Exhibit 10.1.6

THE

CONSOLIDATED EDISON

THRIFT SAVINGS PLAN

Includes

The Consolidated Edison of New York, Inc.

Tax Reduction Act Stock Ownership Plan

And

The Consolidated Edison of New York, Inc.

the Employee Stock Ownership Plan

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  •  

Effective as of January 1, 2005 and

 

  •  

Taking Into Account the Following Amendments:

 

  •  

Amended as of May 8, 2002 For Inclusion of the Employee Stock Ownership Plan;

 

  •  

Amended August 2003 For Favorable Determination Letter and the Economic Growth
and Tax Relief Reconciliation Act;

 

  •  

Amended Effective as of January 1, 2005 To Take Into Account Changes Made By The
Collective Bargaining Agreement For Local 1-2 Of The Utility Workers Of America,
AFL-CIO, As Effective June 27, 2004, Through June 28, 2008;

 

  •  

Amended Effective as of January 1, 2005 to Take Into Account the Collective
Bargaining Agreement for Local 503, of the International Brotherhood of
Electrical Workers, AFL-CIO, As effective June 1, 2004, Through June 1, 2009;

 

  •  

Amended Effective February 1, 2007 for Changes in Loan Provision for CECONY
Management or CEI Participants;

 

  •  

Amended December 2008 In Accordance with the November 2008 IRS Favorable
Determination Letter;

 

  •  

Amended Effective as of July 1, 2008 To Take Into Account Changes Made By the
2008 -2102 Collective Bargaining Agreement For Local 1-2 Of The Utility Workers
of America, AFL-CIO.

 

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Restated as of January 31, 2007 in Accordance with Revenue Procedure 2006-66 and
Notice 2005-101.

The Restatement Reflects Changes Under EGTRRA, with technical corrections made
by the Job Creation and Worker Assistance Act of 2002 (JCWAA), the Pension
Funding Equity Act of 2004 (PFEA), and the American Jobs Creation Act of 2004
(AJCA)

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TABLE OF CONTENTS

 

          Page

ARTICLE I Definitions

   6

1.01

   Account Balance    6

1.02

   Actual Deferral Percentage    6

1.03

   Affiliate    7

1.04

   After-Tax Contribution    8

1.05

   After-Tax Contributions Subaccount    8

1.06

   Annual Dollar Limit    8

1.07

   Annuity Starting Date    8

1.08

   Average Contribution Percentage    8

1.09

   Average Actual Deferral Percentage    9

1.10

   Beneficiary    9

1.11

   Board    9

1.12

   Break in Service    9

1.13

   CECONY    9

1.14

   CECONY Management Employee    9

1.15

   CECONY Management Participant    9

1.16

   CECONY Management Plan    10

1.17

   CECONY Participant    10

1.18

   CECONY Weekly Employee    10

1.19

   CECONY Weekly Participant    10

1.20

   CECONY Weekly Plan    10

1.21

   CEI    10

1.22

   CEI Affiliate or CEI Affiliates    10

1.23

   CEI Employee    10

1.24

   CEI Participant    10

1.25

   Code    10

1.26

   Company    11

1.27

   Company Stock Fund    11

1.28

   Compensation    11

1.29

   Contribution Percentage    13

1.30

   Cost-of-Living Adjustment    13

1.31

   Disability    13

1.32

   Earnings    13

1.33

   Eligible Employee    14

1.34

   Employee    14

1.35

   Employer    14

1.36

   Employer Contribution    14

1.37

   Employer Contributions Subaccount    14

1.38

   ERISA    14

1.39

   ESOP    14

1.40

   ESOP Effective Date    14

 

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1.41

   ESOP Trust Fund    14

1.42

   Excess Aggregate Contributions    15

1.43

   Excess Contributions    16

1.44

   Excess Deferral Percentage    16

1.45

   Excess Pre-Tax Contributions    16

1.46

   Highly Compensated Employee    16

1.47

   Hour of Service    18

1.48

   Investment Fund    18

1.49

   Investment Manager    18

1.50

   Leased Employee    18

1.51

   Loan Reserve    18

1.52

   Local 1-2 Employee    18

1.53

   Local 3 Employee    18

1.54

   Named Fiduciaries    18

1.55

   Non-Highly Compensated Management Employee    19

1.56

   Non-Participating Contribution    19

1.57

   O&R    19

1.58

   O&R Employee    19

1.59

   O&R Hourly Employee    19

1.60

   O&R Hourly Plan    19

1.61

   O&R Management Employee    19

1.62

   O&R Management Plan    20

1.63

   O&R Participant    20

1.64

   Participant    20

1.65

   Participating Contribution    20

1.66

   Payroll Period    21

1.67

   Plan    21

1.68

   Plan Administrator    21

1.69

   Plan Year    21

1.70

   Pre-Tax Contribution    21

1.71

   Pre-Tax Contributions Subaccount    21

1.72

   Prior Plan or Prior Plans    21

1.73

   Record keeper    22

1.74

   Retirement    22

1.75

   Rollover Contributions    22

1.76

   Rollover Contributions Subaccount    22

1.77

   Section 125 Contributions    22

1.78

   Section 132 Contributions    22

1.79

   Shares    22

1.80

   Statutory Compensation    23

1.81

   Top Heavy Group    23

1.82

   Top-Heavy Plan    23

1.83

   Transferred Employer and Employee PAYSOP Contributions    23

1.84

   TRASOP    24

1.85

   TRASOP Account    24

1.86

   TRASOP Trust Fund    24

 

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1.87

   Trust Fund    24

1.88

   Trustee    24

1.89

   Vested Portion    24

1.90

   Year of Service    24

ARTICLE II Eligibility and Participation

   25

2.01

   Eligibility    25

2.02

   Participation    25

2.03

   Reemployment of Former Employees and Former Participants    27

2.04

   Transferred Participants    27

2.05

   Termination of Participation    28

2.06

   Participation in ESOP    28

ARTICLE III Contributions

   29

3.01

   Contribution Election    29

3.02

   Pre-Tax Contribution Dollar Limitation and Re-characterization    32

3.03

   Return of Excess Pre-Tax Contributions    32

3.04

   Excess Deferrals to Other Plans    33

3.05

   Participating Contributions Eligible for Employer Contributions    34

3.06

   Rollover Contributions    38

3.07

   Changes in Contributions    40

3.08

   Payment To Trust    40

3.09

   No Contributions to TRASOP    40

3.10

   Catch-Up Contributions    40

3.11

   Employer Contributions to ESOP    41

ARTICLE IV Investment Elections – Timing and Frequency

   42

4.01

   Employer Contributions Election    42

4.02

   Participant Pre-Tax Contributions, After-Tax Contributions and Rollover
Contributions    42

4.03

   Change of Election    42

4.04

   Certification to Company    43

4.05

   Forfeitures    43

ARTICLE V The Trust Fund - Investments

   44

5.01

   Trust Agreement    44

5.02

   Investment of Trust Fund    44

5.03

   Company Stock Fund    46

5.04

   Accounts and Subaccounts    47

5.05

   Statements of Account    47

5.06

   Responsibility for Investment    48

ARTICLE VI Vesting

   49

6.01

   Participant Contributions    49

6.02

   Employer Contributions    49

6.03

   Special Vesting Rules    50

 

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ARTICLE VII Distributions, Withdrawals and Forfeitures

   52

7.01

   Voluntary Termination or Termination by the Company - Forfeitures    52

7.02

   Death    53

7.03

   Withdrawals    53

7.04

   Hardship Withdrawals    59

7.05

   Distribution from Company Stock Fund    62

7.06

   Leaves of Absence    62

7.07

   Age 70 1/2 Required Distribution    63

7.08

   Form and Timing of Distributions    64

7.09

   Proof of Death and Right of Beneficiary or Other Person    66

7.10

   Distribution Limitation    66

7.11

   Direct Rollover of Certain Distributions    66

ARTICLE VIII Non-Discrimination and Limitation

   70

8.01

   Actual Deferral Percentage Test    70

8.02

   Actual Contribution Percentage Test    73

8.03

   Separate Non-Discrimination Testing    75

8.04

   Maximum Annual Additions    75

ARTICLE IX Loans

   78

9.01

   Loans Permitted    78

9.02

   Amount of Loans    78

9.03

   Source of Loans    79

9.04

   Interest Rate    80

9.05

   Repayment    80

9.06

   Multiple Loans    81

9.07

   Pledge    82

9.08

   Loan Reserve    82

9.09

   Minimum Account Balance    82

9.10

   Other Terms    83

ARTICLE X Administration of the Plan, ESOP and TRASOP

   84

10.01

   Named Fiduciaries and Plan Administrator of Plan ESOP and TRASOP    84

10.02

   Authority of Plan Administrator    84

10.03

   Reliance on Reports    85

10.04

   Delegation of Authority    85

10.05

   Administration Expenses    86

10.06

   Fiduciary Insurance    87

10.07

   Claim Review    87

10.08

   Appointment of Trustee    89

10.09

   Limitation of Liability    89

ARTICLE XI Miscellaneous

   90

11.01

   Exclusive Benefit - Amendments    90

11.02

   Termination - Sale of Assets of Subsidiary    90

11.03

   Beneficiaries    92

11.04

   Assignment of Benefits    93

11.05

   Merger    94

 

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11.06

   Conditions of Employment Not Affected by Plan    95

11.07

   Facility of Payment    95

11.08

   Information    96

11.09

   Additional Participating Employers    96

11.10

   IRS Determination    97

11.11

   Mistaken Contributions    98

11.12

   Prevention of Escheat    98

11.13

   Construction    98

ARTICLE XII Top-Heavy Provisions

   99

12.01

   Application of Top-Heavy Provisions    99

12.02

   Minimum Benefit for Top-Heavy Year    99

12.03

   Minimum Benefits    100

12.04

   Aggregation Groups    101

12.05

   Special Benefit Limits    101

12.06

   Special Distribution Rule    102

ARTICLE XIII Tax Reduction Act Stock Ownership Plan

   103

13.01

   Purpose - Separate Entity    103

13.02

   TRASOP Accounts - Application of Dividends    104

13.03

   Voting Rights, Options, Rights, and Warrants    106

13.04

   Distribution of Shares    106

13.05

   Diversification of TRASOP Accounts    112

ARTICLE XIV Employee Stock Ownership Plan

   114

14.01

   Purpose - Separate Entity    114

14.02

   Special Definitions for ESOP    115

14.03

   Participation in ESOP    117

14.04

   Employer Contributions    117

14.05

   Purchase of Shares    117

14.06

   Dividends    117

14.07

   Voting Rights, Options, Rights, and Warrants    119

14.08

   Transferability    120

14.09

   Diversification    120

14.10

   Distribution of Shares    121

 

v

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THE CONSOLIDATED EDISON THRIFT SAVINGS PLAN

Introduction

The purpose of the Consolidated Edison Thrift Savings Plan (the “Plan”) is to
establish a convenient way for each eligible employee of the parent company,
Consolidated Edison, Inc. (the “Company” and/or “CEI”) and of certain of the
controlled group affiliates of CEI, to supplement his or her retirement income
by saving on a regular and long-term basis, while concurrently offering each
employee an additional incentive to continue his or her career with the Company.
The Thrift Savings Plan is intended to satisfy the requirements of the Internal
Revenue Code of 1986, as amended (the “Code”), Sections 401(k) and 401(m) and to
qualify under Section 401(a). The trust established under and as a part of the
Plan is intended to qualify under Code Section 501(a). The Thrift Savings Plan
and its trust provide each Participant with an opportunity to defer a portion of
his or her compensation and to invest and reinvest that deferred savings under
the Plan on a tax-deferred basis. It is intended that a Participant’s Pre-Tax
contributions, as defined in the Thrift Savings Plan, shall constitute payments
by each Employer as contributions to the trust fund on behalf of the
Participant, within the meaning of Code Section 401(k).

The Thrift Savings Plan was originally established and made effective on
January 1, 1987, by the Consolidated Edison Company of New York, Inc. (“CECONY”)
as the Consolidated Edison Retirement Income Savings Plan for Weekly Employees
(“CECONY Weekly Plan”). Thereafter, the CECONY Weekly Plan was amended from time
to time. On December 1, 1996, the CECONY Weekly Plan was amended and restated in
its entirety, among other reasons, to make a transition from Bankers Trust
Company as trustee and record keeper to Vanguard Fiduciary Trust Company.

 

1

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Effective January 1, 1998, CEI was formed and CECONY became a subsidiary
corporation of CEI. From time to time thereafter, wholly-owned affiliates of CEI
were formed and together with CEI create a controlled group, as defined in Code
Section 414(b), in which CEI is the parent corporation. In July 1999, CEI
acquired Orange and Rockland Utilities, Inc. (“O&R”).

On July 20, 2000, for administrative ease, to facilitate the transfer of
employees from one affiliate to another, and to reduce the cost of operational
expenses, the Board of Trustees of CECONY and the Board of Directors of O&R
approved the merger (“Merger”), effective January 1, 2001, of the following
plans into the CECONY Weekly Plan:

 

  (i) the Consolidated Edison Thrift Savings Plan for Management Employees (the
“CECONY Management Plan”);

 

  (ii) the Orange and Rockland Utilities, Inc. Management Employees Savings Plan
(the “O&R Management Plan”) and

 

  (iii) the Orange and Rockland Utilities, Inc. Hourly Group Savings Plan (the
“O&R Hourly Plan”).

The CECONY Weekly Plan, the CECONY Management Plan, the O&R Management Plan and
the O&R Hourly Plan are called the Prior Plans.

The CECONY Weekly Plan, renamed the Consolidated Edison Thrift Savings Plan, was
also amended, effective January 1, 2001, to take into account the Merger, among
other things, and restated constitutes the single plan and a continuation of
each one of the Prior Plans.

 

2

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In the Plan, CEI is the Company, CECONY is the Plan Sponsor and an Employer, O&R
is an Employer, and certain existing and future affiliates are, or will become,
Employers.

The Plan is amended for the Family and Medical Leave Act of 1993, the Uniformed
Services Employment and Reemployment Rights Act of 1993, the Retirement
Protection Act of 1994, as enacted under the Uruguay Round Agreements Act
(General Agreement on Tariffs and Trade), the Small Business Job Protection Act
of 1996, and the Taxpayer Relief Act of 1997, and certain provisions of the
Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). This
amended Thrift Savings Plan is intended as good faith compliance with the
requirements of EGTRRA and is to be construed in accordance with EGTRRA and
guidance issued thereunder. Except as otherwise provided, the provisions
effectuating EGTRRA will be effective beginning January 1, 2002. The EGTRRA
amendments supersede the provisions of the Thrift Savings Plan to the extent
those provisions are inconsistent with the provisions of the EGTRRA amendments.

Additionally, the Thrift Savings Plan document serves as the official plan
document for the Consolidated Edison Company of New York, Inc. Tax Reduction Act
Stock Ownership Plan (“TRASOP”). The TRASOP is a plan separate from the Thrift
Savings Plan. CECONY has entered into a separate trust agreement with Vanguard
Financing Trust Company under the TRASOP. Participation in the TRASOP is frozen.

The Thrift Savings Plan is amended to take into account the changes made by the
collective bargaining agreement covering employees who are members of Local 1-2
of the Utility Workers Union of America, AFL-CIO, as effective June 24, 2000,
Local 3 of the International Brotherhood of Electrical Workers, AFL-CIO, as
effective June 24, 2001, and the collective bargaining agreement for Local 503
of the International Brotherhood of Electrical Workers, AFL-CIO, as effective
June 20, 2000.

 

3

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Effective May 8, 2002, the Company amended the Thrift Savings Plan to
incorporate, as a separate part, an employee stock ownership plan (“ESOP”). All
Participants are eligible to participate in the ESOP. Any Participant who elects
as an Investment Fund, the Company Stock Fund for his or her Employer
Contributions, will be deemed to be an ESOP Participant. Only Employer
Contributions will be contributed to the ESOP.

On July 30, 2003, the Internal Revenue Service issued a favorable determination
letter to the Thrift Savings Plan finding that the Thrift Savings Plan met the
requirements of the Uniformed Services Employment and Reemployment Rights Act of
1993, the Uruguay Round Agreements Act (General Agreement on Tariffs and Trade),
the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997,
the Internal Revenue Service Restructuring and Reform Act of 1998 and the
Community Renewal Tax Relief Act of 2000. The favorable determination letter was
subject to the adoption of the proposed amendments submitted to the IRS on
June 23, 2003 and now integrated into this Plan document.

Revenue Procedure 2005- 66 announced the opening of the Economic Growth and Tax
Relief Reconciliation Act of 2001, Pub. L. 107-16 (EGTRRA) determination letter
program for individually designed plans. The Thrift Savings Plan was amended to
meet all requirements set forth in Revenue Procedure 2005-66. Revenue Procedure
2006- 4 is intended as good faith compliance with the requirements of EGTRRA, is
to be construed in accordance with EGTRRA and the guidance issued there under.
Except as otherwise provided, the provisions of EBTRRA that have an earlier
effective date will be effective as of the first day of the plan year beginning
after December 31, 2001.

 

4

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The Thrift Savings Plan was amended to take into account the changes made by the
Collective Bargaining Agreement covering employees who are members of Local 1-2
of the Utility Workers of America, AFL-CIO, as effective June 27, 2004, through
June 28, 2008 and the Collective Bargaining Agreement for Local 503, of the
International Brotherhood of Electrical Workers, AFL-CIO, as effective June 1,
2004.

On November 10, 2008, the Internal Revenue Service issued a favorable
determination letter to the Thrift Savings Plan finding that the Thrift Savings
Plan met the requirements of the 2005 Cumulative List of Changes in Plan
Qualification Requirements. The November 10, 2008 Letter expires on January 31,
2012. The November 10, 2008 may not be relied on after the end of the Plan’s
first five-year remedial amendment cycle that ends more than 12 months after the
application was received.

The Thrift Savings Plan was amended to take into account the changes made by the
Collective Bargaining Agreement covering employees who are members of Local 1-2
of the Utility Workers of America, AFL-CIO, as effective June 27, 2008, through
June 28, 2012.

Except as otherwise specifically provided herein, the rights and benefits of any
Participant who retires or whose employment is terminated are determined in
accordance with the provisions of the Thrift Savings Plan as in effect and
operative at the time of such retirement or termination.

 

5

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ARTICLE I

Definitions

The following words and phrases have the following meanings in the Thrift
Savings Plan unless a different meaning is plainly required by the context:

1.01 Account Balance means the amount credited to a Participant consisting of
one or more of his or her Subaccounts, as the case may be, including his or her
Pre-Tax Contributions Subaccount, including, for Plan Years on and after
January 1, 2007, a Roth contribution subaccount (if then established) After-Tax
Contributions Subaccount, Rollover Contributions Subaccount, Employer
Contributions Subaccount, TRASOP, Contributions Subaccount, ESOP Account and
other amounts transferred to the Thrift Savings Plan which are accounted for
under the Thrift Savings Plan under such classification.

1.02 Actual Deferral Percentage (“ADP”) means, for a specified group of
participants for a Plan Year, the average of the ratios, as set forth herein, of
each group. For each Highly Compensated Employee who is a Participant, the
ratio, expressed as a percentage, of (1) the amount of Pre-Tax Contributions
(including Excess Pre-Tax Contributions) actually paid over to the Trust on
behalf of such Highly Compensated Employee for the current Plan Year to (2) the
Highly Compensated Participant’s Statutory Compensation for the entire Plan Year
(whether or not the Eligible Employee was a Participant for the entire Plan
Year). The ADP of each Non-highly Compensated Employee who is a Participant is
the ratio, expressed as a percentage, of (1) the amount of Pre-Tax Contributions
(excluding Excess Pre-Tax Contributions) for the current Plan Year to (2) the
Non-Highly Compensated Employee’s Statutory Compensation for the portion of the
current Plan Year in which the Participant was an Eligible Employee. For
purposes of computing the ADP, an Eligible Employee who would be a Participant
but for the failure to make Pre-Tax Contributions shall be treated as a

 

6

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Participant on whose behalf no Pre-Tax Contributions are made. The ADP of each
Eligible Employee shall be rounded to the nearest 100th of 1% of each such
Eligible Employee’s Statutory Compensation. Beginning in Plan Year 2002,
“current Plan Year testing methodology,” will be applied for determining whether
the Thrift Savings Plan meets the ADP test. For purposes of determining the ADP
for a Plan Year, Pre-Tax Contributions may be taken into account for a Plan Year
only if they:

(a) relate to compensation that either would have been received by the Eligible
Employee in the Plan Year but for the deferral election, or are attributable to
services performed by the Eligible Employee in the Plan Year and would have been
received by the Eligible Employee within 2 1/2 months after the close of the
Plan Year but for the deferral election;

(b) are allocated to the Eligible Employee as of a date within that Plan Year
and the allocation is not contingent on the participation or performance of
service after such date; and

(c) are actually paid to the Trustee no later than 12 months after the end of
the Plan Year to which the contributions relate.

1.03 Affiliate means any company that is a member of a controlled group of
corporations (as defined in Code Section 414(b)) that 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)
that is a member of an affiliated service group (as defined in Code
Section 414(m)) that includes the Company; and any other entity required to be
aggregated with the Company pursuant to regulations under Code Section 414(o).
Notwithstanding the foregoing, the definitions in Code Sections 414(b) and
(c) shall be modified as provided in Code Section 415(h).

 

7

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1.04 After-Tax Contribution means a contribution made by a Participant of
amounts after income taxes have been withheld on the amount and all dividends,
income, gains and losses attributable thereto. After-Tax Contributions include
Participating Contributions and Non-participating Contributions. In the case of
an O&R Participant, After-Tax Contributions include Transferred Employee PAYSOP
Contributions.

1.05 After-Tax Contributions Subaccount means the account into which is credited
all of a Participant’s After-Tax Contributions within which shall be separately
accounted, if applicable, a Participant’s Participating Contributions and
Non-Participating Contributions.

1.06 Annual Dollar Limit means, effective January 1, 2002, in accordance with
Code Section 401(a)(17), $200,000, except that, if for any calendar year from
1994 to 2001 the Cost-of-Living Adjustment is equal to or greater than $15,000,
then the Annual Dollar Limit for any Plan Year beginning January 1, 2003, shall
be increased by the amount of such Cost-of-Living Adjustment, rounded to the
next lowest multiple of $5,000. As of January 1, 2009, the Annual Dollar Limit
is increased to $245,000.

1.07 Annuity Starting Date means the first day of the first period for which an
amount is paid following a Participant’s retirement or other termination from
employment.

1.08 Average Contribution Percentage means, with respect to a specified group of
Eligible Employees for a Plan Year, the average of the actual Contribution
Percentages (calculated separately for each Participant in each specified
group). The Contribution Percentage for each group of Eligible Employees will be
calculated to the nearest on one-hundredth of one percent.

 

8

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1.09 Average Actual Deferral Percentage means, with respect to a specified group
of Eligible Employees, the average of the ADPs (calculated separately for each
Participant in each specified group). The ADP for each group of Eligible
Employees will be calculated to the nearest one one-hundredth of one percent.

1.10 Beneficiary means the person or persons, trust or other recipient
determined in accordance with the provisions of Section 11.03 to succeed to a
Participant’s Account Balance under the Thrift Savings Plan in the event of the
death of such Participant prior to the entire distribution of such Account
Balance.

1.11 Board means the Board of Trustees of CECONY.

1.12 Break in Service means a Plan Year in which an Employee completes 500 or
fewer Hours of Service. Solely for purposes of determining whether a
Break-in-Service has occurred, an Employee who is absent from work on account of
the Employee’s pregnancy, the birth of the Employee’s child, the placement of a
child with the Employee in connection with the adoption of that child by the
Employee, for purposes of caring for that child or for a Family and Medical
Leave Act (“FMLA”), shall be deemed to have earned at least 501 Hours of Service
in the Plan Year in which he or she is absent from work or the immediately
following Plan Year, whichever Plan Year is necessary to first avoiding a Break
in Service.

1.13 CECONY means the Consolidated Edison Company of New York, Inc., and any
successor by merger, purchase or otherwise.

1.14 CECONY Management Employee means an Employee employed by and on the
management payroll of CECONY.

1.15 CECONY Management Participant means a CECONY Management Employee who is a
Participant.

 

9

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1.16 CECONY Management Plan means the Con Edison Thrift Savings Plan for
Management Employees, as in effect and prior to January 1, 2001.

1.17 CECONY Participant means a CECONY Management Participant and/or a CECONY
Weekly Participant.

1.18 CECONY Weekly Employee means an Employee employed by and on the payroll of
CECONY who is (a) a member of the collective bargaining unit represented by
Local 1-2 of the Utility Workers’ Union of America, AFL-CIO or (b) a member of
the collective bargaining unit represented by Local 3 of the International
Brotherhood of Electrical Workers, AFL-CIO.

1.19 CECONY Weekly Participant means a CECONY Weekly Employee who is a
Participant.

1.20 CECONY Weekly Plan means the Con Edison Retirement Income Savings Plan for
Weekly Employees, as in effect on December 31, 2000.

1.21 CEI means Consolidated Edison, Inc.

1.22 CEI Affiliate or CEI Affiliates means one, more than one or all, as the
context indicates, of Consolidated Edison Solutions, Inc. (CES); Consolidated
Edison Energy, Inc. (CEE); Consolidated Edison Development, Inc. (CED);
Consolidated Edison Energy Massachusetts, Inc. (CEEM); CED Operating Company,
L.P. (“CEDOC”) and any future Affiliate who becomes an Employer. As of June
2008, a CEI Affiliate does not include CED, CEEM or CEDOC.

1.23 CEI Employee means an Employee of a CEI Affiliate.

1.24 CEI Participant means a CEI Employee who is a Participant in the Plan.

1.25 Code means the Internal Revenue Code of 1986, as amended from time to time.

 

10

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1.26 Company means Consolidated Edison, Inc. or any successor by merger,
purchase or otherwise, that assumes the obligations of this Thrift Savings Plan
with respect to its Eligible Employees.

1.27 Company Stock Fund shall have the meaning set forth in Plan Section 5.03.

1.28 Compensation means

(a) for a CECONY Weekly Employee, straight time wages, paid for a Payroll Period
and determined prior to any reduction for —

 

  (i) Pre-Tax Contributions,

 

  (ii) Section 125 Contributions, and

 

  (iii) Section 132 Contributions.

Compensation is determined by excluding bonuses, overtime pay, premium pay,
incentive compensation, severance pay, deferred compensation and all other forms
of special pay;

(b) for a CECONY Management Employee, a CEI Participant or an O&R Management
Employee, base salary in a payroll period, determined prior to any reduction
for:

 

  (i) Pre-Tax Contributions,

 

  (ii) Section 125 Contributions, or

 

  (iii) Section 132 Contributions.

Compensation is determined by excluding bonuses, overtime pay, incentive
compensation, commissions, severance pay, deferred compensation and all other
forms of special pay; and

(c) for an O&R Hourly Employee who is not a part-time Employee, forty times the
base hourly wage to an Eligible Employee in a week determined prior to any
reduction for Pre-Tax Contributions and Section 125 Contributions. Compensation
shall not include

 

11

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bonus, overtime, severance pay or other special pay, or any other employer
contributions to another deferred compensation plan or employee welfare benefit
plan. In the case of an O&R Participant who is a part-time Eligible Employee,
twenty shall be substituted for forty in the preceding sentence.

(d) Compensation for a Plan Year in excess of the Annual Dollar Limit for such
Plan Year shall be disregarded.

 

12

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1.29 Contribution Percentage for a Highly Compensated Employee is the ratio,
expressed as a percentage, of After-Tax Contributions and Employer Contributions
on behalf of the Highly Compensated Employee for the current Plan Year to the
Highly Compensated Employee’s Statutory Compensation for such Plan Year (whether
or not the Employee was a Participant for the entire Plan Year). Contribution
Percentage for a Non-Highly Compensated Employee is the ratio, expressed as a
percentage, of After-Tax Contributions and Employer Contributions on behalf of
the Non-Highly Compensated Employee for the prior Plan Year to the Non-Highly
Compensated Employee’s Statutory Compensation for the portion of such Plan Year
in which the Participant was an Eligible Employee. However, Employer
Contributions shall not be taken into account to the extent they are forfeited
either to correct Excess Aggregate Contributions or because the contributions to
which they relate are Excess Pre-Tax Contributions, Excess Contributions, or
Excess Aggregate Contributions. The Contribution Percentage of each Eligible
Employee shall be rounded to the nearest one-hundredth of one percent of such
Employee’s Statutory Compensation.

1.30 Cost-of-Living Adjustment means the cost of living adjustment prescribed by
the Secretary of the Treasury under Code Section 415(d) and applied to such
items and in such manner as the Secretary shall provide.

1.31 Disability means total and permanent physical or mental disability, as
evidenced by (a) receipt of a Social Security disability pension or (b) waiver
of premium under an Employer’s group term life insurance plan.

1.32 Eligible Employee means a CECONY Weekly Employee, CECONY Management
Employee, an O&R Hourly Employee, an O&R Management Employee, and a CEI
Employee.

 

13

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1.33 Employee means an individual who is employed by and a common law employee
of the Company or an Affiliate and receives Compensation other than a pension,
severance pay, retainer or fee under contract. The term Employee excludes any
Leased Employee.

1.34 Employer means one, more than one, or all, as the context requires of
CECONY, O&R, and each CEI Affiliate. Employer also means each newly created,
future established or acquired Affiliate to the extent that such Affiliate
elects to participate and CECONY approves its participation in the Plan.

1.35 Employer Contribution means a contribution to the Trust Fund made by an
Employer on behalf of a Participant. An Employer Contribution includes Pre-Tax
Contributions but not Roth Contributions.

1.36 Employer Contributions Subaccount means the Subaccount into which is
credited a Participant’s Employer Contributions.

1.37 ERISA means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

1.38 ESOP means, effective on the ESOP Effective Date, the Consolidated Edison
Employee Stock Ownership Plan (“ESOP”), which is incorporated into and becomes a
separate plan within this Plan.

1.39 ESOP Effective Date means May 8, 2002.

1.40 ESOP Trust Fund means that part of the Trust Fund held exclusively for the
ESOP Accounts of the ESOP Participants.

1.41 Excess Aggregate Contributions means with respect to any Plan Year, the
excess of:

(a) The aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Average Contribution Percentage actually made on
behalf of Highly Compensated Employees for such Plan Year, over

 

14

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(b) The maximum hypothetically Contribution Percentage Amounts permitted by the
Average Contribution Percentage test determined by reducing contributions made
on behalf of Highly Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentage.

Such determination shall be made after first determining Excess Pre-Tax
Contributions and then Excess Contributions. In no case shall the amount of
Excess Aggregate Contributions with respect to any Highly Compensated Employee
exceed the amount of After-Tax Contributions and Employer Contributions made on
behalf of such Highly Compensated Employee for the Plan Year.

1.42 Excess Contributions means, with respect to any Plan Year, the excess of:

(a) the aggregate amount of Employer Contributions actually taken into account
in computing the Average Actual Deferral Percentage of Highly Compensated
Employees for such Plan Year, over

(b) the maximum amount of Employer’s contributions permitted by the Average
Actual Deferral Percentage test determined by hypothetically reducing
contributions made on behalf of Highly Compensated Employees in order of the
Deferral Percentages Average, beginning with the highest of such percentages.

In no case shall the amount of Excess Contributions for a Plan Year with respect
to any Highly Compensated Employee exceed the amount of Pre-Tax Contributions
made on behalf of such Highly Compensated Employee for the Plan Year.

 

15

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1.43 Excess Elective Deferral (aka Excess Pre-Tax Contributions) Percentage
means the excess of:

(a) the Average Deferral Percentage for the group of eligible Highly Compensated
Employees, over

(b) the Average Deferral Percentage limit permissible to such group of Highly
Compensated Employees.

1.44 Excess Pre-Tax Contributions means those Pre-Tax Contributions that either
(1) are includible in a Participant’s gross income under Code Section 402(g) to
the extent the Participant’s Pre-Tax Contributions exceed the dollar limitation
under Code Section 402(g).

1.45 Highly Compensated Employee means any Employee of the Company or an
Affiliate (whether or not an Eligible Employee) who during the look-back year
received Statutory Compensation in excess of $80,000, or, for calendar year
beginning 2008, $105,000, adjusted by the Cost-of-Living Adjustment and was in
the “Top Paid Group.” The term “Top Paid Group” includes all Employees who are
among the 20% highest paid. A Highly Compensated Management Employee means a
Highly Compensated Employee who is a CECONY Management Employee, an O&R
Management Employee, or a CEI Employee who is not covered by a collective
bargaining agreement. A Highly Compensated Union Employee is a Highly
Compensated Employee who is a Local 1-2 Employee, Local 3 Employee, and an O&R
Hourly Employee who is covered by a collective bargaining agreement.

1.46 Hour of Service means, with respect to any applicable computation period,

(a) each hour for which:

 

  (i) the Employee is paid or entitled to payment for the performance of duties
for the Company or an Affiliate;

 

16

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  (ii) the Employee is paid or entitled to payment by the Company or an
Affiliate on account of a period during which no duties are performed, whether
or not the employment relationship has terminated, due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty, military duty or
leave of absence; and

 

  (iii) back pay, irrespective of mitigation of damages, is either awarded or
agreed to by the Company or an Affiliate, excluding any hour credited under
(a)(i) or (ii), which shall be credited to the computation period or periods to
which the award, agreement or payment pertains rather than to the computation
period in which the award, agreement or payment is made.

(b) No hours shall be credited on account of any period during which the
Employee performs no duties and receives payment solely for the purpose of
complying with unemployment compensation, workers’ compensation or disability
insurance laws. Hours of Service are not required to be credited for a payment
which solely reimburses an Employee for medical or medically-related expenses
incurred by the employee. The Hours of Service credited shall be determined as
required by Title 29 of the Code of Federal Regulations, Sections 2530.200b-2(b)
and (c).

(c) With regard to an Employee for whom a record of his or her Hours of Service
is not maintained,

 

  (i) One day of employment equals 10 Hours of Service;

 

  (ii) One week of employment equals 45 Hours of Service; and

 

  (iii) One month of employment equals 190 Hours of Service.

 

17

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1.47 Investment Fund means an investment fund available under the Thrift Savings
Plan for investment of assets held in the Trust Fund or the ESOP Trust Fund.

1.48 Investment Manager means an investment manager as defined in ERISA
Section 3(38), which is appointed by the Named Fiduciaries.

1.49 Leased Employee means any person performing services for the Company or an
Affiliate as a leased employee as defined in Code Section 414(n). In the case of
any person who is a Leased Employee before or after a period of service as an
Employee, the entire period during which he or she has performed services as a
Leased Employee shall be counted for service as an Employee for all purposes of
the Plan, except that he or she shall not, by reason of that status, become a
Participant of the Plan. Effective for plan years beginning after 1996, the
definition of a Leased Employee, as set forth in Code Section 414(n) and the
Regulations there under is amended to delete the term “…such services are of a
type historically performed by Employees in the business field of the
recipient…” to “…whose services are performed under the primary direction or
control by the recipient….”

1.50 Loan Reserve shall have the meaning set forth in Section 9.08.

1.51 Local 1-2 Employee means an Employee represented by Local 1-2, Utility
Workers’ Union of America, AFL-CIO.

1.52 Local 3 Employee means an Employee represented by Local 3, International
Brotherhood of Electrical Workers, AFL-CIO.

1.53 Named Fiduciaries means the persons designated as named fiduciaries of the
Thrift Savings Plan pursuant to Section 10.01.

1.54 Non-Highly Compensated Management Employee means any CECONY Management
Employee, O&R Management Employee or CEI Employee who is not covered by a
collective bargaining agreement and not a Highly Compensated Employee. Code

 

18

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Section 401(k)(3)(A), as amended by the Small Business Job Protection Act,
provides for the use of the prior year testing method in determining the ADP of
Non-Highly Compensated Employees, while current year data is used for Highly
Compensated Employees. Alternatively, the Thrift Savings Plan may use current
year data for determining the ADPs for both NHCEs and HCEs. This is known as
current year testing method.

1.55 Non-Participating Contribution means the portion of a CECONY Participant’s
or CEI Participant’s Pre-Tax Contributions or After-Tax Contributions that is
not matched by Employer Contributions.

1.56 O&R means Orange and Rockland Utilities, Inc.

1.57 O&R Employee means an Employee employed by and on the active payroll of
O&R. A person designated by O&R as a co-op employee or employed in a co-op
capacity, as such term is defined by O&R, and any employee employed on a
temporary or seasonal basis shall not be considered an O&R Employee or an
Eligible Employee.

1.58 O&R Hourly Employee means an Employee employed by and on the active payroll
of O&R who is a member of the collective bargaining unit represented by Local
503 of the International Brotherhood of Electrical Workers, AFL-CIO.

1.59 O&R Hourly Plan means the Orange and Rockland Utilities, Inc. Hourly Group
Savings Plan, as in effect on December 31, 2000.

1.60 O&R Management Employee means an Employee employed by and on the active
management payroll of O&R and is not an O&R Hourly Employee.

1.61 O&R Management Plan means the Orange and Rockland Utilities, Inc.
Management Employees’ Savings Plan, as in effect on December 31, 2000.

 

19

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1.62 O&R Participant means an O&R Hourly Employee and an O&R Management Employee
who is participating in the Plan.

1.63 Participant means any person who has an Account Balance in the Plan.

1.64 Participating Contribution means the portion of the Participant’s Pre-tax
Contributions or After-Tax Contributions for which there is a matching Employer
Contribution.

1.65 Payroll Period means

(a) for a CECONY Weekly Employee, a one week period commencing on a Sunday and
ending on the next following Saturday;

(b) for a CECONY Management Employee, a one month period commencing on the first
and ending on the last day of the month. Effective beginning in 2009, Payroll
Period means a semi monthly period with contributions to the Thrift Savings Plan
deducted on the 15th and last day of each month;

(c) for an O&R Participant, the dates that O&R provides payroll information to
the Trustees in order to determine the amounts that should be withheld from an
O&R Participant’s pay as Pre-Tax Contributions and/or After-Tax Contributions
and the amounts that should be rendered by O&R to the Trustee on behalf of an
O&R Participant as an Employer Contribution; and

(d) for a CEI Participant, the prevailing payroll period for that CEI Affiliate.

 

20

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1.66 Plan means the Consolidated Edison Thrift Savings Plan, as amended from
time to time, as set forth herein.

1.67 Plan Administrator means the Plan Administrator appointed pursuant to
Section 10.01 to administer the Thrift Savings Plan and the ESOP.

1.68 Plan Year means the calendar year.

1.69 Pre-Tax Contribution means an Employer’s contributions made to the Thrift
Savings Plan at the election of the Participant, in lieu of cash compensation
and before income taxes have been withheld on the amount, and includes
contributions made pursuant to a salary reduction agreement. In the case of an
O&R Participant, Pre-Tax Contributions include those Transferred Employer
PAYSOP-Contributions that were transferred to the O&R Plan. Pre-Tax
Contributions includes amounts deemed as Pre-Tax Contributions pursuant to an
election under a cafeteria plan maintained by CECONY.

1.70 Pre-Tax Contributions Subaccount means the Subaccount into which is
credited all of a Participant’s Pre-Tax Contributions and within which are
separately accounted for as Participating Contributions and Non-Participating
Contributions.

1.71 Prior Plan or Prior Plans means one, more than one, or all, as the context
requires, of the CECONY Management Plan, the CECONY Weekly Plan, the O&R Hourly
Plan and the O&R Management Plan.

1.72 Record keeper means the individual(s) or firm selected by the Plan
Administrator to provide record keeping and Participant accounting services for
the Plan, including maintenance of separate accounts for Participants in
accordance with the provisions of Section 5.04.

 

21

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1.73 Retirement means termination of employment by a Participant under
circumstances in which he or she is entitled to receive an early retirement
pension allowance, normal retirement pension allowance or late retirement
pension allowance under any Employer defined benefit plan. Retirement means
termination from employment on or after his or her sixty-fifth birthday.

1.74 Rollover Contributions means amounts contributed pursuant to Plan
Section 3.08.

1.75 Rollover Contributions Subaccount means the account credited with a
Participant’s Rollover Contributions and earnings on those contributions.
Effective for Rollover Contributions received on or after January 1, 2002, a
Rollover Contributions Subaccount may include a separately accounted for
after-tax rollover Subaccount attributable to after-tax rollover contributions
directly transferred to this Plan.

1.76 Section 125 Contributions means Employee contributions made pursuant to a
salary reduction agreement under a cafeteria plan as that term is defined in
Code Section 125.

1.77 Section 132 Contributions means Employee contributions made for qualified
transportation expenses under a transportation reimbursement account.

1.78 Shares means issued and outstanding shares of common stock of the Company
and shall include fractional shares of such common stock.

1.79 Statutory Compensation means the wages, salaries, and other amounts paid in
respect of an Employee for services actually rendered to the Company or an
Affiliate, including by way of example, shift premiums, bonuses, overtime
payments and similar payments, but excluding non-taxable contributions to
deferred compensation plans, taxable non-qualified stock options and other
distributions which receive special tax benefits under the Code. Statutory
Compensation includes Pre-Tax Contributions, Section 125

 

22

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Contributions and Section 132 Contributions. Statutory Compensation may not
exceed the Annual Dollar Limit. To the extent that the above definition does not
satisfy the non-discrimination requirements, Statutory Compensation may be
redefined, by the Plan Administrator, to meet an alternative definition of
compensation, including within Code Section 415(c)(3).

1.80 Total Compensation means for a CECONY Weekly Employee, who is a Local 1-2
Employee, Compensation including overtime pay and premium pay.

1.81 Top Heavy Group means any required aggregation group (as defined in
Section 12.03) or any permissive aggregation group (as defined in Section 12.03)
in which more than 60% of the sum of (a) the aggregate account balances under
all plans in the group and (b) the aggregate present value of accrued benefits
under all plans in the group is allocated to key employees. For the purpose of
this definition, present value shall be determined on basis of the applicable
interest rate and applicable mortality table as set forth in the Company’s
defined benefit plan.

1.82 Top-Heavy Plan means any defined contribution plan or defined benefit plan
of an Employer or the Company under which more that 60% of the sum of (a) its
aggregate account balances and (b) the present value of its aggregate accrued
benefits is allocated to key employees. For the purposes of this definition
present value shall be determined on the basis of the applicable interest rate
and applicable mortality table as set forth in the Company’s defined benefit
plan.

1.83 Transferred Employer and Employee PAYSOP Contributions means those amounts
transferred to the O&R Management Plan or the O&R Hourly Plan on behalf of an
O&R Employee from the terminated Orange and Rockland Utilities, Inc.
Payroll-Based Employee Stock Ownership Plan.

 

23

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1.84 TRASOP means the Tax Reduction Act Stock Ownership Plan of Consolidated
Edison Company of New York, Inc., as included within this plan document,
effective as of July 1, 1988.

1.85 TRASOP Account means an account maintained under the TRASOP by the Trustee
of the TRASOP Trust Fund for an Employee.

1.86 TRASOP Trust Fund means the Trust Fund established solely for the TRASOP
Accounts.

1.87 Trust Fund means the trust fund described in Article 5.

1.88 Trustee means the trustee appointed and acting as trustee of the Trust
Fund, the TRASOP Trust Fund and the ESOP Trust Fund.

1.89 Vested Portion means the portion of an Account Balance in which the
Participant has a nonforfeitable interest as provided in Article 6.

1.90 Year of Service means each Plan Year in which an Employee is credited with
at least 1000 Hours of Service. An Employee is credited with a Year of Service
in the month in which he or she completes 1000 Hours of Service. An Employee
will be credited with a Year of Service in each Plan Year in which the Employee
is absent on account of qualified military service, in accordance with Code
Section 414(u). For purposes of determining when and if an Employee is 100%
vested in his or her Account Balance, a Year of Vesting Service is a Year of
Service credited to the Employee in the month in which he or she completes 1000
Hours of Service.

 

24

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ARTICLE II

Eligibility and Participation

2.01 Eligibility

(a) Any person who was a Participant in a Prior Plan will continue to be a
Participant in this Plan.

(b) Each Eligible Employee is eligible to participate in the Plan.

(c) Each Eligible Employee who was a Participant in, and had an account under
the TRASOP on December 31, 2000, will continue to participate in the TRASOP and
have a TRASOP Account. As of July 1, 1988, the TRASOP was closed to new Eligible
Employees.

2.02 Participation

(a) An Eligible Employee becomes a Participant by satisfying the service
requirements, if any, as described herein, and by completing the enrollment
process described below or such other enrollment process as may be prescribed by
the Plan Administrator. An Eligible Employee must elect to make contributions to
the Trust Fund in an amount or percentage as permitted by Section 3.01. In
general, a Participant’s contributions are made by regular payroll deductions
authorized from time to time by such Participant in such manner and on such
conditions as may be prescribed by the Plan Administrator. An Eligible Employee
who elects not to make Pre-Tax Contributions is treated as a Participant who has
made an election not to contribute to the Plan.

 

  (i) CECONY Weekly Employee A CECONY Weekly Employee may become a Participant
after completing 3 months of service. Participation may begin with the next
immediately following Payroll Period by making an enrollment election not later
than the day specified by the Plan Administrator.

 

25

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  (ii) CECONY Management Employee or CEI Employee A CECONY Management Employee
or a CEI Employee may become a Participant in a calendar month following his or
her date of hire by making an enrollment election on or before the 20th day of
the first calendar month of hire or any subsequent calendar month.

 

 

(iii)

O&R Hourly Employee An O&R Hourly Employee may become a Participant in any month
following the completion of one Year of Service. Thereafter, an O&R Hourly
Employee may participate by making an election on or before the 24th day of any
month. Participation will become effective on the first day of the first Payroll
Period in the month following the month in which the election is made. Effective
January 1, 2005, an O&R Hourly Employee who is hired on or after January 1,
2005, may become a Participant in any month following the completion of six
months of service by making an election on or before the 24th day of that sixth
month or any month thereafter. Participation will become effective on the first
day of the first Payroll Period in the month following the month in which the
election is made.

 

  (iv)

O&R Management Employee An O&R Management Employee may become a Participant in
any month upon the completion of six months of service and making an election on
or before the 24th day of that sixth month or any month thereafter.
Participation will become effective on the first day of the first Payroll Period
in the month

 

26

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immediately following the month in which the election is made. Six months of
participation means a six-month period in which an O&R Management Employee is
credited with at least five hundred Hours of Service. Such six-month period will
commence on the date the O&R Management Employee first completes an Hour of
Service.

 

  (v) Other Eligible Employees To the extent that a person becomes an Eligible
Employee and is not otherwise covered by a designated classification, he or she
may become a Participant in the month in which his or her Employer adopts the
Thrift Savings Plan as provided in the Plan Section 11.05 and satisfies whatever
eligibility requirements, if any, his or her Employer selects.

2.03 Reemployment of Former Employees and Former Participants

Any person reemployed as an Eligible Employee, who previously was eligible to
become a Participant, will become a Participant upon making an effective
enrollment election as may be prescribed by the Plan Administrator.

2.04 Transferred Participants

A Participant who remains in the employ of the Company or an Affiliate but
ceases to be an Eligible Employee will continue to be a Participant in the
Thrift Savings Plan but will not be eligible to make After-Tax Contributions or
Pre-Tax Contributions or have Employer Contributions made on his or her behalf
while his or her employment status is other than as an Eligible Employee.

 

27

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2.05 Termination of Participation

A Participant’s participation terminates on the date he or she is no longer
employed by the Company or Affiliate and no longer has an Account Balance.

2.06 Participation in ESOP

In accordance with Article XIV, and effective on the ESOP Effective Date, each
Participant who receives an Employer Contribution is eligible to participate in
the ESOP.

 

28

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ARTICLE III

Contributions

3.01 Contribution Election

(a) CECONY Weekly Participant A CECONY Weekly Participant may elect to
contribute as follows:

 

  (i) Local 3 Employee For each of his or her basic straight-time Hours of
Service not in excess of 40 in a Payroll Period, in one cent multiples or in the
maximum permissible amount if such maximum is not a multiple of one cent, for
any Payroll Period beginning on or after: (a) January 1, 2000, and before
January 1, 2001, not in excess of $3.52 per hour; (b) January 1, 2001, and
before January 1, 2002, not in excess of $3.72 per hour; and (c) January 1,
2002, up to but no more than the lesser of $20.00 per hour or 50% of basic
straight-time pay; and

 

  (ii) Local 1-2 Employee For each of his or her basic straight-time Hours of
Service not in excess of 40 in a Payroll Period, in one cent multiples or in the
maximum permissible amount if such maximum is not a multiple of one cent, as
follows for any Payroll Period beginning on or after: (a) January 1, 2000 and
before January 1, 2001, not in excess of $3.52 per hour; (b) January 1, 2001,
and before January 1, 2002, not in excess of $6.75 per hour, and (c) January 1,
2002, and before January 1, 2005, up to but no more than the lesser of $20.00
per hour or 50% of basic straight-time pay. Effective January 1, 2005, a Local
1-2 Employee may elect to contribute at least 1% of Total Compensation, and not
more than 50% of Total Compensation, in multiples of 1%, for any Payroll Period
beginning on or after January 1, 2005.

 

29

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Such maximum amount of contributions shall be subject to limitations imposed
under the Code. At the time a CECONY Weekly Participant elects a contribution
amount, he or she shall, in such manner and on such conditions as may be
prescribed by the Plan Administrator, designate which portion is to be Pre-Tax
Contributions and which is to be After-Tax Contributions. A CECONY Weekly
Participant may elect to make Pre-Tax Contributions whether or not he or she
elects to make After-Tax Contributions and may elect to make After-Tax
Contributions whether or not he or she elects to make Pre-Tax Contributions.
Pre-Tax Contributions and After-Tax Contributions are further limited as
provided below and in Article 8.

(b) CECONY Management and a CEI Participant For Plan Years beginning before
January 1, 2002, a CECONY Management Participant and a CEI Participant may elect
to reduce his or her Compensation payable while a Participant by at least 1% and
not more than 18%, in multiples of 1%, and have that amount contributed to the
Plan as Pre-Tax Contributions and/or After-Tax Contributions. A CECONY
Management Participant or CEI Participant may elect to make Pre-Tax
Contributions whether or not he or she elects to make After-Tax Contributions
and may elect to make After-Tax Contributions whether or not he or she has
elected to make Pre-Tax Contributions. An amount contributed to the Thrift
Savings Plan pursuant to the election of a CECONY Management Participant under a
cafeteria plan under Code Section 125 may be designated as a Pre-Tax
Contribution or an After-Tax Contribution. The maximum total percentage of
Compensation which the CECONY Management Participant and CEI Participant may
elect to contribute in the aggregate as Pre-Tax Contributions and After-Tax
Contributions is 18%. Pre-Tax Contributions and After-Tax

 

30

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Contributions are further limited as provided below and in Article 8. For Thrift
Savings Plan Years beginning on and after January 1, 2002, a CECONY Management
Participant and a CEI Participant may elect to contribute up to 50% of his or
her Compensation as Pre-Tax Contributions and/or After-Tax Contributions,
subject to the maximum annual addition limit set forth in Section 8.03 of the
Plan.

(c) O&R Hourly Participant An O&R Hourly Participant may elect to reduce his or
her Compensation by at least 2% and not more than 20%, in multiples of 1%, and
have that amount contributed to the Thrift Savings Plan as Pre-Tax
Contributions. Pre-Tax Contributions are further limited as provided below and
in Article 8.

(d) O&R Management Participant For Plan Years beginning before January 1, 2002,
an O&R Management Participant may elect to reduce his or her Compensation
payable while a Participant by at least 2% and not more than 15%, in multiples
of 1%, and have that amount contributed to the Plan. Effective January 1, 2002,
an O&R Management Participant may contribute up to 50% of his or her
Compensation. At the time an O&R Management Participant elects a contribution
amount, he or she will designate which portion is to be Pre-Tax Contributions
and which is to be After-Tax Contributions. An O&R Management Participant may
elect to make Pre-Tax Contributions whether or not he or she elects to make
After-Tax Contributions and may elect to make After-Tax Contributions whether or
not he or she elects to make Pre-Tax Contributions. Pre-Tax Contributions and
After-Tax Contributions are to be further limited as provided below and in
Article 8.

 

31

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3.02 Pre-Tax Contribution Dollar Limitation and Re-characterization

In no event will a Participant’s Pre-Tax Contributions made on his or her behalf
by the Company or an Affiliate to all plans, contracts or arrangements, subject
to the provisions of Code Section 402(g), in any calendar year exceed $11,000
multiplied by the Cost-of-Living Adjustment. The Pre-Tax Contribution limit will
be increased for calendar year 2007 to $15,500; for calendar year 2008 to
$15,500; and for calendar year 2009 to $16,500. Beginning in calendar year 2006,
the $15,000 limit will be multiplied by the Cost-of-Living Adjustment,
increasing in $500 increments. Once a Participant’s Pre-Tax Contributions in a
calendar year reach the applicable dollar limitation, his or her election of
Pre-Tax Contributions for the remainder of the calendar year will be canceled.
If so elected by a Participant, other than for an O&R Hourly Participant, excess
Pre-Tax Contributions will be re-characterized as After-Tax Contributions at the
same rate as was previously in effect for Pre-Tax Contributions. Each
Participant affected by this Section 3.02 may elect to change or suspend the
rate at which he or she makes After-Tax Contributions. As of the first Payroll
Period of the calendar year following such cancellation, the Participant’s
election of Pre-Tax Contributions will again become effective at the rate in
accordance with his or her most recent election.

3.03 Return of Excess Pre-Tax Contributions

In the event that the sum of the Pre-Tax Contributions and similar contributions
to any other qualified defined contribution plan maintained by the Company or an
Affiliate exceed the dollar limitation in Code Section 402(g) for any calendar
year, the Participant will be deemed to have elected a return of Pre-Tax
Contributions in excess of such limit (“Excess Pre-Tax Contributions”) from this
Plan. Unless Excess Pre-Tax Contributions are characterized as After-Tax
Contributions, Excess Pre-Tax Contributions, together with

 

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Earnings, will be returned to the Participant no later than the April 15th
following the end of the calendar year in which the Excess Pre-Tax Contributions
were made. The amount of Excess Pre-Tax Contributions to be returned for any
calendar year will be reduced by any Pre-Tax Contributions previously returned
to the Participant under Section 8.01 for that calendar year. In the event any
Pre-Tax Contributions returned under this Section 3.03 were matched by Employer
Contributions, those Employer Contributions, together with Earnings, will be
forfeited and used to reduce future Employer Contributions. In the event any
Pre-Tax Contributions returned under this Section 3.03 were matched by Employer
Contributions, those Employer Contributions, together with Earnings, will be
forfeited and used to reduce future Employer Contributions.

3.04 Excess Deferrals to Other Plans

If a Participant makes tax-deferred contributions under another qualified
defined contribution plan maintained by an employer other than the Company or an
Affiliate for any calendar year and those contributions when added to his or her
Pre-Tax Contributions result if Excess Pre-Tax Contributions, the Participant
may allocate all or a portion of the Excess Pre-Tax Contributions to this Plan.
In that event, the Excess Pre-Tax Contributions, together with Earnings, will be
returned to the Participant no later than the April 15th following the end of
the calendar year in which the Excess Pre-Tax Contributions were made. The
Thrift Savings Plan is not required to return Excess Pre-Tax Contributions
unless the Participant notifies the Plan Administrator, in writing, by March 1st
of the following calendar year of the amount of the Excess Pre-Tax Contributions
allocated to this Plan. The amount of Excess Pre-Tax Contributions to be
returned for any calendar year will be reduced by any Pre-Tax Contributions
previously returned to the Participant under Section 8.01 for that calendar
year. In the event any Pre-Tax Contributions returned under this Section 3.04
were matched by Employer Contributions, those Employer Contributions, together
with Earnings, will be forfeited and used to reduce future Employer
Contributions.

 

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3.05 Participating Contributions Eligible for Employer Contributions

(a) CECONY Weekly Participant. A Participating Contribution means that amount of
a Participant’s contribution which is matched by an Employer Contribution. In
the instance of a CECONY Weekly Participant who is a Local 1-2 Employee, his or
her contribution may not exceed: (1) 97 cents per hour for any Payroll Period
beginning on or after January 1, 2000, (2) $1.02 per hour for any Payroll Period
beginning on or after January 1, 2001, (3) $1.07 per hour for any Payroll Period
beginning on or after January 1, 2002, (4) $1.12 per hour for any Payroll Period
beginning on or after January 1, 2003, (5) $1.17 per hour for any Payroll Period
beginning on or after January 1, 2004, (6) $1.17 per hour, not in excess of 40
hours, for any Payroll Period beginning on or after January 1, 2005; (7) $1.20
per hour, not in excess of 40 hours, for any Payroll Period beginning on or
after January 1, 2009; (8) $1.23 per hour, not in excess of 40 hours, for any
Payroll Period beginning on or after January 1, 2010; (9) $1.26 per hour, not in
excess of 40 hours, for any Payroll Period beginning on or after January 1,
2011; and (10) $1.29 per hour, not in excess of 40 hours, for any Payroll Period
beginning on or after January 1, 2012. Such contribution will be the Local 1-2
Employee’s Participating Contribution for such Payroll Period. A Local 3
Employee’s contribution may not exceed (1) $1.02 per hour for any Payroll Period
beginning on or after January 1, 2001, (2) $1.07 per hour for any Payroll Period
beginning on or after January 1, 2002, (3) $1.12 per hour for any Payroll Period
beginning on or after January 1, 2003, (4) $1.17 per hour for any Payroll Period
beginning on or after January 1, 2004, or (5) $1.22 per hour for any Payroll
Period beginning on or after January 1, 2005. Such contributions shall be the

 

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Local 3 Employee’s Participating Contribution for such Payroll Period. The
amount, if any, by which a CECONY Weekly Participant’s contribution for a
Payroll Period exceeds his or her Participating Contribution will be his or her
Non-Participating Contribution for such Payroll Period.

CECONY will contribute on behalf of a CECONY Weekly Participant who elects to
make Pre-Tax Contributions or After-Tax Contributions for a Payroll Period an
amount equal to 50% of the aggregate Participating Contributions made by the
CECONY Weekly Participant for such Payroll Period matching first Pre-Tax
Contributions and then After-Tax Contributions. Employer Contributions are made
expressly conditional on the Thrift Savings Plan satisfying the provisions of
Article VIII. If any portion of the Pre-Tax Contribution or After-Tax
Contribution to which the Employer Contribution relates is returned to the
CECONY Weekly Participant under Section 3.01, 8.01, 8.02 or 8.03, the
corresponding Employer Contribution will be forfeited, and if any amount of the
Employer Contribution is deemed an Excess Aggregate Contribution under
Section 8.03, such amount will be forfeited in accordance with the provisions of
that Section.

(b) CECONY Management Participant and CEI Participant. CECONY and each CEI
Affiliate will contribute on behalf of each CECONY Management Participant or CEI
Participant, as the case may be, who elects to make Pre-Tax Contributions or
After-Tax Contributions an amount equal to 50% of the sum of the Pre-Tax
Contributions and After-Tax Contributions made on behalf of or by the CECONY
Management Participant or the CEI Participant to the Thrift Savings Plan during
each month, not to exceed 6% of Compensation for such month, to be matched first
on Pre-Tax Contributions, and then on After-Tax Contributions. Employer

 

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Contributions for a month will not exceed 3% of the Participant’s Compensation
for such month. Employer Contributions are made expressly conditional on the
Thrift Savings Plan satisfying the provisions of Article VIII. If any portion of
the Pre-Tax Contribution or After-Tax Contribution to which an Employer
Contribution relates is returned to the CECONY Management Participant or CEI
Participant under Section 3.01, 8.01, 8.02 or 8.03, the corresponding Employer
Contribution will be forfeited, and if any amount of the Employer Contribution
is deemed an Excess Aggregate Contribution under Section 8.03, the Excess
Aggregate Contribution will be forfeited in accordance with the provisions of
Section 8.03. In the event a CECONY Management Participant or CEI Participant
elects to make Pre-Tax Contributions and/or After-Tax Contributions in an amount
which, when taking into account his or her Employer Contributions, exceeds the
maximum annual additions, as defined and determined in Section 8.03 of the Plan,
the Employer will contribute an additional Employer contribution on behalf of
such Participant (“CECONY/CEI True- Up Contribution”). The CECONY/CEI True- Up
Contribution, will be made as soon as administratively possible after the end of
the Plan Year, for each such CECONY Management Participant and CEI Participant
who is employed at year end. The CECONY/CEI True-Up Contribution will equal the
difference between 3% of such Participant’s Compensation on an annual basis
minus his or her total Employer Contributions made during the year.

(c) O&R Hourly Participant. O&R will contribute on behalf of each O&R Hourly
Participant who elects to make Pre-Tax Contributions an amount equal to 50% of
the Pre-Tax Contributions made on behalf of or by the O&R Hourly Participant to
the Thrift Savings Plan up to the first “x” percent of Compensation of the O&R
Hourly Participant during each Payroll Period, where beginning: (1) January 1,
2000, “x” equals 3; (2) January 1, 2003, “x” equals 4; (3) January 1, 2004, “x”
equals 5; and (4) January 1,

 

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2005, “x” equals 6. In addition, as soon as administratively possible after the
end of the Plan Year, O&R will contribute, as of the end of the Plan Year, for
each O&R Hourly Participant who is employed at year end and who in the prior
Payroll Periods during that Plan Year had made Pre-Tax Contributions at a rate
in excess of, beginning (1) January 1, 2000, 3%; (2) January 1, 2003, 4%;
(3) January 1, 2004, 5%; or (4) January 1, 2005, 6% of the O&R Hourly
Participant’s Compensation, an Employer Contribution equal to 50% of the O&R
Hourly Participant’s Pre-Tax Contributions that were not previously matched
(“True-Up Contributions”). True-Up Contributions will not exceed such amounts as
will result in the total O&R Employer Contributions, both those made previously
during the year and those as of year end, exceeding 50% of a O&R Hourly
Participant’s Pre-Tax Contributions that do not exceed, beginning:
(1) January 1, 2000, 3%; (2) January 1, 2003, 4%; or (3) January 1, 2004, 5%; or
(4) January 1, 2005, 6%; of the O&R Hourly Participant’s Compensation on an
annual basis.

(d) O&R Management Participant. O&R will contribute on behalf of each O&R
Management Participant who elects to make Pre-Tax Contributions an amount equal
to 50% of the Pre-Tax Contributions made on behalf of or by the O&R Management
Participant to the Plan up to the first “x” percent of Compensation of the O&R
Management Participant during each Payroll Period, where beginning:
(1) January 1, 2000, “x” equal 3; (2) January 1, 2003, “x” equals 4;
(3) January 1, 2004, “x” equals 5; and (4) January 1, 2005, “x” equals 6. In
addition, as soon as administratively possible after the end of the Plan Year,
O&R will contribute, as of the end of the Plan Year, for each O&R Management
Participant who is employed at year end and who in the prior Payroll Periods
during that Plan Year had made Pre-Tax Contributions at a rate in excess of
beginning: (1) January 1, 2000, 3%; (2) January 1, 2003, 4%; (3) January 1,
2004, 5%; and (4) January 1, 2005, 6% of the O&R Management Participant’s
Compensation,

 

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an Employer Contribution equal to 50% of the O&R Management Participant’s
Pre-Tax Contributions that were not previously matched (“True-Up
Contributions”). True-Up Contributions will not exceed such amount as will
result in the total O&R Employer Contributions, both those made previously
during the year and those as of year end, exceeding 50% of an O&R Management
Participant’s Pre-Tax Contributions that do not exceed, beginning:
(1) January 1, 2000, 3%; (2) January 1, 2003, 4%; (3) January 1, 2004, 5% or
(4) January 1, 2005, 6% of the O&R Management Participant’s Compensation on an
annual basis.

3.06 Rollover Contributions

(a) Subject to such terms and conditions as the Plan Administrator may determine
to be appropriate, applied in a uniform and non-discriminatory manner to all
Eligible Employees, and without regard to any limitations on contributions set
forth in this Article 3, the Thrift Savings Plan may receive from an Eligible
Employee for credit to his or her Rollover Contributions Subaccount, in cash,
any amount previously distributed (or deemed to have been distributed) to him or
her from a qualified plan or, beginning January 1, 2002, a traditional
individual retirement account (“IRA”), a government plan subject to Code
Section 457, a Code Section 403(a) plan or Code Section 403(b) tax sheltered
annuity. Effective on or after January 1, 2002, a Rollover Contribution may
include a separately accounted for after –tax rollover subaccount attributable
to after –tax rollover contributions directly transferred to the Thrift Savings
Plan. The Thrift Savings Plan may receive a rollover contribution amount either
from the Eligible Employee or in the form of a direct rollover. Notwithstanding
the foregoing, the Thrift Savings Plan shall not accept any amount unless such
amount is eligible to be

 

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rolled over in accordance with applicable law and the Eligible Employee provides
evidence satisfactory to the Plan Administrator that such amount qualifies for
rollover treatment. Unless received by the Plan in the form of a direct
rollover, the rollover contribution must be paid to the Trustee on or before the
60th day after the day it was received by the Eligible Employee or be rolled
over from an IRA. Effective January 1, 2002, an eligible rollover distribution
from an IRA is the amount of a distribution from an IRA that is includible in
gross income, including amounts attributable to an Employee’s personal IRA
contributions made outside of a qualified plan. At the time received by the
Plan, the Eligible Employee shall, in such manner and on such conditions as may
be prescribed by the Plan Administrator, elect to invest the Rollover
Contribution in the investment funds then available under the Thrift Savings
Plan to a Participant. If the Eligible Employee fails to make an investment
election, 100% of the Rollover Contribution shall be invested in the Fixed
Income Fund.

(b) The Thrift Savings Plan may also accept from a former Employee who is a
Participant a rollover or a direct rollover of an amount received from a defined
benefit plan sponsored by an Employer or from the TRASOP.

(c) Subject to terms and conditions as the Plan Administrator may determine to
be appropriate, applied and non-discriminatory manner to all Participants, the
Thrift Savings Plan may receive on behalf of Participant a trust-to-trust
transfer from another qualified plan. Any Participant whose benefits are the
subject of a trust-to-trust transfer from another qualified plan to this Thrift
Savings Plan will be entitled to receive benefits, rights and features from the
Thrift Savings Plan that are no less than the benefits, rights and features he
would be entitled to receive from the other qualified plan immediately preceding
the transfer. To the extent feasible, such

 

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transfer shall be made on an in-kind basis. To the extent such transfer is made
in the form of cash, at the time received by the Thrift Savings Plan the
Participant shall, in such manner and on such terms as may be prescribed by the
Plan Administrator, elect to invest the cash in the Investment Funds then
available under the Thrift Savings Plan other than the Company Stock fund.

3.07 Changes in Contributions

A Participant may increase, reduce, suspend or resume his or her contributions
within the limits prescribed by Sections 3.01 and/or 3.02, effective as of the
next first Payroll Period, by making a new election, on or before the date set
by the Plan Administrator, in such manner and on such conditions as may be
prescribed by the Plan Administrator. A Participant may make changes in
contribution levels once a month.

3.08 Payment To Trust

Amounts contributed by Participants will be paid by each Employer to the Trustee
promptly and credited by the Trustee to their Accounts in accordance with the
certification of each Employer as to the names of the contributing Participants
and the respective amounts contributed by each Participant as Participating
Contributions, Non-Participating Contributions, Pre-Tax Contributions, After-Tax
Contributions and Rollover Contributions.

3.09 No Contributions to TRASOP

No contributions to the TRASOP by any Employer or by Participants are permitted.

3.10 Catch-Up Contributions

(a) Effective January 1, 2002, or at such later time as the Plan Administrator
may determine to implement, each “Catch-Up Participant,” as defined below, may
contribute for each “Catch-Up Year,” as defined below, an amount not to exceed
the lesser of the “Catch-Up Contribution,” as defined below, or the Catch-Up
Participant’s compensation reduced by any other Pre-Tax Contributions for that
Catch-Up Year.

 

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(b) Definitions:

 

  (i) Catch-Up Participant means a Participant who has attained age 50 by the
last day of a Catch-Up Year and for whom no additional Pre-Tax Contributions can
be made for that Catch-Up Year because of the application of the calendar year
annual dollar limit set forth in Code Section 402(g) or any other limitations in
the Plan.

 

  (ii) Catch-Up Year means Plan Year beginning January 2, 2002 (“CUY
2002”), January 1, 2003 (“CUY 2003”), January 1, 2004 (“CUY 2004”), January 1,
2005 (“CUY 2005”), or January 1, 2006 (“CUY 2006”).

 

  (iii) Catch-Up Contribution means a Pre-Tax Contribution in the amount of
$4,000 for CUY 2005; $5,000 for CUY 2006; $5,000 for CUY 2007; $5,000 for CUY
2008; and $5,500 for CUY 2009. For Plan Years beginning after CUY 2006, the
$5,000 Catch-Up Contribution is adjusted by the Cost of Living Adjustment,
increasing, when applicable, in $500 increments. Catch-Up Contributions are not
taken into account for purposes of determining the Actual Deferral Percentage or
Average Actual Deferral Percentage.

3.11 Employer Contributions to ESOP

Employer Contributions made on behalf of an ESOP Participant are automatically
contributed to the ESOP.

 

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ARTICLE IV

Investment Elections – Timing and Frequency

4.01 Employer Contributions Election

A Participant may elect to have Employer Contributions allocated to his or her
Employer Contributions Subaccount invested, in multiples of 1%, in one or more
of the Investment Funds, including the Company Stock Fund. Effective May 8,
2002, Employer Contributions allocated to the Company Stock Fund are made to the
ESOP. If the Participant fails to make an election as to the Investment Fund(s)
for his or her Employer Contributions, 100% of such Contributions shall be
invested in the Fixed Income Fund. Any such election shall be made in such
manner and on such conditions as may be prescribed by the Plan Administrator.

4.02 Participant Pre-Tax Contributions, After-Tax Contributions and Rollover
Contributions

A Participant may elect to have his or her Pre-Tax Contributions, After-Tax
Contributions, and Rollover Contributions invested, in multiples of 1%, in any
Investment Fund other than the Company Stock Fund. If the Participant fails to
make an election as to the Investment Fund(s) for his or her contributions, 100%
of such contributions will be invested in the Fixed Income Fund.

4.03 Change of Election

Subject to possible restrictions imposed on certain Funds by the Trustee or an
Investment Fund Manager, a Participant may change his or her investment election
regarding future contributions once a month and his or her existing Account
Balance once a day. Any election will be made in such manner and on such
conditions as may be prescribed by the Plan Administrator and subject to any
restrictions imposed on an Investment Fund.

 

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4.04 Certification to Company

For each Payroll Period, the Recordkeeper will certify to each Employer the
amount of Employer Contributions to be made on behalf of each Participant.

4.05 Forfeitures

The total amount of the Trust Fund forfeited by Participants pursuant to
Section 7.02 or otherwise, will be invested in such Investment Fund as may be
specified by the Plan Administrator and will be applied to reduce future
Employer Contributions due under the Plan. The Trustee will promptly advise the
Employers of any such forfeiture and the amount thereof.

 

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ARTICLE V

The Trust Fund - Investments

5.01 Trust Agreement

Contributions are held in a Trust Fund by the Trustee under a written trust
agreement between CECONY and the Trustee. TRASOP Accounts are held in a TRASOP
Trust Fund under a written trust agreement between CECONY and the Trustee. ESOP
Accounts are held in the ESOP Trust Fund which is included in, but a separate
part of the Trust Fund. No person has any rights to or interest in the Trust
Fund except as provided in the Plan. The provisions of the trust agreement
between CECONY and the Trustee shall be considered an integral part of the
Thrift Savings Plan as if fully set forth herein.

5.02 Investment of Trust Fund

(a) The Trust Fund shall be invested and reinvested in Investment Funds in
accordance with the Participant’s investment directions. The Thrift Savings Plan
is intended to be an ERISA Section 404(c) plan within the meaning of regulations
issued pursuant to such section. Each Participant shall have the opportunity, on
a daily basis, to give investment instructions to the Trustee, or other
fiduciary who is appointed and assumes such fiduciary responsibility, with an
opportunity to obtain written confirmation of such instructions as to his or her
existing Account Balance among the Investment Funds. The Plan Administrator, the
Trustee and the Record keeper or their delegate, will comply with such
instructions except as otherwise provided in the ERISA Section 404(c)
regulations. The Plan Administrator will prescribe the form and manner in which
such directions will be made, as well as the frequency with which such
directions may be made or changed, and the dates as of which they will be
effective, in a manner consistent with the foregoing. Transfers to or from an
Investment Fund may be restricted or limited by the manager of such Investment
Fund or by the terms of the Trust Agreement.

 

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(b) The Named Fiduciaries shall select a range of Investment Funds as described
by ERISA Section 404(c) and applicable regulations. The Investment Fund
categories shall give each Participant a reasonable opportunity to:

 

  (i) Materially affect the potential return on and the degree of risk of assets
over which the Participant exercises investment control;

 

  (ii) Choose from at least three investment alternatives, each of which is
diversified and has materially different risk and return characteristics;

 

  (iii) Enable a Participant to achieve a portfolio with risk and return
characteristics at any point within the range normally appropriate by choosing
among the core alternatives; and

 

  (iv) Diversify investments so as to minimize the risk of large losses.

(c) The Named Fiduciaries may establish new Investment Funds without the
necessity of an amendment to the Thrift Savings Plan and shall have the
objectives prescribed by the Named Fiduciaries. The Named Fiduciaries may
eliminate one or more Investment Fund existing at any time without the necessity
of an amendment to the Plan. The Named Fiduciaries may establish rules and
procedures governing the transfer of portions of Participant’s Account Balance
in the event that existing Investment Funds are changed or new Investment Funds
added. The Named Fiduciaries may appoint an Investment Manager to manage an
Investment Fund.

 

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5.03 Company Stock Fund

For Plan Years beginning before January 1, 2002 and for Plan Year 2002 until
May 8, 2002, all funds invested in the Company Stock Fund, are invested as a
Participant’s Employer Contributions Subaccount, and subject to this
Section 5.03(a), (b) and (c). Effective as of the ESOP Effective Date, a
Participant who invests some, all, or any part of his or her Employer
Contributions in the Company Stock Fund will be an ESOP Participant subject to
Article XIV.

(a) Investments in Fund The Trustee shall regularly purchase Shares for the
Company Stock Fund in accordance with a non-discretionary purchasing program.
Such purchases may be made on any securities exchange where Shares are traded,
in the over-the-counter market, or in negotiated transactions, and may be on
such terms as to price, delivery and otherwise as the Trustee may determine to
be in the best interests of the Participants. Dividends, interest and other
income received on assets held in the Company Stock Fund shall be reinvested in
the Company Stock Fund. All funds to be invested in the Company Stock Fund shall
be invested by the Trustee in one or more transactions promptly after receipt by
the Trustee, subject to any applicable requirement of law affecting the timing
or manner of such transactions. All brokerage commissions and other direct
expenses incurred by the Trustee in the purchase or sale of Shares under the
Thrift Savings Plan will be borne by the Account investing and/or trading in the
Company Stock Fund.

(b) Units The interests of Participants in the Company Stock Fund shall be
measured in Units, the number and value of which shall be determined daily.

(c) Voting of Shares Each Participant shall be entitled to direct the Trustee as
to the manner in which any Shares or fractional Share allocated to the
Participant’s Account Balance are to be voted. Any such Shares or fractional
Share for which the Participant

 

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does not give voting directions shall be voted by the Trustee in the same manner
and proportions as all other Shares held by the Trustee for which voting
directions are given by Participants. The Trustee shall keep confidential a
Participant’s voting instructions and information regarding a Participant’s
purchases, holdings and sales of Shares. The Plan Administrator shall be
responsible for monitoring the Trustee’s performance of its confidentiality
obligations.

5.04 Accounts and Subaccounts

The Recordkeeper will maintain a daily evaluation at current market values, as
determined by the Trustee. The Recordkeeper will also maintain a separate TRASOP
Account for each eligible Participant and a separate Account Balance for each
Participant, and within each such Account Balance, as applicable, a Pre-Tax
Contributions Subaccount, an After-Tax Contributions Subaccount, a Rollover
Contributions Subaccount, an ESOP Account and an Employer Contributions
Subaccount. The Recordkeeper will keep a separate record of the respective
amounts of each Participant in the Trust Fund, including each Investment Fund
and the Loan Reserve, attributable to amounts credited to a Participant’s
Pre-Tax Contributions Subaccount, After-Tax Contributions Subaccount, Rollover
Contributions Subaccount, ESOP Account, and Employer Contributions Subaccount.

5.05 Statements of Account

As soon as practicable after each calendar quarter, the Recordkeeper will cause
to be sent to each Participant a written statement showing, as of such date, the
respective amounts of the Participant’s Account Balance, including each
Investment Fund and the Loan Reserve, attributable to the Participant’s Pre-Tax
Contributions Subaccount, After-Tax Contributions Subaccount, Rollover
Contributions Subaccount, Employer Contributions Subaccount and TRASOP Account,
if any. With respect to the Participant’s After-Tax Contributions Subaccount,
the statement will show separately the amount of the Participant’s own
contributions (less any

 

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withdrawal) credited to his or her After-Tax Subaccount. The Plan Administrator
may direct the Recordkeeper from time to time to issue comparable statements to
Participants as of other dates during the calendar year.

5.06 Responsibility for Investment

Each Participant is solely responsible for the selection of his or her
Investment Funds. The Trustee, the Recordkeeper, any Investment Manager, the
Named Fiduciaries, the Plan Administrator, the Company, each Employer and the
trustees, officers and other Employees of each entity are not empowered to
advise a Participant as to the decision in which his or her Account Balance is
invested. The fact that an Investment Fund is available to Participants for
investment under the Thrift Savings Plan is not to be construed as a
recommendation for a particular Participant to invest in the Investment Fund.

 

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ARTICLE VI

Vesting

6.01 Participant Contributions

The amount to the credit of a Participant’s Account Balance attributable to his
or her Pre-Tax Contributions, After-Tax Contributions, Rollover Contributions
and TRASOP Account is 100% vested at all times.

6.02 Employer Contributions

(a) CECONY Weekly Participant

(b) The amount to the credit of a CECONY Weekly Participant’s Account Balance
attributable to Employer Contributions, including those allocated to his or her
ESOP Account, if applicable, made with respect to any Payroll Period ending in a
calendar year (the Contribution Year) shall become 100% vested, subject to
Article 8, on the earlier of the last day of the third calendar year following
the close of the Contribution Year or the first day of the month in which the
CECONY Weekly Participant completes five Years of Service. Once a CECONY Weekly
Participant completes five years of Vesting Service, each Employer Contribution
made on behalf of the CECONY Weekly Participant becomes 100% vested. Effective
January 1, 2002, each CECONY Weekly Participant shall be 100% fully vested on
the first day of the month in which he or she completes three Years of Vesting
service. All amounts to the credit of a CECONY Weekly Participant’s Account
Balance attributable to Employer Contributions, including those allocated to his
or her ESOP Account, not yet vested will become 100% vested upon attainment of
age 65, death, Disability, Retirement or termination of employment by the
Company for reasons other than cause. Employer Contributions not yet vested are
subject to forfeiture as provided in Section 7.01.

 

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(c) CECONY Management or CEI Participant

The amount to the credit of a CECONY Management or CEI Participant’s Account
Balance attributable to Employer Contributions, including those allocated to his
or her ESOP Account, if applicable, shall become 100% vested, subject to Article
8, on the first day of the calendar month in which the CECONY Management or CEI
Participant completes three years of Vesting Service. Once a CECONY Management
or CEI Participant completes three years of Vesting Service, each Employer
Contribution made on behalf of the CECONY Management Participant or CEI shall be
100% vested. All amounts to the credit of a CECONY Management or CEI
Participant’s Account Balance attributable to Employer Contributions, including
those allocated to his or her ESOP Account, if applicable, not yet vested will
become 100% vested upon attainment of age 65, Disability, death, retirement or
termination of employment by the Company for reasons other than cause. Employer
Contributions otherwise are subject to forfeiture as provided in Section 7.01.

(d) O&R Hourly Participant

An O&R Hourly Participant’s Account Balance is 100% vested at all times.

(e) O&R Management Participant

An O&R Management Participant’s Account Balance is 100% vested at all times.

6.03 Special Vesting Rules

(a) Each person employed at the electric power generating facilities purchased
from Western Massachusetts Electric Company (“WMECO Facilities”) on July 19,
1999, the date of the Closing of the purchase of the WMECO Facilities by a CEI
Affiliate, was 100% vested as of July 19, 1999, in his or her Account Balance.

 

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(b) Each CECONY Participant at the fossil-fueled electricity generating
facilities in New York City or at the nuclear-fueled electricity generating
facilities at Indian Point divested by CECONY (“Divested Operations”) who became
employed by the respective buyers of the Divested Operations were 100% vested as
of the Date of the Closing of each Divested Operation.

(c) Each person employed at the natural gas fueled electricity generating
facility known as the Lakewood Cogeneration Facility (“Lakewood Plant”)
purchased by a CEI Affiliate and who became an Employee of such CEI Affiliate,
was 100% vested in his or her Account Balance as of June 1, 2000.

 

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ARTICLE VII

Distributions, Withdrawals and Forfeitures

7.01 Voluntary Termination or Termination by the Company - Forfeitures

(a) If a CECONY or CEI Participant’s service is terminated by the Company for
cause or if the CECONY or CEI Participant voluntarily terminates his or her
service other than by reason of Retirement, at on or after attainment of age 65,
or Disability the non-vested portion of the CECONY or CEI Participant’s Employer
Contributions Subaccount and ESOP Account shall not be forfeited until the
CECONY or CEI Participant incurs a five-year Break in Service. The vested
portion of such CECONY or CEI Participant’s Account Balance (including any
amount due under any outstanding loan pursuant to Article 9) will be distributed
to such CECONY or CEI Participant in accordance with Section 7.08. Termination
of service for cause shall be determined by the Plan Administrator under rules
uniformly applied to all CECONY or CEI Participants. If the CECONY Participant
is not reemployed by the Company or an Affiliate before he or she incurs five
one-year Breaks in Service or receives a distribution, the non-vested portion of
his or her Employer Contributions Subaccount and ESOP Account will then be
forfeited.

(b) If an amount to the credit of a Participant’s Employer Contributions
Subaccount and ESOP Account has been forfeited in accordance with paragraph
(a) above, such amount shall subsequently be restored to his or her Employer
Contributions Subaccount and ESOP Account by the Company provided; however, that
within five years after his or her reemployment date if he or she makes a lump
sum payment to the Trust Fund in cash in an amount equal to that portion of the
distribution received which represents the Participant’s Participating
Contributions relating directly to Employer Contributions which were forfeited
at the time of distribution.

 

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The amount restored will vest in accordance with Section 6.02 as an Employer
Contribution and shall be credited to the Participant’s Employer Contributions
Subaccount and ESOP Account. The lump sum payment by the Participant is
immediately 100% vested and will be credited to the Participant’s Account
Balance and ESOP Account.

(c) If any amounts to be restored to a Participant’s Employer Contributions
Subaccount and ESOP Account have been forfeited under paragraph (a) above, those
amounts will be taken first from any forfeitures which have not as yet been
applied against Employer Contributions and if any amounts remain to be restored,
the Employer will make a special Employer Contribution equal to those amounts.

(d) A Participant shall elect how to invest the repayment at the time of the
repayment.

7.02 Death

Upon the death of a Participant, the entire amount to the credit of his or her
Account Balance (including any amount due under any outstanding loan pursuant to
Article 9) will be distributed to his or her Beneficiary in accordance with
Section 11.03 as soon as practicable after the calendar month in which his or
her death occurs.

7.03 Withdrawals

(a) A CECONY or CEI Participant may request an in-service cash withdrawal from
his or her vested Account Balance of amounts other than Pre-Tax Contributions,
by making a withdrawal application in such manner and on such conditions as may
be prescribed by the Plan Administrator. In-service withdrawals of Pre-Tax
Contributions are restricted, as described herein. Payment of the amount
withdrawn will be made as soon as practicable after such application has been
completed and processed. Withdrawal requests by CECONY or CEI Participants are
permitted up to four times in any calendar year and only in accordance with the
following terms: Withdrawals will be made on an average cost basis within each
category below and pro rata from the CECONY or

 

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CEI Participant’s Account Balance available for withdrawal. A CECONY or CEI
Participant may at any time withdraw an amount up to the entire vested amount to
the credit of his or her After-Tax and Employer Contribution Subaccounts, and
ESOP Account except that a CECONY Weekly Participant may not withdraw an amount
attributable to an Employer Contribution until December 31st, of the third
calendar year — and a CECONY Management Participant or CEI Participant, of the
second calendar year — beginning after the calendar month for which the Employer
Contribution was made. A CECONY or CEI Participant will not be permitted to make
any such withdrawal amounting to less than $300 unless the maximum amount
available under this paragraph is less than $300 in which case the CECONY or CEI
Participant will only be permitted to withdraw such maximum amount. Withdrawals
will be made in the following order from a CECONY or CEI Participant’s Account
Balance:

 

  (i) If the CECONY or CEI Participant requests a nontaxable withdrawal:

 

  1. Non-Participating After-Tax Contributions made before January 1, 1987,
excluding any earnings thereon, and

 

  2. Participating After-Tax Contributions made before January 1, 1987,
excluding any earnings thereon.

 

  (ii) If the CECONY or CEI Participant requests a taxable withdrawal, without
incurring a suspension as provided below:

 

  1. Non-Participating After-Tax Contributions made before January 1, 1987,
excluding any earnings thereon;

 

  2. Participating After-Tax Contributions made before January 1, 1987,
excluding any earnings thereon;

 

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  3. Non-Participating After-Tax Contributions made on or after January 1, 1987,
including any earnings thereon;

 

  4. Participating After-Tax Contributions made on or after January 1, 1987,
that have been in the Account for two full calendar years after the year
contributed for a CECONY Management or CEI Participant and three full calendar
years after the year contributed for a CECONY Weekly Participant, including any
earnings thereon;

 

  5. Any earnings attributable to Non-Participating After-Tax Contributions made
before January 1, 1987;

 

  6. Any earnings attributable to Participating After-Tax Contributions made
before January 1, 1987; and

 

  7. Employer Contributions that have not been in the CECONY Weekly
Participant’s Account for three, or in a CECONY Management or CEI Participant’s
Account for two, full calendar years after the contribution year, including any
earnings thereon.

 

  (iii) If the CECONY or CEI Participant requests a taxable withdrawal resulting
in a suspension as provided below:

 

  1. Non-Participating After-Tax Contributions made before January 1, 1987,
excluding any earnings thereon;

 

  2. Participating After-Tax Contributions made before January 1, 1987,
excluding any earnings thereon;

 

  3. Non-Participating After-Tax Contributions made on or after January 1, 1987,
including any earnings thereon;

 

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  4. Participating After-Tax Contributions made on or after January 1, 1987,
including any earnings thereon;

 

  5. Any earnings attributable to Non-Participating After-Tax Contributions made
before January 1, 1987;

 

  6. Any earnings attributable to Participating After-Tax Contributions made
before January 1, 1987; and

 

  7. Employer Contributions that have not been in the Account for three full
calendar years for a CECONY Weekly Participant and two full calendar years for a
CECONY Management or CEI Participant, after the contribution year, including any
earnings thereon.

A CECONY or CEI Participant who has withdrawn at least the entire amount
available in his or her After-Tax, Employer Contribution Subaccount and ESOP
Account without incurring a suspension may at any time withdraw an amount up to
the entire amount to the credit of his or her Rollover Contribution Subaccount.

A CECONY or CEI Participant who has attained the age of fifty-nine and one-half
and who has withdrawn at least the entire vested amount available for withdrawal
in his or her After-Tax Contribution Subaccount, Employer Contribution
Subaccount, ESOP Account and Rollover Contribution Subaccount without incurring
a suspension, may withdraw an amount up to the entire amount to the credit of
his or her Pre-tax Contribution Subaccount in the following order:

 

  (i) If the CECONY or CEI Participant requests a withdrawal, without resulting
in a suspension:

 

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  (ii) Non-Participating Pre-Tax Contributions, including any earnings thereon,
and

 

  (iii) Participating Pre-Tax Contributions that have been in the Account for
three full calendar years for a CECONY Weekly Participant and two full calendar
years for a CECONY or CEI Management Participant after the year contributed,
including any earnings thereon.

 

  (iv) If the CECONY or CEI Participant requests a withdrawal resulting in a
suspension:

 

  (v) Participating After-Tax Contributions, made on or after January 1, 1987
that have been in the Account for less than three full calendar years for a
CECONY Weekly Participant and two full calendar years for a CECONY or CEI
Management Participant after the contribution year, including any earning
thereon;

 

  (vi) Non-Participating Pre-Tax Contributions, including any earnings thereon;
and

 

  (vii) Participating Pre-Tax Contributions including any earnings thereon.

A CECONY or CEI Participant shall not be permitted to make any such withdrawal
amounting to less than $300 unless the maximum amount available is less than
$300 in which case the CECONY or CEI Participant shall only be permitted to
withdraw such maximum amount.

Notwithstanding the preceding subparagraphs, a CECONY or CEI Participant may not
withdraw any amount that would cause his or her Account Balance to be less than
the minimum amount required under Section 9.12.

 

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In the event a CECONY or CEI Participant withdraws any amounts which represent
After-Tax Participating Contributions made at any time during the three full
calendar years for a CECONY Weekly Participant and two full calendar years for a
CECONY or CEI Management Participant, preceding the calendar year in which the
withdrawal is made, the CECONY or CEI Participant’s right to make any
contributions to the Thrift Savings Plan shall be suspended throughout all
Payroll Periods commencing during the six full calendar months as soon as
practicable following the withdrawal. To resume contributions following such
suspension, the CECONY or CEI Participant must elect on or before such day, in
such manner and on such conditions as may be prescribed by the Plan
Administrator, to resume making contributions.

(b) An O&R Hourly Participant who has attained the age of fifty-nine and
one-half may request an in-service cash withdrawal. He or she may withdraw all
or a portion of his or her Account Balance attributable to Pre-Tax Contributions
and Rollover Contributions and income credited thereon (other than any portion
of his or her Account Balance attributable to an outstanding loan balance),
except that he or she may not withdraw such amount to the extent that under
applicable state law such contributions and/or earnings, whether or not
withdrawn, would be subject to state income tax if such O&R Hourly Participant
had the right to withdraw it from his or her Account Balance. Such request may
be made only once each twelve-month period and may not be for an amount of less
than $500 or the entire amount available for withdrawal. Effective January 1,
2002, withdrawals may be made up to four times in a year and the minimum amount
that may be withdrawn is reduced to $300.

(c) An O&R Management Participant may request a withdrawal from his or her
Account Balance which is attributable to After-Tax Contributions in such manner
and on such conditions as may be prescribed by the Plan Administrator.
Additionally, an

 

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O&R Management Participant who is at least age fifty-nine and one-half may
withdraw during employment all or a portion of his or her Account Balance which
is attributable to Pre-Tax Contributions and Rollover Contributions and income
credited thereon (except for any portion of his or her Account Balance
attributable to an outstanding loan balance), except that he or she may not
withdraw such amount to the extent that under applicable state law such
contributions and/or earnings, whether or not withdrawn, would be subject to
state income tax if such O&R Management Participant had the right to withdraw it
from his or her Account Balance. Such requests may be made only once each twelve
month period and may not be for an amount of less than $500 or the entire amount
available for withdrawal. Effective January 1, 2002, withdrawals, when
available, may be made up to four times in a year and the minimum amount that
may be withdrawn is reduced to $300.

7.04 Hardship Withdrawals

A Participant may, in the event of hardship, withdraw all or any part of the
amount of Pre-Tax Contributions to the credit of the Account Balance of the
Participant (excluding any earnings after December 31, 1998, attributable to
Pre-Tax Contributions) in excess of any minimum Account Balance required under
Section 9.09. An O&R Participant may also withdraw the income credited after
December 31, 1988, attributable to Transferred Employer PAYSOP Contributions and
Rollover Contributions and income attributable to After-Tax Contributions if
such income is subject to the restrictions on withdrawal pursuant to
Section 7.03. A Participant may apply for a hardship withdrawal in such manner
and on such conditions as may be prescribed by the Plan Administrator. A
Participant shall be deemed to have a hardship if the Participant has an
immediate and heavy financial need and if the withdrawal is necessary to

 

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satisfy such financial need as set forth below. The Plan Administrator or his or
her delegate shall determine whether the Participant satisfies the requirements
for a hardship and the amount of any hardship withdrawal. Any withdrawal under
this Section shall be made pro-rata from the Participant’s balances in the
Investment Funds from which withdrawal may be made as provided in Section 7.03.
A withdrawal pursuant to this Section 7.04 shall not be subject to the
limitations on number of withdrawals permitted under Section 7.03.

(a) Immediate and Heavy Financial Need. A Participant will be deemed to have an
immediate and heavy financial need if the withdrawal is to made on account of
any of the following:

 

  (i) Medical expenses described in Code Section 213(d) previously incurred by
the Participant, the Participant’s spouse or any dependent, (as defined in Code
Section 152), of the Participant, or expenses necessary for those persons to
obtain medical care described in Code Section 213(d);

 

  (ii) Costs directly related to the purchase, excluding mortgage payments, of a
principal residence for the Participant;

 

  (iii) Payment of tuition, related educational fees, and room and board
expenses for the next twelve-months of post- secondary education for the
Participant, or the Participant’s spouse, children or dependents;

 

  (iv) Payment of amounts necessary to prevent the eviction of the Participant
from his or her principal residence or to avoid foreclosure on the mortgage of
the Participant’s principal residence;

 

  (v) Payment of funeral expenses for a family member;

 

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  (vi) Any other need added to the foregoing items of deemed immediate and heavy
financial needs by the Commissioner of the Internal Revenue Service through the
publication of revenue rulings, notices and other documents of general
availability, rather than on an individual basis.

 

  (vii) A Participant shall not be permitted to make a withdrawal in the event
of a hardship on account of any reason other than as set forth above.

(b) Necessary to Satisfy Such Need. The requested withdrawal will not be treated
as necessary to satisfy the Participant’s immediate and heavy financial need to
the extent that the amount of the requested withdrawal is in excess of the
amount required to relieve the financial need or to the extent such need may be
satisfied from other sources that are reasonably available to the Participant.
The amount of an immediate and heavy financial need may include any amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the hardship withdrawal. The Participant
must request, on such form or otherwise as the Plan Administrator or his or her
delegate may prescribe, that the Plan Administrator or his or her delegate made
its determination of the necessity for the withdrawal solely on the basis of the
Participant/s certification, without any supporting documents. In the event the
Plan Administrator or his or her delegate shall make such determination provided
all of the following requirements are met: (1) the Participant has obtained all
distributions and withdrawals, other than distributions available only on
account of hardship, and all nontaxable loans currently available under all
plans of the Company and Affiliates, (2) the Participant is prohibited from
making Pre-Tax Contributions and After-Tax Contributions to the Thrift Savings
Plan and all other plans of the Company and Affiliates under the terms of such
plans or by means of an otherwise legally enforceable agreement for at least 12

 

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months, or beginning on or after January 1, 2002, six months, after receipt of
the distribution, and (3) the limitation described in Section 3.02 under all
plans of the Company and Affiliates for the calendar year following the year in
which the distribution is made must be reduced by the Participant’s Pre-Tax
Contributions made prior to such distribution in the calendar year of the
distribution for hardship. All other plans of the Company and Affiliates means
all qualified and non-qualified plans of deferred compensation maintained by the
Company and Affiliates and includes a stock option, stock purchase (including
the Company’s Discount Stock Purchase Plan), qualified and non-qualified
deferred compensation plans and such other plans as may be designated under
regulations issued under Code Section 401(k), but shall not include health and
welfare benefit plans.

7.05 Distribution from Company Stock Fund

Where an amount to be distributed pursuant to Section 7.02, 7.03 or 14.10 is
represented in part by Units, the distributee may elect, in such manner and on
such conditions as may be prescribed by the Plan Administrator, to have
distributed the number of whole Shares represented by such Units, together with
an amount of dollars representing the balance of the current value of such
Units. In the absence of such an election, the distribution shall be made
entirely in cash. Withdrawals for hardships or loans to be made from the Company
Stock Fund shall be made entirely in cash.

7.06 Leaves of Absence

If a Participant is granted an unpaid leave of absence by an Employer, such
event will not be deemed a termination of service, but such Participant’s
Pre-Tax Contributions and After-Tax Contributions under this Thrift Savings Plan
will be suspended as of the last day of the Payroll Period in which such leave
commences. Such Participant may resume making Pre-Tax Contributions and

 

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After-Tax Contributions, as of a Payroll Period following the termination of
such leave of absence, by making a new payroll deduction authorization in such
manner and on such conditions as may be prescribed by the Plan Administrator.
Notwithstanding the preceding sentence, and the provisions of Section 7.04, if a
Participant makes a hardship withdrawal while on a leave of absence, any
suspension of such Participant’s right to make Pre-Tax or After-Tax
Contributions which shall result from such withdrawal shall begin with the first
Payroll Period beginning after such leave of absence.

7.07 Age 70 1/2 Required Distribution

(a) A Participant who attains age 70 1/2 on or after January 1, 2000, shall
begin his or her distribution of his or her Account Balance no later than the
April 1st following the later of the calendar year in which he or she attains
age 70 1/2 or the calendar year in which the Participant terminates employment.
In accordance with the Worker, Retiree, and Employer Recovery Act of 2008, and
newly published Code Section 401(a)(9)(H),the minimum required distribution may
be waived temporarily for calendar year 2009.

(b) In the event a Participant in active service was required prior to
January 1, 2000 to begin receiving payments while in service under the
provisions of a Prior Plan, the Thrift Savings Plan shall distribute to the
Participant in each distribution calendar year the minimum amount required to
satisfy the provisions of Code Section 401(a)(9) provided; however, that the
payment for the first distribution calendar year shall be made on or before
April 1 of the following calendar year. Such minimum amount will be determined
on the basis of the joint life expectancy of the Participant and his or her
Beneficiary. Such life expectancy will be recalculated once each year; however,
the life expectancy of the Beneficiary will not be recalculated if the
Beneficiary is not the Participant’s spouse. The amount of the withdrawal shall
be allocated among the Investment Funds in proportion to the value of the

 

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Account Balance as of the date of each withdrawal. The commencement of payments
under this Section shall not constitute an Annuity Starting Date for purposes of
Code Sections 72, 401(a)(11) and 417. Upon the Participant’s subsequent
termination of employment, payment of the Participant’s Account Balance shall be
made in accordance with the provisions of Section 7.08.

(c) With respect to distributions under the Thrift Savings Plan made in calendar
years beginning on or after January 1, 2000, the Thrift Savings Plan will apply
the minimum distribution requirements of Code Section 401(a)(9) that were
proposed in January 2001, notwithstanding any provision of the Thrift Savings
Plan to the contrary. This amendment shall continue in effect until the end of
the last calendar year beginning before the effective date of final regulations
under Code Section 401(a)(9) or such other date specified in guidance published
by the Internal Revenue Service. With respect to determining the amount of and
the timing for required minimum distributions for calendar years on or after
January 1, 2003, the Thrift Savings Plan will comply with the final regulations
under Code Section 401(a)(9) as promulgated on June 15, 2004 and published in
the Federal Register as 69 FR 33288 -01.

7.08 Form and Timing of Distributions

(a) Timing of Distributions. Upon termination from employment with the Company
and any Affiliate service, distributions will be made as follows:

 

  (i) if the vested portion of the Participant’s Account Balance equals $5,000,
or effective March 28, 2005, $1,000, his or her Account Balance will be
distributed in a single lump sum as soon as practicable but not later than 60
days after the end of the calendar year in which the Participant’s termination
from employment occurs; or

 

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(ii)

unless the participant consents to a distribution upon termination from
employment, if the vested portion of the Participant’s Account Balance exceeds
$5,000, or effective March 28, 2005, $1,000, distribution will be deferred until
April 1 of the calendar year following the calendar year in which the
Participant attains age 70  1/2 unless and until, the Participant elects an
earlier distribution under Section 7.08(b).

 

  (iii) Termination of employment entitling a Participant to a distribution does
not occur in the event of a corporate transaction in which there is a transfer
of the Account Balances of Participants affected by the corporate transaction to
a plan maintained or created by the affected Participant’s new employer.

(b) The Participant may elect an immediate or deferred distribution, subject to
Code Section 401 (a)(9), Article XIV, if applicable, and, in such manner and on
such conditions as may be prescribed by the Plan Administrator, any of the
following:

 

  (i) a distribution of the Participant’s Vested Account Balance in a single
lump sum;

 

  (ii) monthly, quarterly or annual periodic installment payments in a fixed
dollar amount or fixed percentage amount, up to a 15-year period; or

 

  (iii) a distribution of all or part of the Participant’s Vested Account
Balance.

 

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(c) If a Participant’s distribution is deferred until April 1 of the calendar
year following the calendar year in which the Participant attains again 70 1/2,
the Participant may elect, in such manner and on such conditions as may be
presented by the Plan administrator;

 

  (i) a distribution in a single lump sum, or

 

  (ii) a distribution in the required minimum amounts and over the applicable
distribution period prescribed under the Code’s minimum distribution rules. If
the Participant fails to make an election, the distribution shall be made in a
single lump sum;

(d) Any distribution of less than all of a Participant’s Vested Account Balance
shall be made pro-rata from the Investment Funds in which the Account Balance in
invested.

7.09 Proof of Death and Right of Beneficiary or Other Person

The Plan Administrator may require and rely upon such proof of death and such
evidence of the right of any Beneficiary or other person to receive the value of
the vested Account Balance of a deceased Participant as the Plan Administrator
may deem proper, and his or her determination of the right of that Beneficiary
or other person to receive payment will be conclusive.

7.10 Distribution Limitation

Notwithstanding any other provision of this Article 7, all distributions from
this Thrift Savings Plan shall conform to the regulations issued under Code
Section 401(a)(9), including the incidental death benefit provisions of Code
Section 401(a)(9)(G). Such regulations override any Thrift Savings Plan
provision that is inconsistent with Code Section 401(a)(9).

7.11 Direct Rollover of Certain Distributions

Notwithstanding any provision of the Thrift Savings Plan to the contrary that
would otherwise limit a Distributee’s election under this Section, a Distributee
may elect, in such manner and on such conditions as may be prescribed by the
Plan Administrator, to

 

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have any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a direct rollover. The
following definitions apply to the terms used in this Section:

(a) Eligible Rollover Distribution means any distribution of all or any portion
of the balance to the credit of the Distributee. An Eligible Rollover
Distribution does not include any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee’s designated
beneficiary, or for a specified period of ten years or more or any distribution
to the extent such distribution is required under Code Section 401(a)(9). Any
amount that is distributed on account of hardship is not an Eligible Rollover
Distribution. The Distributee may not elect to have any portion of a hardship
distribution paid directly to an Eligible Retirement Plan. Effective beginning
January 1, 2002, a distribution does not fail to be an Eligible Rollover
Distribution solely because it includes after-tax employee contributions that
are not includible in gross income. The portion attributable to after-tax
contributions may be transferred only to an individual retirement account or
annuity described in Code Section 408(a) or (b), or to a qualified defined
contribution plan described in Code Section 401(a) or 403(a) that agrees to
separately account for amounts so transferred, including separately accounting
for the portion of such distribution which is includible in gross income and the
portion of such distribution which is not so includible.

(b) Eligible Retirement Plan means an individual retirement account described in
Code Section 408(a), an individual retirement annuity described in Code
Section 408(b), an annuity plan described in Code Section 403(a), or a qualified
trust described in Code

 

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Section 401(a) that is a defined contribution plan, that accepts the
Distributee’s Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement
Plan is an individual retirement account or individual retirement annuity.
Effective January 1, 2002, Eligible Retirement Plan also means an annuity plan
described in Code Section 403(a) or Code Section 403(b), and an eligible plan
under Code Section 457(b) maintained by a political subdivision of a state, or
any agency or instrumentality of a state or political subdivision of a state and
which agrees to separately account for amounts transferred into such plan from
this Plan, including separately accounting for the portion of such distribution
that is includible in gross income and the portion of such distribution that is
not so includible.

(c) Distributee means an Employee, former employee, the surviving spouse of the
Employee or Former Employee, spouse or former spouse of an Employee or Former
Employee who is the alternate payee under a qualified domestic relations order
as defined in Code Section 414(p), are Distributees.

(d) Direct rollover means a payment by the Plan to the Eligible Retirement Plan
specified by the Distributee.

(e) Effective as of March 28, 2005, this Thrift Savings Plan does not provide
for mandatory distributions in any amount that exceeds $1,000. However in the
unlikely event a distribution in excess of $1,000 is made without the
Participant’s consent and before the Participant attains the later of age 62 or
normal retirement age, and the Participant does not elect to have such
distribution paid directly to an eligible retirement plan specified by the
Participant in a direct rollover or to receive the distribution directly, then
the distribution will be paid in a direct rollover to an individual retirement
plan designated by the Plan Administrator.

 

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(f) Effective for distributions on and after March 4, 2008, the term
“Distributee” means an individual who is a designated beneficiary of the
Participant and is not the surviving spouse of the Participant. If, with respect
to any portion of a distribution from the Thrift Savings Plan of a deceased
Participant, a direct trustee –to –trustee transfer is made to an individual
retirement plan established for the purpose of receiving the distribution on
behalf of an individual who is a designated beneficiary but not the surviving
spouse of the Participant then this provision applies. In accordance with the
changes made by the Pension Protection Act of 2006, first, the transfer will be
treated as an eligible rollover distribution for purposes of IRC
Section 402(c)(11). Second, the individual retirement plan will be treated as an
inherited individual retirement account or annuity. Third, IRC
Section 401(a)(9)(B) (other than clause (iv)) will apply to the individual
retirement plan.

(g) If the Internal Revenue Code or Treasury Regulations promulgated under IRC
Section 401(a)(9) is subsequently amended, changed or modified, this
Section 7.11(g) will be operated and administered in accordance with any future
amendments, changes or modifications.

 

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ARTICLE VIII

Non-Discrimination and Limitation

8.01 Actual Deferral Percentage Test

(a) Separate Testing Groups. Solely for purposes of determining whether the
Thrift Savings Plan satisfies the Average ADP tests, the Thrift Savings Plan
will be tested as if it were four separate plans (“Testing Plan”): (1) a Thrift
Savings Plan covering CECONY Management Employees, O&R Management Employees and
CEI Employees (“Management Employees”), (2) a Testing Plan covering O&R Hourly
Employees (“O&RU”), (3) a Thrift Savings Plan covering Local 1-2 Employees
(“Local 1-2U”) and, (4) a Thrift Savings Plan covering Local 3 Employees (“Local
3U”). Each employee in the O&RU, Local 1-2U, and Local 3U is referred to as a
“Union Employee.” Solely for purposes of determining whether a Testing Plan
satisfies the ADP test (“ADP Test”), an Employee who is under age 21 or has less
than one Year of Service is not taken into account as an Eligible Employee.

(b) The Average ADP for both Highly Compensated Management Employees (“HCMEs”)
and for Highly Compensated Union Employees (“HCUEs”), respectively, who are, or
are eligible to become, Participants may not exceed the greater of:

 

  (i) the Average ADP for Non-Highly Compensated Management Employees (“NHCMEs”)
or Non-Highly Compensation Union Employees (“NHCUEs”), respectively, who are, or
eligible to become, Participants multiplied by 1.25; or

 

  (ii) the Average Actual Deferral Percentage for HCMEs or HCUEs, respectively,
multiplied by 2.0, but not more than 2 percentage points in excess of the
Average Actual Deferral Percentage for the NHCMEs or NHCUEs, respectively.

 

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(c) During a Plan Year, the Plan Administrator may implement rules limiting the
Pre-Tax Contributions which may be made on behalf of some or all of either the
HCMEs or HCUEs so that this limitation is satisfied. If the Plan Administrator
determines that the limitation has been exceeded in any Plan Year, the following
provisions apply:

 

  (i) The amount of Pre-Tax Contributions made by either the HCMEs or HCUEs, as
applicable, will be reduced by a leveling process under which the Pre-Tax
Contributions of the HCME or HCUE, as applicable, with the highest dollar amount
of Pre-Tax Contributions shall be reduced to the extent necessary to completely
eliminate the excess Pre-Tax Contribution or cause such Pre-Tax Contributions to
equal the amount of such contributions of the HCME or HCUE, as applicable, with
the next highest dollar amount of Pre-Tax Contribution. This process will be
repeated until the excess Pre-Tax Contribution is eliminated. Effective for Plan
Years beginning after December 31, 1996, excess Pre-Tax Contributions is
determined using the “ratio leveling” method and distributed using the “dollar
leveling” method. Accordingly, excess Pre-Tax Contributions are allocated to the
HCME or HCUE with the largest amounts of Employer Contributions taken into
account in calculating the ADP test for the year in which the excess arose,
beginning with the HCME or HCUE with the largest amount of such employer
contributions and continuing in descending order until all the Excess Pre-Tax
Contributions have been allocated. The largest amount is determined after
distribution of any excess contributions.

 

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(ii)

Excess Pre-Tax Contributions, together with Earnings, will be paid to the
Participant before the close of the Plan Year following the Plan Year in which
the excess Pre-Tax Contributions were made and, to the extent practicable,
within 2  1/2 months of the close of the Plan Year in which the Excess Pre-Tax
Contributions were made. However, any Excess Pre-Tax Contributions for any Plan
Year will be reduced by any Pre-Tax Contributions previously returned to the
Participant for that Plan Year. If any returned Excess Pre-Tax Contributions
were matched by Employer Contributions, such corresponding Employer
Contributions, with Earnings will be forfeited and used to reduce Employer
Contributions. The Participant, other than an O&R HCUE, may elect, in lieu of a
return of the Excess Pre-Tax Contributions to have the Plan treat all or a
portion of the Excess Pre-Tax Contributions to the Plan as After-Tax
Contributions for the Plan Year in which the Excess Pre-Tax Contributions were
made, subject to the limitations of Section 3.01. Re-characterized Excess
Pre-Tax Contributions shall be considered After-Tax Contributions made in the
Plan Year to which the Excess Pre-Tax Contributions relate for purposes of
Section 8.02 and shall be subject to the withdrawal provisions applicable to
After-Tax Contributions under Article 7. The Participant’s election to
re-characterize Excess Pre-Tax Contributions shall be made within 2  1/2 months
of the close of the Plan Year in which the Excess Pre-Tax Contributions were
made or within such shorter period as the Plan Administrator may prescribe. In
the absence of a timely election by the Participant, the Thrift Savings Plan
shall return Excess Pre-Tax Contributions.

 

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The multiple use test described in Treasury Regulation Section 1.401(m)-2 will
not apply for Plan Years beginning after December 31, 2001.

8.02 Actual Contribution Percentage Test

(a) Solely for purposes of determining whether the Plan satisfies the Average
Contribution Percentage test, the Plan will not test Union Employees. The Plan
will test only the Management Employees.

(b) The Average Contribution Percentage for HCMEs who are, or eligible to
become, Participants may not exceed the Average Contribution Percentage of
NHCMEs who are, or are eligible to become, Participants multiplied by 1.25. If
the Average Contribution Percentage for the HCMEs does not meet the foregoing
test, the Average Contribution Percentage for HCMEs may not exceed the Average
Actual Contribution Percentage of NHCMEs who are, or eligible to become,
Participants by more than two percentage points, and the Average Contribution
Percentage for HCMEs may not be more than 2.0 times the Average Contribution
Percentage for NHCMEs (or such lesser amount as the Plan Administrator shall
determine to satisfy the provisions of Section 8.03). During a Plan Year, the
Plan Administrator may implement rules limiting the After-Tax Contributions
which may be made by some or all HCMEs so that this limitation is satisfied. If
the Plan Administrator determines that the limitation under this Section 8.02
has been exceeded in any Plan Year, the following provisions shall apply:

 

  (i) The amount of After-Tax Contributions and Employer Contributions made by
or on behalf of some or all HCMEs in the Plan Year shall be reduced in the same
leveling manner as Excess Pre-Tax Contributions are reduced.

 

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  (ii) Any Excess Aggregate Contributions will be reduced and allocated in the
following order:

 

  (iii) Non-Participating After-Tax Contributions, to the extent of the Excess
Aggregate Contributions, will be paid to the Participant; and then, if
necessary,

 

  (iv) so much of the Participating After-Tax Contributions and corresponding
Employer Contributions, as is necessary to meet the test will be reduced, with
the After-Tax Contributions, together with Earnings, being paid to the
Participant and the Employer Contributions, together with Earnings, being
reduced, with vested Employer Contributions being paid to the Participant and
Employer Contributions which are forfeitable under the Plan being forfeited and
applied to reduce Employer Contributions; then if necessary,

 

  (v) so much of the Employer Contributions, together with Earnings, as is
necessary to equal the balance of the Excess Aggregate Contributions will be
reduced, with vested Employer Contributions being paid to the Participant and
Employer Contributions which are forfeitable under the Plan being forfeited and
applied to reduce Employer Contributions.

(c) Any repayment or forfeiture of Excess Aggregate Contributions will be made
before the close of the Plan Year following the Plan Year for which the Excess
Aggregate Contributions were made and, to the extent practicable, any repayments
or forfeiture will be made within 2 1/2 months of the close of the Plan Year in
which the Excess Aggregate Contributions were made. The multiple use test
described in Treasury Regulation Section 1.401(m)-2 will not apply for Plan
Years beginning after December 31, 2001.

 

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8.03 Separate Non-Discrimination Testing

Effective for Plan Years beginning on and after January 1, 2002, solely for
purposes of determining whether the Thrift Plan and the ESOP satisfy the Average
Actual Deferral Percentage Test and the Average Contribution Percentage all
Employer Contributions allocated to the Company Stock Fund are treated as
contributions to the ESOP and tested separately.

8.04 Maximum Annual Additions

(a) Except to the extent permitting Catch-Up Contributions in accordance with
Code Section 414(v), the annual addition to a Participant’s Account Balance for
any Plan Year, (the “Limitation Year”) when added to the Participant’s annual
addition for the Limitation Year under any other qualified defined contribution
plan of the Company or an Affiliate, may not exceed the lesser of (1) 25% or,
for Plan Years beginning on January 1, 2002, 100%, of his or her Compensation
for the Plan Year or (2) the greater of $30,000 or, for Plan Years beginning on
January 1, 2002, $40,000, and on January 1, 2009, $49,000, each as adjusted for
increases in the Cost-Of-Living Adjustment. All contributions to the Thrift
Savings Plan are subject to the applicable limits set forth in this provision
and all other applicable provisions under Code Sections 401(k), 401(m), 402(g),
404, and 415.

(b) For purposes of this Section, the annual addition to a Participant’s Account
Balance under this Plan or any other qualified defined contribution plan
maintained by the Company or an Affiliate will be the sum of:

 

  (i) the total contributions, including Pre-Tax Contributions, made on the
Participant’s behalf by each Employer and all Affiliates,

 

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  (ii) all After-Tax Contributions, exclusive of any Rollover Contributions,

 

  (iii) all Employer Contributions; and

 

  (iv) forfeitures, if applicable, that have been allocated to the Participant’s
Account Balance under this Plan or his or her accounts under any other such
qualified defined contribution plan. Any Pre-Tax Contributions distributed under
Section 8.01 and any Employer Contributions or After-Tax Contributions
distributed or forfeited under the provisions of Section 3.01, 8.01, 8.02 or
8.03 shall be included in the annual addition for the year allocated.

(c) If the annual addition to a Participant’s Account Balance for any Plan Year,
prior to the application of the limitation set forth in paragraph (a) above,
exceeds that limitation due to a reasonable error in estimating a Participant’s
Compensation or in determining the amount of Pre-Tax Contributions that may be
made with respect to a Participant under Code Section 415, or as the result of
the allocation of forfeitures, the amount of contributions credited to the
Participant’s Account Balance in that Plan Year shall be adjusted to the extent
necessary to satisfy that limitation in accordance with the following order of
priority:

 

  (i) The Participant’s Non-Participating After-Tax Contributions shall be
reduced to the extent necessary. The amount of the reduction shall be returned
to the Participant, together with any earnings on the contributions to be
returned.

 

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  (ii) The Participant’s Non-Participating Pre-Tax Contributions shall be
reduced to the extent necessary. The amount of the reduction shall be returned
to the Participant, together with any earnings on the contributions to be
returned.

 

  (iii) The Participant’s Participating After-Tax Contributions and
corresponding Employer Contributions shall be reduced to the extent necessary.
The amount of the reduction attributable to the Participant’s Participating
After-Tax Contributions shall be returned to the Participant, together with any
earnings on those contributions to be returned, and the amount attributable to
the Employer Contributions shall be forfeited and used to reduce subsequent
contributions payable by the affected Employer.

 

  (iv) The Participant’s Participating Pre-Tax Contributions and corresponding
Employer Contributions shall be reduced to the extent necessary. The amount of
the reduction attributable to the Participant’s Participating Pre-Tax
Contributions shall be returned to the Participant, together with any earnings
on those contributions to be returned, and the amount attributable to the
Employer Contributions shall be forfeited and used to reduce subsequent
contributions payable by the affected Employer.

(d) Any Pre-Tax Contributions returned to a Participant under this paragraph
(d) shall be disregarded in applying the dollar limitation of Pre-Tax
Contributions under Section 3.01(b), and in performing the Actual Deferral
Percentage Test under Section 8.01. Any After-Tax Contributions returned shall
be disregarded in performing the Actual Contribution Percentage Test under
Section 8.02.

 

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ARTICLE IX

Loans

9.01 Loans Permitted

Upon terms and conditions set forth in this Article 9, and in accordance with
such uniform rules as the Plan Administrator may adopt, a Participant who is not
on a leave of absence and remains on the active payroll may borrow from his or
her Account Balance. The Plan Administrator or his or her delegate is authorized
to administer the loan program under this Article 9. Any Participant who is an
Employee, a former Employee, or a Beneficiary of an O&R Participant, and who is
also a “party-in-interest” (as defined in Section 3(14) of ERISA) to the Plan,
may borrow from his or her Account Balance.

9.02 Amount of Loans

The minimum amount of any loan is $1,000 for a CECONY or CEI Participant and
$500 for an O&R Participant. Effective January 1, 2002, the minimum amount of a
loan for a CECONY or CEI Participant will be $500. The amount of any loan to a
Participant may not exceed the lesser of (a) or (b), where (a) is $50,000
reduced by the excess (if any) of (i) the highest outstanding balance of loans
to the Participant from the Plan during the one-year period ending on the day
before the date on which such loan is made, over (ii) the outstanding balance of
loans to the Participant from the Plan on the date on which such loan is made,
and (b) is one-half of the vested portion of the Participant’s Account Balance.
Outstanding balance of loans means the outstanding amount of all loans from the
Plan and any other qualified plans of the Company or an Affiliate.

 

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Effective February 1, 2007, as to any new loan applications made by a CECONY
Management or CEI Participant, he or she may not have more than two loans
outstanding at any time.

9.03 Source of Loans

(a) Funds for loans from a Participant’s Account Balance shall be taken from the
Participant’s Subaccounts in the following order:

 

  (i) For a CECONY Participant:

 

  (ii) Non-Participating Pre-Tax Contributions and Earnings;

 

  (iii) Participating Pre-Tax Contributions and Earnings;

 

  (iv) Rollover Contributions and Earnings;

 

  (v) Vested Employer Contributions and Earnings that have been in the Account
Balance for three full calendar years for a CECONY Weekly Participant and two
full calendar years for a CECONY or CEI Management Participant after the
contribution year and Earnings;

 

  (vi) Non-Participating After-Tax Contributions and Earnings; and

 

  (vii) Participating After-Tax Contributions and Earnings.

 

  (viii) For an O&R Participant:

 

  (ix) Pre-Tax Contributions and Earnings;

 

  (x) Rollover Contributions and Earnings; and

 

  (xi) After-tax Contributions and Earnings.

(b) No loan will be made from a Subaccount or a part of a Subaccount until the
entire balance in the Subaccount or part of the Subaccount preceding it on the
above list has been exhausted. Within each Subaccount or part thereof, funds for
loans will be taken

 

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on an average cost basis and pro-rata from each Investment Fund within the
Subaccount or part of the Subaccount, and such pro-rata portion of each
Investment Fund will be converted to cash for the loan based upon the market
value of the investment on the date of conversion.

9.04 Interest Rate

The interest rate to be charged on loans will be a reasonable rate of interest
determined from time to time by the Plan Administrator. In determining such rate
the Plan Administrator seeks to provide to the Plan a rate of return
commensurate with the interest rates charged by persons in the business of
lending money for loans that would be made under similar circumstances on the
date the loan is approved. The interest rate will be fixed for the entire term
of the loan.

Effective for loans originating before January 1, 2001, the interest rate to be
charged to an O&R Participant is the effective interest rate charged by the
Orange and Rockland Employees’ Federal Credit Union for a 48 month share-secured
loan. The interest rate to be charged for a principal residence loan to an O&R
Management Participant will be based upon Federal National Mortgage Association
mortgage rates. Effective for loans originating after January 1, 2001, the
interest rate to be charged to an O&R Participant will be the same interest rate
applicable to a CECONY Participant.

9.05 Repayment

The Participant may select a period of one, two, three, four or five years for
repayment of a loan, except that the Participant may, at his or her option,
select a longer period of whole years, not exceeding ten, (20 in the case of an
O&R Management Participant) for repayment of a loan for the purpose of
purchasing his or her principal residence. Repayment will be made by level
payments, not less frequently than quarterly, in such amount as shall be
sufficient to pay the principal and interest thereon over the period for
repayment.

 

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Repayment shall be made by payroll deductions, except that in the case of a
Participant who is not on the active payroll, repayments may continue to be made
by check or other similar means as the Plan Administrator shall determine.
Prepayment by a CECONY Weekly Participant of a loan in full, without penalty,
may be made only after 52 weekly payments have been made. Prepayment by an O&R
Participant of a loan in full, without penalty, and prepayment by a CECONY
Management or CEI Participant of a loan in full or in part, without penalty, may
be made at any time by personal check or money order. The amount of each loan
payment shall be placed into the Investment Funds, except the Company Stock
Fund, in accordance with the most recent investment election made by the
Participant with respect to the Participant’s Contributions. Notwithstanding the
foregoing, a loan which is made to a Participant who is an Employee shall become
due and payable in full upon the Employee’s termination of employment; provided,
however, that if a Participant becomes an employee of a buyer or one of its
affiliates following the sale of the Company’s or an Affiliate’s assets, and if
the Participant’s Account is transferred to a qualified plan maintained by the
buyer or one of its affiliates (the “Buyer’s Plan”), any outstanding loan at his
or her termination of employment with the Company will not be due and payable in
full at termination but will instead be transferred to the Buyer’s Plan.

9.06 Multiple Loans

A CECONY Weekly Participant may not have more than one loan outstanding at a
time. A CECONY Management or CEI Participant may not have more than one loan
granted in a calendar year unless all earlier loans made in the same calendar
year to the Participant shall have been repaid in full. An O&R Participant may
not have more than one loan outstanding at any time and may make a request for a
loan only once in a twelve month period.

 

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9.07 Pledge

The vested portion of the Participant’s Account Balance shall be pledged as
security for all loans to the Participant. The amount pledged shall not be
greater than fifty percent of the Participant’s vested portion. If a default
occurs in the repayment of a loan, the entire unpaid principal balance plus
accrued interest, if any: (i) will be charged, when the Participant becomes
eligible to receive a distribution, against that portion of the Participant’s
vested portion which serves as security for the loan; (ii) will be deducted, if
a distribution is to made, from the amount payable to the Participant or the
Participant’s Beneficiary; or (iii) if neither (i) nor (ii) applies, will
continue to encumber that portion of the Participant’s vested portion that
serves as security for the loan.

9.08 Loan Reserve

The amount of each loan to a Participant will be transferred from the portion of
the Trust Fund held for the Participant’s Account Balance and invested pursuant
to Section 5.02 to a special Loan Reserve maintained for such Participant’s
Account Balance. Such Loan Reserve will be invested solely in the loan or loans
made to the Participant. Payments on any such loan will reduce the Participant’s
Loan Reserve and will be reinvested for the Participant’s Account Balance in
accordance with Section 9.05.

9.09 Minimum Account Balance

So long as any amount of a loan remains outstanding to a Participant, the
Participant may not make any withdrawal from his or her Account Balance that
would reduce the value of his or her vested portion to less than his or her Loan
Reserve.

 

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9.10 Other Terms

Each loan will be evidenced by a promissory note payable to the Trustee. The
terms and conditions of any loan may be adjusted at any time, to the extent
determined by the Plan Administrator, to be necessary for compliance with law or
to maintain the qualification of the Plan under the Code.

 

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ARTICLE X

Administration of the Plan, ESOP and TRASOP

10.01 Named Fiduciaries and Plan Administrator of Plan ESOP and TRASOP

The following persons from time to time occupying the following offices of
CECONY are hereby designated as Named Fiduciaries: Chief Executive Officer,
Chief Financial Officer, and Chief Accounting Officer. CECONY may designate
other persons who, upon acceptance of such designation, shall serve as Named
Fiduciaries either instead of or in addition to those named above. Any such
designation and acceptance shall be in writing and retained by the Plan
Administrator. The Named Fiduciaries shall act by majority rule. The Named
Fiduciaries shall appoint from among the officers of CECONY a Plan Administrator
who shall serve at the discretion of the Named Fiduciaries. The Plan
Administrator shall serve without compensation for his or her services as such
and shall act solely in the interest of the Participants and their
Beneficiaries.

Solely in this Article X, the term Plan includes the Thrift Savings Plan, the
ESOP and the TRASOP unless the context clearly designates otherwise.

10.02 Authority of Plan Administrator

The Plan Administrator has the discretionary authority to control and manage the
operation and administration of the Plan, ESOP, and TRASOP and, without limiting
the generality of the foregoing, shall interpret the Plan, ESOP, determine
eligibility for benefits under the Plan, determine any facts or resolve any
questions relevant to the administration of the Plan, ESOP, and TRASOP and, in
connection therewith, may remedy and correct any ambiguities, inconsistencies,
or omissions in the Plan, ESOP and TRASOP. Any such action taken by the Plan
Administrator shall be conclusive and binding on all Participants, ESOP
Participant,

 

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Beneficiaries and other persons. The Plan Administrator is authorized to make
any changes to the Plan, ESOP and TRASOP that he or she, in his or her sole
discretion, determines are necessary or desirable to carry out (a) the
transition to Vanguard Fiduciary Trust Company as Trustee, record keeper and
Investment Manager for the O&R Hourly Plan and the O&R Management Plan, (b) the
addition of new Investment Funds, (c) the merger of the CECONY Management Plan,
the O&R Hourly Plan and O&R Management Plan into this Plan, ESOP and TRASOP, and
(d) to make any other changes to facilitate administration of the Plan, ESOP and
TRASOP.

The Plan Administrator also has the authority to adopt certain amendments to the
Plan, ESOP and TRASOP, which are (a) required or desirable in order to implement
corporate transactions such as mergers, acquisitions and divestitures;
(b) required, necessary or recommended for compliance with ERISA, the Code or
other laws; or (c) necessary or desirable for uniform or efficient
administration. In all cases, any amendment(s) adopted by the Plan Administrator
shall neither materially nor significantly increase the Employers’ or the
Company’s obligations or adversely affect or reduce the Account Balance of any
Participant.

10.03 Reliance on Reports

The Named Fiduciaries and the Plan Administrator are entitled to rely upon any
opinions, reports, or other advice that will be furnished by specialists,
subject to fiduciary responsibilities imposed by ERISA.

10.04 Delegation of Authority

With approval of the Named Fiduciaries, the Plan Administrator may designate one
or more persons to exercise any power, or perform any duty, of the Plan
Administrator. Any such designation will be in writing and signed by the Plan
Administrator and the Named Fiduciaries and a copy thereof will be delivered to
the Trustee.

 

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10.05 Administration Expenses

All expenses arising in connection with the operation and administration of the
Plan will be paid by the Plan, ESOP or TRASOP, as applicable.

The expenses of administration of the TRASOP shall include, without limitation,
transfer taxes, postage, brokerage commissions and other direct selling expenses
incurred by the Trustee in the sale of Shares pursuant to Article XIII, losses
incurred by the Trustee on funds invested pursuant to Article XIII, and fees of
the Trustee in connection with the administration of TRASOP, including fees for
legal services rendered to the Trustee (whether or not rendered in connection
with a judicial or administrative proceeding and whether or not incurred while
it is acting as Trustee), but shall excludes brokerage fees and commissions for
purchases of Shares pursuant to Section 13.02, which brokerage fees and
commissions shall be paid out of the dividends being reinvested thereby. Such
expenses of administration of TRASOP will, to the extent permitted by law, be
paid:

 

  (i) first, out of any available income of TRASOP;

 

  (ii) second, out of any available dividends received by the Trustee on Shares
allocated to Participants pursuant to Section 13.02, which dividends have not
then been applied to the purchase of additional Shares pursuant to
Section 13.02; and

 

  (iii) Third, by CECONY.

In no event shall the amounts paid by the Trustee during such Plan Year pursuant
to clauses “first” and “second” above, exceed the smaller of: the sum of (x)10
percent of the first $100,000 and (y) 5 percent of an amount in excess of
$100,000 of the income from dividends paid to the Trustee with respect to common
stock of the Company during such Plan Year or $100,000.

 

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10.06 Fiduciary Insurance

The Employers may purchase and carry fiduciary responsibility insurance under
which each member of the Board, each Named Fiduciary, the Plan Administrator,
and any person, including each employee, to whom there may be delegated any
responsibility in connection with the administration of the Plan, including the
Trustee, will be indemnified against any cost or expense (including counsel’s
fees) or liability which may be incurred arising out of any act or failure to
act in the administration of this Plan, except for gross negligence or willful
misconduct.

10.07 Claim Review

(a) Upon receipt from a Participant or Beneficiary of an initial claim for
benefits, the Plan Administrator shall respond in writing and deliver or mail to
the Participant or Beneficiary within 90 days following the date on which the
initial claim is filed. If the initial claim is denied, in part or totally, the
Plan Administrator shall set forth the specific reasons for the denial, written
in a plain and understandable manner, with specific reference to pertinent Plan,
ESOP and TRASOP provisions on which the denial is based, a description of any
additional material or information necessary for the claimant to perfect the
claim, an explanation of why such material or information is necessary, and an
explanation of the Plan’s ESOP and TRASOP claim review procedure. If special
circumstances require an extension of time for processing the claim, written
notice of an extension shall be furnished to the claimant prior to the end of
the initial period of 90 days following the date on which the claim was filed.
Such an extension may not exceed a period of 90 days beyond the end of the
initial period. If the claim has not been granted, and if written notice of the
denial of the claim is not furnished within 90 days following the date on which
the claim is filed, the claim shall be deemed denied for the purpose of
proceeding to the claim review procedure.

 

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(b) Claim Review Procedure. A Participant, Beneficiary, or the authorized
representative of either shall have 60 days after receipt of written
notification of denial of a claim to request a review of the denial by making
written request to the Plan Administrator. The Plan Administrator shall give the
Participant, Beneficiary, or the authorized representative of either an
opportunity to appear to review pertinent documents, to submit issues and
comments in writing, and to present evidence supporting the claim. Not later
than 60 days after receipt of the request for review, the Plan Administrator
shall render and furnish to the claimant a written decision which shall include
specific reasons for the decision, and shall make specific references to
pertinent Plan provisions on which it is based. If special circumstances require
an extension of time for processing, the decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for review,
provided that written notice and explanation of the delay are given to the
claimant prior to commencement of the extension. Such decision by the Plan
Administrator shall not be subject to further review. If a decision on review is
not furnished to a claimant within the specified time period, the claim will be
deemed to have been denied on review.

(c) Exhaustion of Remedy. No claimant shall institute any action or proceeding
in any state or federal court of law or equity, or before any administrative
tribunal or arbitrator, for a claim for benefits under the Plan until he or she
has first exhausted the procedures set forth in this section.

 

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10.08 Appointment of Trustee

The Trustee will be appointed by the Board.

10.09 Limitation of Liability

The Company, the Board, the Named Fiduciaries, the Plan Administrator, the
Employers and any officer, Employee or agent of the Company and each Employer
shall not incur any liability individually or on behalf of any other individuals
or on behalf of the Company or Employers for any act or failure to act, made in
good faith in relation to the Plan or the funds of the Plan. However, this
limitation shall not act to relieve any such individual or the Company or
Employers from a responsibility or liability for any fiduciary responsibility,
obligation or duty under Part 4, Title I, of ERISA.

 

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ARTICLE XI

Miscellaneous

11.01 Exclusive Benefit - Amendments

It shall be impossible for any part of the corpus or income of the Trust Fund,
ESOP Trust Fund or the TRASOP Trust Fund to be used for or diverted to purposes
other than for the exclusive benefit of Participants or Beneficiaries entitled
to benefits under the Plan and for paying the expenses of the Plan. No person
has any interest in, or right to, any part of the Trust Fund except as and to
the extent expressly provided in the Plan. Subject to the foregoing, the Plan
may be amended, in whole or in part, at any time and from time to time by the
Board or pursuant to authority granted by the Board and any amendment may be
given such retroactive effect as the Board or its duly authorized delegate may
determine. If an Employer, other than CECONY, wishes to amend the Plan as to its
participating employees, that Employer will present a resolution of its board of
directors approving the proposed amendment and requesting CECONY to amend the
Plan. CECONY shall have the sole discretion whether to amend the Plan as
requested by an Employer.

Solely in this Article XI, the term Plan includes the Thrift Savings Plan, the
ESOP and the TRASOP and reference to the Trust Fund includes the ESOP Trust Fund
and the TRASOP Trust Fund, unless the context clearly designates otherwise.

11.02 Termination - Sale of Assets of Subsidiary

(a) The Plan may be partially or fully terminated or contributions may be
permanently discontinued for any reason at any time by the Board. In the event
of a partial or total termination of the Plan or permanent discontinuance of
contributions under the Plan: (i) no contribution will be made thereafter except
for a Payroll Period the last day of which coincides with or precedes such

 

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termination or discontinuance; (ii) no distribution shall be made except as
provided in the Plan; (iii) the rights of all Participants to the entire amounts
to the credit of their Account Balances as of the date of such termination or
partial termination or discontinuance shall become 100% vested; (iv) no person
shall have any right or interest except with respect to the Trust Fund; (v) any
remaining forfeitures shall be considered a special Employer Contribution and
shall be allocated on a pro-rata basis, based on Account Balance, to all
Participants with an Account Balance as of the date of termination, partial
termination or discontinuance; and (vi) the Trustee shall continue to act until
the Trust Fund shall have been distributed in accordance with the Plan.

(b) Upon termination of the Plan, Pre-Tax Contributions, with Earnings, will be
distributed to Participants only if neither the Company, Employers nor an
Affiliate establishes or maintains a successor defined contribution plan. For
purposes of this paragraph, a “successor defined contribution plan” is a defined
contribution plan, other than an employee stock ownership plan as defined in
Code Section 4975(e)(7), a simple IRA, as defined in Code Section 403(b), a Code
Section 457 plan, or a simplified employee pension as defined in Code
Section 408(k) which exists at the time the Plan is terminated or within the
12-month period beginning on the date all assets are distributed. A defined
contribution plan will not be deemed a successor plan if fewer than two percent
of the Employees who are eligible to participate in the Plan at the time of its
termination are or were eligible to participate under another defined
contribution plan of the Company or an Affiliate (other than an ESOP or a SEP)
at any time during the period beginning 12 months before and ending 12 months
after the date of the Plan’s termination.

 

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11.03 Beneficiaries

Upon the death of a Participant, his or her Account Balance shall be payable in
a lump sum to his or her surviving spouse. If there is no surviving spouse or
the surviving spouse has consented, in the manner provided in this
Section 11.03, to a designation of a Beneficiary in addition to or instead of
such spouse, and such designation is in effect at the time of the Participant’s
death, the Participant’s Account Balance will be paid to such Beneficiary.
Effective beginning June 1, 2002, the surviving spouse or Beneficiary(ies) may
elect to take a distribution in monthly, quarterly or yearly installments up to
but not exceeding a 15-year period; providing, however, that any distribution
election is consistent with Code Section 401(a)(9) and the regulations
promulgated thereunder. Each Participant may designate a primary or contingent
Beneficiary or Beneficiaries in the event of the death of the Participant prior
to distribution of such benefits. The Participant may file a written designation
with the Plan, on a form furnished by the Plan Administrator, or his or her
delegate. Such designation shall be effective only if (1) such designation is
accompanied by the written consent of the Participant’s spouse which
acknowledges the effect on the spouse of the designation and it witnessed by a
notary public, or (2) the Participant if not married. Any such designation made
by an unmarried Participant shall become null and void in the event the
unmarried Participant marries before his or her Annuity Starting Date. Any
consent of a spouse shall be effective only with respect to such spouse. If, at
the time of a Participant’s death, there is no surviving spouse of the
Participant and no designation of a Beneficiary by such Participant is in
effect, then the Participant’s benefits shall be payable to his or her estate or
legal representative. A Participant may revoke a designation made pursuant to
this Section 11.03 by signing and filing with the Plan Administrator or his or
her delegate a written instrument to that effect, in such manner and on such
conditions as may be prescribed by the Plan

 

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Administrator, or by filing a new designation pursuant to this Section 11.03.
The consent of a Participant’s spouse may not be revoked, but such spouse’s
consent shall be required for every designation of a Beneficiary other than the
Participant’s spouse and for every change in any such designation. The
requirement for spousal consent may be waived by the Plan Administrator if he or
she believes there is no spouse, or the spouse cannot be located, or because of
such other circumstances as may be established by applicable law.

11.04 Assignment of Benefits

(a) No Participant or Beneficiary shall have the right to assign, transfer,
alienate, pledge, encumber or subject to lien any benefits to which he or she is
entitled under the Plan. Nothing in this Section shall preclude payment of Plan
benefits pursuant to a qualified domestic relations order as defined in Code
Section 414(p) and Section 206(d) of ERISA. The Plan Administrator will
establish a written procedure to determine the qualified status of domestic
relations orders and to administer distributions under such qualified orders.

(b) Notwithstanding anything herein to the contrary, if the amount payable to
the alternate payee under the qualified domestic relations order is $5,000 or
less, such amount shall be paid in one lump sum as soon as practicable following
the qualification of the order. If the amount exceeds $5,000, it may be paid as
soon as practicable following the qualification of the order if the alternate
payee consents thereto; otherwise it may not be payable before the earliest of
(1) the Participant’s termination of employment, (2) the time such amount could
be withdrawn under Article 7 or (3) the Participant’s attainment of age 50.

 

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(c) A Participant’s Account Balance may be offset against the amount owed to the
Plan as a result of a breach of fiduciary duty to the Plan or criminality
involving the Plan. The participant’s Account Balance will be reduced to satisfy
liabilities of the Participant to the Plan due to: (1) the Participant being
convicted of committing a crime involving the Plan; (2) a civil judgment (or
consent order or decree) being entered by a court in an action brought in
connection with a violation of ERISA’s fiduciary duty rules; or (3) a settlement
agreement between the Secretary of Labor and the Participant in connection with
a violation of ERISA’s fiduciary rules. If the Participant is married at the
time at which the offset is to be made, either the Participant’s spouse must
consent in writing to these offset (unless there is no spouse, the spouse cannot
be located, or due to other circumstances prescribed by the Secretary pursuant
to Code Section 417(a)(2)(B)), or a spousal waiver of survivor benefits must be
in effect for the offset to take place. Spousal consent is not required if the
spouse is ordered or required by the judgment, order, decree, or settlement to
pay an amount to the Plan in connection with a violation of Part 4 of Title I of
ERISA. Spousal consent is not required where, in the judgment, order, decree, or
settlement, the spouse retains the right to receive a 50% survivor annuity under
a qualified joint and survivor annuity and under a qualified pre-retirement
survivor annuity. The amount of a benefit that is so offset is includible in
income on the date of the offset.

11.05 Merger

The Plan may not be merged or consolidated with, or its assets or liabilities
may not be transferred to any other plan unless each person entitled to benefits
under the Plan would, if the resulting plan were then terminated, receive
immediately after the merger or consolidation, or transfer of assets or
liabilities, a benefit which is equal to or greater than the benefit he or she
would have been entitled to receive immediately before the merger, consolidation
or transfer if the Plan had then terminated.

 

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In the event of a corporate transaction, divestiture of assets or an Affiliate,
or other corporate reorganization in which one or a group of Participants are
transferred to another employer, the Plan Administrator, in his or her sole
discretion, may effectuate a trust-to-trust transfer of affected Participants’
Account Balance to the other employer’s qualified defined contribution plan.

In the event of a corporate acquisition, merger, or other corporate
reorganization in which one or a group of persons become Employees, the Plan
Administrator, in his or her sole discretion, or if CECONY so requires, may
accept a trust-to-trust transfer of the affected persons’ Account Balance from
another employer’s qualified defined contribution plan to the Plan.

11.06 Conditions of Employment Not Affected by Plan

The establishment and maintenance of the Plan shall not confer any legal rights
upon any Employee or other person for a continuation of employment, nor shall it
interfere with the rights of the Employers to discharge any Employee and to
treat him or her without regard to the effect which that treatment might have
upon him or her as a Participant or potential Participant of the Plan.

11.07 Facility of Payment

If the Plan Administrator finds that a Participant or other person entitled to a
benefit is unable to care for his or her affairs because of illness or accident
or is a minor, the Plan Administrator may direct that any benefit due him or
her, unless claim has been made by a duly appointed legal representative, be
paid to his or her spouse, a child, a parent or other blood relative, or to a
person with whom he or she resides. Any payment so made shall be a complete
discharge of the liabilities of the Plan for that benefit.

 

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11.08 Information

Each Participant, Beneficiary or other person entitled to a benefit, before any
benefit is payable to him or her/on his or her account under the Plan, shall
file with the Plan Administrator the information that the Plan Administrator
requires to establish his or her rights and benefits under the Plan.

11.09 Additional Participating Employers

(a) If any entity is or becomes an Affiliate, the Board may include the
employees of that Affiliate in the participation of the Plan upon appropriate
action by that Affiliate necessary to adopt the Plan. If any person becomes an
Employee as the result of a merger, a consolidation, or an acquisition of all or
part of the assets or business of another company, the Board shall determine to
what extent, if any, previous service with the other entity will be recognized
under the Plan, subject to the continued qualification of the trust for the Plan
as tax-exempt under the Code.

(b) An Employer may terminate its participation in the Plan upon appropriate
action. In that event, the funds of the Plan held on account of Participants in
the employ of that Affiliate, and any unpaid Account Balances of Participants
who have separated from the employ of that Affiliate, shall be determined by the
Plan Administrator. Those funds will be distributed as provided in and permitted
under Section 11.02 if the Plan, as to that employer, is terminated, or
segregated by the Trustee to a separate trust, pursuant to certification to the
Trustee by the Plan Administrator, continuing the Plan as a separate plan for
the employees of that Affiliate under which the board of directors of that
Affiliate will succeed to all the powers and duties of the Board, including the
appointment of named fiduciaries and plan administrator.

 

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11.10 IRS Determination

All contributions made to the Trust Fund, and all loans made pursuant to Article
9, which are made prior to the receipt of a determination from the Internal
Revenue Service to the effect that the Plan is a qualified plan under Code
Sections 401 (a) and 401(k) or the refusal of the IRS in writing to issue such a
determination, shall be made on the express condition that such determination is
received. In the event the Internal Revenue Service determines that the Plan is
not so qualified or refuses in writing to make such determination, such
contributions, increased by any earnings thereon, and reduced by any losses
thereon and by the outstanding balance (principal and interest) on any loans
made under Article 9, shall be returned to the Employer(s) and Participants, as
appropriate, as promptly as practicable after such determination. In the event
the Internal Revenue Service requires reductions in such contributions and/or
changes in the terms and conditions of such loans as a condition of its
determination that the Plan is so qualified, the required reductions in
contributions, increased by any earnings and reduced by any losses attributable
thereto, shall be returned to the Employer(s) and Participants, as appropriate,
and/or the amounts and terms and conditions of any such outstanding loans shall
be modified to meet Internal Revenue Service requirements, as promptly as
practicable after notification from the Internal Revenue Service. If all or part
of an Employer’s deductions under Code Section 404 for Employer Contributions to
the Plan are disallowed by the Internal Revenue Service, the portion of the
Employer Contributions to which the disallowance applies shall be returned to
that Employer without earnings thereon, but reduced by any losses attributable
thereto. The return shall be made within one year after the denial of
qualification or disallowance of deduction, as the case may be.

 

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11.11 Mistaken Contributions

Any contribution made by mistake of fact shall be returnable, without any
earnings thereon but reduced by any losses attributable thereto, to the
Employer(s) and/or Participants, as appropriate within one year after the
payment of the contribution.

11.12 Prevention of Escheat

If the Plan Administrator cannot ascertain the whereabouts of any person to whom
a payment is due under the Plan, the Plan Administrator may, no earlier than
three years from the date such payment is due, mail a notice of such due and
owing payment to the last known address of such person, as shown on the records
of the Plan or Employer. If such person has not made written claim therefor
within three months of the date of the mailing, the Plan Administrator may, if
he or she so elects and upon receiving advice from counsel to the Plan, direct
that such payment and all remaining payments otherwise due such person be
canceled on the records of the Plan and the amount thereof applied to reduce the
contributions of the applicable Employer. Upon such cancellation, the Plan and
the Trust shall have no further liability therefor except that, in the event
such person or his or her beneficiary later notifies the Plan Administrator of
his or her whereabouts and requests the payment or payments due to him under the
Plan, the amount so applied shall be paid to him or her in accordance with the
provisions of the Plan.

11.13 Construction

The Plan shall be construed, regulated and administered under ERISA and the laws
of the State of New York, except where ERISA controls. In the event a claimant
institutes an action or proceeding in any state or federal court of law or
equity, the applicable “statute of limitations” for such action will be New York
State statute for actions brought in contract matters.

 

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ARTICLE XII

Top-Heavy Provisions

12.01 Application of Top-Heavy Provisions

This Article XII shall apply for purposes of determining whether the plan is a
top-heavy plan under Code Section 416(g) for Plan Years beginning after
December 31, 2001, and whether the Plan satisfies the minimum benefit
requirements of Code Section 416(c) for such years.

12.02 Minimum Benefit for Top-Heavy Year

(a) Key Employee Key Employee means any Employee or former Employee (including
any deceased Employee) who at any time during the Plan Year that includes the
determination date was an officer of the Company or Affiliate having Annual
Compensation greater that $130,000 (as adjusted under Code Section 416(i)(1))
beginning after December 31, 2002, or $160,000 for Plan Years beginning after
December 31, 2008, a 5-percent owner of the Company or Affiliate or a 1-percent
owner of the Company or Affiliate having Annual Compensation of more than
$150,000. The determination of who is a Key Employee will be made in accordance
with Code Section 416(i)(1) and the applicable regulations and other guidance of
general applicability issued there under.

(b) Determination of present values and amounts This section 12.02(b) shall
apply for purposes of determining the present values of accrued benefits and the
amounts of Account Balances of Employees as of the determination date.

 

  (i)

Distributions during the year ending on the determination date. The present
values of accrued benefits and the amounts of Account Balances of an Employee as
of the determination date shall be increased by the distributions

 

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made with respect to the Employee under the Plan and any Plan aggregated with
the Plan under Code Section 416(g)(2) during the 1-year period ending on the
determination date. The preceding sentence shall also apply to distribution
under a terminated plan which, had if not been terminated, would have been
aggregated with the plan under Code Section 416(g)(2)(A)(i). In the case of a
distribution made for a reason other than separation from service, death, or
disability, this provision shall be applied by substituting “5-year period” for
“1-year period.”

 

  (ii) Employees not performing services during year ending on the determination
date The accrued benefits and Account Balances of any individual who has not
performed services for the Company or an Affiliate during the 1-year period
ending on the determination date shall not be taken into account.

12.03 Minimum Benefits

Matching Contributions Employer Contributions shall be taken into account for
purposes of satisfying the minimum contribution requirements of Code
Section 416(c)(2) and the Plan. Employer Contributions that are used to satisfy
the minimum contribution requirements shall be treated as matching contributions
for purposes for the Actual Contribution Percentage Test and other requirements
of Code Section 401(m).

In the event the Plan becomes a Top-Heavy Plan in any Plan Year, then the
minimum Employer Contribution will not be less than 3% of Compensation per year,
or if less than 3%, the highest rate allocated to any Key Employee, including
amount contributed as a result of a Pre-Tax Contribution election, on behalf of
each Non-Key Employee without regard to whether he or she has less than 1,000
Hours of Service or his or her Compensation.

 

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12.04 Aggregation Groups

(a) Notwithstanding anything to the contrary herein, this Plan shall not be a
Top-Heavy Plan if it is part of either a “required aggregation group” or a
“permissive aggregation group” that is not a Top-Heavy Group.

(b) The “required aggregation group” consists of:

 

  (i) Each Defined Contribution Plan or Defined Benefit Plan in which at least
one Key Employee participates; and

 

  (ii) Each other Defined Contribution Plan or Defined Benefit Plan which
enables a plan referred to in the preceding subparagraph (i) to meet the
nondiscrimination requirements of Section 401(a)(4) or 410 of the Code.

(c) A “permissive aggregation group” consists of the plans included in the
“required aggregation group” plus any one or more other Defined Contribution
Plans or Defined Benefit Plans which, when considered as a group with the
“required aggregation group”, would continue to meet the nondiscrimination
requirements of Section 401(a)(4) and 410 of the Code.

12.05 Special Benefit Limits

For any Plan Year for which this Article 12 is applicable the definitions of
“Defined Benefit Plan Fraction” and “Defined Contribution Plan Fraction” in
Sections 1.20 and 1.22, respectively, shall be modified in each case by
substituting “1.0”for “1.25”. Effective for limitation years beginning after
December 31, 1999, the provisions of this Section 12.05 no longer apply on
account of the repeal of Section 415(e) of the Code.

 

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12.06 Special Distribution Rule

For any Plan Year for which this Article 12 is applicable, Section 7.08(a) shall
apply to Key Employees, effective December 31, 2004, who are 5% owners of the
Company or Affiliate.

 

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ARTICLE XIII

Tax Reduction Act Stock Ownership Plan

13.01 Purpose - Separate Entity

(a) The TRASOP, is a stock bonus plan, established under the Tax Reduction Act
of 1975 was intended to give eligible participants an equity interest in CECONY
and encourage those participants to remain in the employ of CECONY. The TRASOP
is invested in Shares and in a short-term investment fund of cash and cash
equivalents. Applicable laws do not permit additional contributions to the
TRASOP. CECONY desires to continue the TRASOP Accounts of Participants having
such accounts. Effective as of July 1, 1988, all TRASOP Accounts were
transferred to this Plan, and all TRASOP provisions which continue to be
applicable were added to this Plan and shall, together with other applicable
provisions of this Plan, govern the TRASOP Accounts.

(b) Participant’s Plan Account Balances and TRASOP Accounts shall be
administered separately, although they shall be held as part of the same Trust
Fund. There shall be no transfers between TRASOP Accounts and Plan Accounts.

(c) All matters relating to the TRASOP which relate to or arise out of facts,
circumstances or conditions in effect prior to July 1, 1988, shall be governed
by the provisions of the TRASOP as in effect on June 30, 1988 prior to the
merger, unless expressly otherwise provided in this Plan.

(d) Effective on or after January 1, 2002, the Economic Growth and Tax Reduction
Recovery Act of 2001 amended the definition of applicable dividend to allow a
deduction for dividends paid on applicable employer securities with respect to
which participants or beneficiaries are provided an election to have the
dividend paid to an ESOP and distributed in cash, or reinvested

 

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in qualifying employer securities. The deduction is available both with respect
to dividends that are reinvested and paid out in cash. Accordingly, effective
January 1, 2002, the TRASOP is being amended to provide participants or
beneficiaries with the election to have dividends paid in cash or reinvested, as
set forth below.

13.02 TRASOP Accounts - Application of Dividends

(a) The TRASOP Account of each Participant in TRASOP who remained in the employ
of CECONY on July 1, 1988 was transferred to this Plan effective as of July 1,
1988. Each such Participant shall continue to have a nonforfeitable right to all
Shares allocated and all amounts credited to such Participant’s TRASOP Account.

(b) All dividends received by the Trustee with respect to Shares allocated to
the TRASOP Accounts of Participants shall be applied to the purchase of
additional Shares. Such purchases shall be made promptly after the receipt of
each such dividend. The Trustee shall purchase, in one or more transactions, the
maximum number of whole Shares obtainable at then prevailing prices, including
brokerage commissions and other reasonable expenses incurred in connection with
such purchases. Such purchases may be made on any securities exchange where
Shares are traded, in the over-the-counter market, or in negotiated
transactions, and may be on such terms as to price, delivery and otherwise as
the Trustee may determine to be in the best interest of the Participants. The
Trustee shall complete such purchases as soon as practical after receipt of such
dividends, having due regard for any applicable requirements of law affecting
the timing or manner of such purchases. The additional Shares so purchased shall
be allocated among the respective TRASOP Accounts of the Participants in
proportion to the number of Shares in each TRASOP Account at the record date for
the payment of the dividend so applied. Such allocation shall be made as
promptly as practicable but for purposes of

 

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determining the time at which such additional Shares shall become distributable
pursuant to Section 13.04, the additional Shares so allocated to each
Participant’s TRASOP Account shall be deemed to have been allocated as of the
respective allocation dates of the Shares in such TRASOP Account at such record
date, in proportion to the number of such Shares previously allocated as of each
such allocation date.

(c) For Plan Years beginning on and after January 1, 2002, dividends received by
the Trustee with respect to Shares allocated to the TRASOP accounts of
Participants, in accordance with the election of the Participant, will be either
paid in cash to Participants not later than 90 days after the close of the Plan
Year in which the dividends are paid, or applied by the Trustee for the purchase
of additional shares. A Participant will be given a reasonable opportunity
before a dividend is paid or distributed to make the election and can change a
dividend election at least annually. If there is a change in the Plan governing
the manner in which the dividends are paid or distributed to Participants, each
Participant will be given a reasonable opportunity to make an election under the
new Plan terms prior to the date on which the first dividend subject to the new
Plan terms is paid or distributed. A Participant who fails to make an election
as to whether to receive his or her dividend in cash or have such dividend
reinvested will be treated as if he or she elected to have his or her dividend
reinvested until such time that he or she makes an affirmation election for a
distribution of the dividend. Dividends that are distributed will be held and
invested in a short-term investment fund or like kind of cash account until
distributed.

 

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13.03 Voting Rights, Options, Rights, and Warrants

(a) Each Participant shall be entitled to direct the Trustee as to the manner in
which any Shares or fractional Shares allocated to the Participant’s TRASOP
Account are to be voted.

(b) In the event that any option, right, or warrant shall be granted or issued
with respect to any Shares allocated to the Participant’s TRASOP Account, each
Participant shall be entitled to direct the Trustee whether to exercise, sell,
or deal with such option, right, or warrant.

(c) The Trustee shall keep confidential the Participant’s voting instructions
and instructions as to any option, right or warrant and any information
regarding a Participant’s purchases, holdings and sales of Shares.

13.04 Distribution of Shares

(a) Each Share allocated to a Participant’s TRASOP Account shall be available
for distribution to such Participant promptly after the earlier of the death,
disability or termination of employment of such Participant.

(b) Each Share which shall become distributable to a Participant by reason of
clause (a)(i) above is herein called, from the time such Share shall become so
distributable, an Unrestricted Share. Notwithstanding the provisions of the
aforesaid clause A.(i), Unrestricted Shares shall be distributed to Participants
as follows:

 

  (i)

From time to time, a Participant may request, in such manner and on such
conditions as may be prescribed by CECONY, that Unrestricted Shares held in the
Participant’s TRASOP Account be distributed to the Participant. If such
Participant is married, the written application shall include written consent of
the Participant’s spouse witnessed by a Notary Public. Spousal consent shall not
be required with respect to withdrawal requests made on or

 

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after March 1, 1994. Applications made in a calendar month shall be effective as
of the last day of such calendar month. Any such request must be for whole
Shares only and must be for at least ten Shares or the number of whole
Unrestricted Shares in the TRASOP Account, whichever is less.

 

  (ii) Certificates for Unrestricted Shares requested in accordance with the
preceding paragraph B(a) shall be delivered, or a cash distribution in respect
of such Unrestricted Shares if elected by the Participant pursuant to
Section 13.04D below shall be made, to the Participant as soon as practicable
after the effective date of the application.

 

  (iii) Any Unrestricted Share which shall become distributable by reason of any
provision of this Plan other than clause A.(i) above (including, without
limitation, provision for distribution upon the death, disability or termination
of employment of the Participant) shall be distributed in accordance with such
provision.

(c) In the case of death of a Participant, distributions in respect of Shares
allocated to the Participant’s TRASOP Account shall be made to the Participant’s
Beneficiary. In the case of disability or termination of employment with the
Company or an Affiliate of a Participant, distributions in respect of Shares
allocated to the Participant’s TRASOP Account shall be made to the Participant.

All distributions under the TRASOP will begin, subject to Section 7.08 and
Subsection 13.04.F, not later than the 60th day after the close of the Plan Year
in which the latest of the following events occurs: (1) the Participant attains
age 65, (2) the 10th anniversary of the year in which the Participant commenced
participation in TRASOP, or (3) the Participant becomes disabled, dies or
terminates employment with the Company or an Affiliate.

 

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(d) All distributions from a Participant’s TRASOP Account shall be made in
Shares; provided, however, that a Participant or Beneficiary shall have the
right to elect, on a form furnished by and submitted to CECONY, to receive a
distribution, other than a distribution upon termination of TRASOP, in cash.
Except in the case of a final distribution from a Participant’s TRASOP Account
and a distribution of the Participant’s entire TRASOP Account balance after such
time as all Shares in a Participant’s TRASOP Account have become Unrestricted
Shares, all distributions from such TRASOP Account shall be made in respect of
whole Shares only, and any fractional Share which is otherwise distributable
shall be retained in such TRASOP Account until it can be combined, in whole or
in part, with another fractional Share which shall subsequently become
distributable, so as to make up a whole Share. In the case of a final
distribution from a Participant’s TRASOP Account (except a distribution upon
termination of the TRASOP) or in the case of a distribution of the Participant’s
entire TRASOP Account balance after such time as all of the Shares in the
Participant’s TRASOP Account have become Unrestricted Shares, such distribution
shall be made in respect of the number of whole Shares then remaining in the
Participant’s TRASOP Account, together with a cash payment in respect of any
fractional Share based on the closing price of a Share as reported on the New
York Stock Exchange consolidated tape on the last trading day of the month
immediately preceding the month in which such final distribution is made. The
Trustee, in each such case, shall purchase such fractional Share from the
Participant at a price equal to the cash payment to be made to the Participant.
Whenever the Trustee requires funds for the

 

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purchase of fractional Shares, such funds shall be drawn from the accumulated
income of the TRASOP Trust Fund, if any, and otherwise shall be advanced by
CECONY upon the Trustee’s request, subject to reimbursement from future income
of the TRASOP Trust. All fractional Shares so purchased by the Trustee shall be
allocated to the TRASOP Accounts of the remaining Participants at such intervals
as shall be determined by the Plan Administrator, but no later than the end of
the next succeeding Plan Year. The Trustee shall sell any Shares in respect of
which a cash distribution is to be made. The Trustee may make such sales on any
securities exchange where Shares are traded, in the over-the-counter market, or
in negotiated transactions. Such sales may be on such terms as to price,
delivery and otherwise as the Trustee may determine to be in the best interests
of the Participants. The Trustee shall complete such sales as soon as practical
under the circumstances having due regard for any applicable requirements of law
affecting the timing or manner of such sales. All brokerage commissions and
other direct selling expenses incurred by the Trustee in the sale of Shares
under this Subsection 13.04D shall be paid as provided in Section 10.05.

(e) Upon any termination of TRASOP pursuant to Section 11.02, the Trust shall
continue until all Shares which have been allocated to Participants’ TRASOP
Accounts have been distributed to the Participants, unless the Board directs an
earlier termination of the TRASOP Trust Fund. Upon the final distribution of
Shares, or at such earlier time as the Board shall have fixed for the
termination of the TRASOP Trust Fund, the Plan Administrator shall direct the
Trustee to allocate to the Participants any Shares then held by the Trustee and
not yet allocated, and the Trustee shall distribute to the Participants any
whole Shares which have been

 

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allocated to their TRASOP Accounts but which have not been distributed, shall
sell all fractional Shares and distribute the proceeds to the respective
Participants entitled to such fractional Shares, shall liquidate any remaining
assets (other than Shares) held by the TRASOP Trust Fund, and shall apply the
proceeds of such liquidation and any remaining funds held by the Trustee, the
disposition of which is not otherwise provided for, to a distribution to all
Participants then receiving a final distribution of Shares, in proportion to the
whole and fractional Shares to which each is entitled; and the TRASOP Trust Fund
shall thereupon terminate.

(f) Notwithstanding any other provision of this Plan, unless a Participant
otherwise elects in writing on a form furnished by CECONY:

 

  A. Distribution of a Participant’s TRASOP Account balance will commence not
later than one (1) year after the close of the Plan Year

 

  (i) in which the Participant terminates employment with the Company or an
Affiliate by reason of Retirement upon or after attainment of Normal Retirement
Age, death, or disability, or

 

  (ii) which is the fifth Plan Year following the Plan Year in which the
Participant terminates employment for any other reason, and the Participant is
not reemployed before such Plan Year.

 

  B.

Distribution of the Participant’s TRASOP Account balance will be in five
(5) annual distributions as promptly as practicable after the end of each Plan
Year; provided, however, that a TRASOP Account balance that equals $1,000 or
less shall be distributed in a single distribution as soon as practicable, but
not later than 60 days after the close of the Plan Year in which the
Participant’s termination of employment occurs. Each such annual distribution
shall be in respect of the

 

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number of Shares, rounded down to the nearest number of whole Shares, which most
closely approximates the entire balance in the Participant’s TRASOP Account as
of December 31 of the previous year divided by the number of annual
distributions remaining to be made under this subsection, except that the fifth
such distribution shall be respect of the entire balance in the Participant’s
TRASOP Account as of the preceding December 31. Each such annual distribution
shall be taken pro rata from all contribution years in Participant’s TRASOP
Account.

 

  C. A Participant whose employment with the Company or an Affiliate is
terminated by reason of Retirement, disability or any other reason (other than
death) may elect in such a manner and on such conditions as may be prescribed by
CECONY to have his TRASOP Account balance distributed in one of the following
forms:

 

  (iii) a single lump sum distribution as soon as practicable, but not later
than 60 days after the end of the Calendar Year in which the Participant’s
termination of employment occurs; or

 

  (iv) a distribution deferred until the last day of a calendar month not later
than the calendar month in which the Participant attains age 70, as designated
by the Participant, in which event the distribution of the Participant’s TRASOP
Account balance as of the last day of the calendar month so designated by the
Participant shall be made in a single lump sum as soon as practicable after such
calendar month.

 

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13.05 Diversification of TRASOP Accounts

(a) Definitions: The following terms shall have the following meanings for
purposes of this Section 13.05:

 

  (i) Qualified Participant shall mean a Participant who has a TRASOP Account
and has attained at least age 55 and completed at least 10 years of
participation in TRASOP.

 

  (ii) Qualified Election Period shall mean the first ninety (90) days following
the end of each Plan Year.

 

  (iii) Eligible Shares shall mean Shares added to a Participant’s TRASOP
Account after December 31, 1986.

 

  (iv) Diversifiable Amount shall, with respect to any Qualified Election
Period, mean twenty-five percent (25%) of the number of Eligible Shares in the
Participant’s TRASOP Account as of the end of the preceding Plan Year. However,
if the Diversifiable Amount for any Qualified Election Period shall have a value
which may be deemed de minimis under regulations issued by the Secretary of the
United States Department of the Treasury, then there shall be no Diversifiable
Amount available for such Qualified Election Period.

(b) Eligibility for Diversification: Each Qualified Participant shall have the
right to elect to diversify, by means of a distribution of whole Eligible Shares
only, all or some portion of the Diversifiable Amount in his TRASOP Account
during each of the six (6) consecutive Qualified Election Periods following the
Plan Year in which such Participant first became a Qualified Participant,
provided, however, that, notwithstanding subsection 13.05.A.(d), the
Diversifiable Amount in the sixth Qualified Election Period

 

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for each Qualified Participant shall be fifty percent (50%) of the number of
Eligible Shares in his TRASOP Account as to the end of the preceding Plan Year.
A distribution pursuant to this Article 13.05 must be a minimum of ten
(10) Shares, or all Whole Shares comprising the Diversifiable Amount for such
Qualified Election Period if less than 10. Each Qualified Participant who
desires to elect diversification under this Section shall, during the Qualified
Election Period, complete and execute a diversification election and consent
form provided by CECONY. Such election may be revoked or modified or a new
election may be made in its stead within the Qualified Election Period, upon the
expiration of which the diversification election shall be irrevocable.

(c) Diversification Procedure

 

  (i) The TRASOP shall, within the 90 day period following each Qualified
Election Period, distribute to each Qualified Participant who has elected to
diversify under this Section, the number of whole Eligible Shares which most
closely approximates, but does not exceed, the number of Eligible Shares duly
elected to be diversified by each such Qualified Participant. Failure by a
Qualified Participant to provide required consents to distribution of any
Diversifiable Amount, shall relieve the TRASOP of all obligation to make any
such distribution.

 

  (ii) To the extent a Qualified Participant has Eligible Shares which are
Unrestricted Shares in his TRASOP Account, such Unrestricted Shares shall be
distributed pursuant to this Section 13.05. Only upon exhaustion of all such
Unrestricted Shares may additional Eligible Shares then be distributed
hereunder.

 

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ARTICLE XIV

Employee Stock Ownership Plan

14.01 Purpose - Separate Entity

(a) Effective as of the ESOP Effective Date, the Company established the
Consolidated Edison Employee Stock Ownership Plan (“ESOP”) as a portion of,
included within and separate from the Thrift Plan. The ESOP affords special
rights and has specific requirements which must be satisfied that are distinct
from the Thrift Plan, such as the right of an ESOP Participant to: (1) vote his
or her allocated Shares; (2) request his or her distribution be in the form of
Shares; (3) diversify his or her ESOP Account; (4) elect to take dividends in
cash or have dividends reinvested; and, (5) be 100% fully invested immediately
in those Shares purchased by reinvested dividends. Each of these distinct ESOP
rights and requirements is set forth in the Thrift Plan and obligations in the
Thrift Plan such as those requirements regarding eligibility to participate,
vesting, distributions, in-service distributions, operational, administrative
and fiduciary requirements continue to apply to the ESOP and are deemed
incorporated into and so are not repeated in this Article XIV. The ESOP is
intended to be an employee stock ownership plan within the meaning of Code
Section 4975(e)(7). The ESOP is intended to give ESOP Participants an equity
interest in CEI and encourage ESOP Participants to remain in the employ of CEI.

(b) Effective as of the ESOP Effective Date, the part of a Participant’s
Employer Contributions Subaccount invested in the Company Stock Fund in the
Thrift Plan was transferred to the ESOP and ESOP Trust Fund and established and
included into the Participant’s ESOP Account.

 

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(c) Participants’ ESOP Accounts will be held in the ESOP Trust Fund and
administered separately, although they shall be held as part of the same Trust
Fund. Participants are permitted to transfer assets to and from their ESOP
Accounts to their Thrift Plan Accounts within the ESOP Trust Fund and the Trust
Fund.

14.02 Special Definitions for ESOP

(a) The following terms shall have the following meanings for purposes of the
ESOP:

 

  (i) ESOP Account means the account into which is credited a Participant’s
Employer Contributions’ invested in the Company Stock Fund and dividends paid on
these Shares and comprising the following Subaccounts:

 

  (ii) the Participant’s Transferred ESOP Subaccount which is the Participant’s
Company Stock Fund that was transferred from the Thrift Plan to the ESOP as of
the ESOP Effective Date;

 

  (iii) a Participant’s Dividend Subaccount which, for a Participant who is
credited with less than three Years of Service, consists solely of Shares
purchased with reinvested dividends after the ESOP Effective Date and are 100%
fully vested at all times; and

 

  (iv) a Participant’s ESOP Subaccount which is the account into which is
credited a Participant’s Employer Contributions contributed to the ESOP after
the ESOP Effective Date.

 

  (v) Once a Participant is credited with at least three Years of Vesting
Service, his or her Dividend Subaccount will be merged into his or her ESOP
Subaccount. After the ESOP Effective Date, a Participant’s ESOP Subaccount will
include any Employer Contributions invested in the other Investment Funds to the
extent such amounts were ever at any time invested in the ESOP after the ESOP
Effective Date.

 

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  (vi) ESOP Effective Date means May 8, 2002.

 

  (vii) ESOP Participant means a Participant in the Thrift Plan who has elected
to invest some or all of his or her Employer Contributions in the Company Stock
Fund.

 

  (viii) Diversifiable ESOP Amount, with respect to any Qualified ESOP Election
Period, means 25% of the number of Shares in the Participant’s ESOP Account as
of the end of the preceding Plan Year. However, if the Diversifiable ESOP Amount
for any Qualified ESOP Election Period has a value which may be deemed de
minimis under regulations issued by the Secretary of the United States
Department of the Treasury, then there will be no Diversifiable ESOP Amount
available for such Qualified ESOP Election Period.

 

  (ix) Qualified ESOP Participant shall mean an ESOP Participant who has an ESOP
Account, attained at least age 55 and completed at least 10 years of
participation in the ESOP. Years of participation in the Thrift Plan will be
taken into account in determining whether a Qualified ESOP Participant has
completed 10 years of participation.

 

  (x) Qualified ESOP Election Period shall mean the first 90 days following the
end of each Plan Year.

 

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14.03 Participation in ESOP

Each Participant in the Thrift Plan who elects to have his or her Employer
Contributions invested in the Company Stock Fund will automatically become an
ESOP Participant in the ESOP. Each ESOP Participant will have his or her ESOP
Account held in the ESOP Trust Fund.

14.04 Employer Contributions

Only Employer Contributions and dividends issued on Shares held in the ESOP
Trust Fund will be contributed to the ESOP.

14.05 Purchase of Shares Purchases for ESOP Trust Fund.

(b) The Trustee shall regularly purchase Shares for the ESOP Trust Fund in
accordance with a non-discretionary purchasing program. Such purchases may be
made on any securities exchange where Shares are traded, in the over-the-counter
market, or in negotiated transactions, and may be on such terms as to price,
delivery and otherwise as the Trustee may determine to be in the best interests
of the ESOP Participants. Interest and other income received on assets held in
the ESOP Trust Fund shall be reinvested in the ESOP Trust Fund. All funds to be
invested shall be invested by the Trustee in one or more transactions promptly
after receipt by the Trustee, subject to any applicable requirement of law
affecting the timing or manner of such transactions. All brokerage commissions
and other direct expenses incurred by the Trustee in the purchase of sale of
Shares under the ESOP will be borne by the ESOP Account investing and/or trading
in Shares.

(c) Units. The interests of an ESOP Participant in his or her ESOP Account shall
be measures in Units, the number and value of which shall be determined daily.

14.06 Dividends

Beginning on and after the ESOP Effective Date, and for all Plan Years
thereafter, dividends received by the Trustee with

 

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respect to Shares allocated to the ESOP Accounts, in accordance with the
election of each ESOP Participant, will be either paid in cash to the ESOP
Participant as soon as practicable following the declaration date but in any
case not later than 90 days after the close of the Plan Year in which the
dividends are paid or applied by the Trustee for the purchase of additional
Shares.

An ESOP Participant will be given a reasonable opportunity before a dividend is
paid or distributed to make the election. The ESOP Participant will have a
reasonable opportunity to change a dividend election at least annually. If there
is a change in the ESOP governing the manner in which the dividends are paid or
distributed to ESOP Participants, each ESOP Participant will be given a
reasonable opportunity to make an election under the new ESOP terms prior to the
date on which the first dividend subject to the new ESOP terms is paid or
distributed. An ESOP Participant who fails to make an election as to whether to
receive his or her dividend in cash or have such dividend reinvested will be
treated as if he or she elected to have his or her dividend reinvested until
such time that he or she makes an affirmation election for a distribution of the
dividend. If dividends are reinvested and applied to the purchase of additional
Shares, such purchases shall be made promptly after the receipt of each such
dividend. The Trustee shall purchase, in one or more transactions, the maximum
number of whole Shares obtainable at then prevailing prices, including brokerage
commissions and other reasonable expenses incurred in connection with such
purchases. Such purchases may be made on any securities exchange where Shares
are traded, in the over-the-counter market, or in negotiated transactions, and
may be on such terms as to price, delivery and otherwise as the Trustee may
determine to be in the best interest of the ESOP Participants. The Trustee shall
complete such purchases as soon as practical after receipt of such dividends,
having due regard for any applicable requirements of law affecting the

 

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timing or manner of such purchases. The additional Shares so purchased shall be
allocated among the respective ESOP Accounts of the Participants in proportion
to the number of Shares in each ESOP Account at the record date for the payment
of the dividend so applied. Such allocation shall be made as promptly as
practicable but for purposes of determining the time at which such additional
Shares shall become distributable, the additional Shares so allocated to each
ESOP Participant’s ESOP Account shall be deemed to have been allocated as of the
respective allocation dates of the Shares in such ESOP Account at such record
date, in proportion to the number of such Shares previously allocated as of each
such allocation date.

14.07 Voting Rights, Options, Rights, and Warrants

(a) Each ESOP Participant is entitled to direct the Trustee as to the manner in
which any Shares or fractional Shares allocated to the ESOP Participant’s ESOP
Account are to be voted. Any such Shares or fractional Share for which the
Participant does not give voting directions shall be voted by the Trustee n the
same manner and proportions as all other Shares held by the Trustee for which
voting directions are given by ESOP Participants.

(b) In the event that any option, right, or warrant shall be granted or issued
with respect to any Shares allocated to the ESOP Participant’s ESOP Account,
each ESOP Participant shall be entitled to direct the Trustee whether to
exercise, sell, or deal with such option, right, or warrant.

(c) The Trustee shall keep confidential the ESOP Participant’s voting
instructions and instructions as to any option, right or warrant and any
information regarding an ESOP Participant’s purchases, holdings and sales of
Shares. The Plan Administrator shall be responsible for monitoring the Trustee’s
performance of its confidentiality obligations.

 

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14.08 Transferability

A Participant may transfer all or any part of his or her existing ESOP Account
once a day to any other Investment Funds in the Trust Fund. Any election will be
made in such manner and on such conditions as may be prescribed by the Plan
Administrator and subject to any restrictions imposed on an Investment Fund by
the Trustee or Investment Manager.

14.09 Diversification

(a) Each Qualified ESOP Participant shall have the right to elect to diversify,
by means of a distribution of whole ESOP Shares only, all or some portion of the
Diversifiable Amount in his ESOP Account during each of the six consecutive
Qualified ESOP Election Periods following the Plan Year in which such
Participant first became a Qualified ESOP Participant. The Diversifiable ESOP
Amount in the sixth Qualified ESOP Election Period for each Qualified ESOP
Participant shall be 50% of the number of Eligible ESOP Shares in his or her
ESOP Account as of the end of the preceding Plan Year. A distribution pursuant
to this must be a minimum of ten Shares, or all Whole Shares comprising the
Diversifiable ESOP Amount for such Qualified ESOP Election Period if less than
10. Each Qualified ESOP Participant who desires to elect diversification under
this Section shall, during the Qualified ESOP Election Period, complete and
execute a diversification election and consent form provided by his or her
Employer. Such election may be revoked or modified or a new election may be made
in its stead within the Qualified ESOP Election Period, upon the expiration of
which the diversification election shall be irrevocable.

(b) Diversification Procedure. The ESOP shall, within the 90-day period
following each Qualified ESOP Election Period, distribute to each Qualified ESOP
Participant who has elected to diversify under this Section, the number of whole
Shares which most

 

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closely approximates, but does not exceed, the number of ESOP Shares duly
elected to be diversified by each such Qualified ESOP Participant. Failure by a
Qualified ESOP Participant to provide required consents to distribution of any
Diversifiable ESOP Amount, shall relieve the ESOP of all obligation to make any
such distribution.

14.10 Distribution of Shares

(a) An ESOP Participant’s ESOP Account shall be available for distribution to
such ESOP Participant promptly after the earlier of the death, disability or
termination of employment of such ESOP Participant.

(b) If an ESOP Participant elects a distribution in Shares, certificates for
such Shares shall be delivered to the ESOP Participant as soon as practicable
after the effective date of the application.

(c) In the case of death of an ESOP Participant, distributions in respect of
Shares allocated to his or her ESOP Account shall be made to his or her
Beneficiary. In the case of disability or termination of employment with the
Company or an Affiliate, distributions in respect of Shares allocated to the
ESOP Participant’s ESOP Account shall be made unless the ESOP Participant elects
otherwise.

(d) All distributions from an ESOP Participant’s ESOP Account shall be made in
Shares; provided, however, that an ESOP Participant or Beneficiary shall have
the right to elect, on a form furnished by and submitted to his or her Employer,
to receive a distribution, other than a distribution upon termination of the
ESOP, in cash. Except in the case of a final distribution from an ESOP
Participant’s ESOP Account and a distribution of the entire ESOP Account
balance, all distributions from such ESOP Account made in Shares shall be made
in respect of whole Shares only, and any fractional Share which is otherwise
distributable shall be retained in

 

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such ESOP Account until it can be combined, in whole or in part, with another
fractional Share which shall subsequently become distributable, so as to make up
a whole Share. A final distribution from an ESOP Account (except a distribution
upon termination of the ESOP) shall be made in respect of the number of whole
Shares then remaining in the ESOP Account, together with a cash payment in
respect of any fractional Share based on the closing price of a Share as
reported on the New York Stock Exchange consolidated tape on the last trading
day of the month immediately preceding the month in which such final
distribution is made. The Trustee, in each such case, shall purchase such
fractional Share from the ESOP Participant at a price equal to the cash payment
to be made to the ESOP Participant.

(e) Whenever the Trustee requires funds for the purchase of fractional Shares,
such funds shall be drawn from the accumulated income of the ESOP Trust Fund, if
any, and otherwise shall be advanced by the Employer upon the Trustee’s request,
subject to reimbursement from future income of the ESOP Trust Fund. All
fractional Shares so purchased by the Trustee shall be allocated to the ESOP
Accounts of the remaining Participants at such intervals as shall be determined
by the Plan Administrator, but no later than the end of the next succeeding Plan
Year. The Trustee shall sell any Shares in respect of which a cash distribution
is to be made. The Trustee may make such sales on any securities exchange where
Shares are traded, in the over-the-counter market, or in negotiated
transactions. Such sales may be on such terms as to price, delivery and
otherwise as the Trustee may determine to be in the best interests of the ESOP
Participants. The Trustee shall complete such sales as soon as practical under
the circumstances having due regard for any applicable requirements of law
affecting the timing or manner of such sales.

 

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(f) Upon any termination of the ESOP, the ESOP Trust Fund shall continue until
all Shares which have been allocated to ESOP Participants’ ESOP Accounts have
been distributed to the ESOP Participants, unless the Board directs an earlier
termination of the ESOP Trust Fund. Upon the final distribution of Shares, or at
such earlier time as the Board shall have fixed for the termination of the ESOP
Trust Fund, the Plan Administrator shall direct the Trustee to allocate to the
ESOP Participants any Shares then held by the Trustee and not yet allocated, and
the Trustee shall distribute to the ESOP Participants any whole Shares which
have been allocated to their ESOP Accounts but which have not been distributed,
shall sell all fractional Shares and distribute the proceeds to the respective
ESOP Participants entitled to such fractional Shares, shall liquidate any
remaining assets (other than Shares) held by the ESOP Trust Fund, and shall
apply the proceeds of such liquidation and any remaining funds held by the
Trustee, the disposition of which is not otherwise provided for, to a
distribution to all ESOP Participants then receiving a final distribution of
Shares, in proportion to the whole and fractional Shares to which each is
entitled; and the ESOP Trust Fund shall thereupon terminate.

 

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APPENDIX A

Participating Employers

ARTICLE XV

 

A. List of Participating Employers

The following list sets forth:

 

  (i) the Participating Employers,

 

  (ii) the effective date of each Employer’s participation, and

 

  (iii) the designation of those employees who will become Participants or
continue their participation in the Plan.

 

Name of Company

  

Effective

Date of
Participation

  

Eligible Employees

Consolidated Edison Development, Inc.    May 1, 1996    All otherwise Eligible
Employees. Consolidated Edison Solutions, Inc.    May 1, 1997    All otherwise
Eligible Employees. Consolidated Edison Communications, Inc.    February 1, 1999
   All otherwise Eligible Employees. Consolidated Edison Energy, Inc.    March
1, 1998    All otherwise Eligible Employees. Orange and Rockland Utilities, Inc.
   January 1, 2001    All otherwise Eligible Employees Consolidated Edison
Energy Massachusetts, Inc.    July 18, 1999    Employees working at the Western
Massachusetts Electric Cogeneration Facility. CED Operating Company, L.P.   
June 1, 2000    Employees working at the Lakewood Cogeneration Facility

 

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