Committee in
which such certification is made may be treated as a written certification.

 

(c) The Committee shall have full discretion and authority to establish the
terms and conditions applicable to the Award in the event of the Participant’s
Termination, including a termination by reason of Retirement, death or
Disability.

 

(d) Any shares of Performance-Based Restricted Stock that are forfeited will be
transferred to the Company.

 

Section 11.5    Form and Timing of Payment.    With respect to shares of
Performance-Based Restricted Stock for which restrictions lapse, new
certificates will be issued (the payout) without the restrictive legend
described in Section 11.2(a). Each Performance Unit is payable in cash or Shares
or in a combination of cash and Shares, as determined by the Committee in its
sole discretion. Such payment will be made as soon as practicable after the
Award payment is determined.

 

ARTICLE 12.    STOCK APPRECIATION RIGHTS.

 

Section 12.1    Grants of Stock Appreciation Rights.    Stock Appreciation
Rights may be granted under the Plan to an eligible person, other than a
Director of the Company, in conjunction with an Option either at the Date of
Grant or by amendment or may be separately granted. Stock Appreciation Rights
will be subject to such terms and conditions not inconsistent with the Plan as
the Committee may impose.

 

Section 12.2    Right to Exercise; Exercise Period.    A Stock Appreciation
Right issued pursuant to an Option will be exercisable to the extent the Option
is exercisable A Stock Appreciation Right issued independent of an Option will
be exercisable pursuant to such terms and conditions established in the grant.

 

Section 12.3    Failure to Exercise.    If on the last day of the Option Period,
in the case of a Stock Appreciation Right granted pursuant to an Option, or the
specified Exercise Period, in the case of a Stock Appreciation Right issued
independent of an Option, the Participant has not exercised a Stock Appreciation
Right, then such Stock Appreciation Right will be deemed to have been exercised
by the Participant on the last day of the Option Period or Exercise Period.

 

Section 12.4    Payment.    An exercisable Stock Appreciation Right granted
pursuant to an Option will entitle the Participant to surrender unexercised the
Option or any portion thereof to which the Stock Appreciation Right is attached,
and to receive in exchange for the Stock Appreciation Right payment (in cash or
Shares or a combination thereof as described below) equal to the excess of the
Fair Market Value of one Share at the date of exercise over the Option price,
times the number of Shares called for by the Stock Appreciation Right (or
portion thereof) which is so surrendered. Upon exercise of a Stock Appreciation
Right not granted pursuant to an Option, the Participant will receive for each
Stock Appreciation Right payment (in cash or Shares or a combination thereof as
described below) equal to the excess of the Fair Market Value of one Share at
the date of exercise over the Fair Market Value of one Share at the Date of
Grant of the Stock Appreciation Right, times the number of Shares called for by
the Stock Appreciation Right (or portion thereof) which is exercised.

 

Section 12.5    Settlement.    The Committee may direct the payment in
settlement of the Stock Appreciation Right to be in cash or Shares or a
combination thereof. Alternatively, the Committee may permit the Participant to
elect to receive cash in full or partial settlement of the Stock Appreciation
Right. The value of the Share to be received upon exercise of a Stock
Appreciation Right shall be the Fair Market Value of the Share. To the extent
that a Stock Appreciation Right issued pursuant to an Option is exercised, such
Option shall be deemed to have been exercised, and shall not be deemed to have
lapsed.

 

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Section 12.6    Nontransferable.    A Stock Appreciation Right will not be
transferable by the Participant except by will or the laws of descent and
distribution and will be exercisable during the Participant’s lifetime only by
the Participant or by the Participant’s guardian or legal representative except
that the Committee may, in its discretion, provide for the transferability of
Stock Appreciation Right:

 

(a) by gift or other transfer to (i) an Immediate Relative, or (ii) a trust or
an estate in which the original Participant or the Participant’s Immediate
Relative has a substantial interest;

 

(b) pursuant to a domestic relations order; and

 

(c) as may be otherwise permitted by Form S-8 under the Securities Act;
provided, however, that any Stock Appreciation Right so transferred shall
continue to be subject to all the terms and conditions contained in the Option
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 pursuant to Article 19.

 

Section 12.7    Lapse of a Stock Appreciation Right.    A Stock Appreciation
Right will lapse upon the earlier of: (i) 10 years from the Date of Grant; or
(ii) at the expiration of the Exercise Period as set by the grant. The Committee
shall have full discretion and authority to establish in the Award the terms and
conditions applicable to the Stock Appreciation Right in the event of the
Participant’s Termination, including a termination by reason of Retirement,
death, or Disability.

 

ARTICLE 13.    DIVIDEND EQUIVALENTS

 

Section 13.1    Grants of Dividend Equivalents.    (a) Dividend Equivalents
shall be granted under the Plan in conjunction with Stock Units granted to
Director Participants under the terms set forth in Article 7.

 

(b) Dividend Equivalents may also be granted without consideration by the
Participant in conjunction with Stock Units granted under Article 8, at the Date
of Grant, in conjunction with an Option or a separately awarded Stock
Appreciation Right, at the Date of Grant or by amendment, or in conjunction with
Performance Units, at any time during the Performance Period, subject to the
terms, conditions, restrictions or limitations if any, as the Committee may
establish and as set forth in this Article 13.

 

Section 13.2    Payment.    Each Dividend Equivalent will entitle the
Participant to receive an amount equal to the dividend actually paid with
respect to a Share on each dividend payment date from the Date of Grant to the
date the Dividend Equivalent lapses as set forth in Section 13.4. Dividend
Equivalents may be invested in additional shares or units as determined by the
Committee. The Committee, in its sole discretion, may direct the payment of such
amount at such times and in such form and manner as determined by the Committee.
The Committee may impose such other terms and conditions as, in its sole
discretion, it deems appropriate.

 

Section 13.3    Nontransferable.    Rights to Dividend Equivalents will not be
transferable by the Participant except to the extent that the underlying Option,
Stock Unit, Stock Appreciation Right or Performance Units is transferred in
accordance with the Plan.

 

Section 13.4    Lapse of a Dividend Equivalent.    Each Dividend Equivalent will
lapse on the earlier of (i) the date of the lapse of the related Option or Stock
Appreciation Right; (ii) the date of the exercise of the related Option or Stock
Appreciation Right; (iii) the end of the Performance Period (or if earlier, the
date the Participant terminates employment) of the related Performance Units; or
(iv) the lapse date established by the Committee on the Date of Grant of the
Dividend Equivalent.

 

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ARTICLE 14.    ACCELERATED AWARD PAYOUT/EXERCISE

 

Section 14.1    Change in Control.    Notwithstanding anything in this Plan
document to the contrary, a Participant is entitled to an accelerated payout or
accelerated Option or Exercise Period (as set forth in Section 14.2) with
respect to any previously granted Award, upon the happening of a Change in
Control.

 

Section 14.2    Amount of Award Subject to Accelerated Payout/Option
Period/Exercise Period.    The amount of a Participant’s previously granted
Award that will be paid or exercisable upon the happening of a Change in Control
will be determined as follows:

 

A.    Stock Unit Awards.    The Participant will be entitled to an accelerated
Award payout, and the amount of the payout will be the balance of the number of
Shares in his or her Stock Unit account.

 

B.    Restricted Stock Awards.    The Participant will be entitled to an
accelerated Award payout, and the amount of the payout will be based on the
number of Shares of Restricted Stock that were issued on the Date of Grant plus
any stock resulting from reinvested dividends.

 

C.    Stock Option Awards and Stock Appreciation Rights.    Any previously
granted Stock Option Awards or Stock Appreciation Rights will vest upon the
occurrence of a Change in Control. In addition, the Plan Administrator may
provide, either at the time an Award is made or at a later date, that any Stock
Option Award or Stock Appreciation Right for which the exercise price is greater
than the Fair Market Value of a Share may be canceled if, in the determination
of the Plan Administrator, cancellation would reduce or eliminate any excise tax
that otherwise would be imposed on the holder of such Stock Option Award or
Stock Appreciation Right under Code Section 4999.

 

D.    Performance-Based Restricted Stock/Performance Units.    The Participant
will be entitled to an accelerated Award payout, and the amount of the payout
will be based on the number of shares of Performance-Based Restricted
Stock/Performance Units subject to the Award as established on the Date of
Grant, prorated based on the number of months of the Performance Period that
have elapsed as of the payout date, and assuming that targeted performance was
achieved.

 

Section 14.3    Timing of Accelerated Payout/Option Period/Exercise
Period.    Accelerated payouts provided for in Section 14.2 will be made within
30 days after the date of the Change in Control. When Common Stock is related to
a cash payout, the amount of cash will be determined based on the Fair Market
Value of Common Stock on the payout date.

 

Section 14.4    Notwithstanding the foregoing sections of this Article, the Plan
Administrator may provide for a different result on a Change of Control at the
time an Award is made.

 

ARTICLE 15.    TAX WITHHOLDING

 

Section 15.1    Tax Withholding.    The Company and its Affiliates shall have
the authority to withhold, or require the Participant to remit to the Company or
its Affiliates, prior to issuance or delivery of any Shares or cash hereunder,
an amount sufficient to satisfy any applicable federal, state or local tax
withholding requirements associated with any Award. Subject to compliance with
any requirements of applicable law, the Committee may, in its sole discretion,
permit or require a Participant to have any portion of any withholding or other
taxes payable in respect to a distribution of Common Stock satisfied through (i)
the payment of cash by the Participant to the Company or an Affiliate, (ii) the
withholding of amounts due the Participant from other compensation, (iii) the
retention by the Company or an Affiliate of Shares, or delivery of previously
owned Shares, having a Fair Market Value on the date the tax withholding is
required to be made equal to the withholding amount, (iv) the canceling of any
number of Shares issuable in an amount sufficient to reimburse the Company or
Affiliate for the amount it

 

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is required to withhold, or (v) any other method approved by the Committee. Any
such Share withholding with respect to a Participant subject to Section 16(a) of
the Exchange Act shall be subject to such limitations as the Committee may
impose to comply with the requirements of Section 16 of the Exchange Act.

 

ARTICLE 16.    AMENDMENT, MODIFICATIONS, AND TERMINATION

 

Section 16.1    Amendment of Plan.    Subject to the terms of the Plan, the
Committee may at any time and from time to time alter, amend, suspend or
terminate the Plan in whole or in part, as it may deem advisable, except (i) no
such action that would require the consent of the Board and/or the stockholders
of the Company pursuant to Section 162(m) of the Code or the securities laws,
any other applicable law, rule, or regulation, the listing requirement of any
national securities exchange or national market system on which are listed any
of the Company’s equity securities shall be effective without such consent; and
(ii) no such action may be taken without the written consent of the Participant
to whom any Award was previously granted, which materially adversely affects the
rights of such Participant concerning such Award, except as such termination or
amendment of the Plan is required by statute, or rules and regulations
promulgated thereunder. Upon termination, the administration will continue in
effect until all matters relating to the payment of outstanding Awards and the
administration of the Plan have been settled.

 

ARTICLE 17.    NO IMPLIED RIGHTS

 

Section 17.1    Participating in this Plan shall not constitute a contract of
employment between the Company or any Affiliate and any person and shall not be
deemed to be consideration for, or a condition of, continued employment of any
person or affect any right of the Company or any Affiliate to terminate any
employee’s employment.

 

Section 17.2    Nothing contained in the Plan shall be deemed to confer upon any
Director any right to remain a member of the Board or of the board of directors
or analogous governing body of an Affiliate or in any way limit the right of a
company’s stockholders to terminate or fail to re-nominate or reelect any
Director as a member of a Board.

 

Section 17.3    Nothing contained in this Plan shall be deemed to confer upon
any employee or other person any claim or right to be granted an Award under the
Plan.

 

ARTICLE 18.    NONALIENBILITY

 

Section 18.1    Nontransferability.    No benefit provided under this Plan shall
be subject to alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, execution, levy or garnishment or other legal process by creditors
of the Participant, the Participant’s beneficiary or by a Participant (or by any
person entitled to such benefit pursuant to the terms of this Plan) except (i)
to the extent specifically mandated and directed by applicable state or federal
statute; (ii) as requested by the Participant (or by any person entitled to such
benefit pursuant to the terms of this Plan), and approved by the Committee, to
satisfy income tax withholding; (iii) as requested by the Participant and
approved by the Committee to members of the Participant’s family, or a trust
established by the Participant for the benefit of family members; (iv) by will,
(v) by the laws of descent and distribution, (vi) pursuant to a beneficiary
designation in accordance with Article 19 (Beneficiary Designation), or (vii) to
the extent transfer of benefit is authorized and made in accordance with another
specific Section of the Plan.

 

ARTICLE 19.    BENEFICIARY DESIGNATION

 

Section 19.1    If a benefit is payable upon the death of a Participant, the
Participant may, from time to time, name any beneficiary or beneficiaries (who
may be named contingently or successively) to whom such benefit

 

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under the Plan is to be paid in the event of such Participant’s death before he
or she receives any or all of such benefit. Each such designation shall revoke
all prior designations by such Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Secretary of the Company during the Participant’s lifetime. In the
absence of any such designation, or if such designated beneficiary or
beneficiaries do not survive the Participant, to the extent benefits are payable
and remain unpaid at the Participant’s death they shall be paid to his or her
estate.

 

ARTICLE 20.    SUCCESSORS

 

Section 20.1    All rights and obligations of the Company under the Plan shall
be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the
Company or other corporate reorganization in which the Company will not be the
surviving corporation or in which the holders of the Common Stock will receive
securities of another corporation. The Company and such successor shall be
jointly and severally liable for all of the Company’s obligations under the
Plan.

 

ARTICLE 21.    UNFUNDED STATUS

 

Section 21.1    Unless otherwise determined by the Committee, the Plan shall be
unfunded and shall not create (or be construed to create) a trust or a separate
fund or funds. The Plan shall not establish any fiduciary relationship between
the Company and any employee, awardee or other person. To the extent any person
holds any rights by virtue of an Award granted under the Plan, such rights shall
constitute general, unsecured liabilities of the Company and shall not confer
upon such person any right, title or interest in any assets of the Company.

 

ARTICLE 22.    ACCOUNT STATEMENT

 

Section 22.1    The Company will maintain Accounts, and credit thereto
bookkeeping entries evidencing unfunded and unsecured general obligations of the
Company. Annually, the Company will send to each Participant a statement of his
or her account(s). This statement will include the account(s) balance and all
activity since the last statement.

 

ARTICLE 23.    GENERAL

 

Section 23.1    No Stockholder Rights Conferred.    Nothing contained in the
Plan will confer upon a Participant or beneficiary any rights of a stockholder
of the Company, unless and until Shares are in fact issued or transferred to
such Participant or beneficiary.

 

Section 23.2    Employment Agreements.    To the extent that an employment
agreement with an Officer or Employee is inconsistent with the Plan, the
employment agreement shall govern.

 

Section 23.3    Gender and Number.    Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.

 

Section 23.4    Articles and Sections.    Except where otherwise indicated by
the context, any reference to an “Article” or “Section” shall be to an Article
or Section of this Plan.

 

Section 23.5    Title and Headings.    The titles and headings of the sections
in the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.

 

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Section 23.6    Severability.    If any part of the Plan is declared to be
unlawful or invalid, such unlawfulness or invalidity shall not invalidate any
other part of the Plan. Any part of the Plan so declared to be unlawful or
invalid shall, if possible, be construed in a manner that will give effect to
the terms of such part to the fullest extent possible while remaining lawful and
valid.

 

Section 23.7    Government and Other Regulations.    The obligation of the
Company to make payment of Awards in Shares or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any government
agencies as may be required. The Company shall be under no obligation to
register under the Securities Act of 1933, as amended (“Act”), any of the Shares
issued, delivered or paid in settlement under the Plan. If Shares awarded under
the Plan may in certain circumstances be exempt from registration under the Act,
the Company may restrict its transfer in such manner as it deems advisable to
ensure such exempt status. If the Company determines that the exercise or
nonforfeitability of, or delivery of benefits pursuant to, any Award or Deferral
Election would violate any applicable provision of (i) federal or state
securities laws or (ii) the listing requirements of any national securities
exchange or national market system on which are then listed any of the Company’s
equity securities, then the Company may postpone any such exercise,
nonforfeitability or delivery, as applicable, but the Company shall use all
reasonable efforts to cause such exercise, nonforfeitability or delivery to
comply with all such provisions at the earliest practicable date. If the Company
deems necessary to comply with any applicable securities law, the Company may
require a written investment intent representation by a Participant or
beneficiary and may require that a restrictive legend be affixed to certificates
for Shares delivered pursuant to the Plan.

 

Section 23.8    Governing Law and Interpretation.    The provisions of the Plan
shall take precedence over any conflicting provision contained in an Award. All
matters relating to the Plan or to Awards granted hereunder shall be governed by
and construed in accordance with the laws of the State of New York without
regard to the principles of conflict of laws.

 

Section 23.9    Expenses.    The costs and expenses of administering the Plan
shall be borne by the Company and its Affiliates and shall not be charged
against any Award or to any Participant or beneficiary receiving an Award.

 

Section 23.10    Relationship to Other Benefits.    Any Awards under this Plan
are not considered compensation for purposes of determining benefits under any
pension, profit sharing, or other retirement or welfare plan, or for any other
general employee benefit program unless specifically provided by any such plan
or program.

 

Section 23.11    Ratification of Actions.    By accepting any Award or other
benefit under the Plan, each employee and each person claiming under or through
such person shall be conclusively deemed to have indicated such person’s
acceptance and ratification of, and consent to, any action taken under the Plan
by the Company, the Board or the Committee.

 

Section 23.12    Fractional Shares.    Any fractional Shares concerning Awards
shall be eliminated at the time of payment or payout by rounding down for
fractions of less than one-half and rounding up for fractions of equal to or
more than one-half.

 

Section 23.13    Reliance on Reports.    Each member of the Committee (and each
person or Committee to whom the Committee or any member thereof has delegated
any of its authority or power under this Plan) shall be fully justified in
relying or acting in good faith upon any report made by the independent public
accountants of the Company and its Affiliates and upon any other information
furnished in connection with the Plan. In no event shall any person who is or
shall have been a member of the Committee be liable for any determination made
or other action taken or any omission to act in reliance upon any such report or
information or for any action taken, including the furnishing of information, or
failure to act, if in good faith.

 

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