CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
1996 STOCK OPTION PLAN
ARTICLE 1
Establishment and Purpose
Section 1.1. Establishment. Effective January 23, 1996 and
subject to the provisions of Article 11 hereof, Consolidated
Edison Company of New York, Inc., (the "Company"), hereby
establishes a stock option plan as described herein which shall
be known as the Consolidated Edison Company of New York, Inc.
1996 Stock Option Plan (the "Plan"). The Plan provides for the
grant of stock options qualifying as incentive stock options
satisfying the requirements of Section 422 of the Code (as
defined in Section 2.2) and\or the grant of non-qualified stock
options which are not intended to so qualify under Section 422 of
the Code.
Section 1.2. Purpose. The purpose of the Plan is to
promote the interests of the Company and its shareholders by
providing long-term incentives to those persons with significant
responsibility for the success and growth of the Company, by
strengthening the Company's ability to attract and retain
officers and other employees of the Company on a competitive
basis and by aligning the interests of the officers and other
employees with the Company's shareholders,
through facilitating their acquisition of equity interests in the
Company.
ARTICLE 2
Definitions
For purposes of the Plan, the following terms shall have the
meanings provided herein:
Section 2.1. "Board" means the Board of Trustees of the
Company.
Section 2.2. "Code" means the Internal Revenue Code of
1986, as amended from time to time.
Section 2.3. "Committee" means the Executive Personnel and
Pension Committee of the Board or such other committee as may be
appointed by the Board to administer the Plan; provided, however,
that the Committee shall consist of three or more non-employee
members of the Board who shall qualify to administer the Plan as
contemplated by both Rule 16b-3 under the Exchange Act and
Section 162(m) of the Code.
Section 2.4. "Disability" means permanent and total
disability as defined under the Company's Long-Term
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Disability Plan for Management Employees, as in effect from time
to time.
Section 2.5. "Exchange Act" means the Securities Exchange
Act of 1934, as amended from time to time.
Section 2.6. "Fair Market Value" means the closing price of
a Share in the Consolidated Reporting System as reported in the
Wall Street Journal or in a similarly readily available public
source for the trading day immediately prior to the applicable
transaction date under the Plan. If no trading of Shares
occurred on such date, the closing price of a Share in such
System as reported for the preceding day on which sales of Shares
occurred shall be used.
Section 2.7. "Incentive Option" means an option granted
under the Plan to purchase Shares and which is intended to
qualify as an incentive stock option under Section 422 of the
Code.
Section 2.8. "Non-qualified Option" means an option granted
under the Plan to purchase Shares and which is not intended to
qualify as an Incentive Option.
Section 2.9. "Option" means, collectively, Incentive
Options and Non-qualified Options.
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Section 2.10. "Shares" means shares of the Company's common
stock, $2.50 par value.
ARTICLE 3
Administration
Section 3.1. Administration. (a) The Plan shall be
administered by the Committee. The Committee shall have authority
in its sole discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to
exercise all the powers and authorities either specifically
granted to it under the Plan or necessary or advisable in the
administration of the Plan, including without limitation
authority to select the employees to be granted Options, to
determine the size and terms of the Options to be granted to each
employee selected, to determine the time or times when Options
will be granted, the period or periods during which Options will
be exercisable, and to prescribe the form of the agreements
embodying Options granted under the Plan. The Committee shall be
authorized to interpret the Plan and the Options granted under
the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, and to make any other
determinations which it believes necessary or advisable for the
administration of the Plan. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in
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the Plan or in any Option in the manner and to the extent the
Committee deems necessary or desirable to carry it into effect.
In no event, however, shall the Committee have the right to grant
dividend equivalents in respect of Options or to cancel
outstanding Options for the purpose of replacing or regranting
such Options with a purchase price that is less than the purchase
price of the original Option.
(b) The Committee shall maintain a written record of its
proceedings. Any decision of the Committee in the administration
of the Plan, as described herein, shall be final and conclusive
and binding on all persons affected by the decision, including
the Company, any employee or optionee or any person claiming any
rights under the Plan from or through any employee or optionee.
The Committee may delegate to one or more of its members or to
any officer or officers of the Company such administrative duties
under the Plan as the Committee may deem advisable.
ARTICLE 4
Eligibility and Participation
Options may be granted to officers and other employees of
the Company as the Committee may from time to time select. Any
officer or employee of the Company shall be eligible to receive
one or more Options, subject to the
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limitation set forth in Section 5.1. In determining the persons
to whom Options are to be granted and the number of Shares
subject to each Option, the Committee shall take into
consideration the person's present and potential contribution to
the success of the Company and such other factors as the
Committee may deem proper and relevant. For purposes of
participation in the Plan, the term "Company" shall include any
entity that is directly or indirectly controlled by the Company
or any entity, including an acquired entity, in which the Company
has a significant equity interest, as determined by the
Committee.
ARTICLE 5
Shares Subject to Plan
Section 5.1. Amount of Stock. There may be delivered under
the Plan an aggregate of not more than 10,000,000 Shares, subject
to adjustment as provided in Section 5.2. The aggregate number
of Shares that may be covered by Options granted to a single
individual under the Plan shall not exceed 1,500,000 Shares.
Shares delivered pursuant to the Plan may consist in whole or in
part of authorized and unissued Shares or reacquired Shares, and
no fractional Shares shall be delivered under the Plan. Cash may
be paid in lieu of any fractional Shares in the exercise of
Options under the Plan. In the event that Options shall be
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forfeited or cancelled or shall terminate or expire without being
exercised in whole or in part, new Options may be granted
covering the Shares not purchased under such forfeited,
cancelled, terminated or expired Options. For purposes of this
Section, the number of Shares deemed to be delivered under the
Plan upon the exercise of an Option shall equal the number of
Shares as to which the Option is exercised less the number of
Shares tendered, if any, pursuant to Section 6.5. However, the
number of Shares deemed exercised by the optionee under the
applicable option(s) shall be the full number of Shares specified
in the exercise notice required under Section 6.5.
Section 5.2. Dilution and Other Adjustments. In the event
of any change in the number of outstanding Shares or Share price
by reason of any stock split, stock dividend, recapitalization,
merger, consolidation, reorganization, combination or exchange of
equity securities or other distribution (other than normal cash
dividends) of Company assets to stockholders, or any other
similar change, if the Committee shall determine, in its sole
discretion, that such change equitably requires an adjustment in
the limitations on the numbers of Shares that may be delivered as
set forth in Section 5.1, in the number or kind of shares that
may be delivered under the Plan, or in the number or kind of
shares which are subject to outstanding Options and in the
exercise
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price per Share relating thereto, such adjustment shall be made
by the Committee and shall be conclusive and binding for all
purposes of the Plan.
ARTICLE 6
Terms and Conditions of Options
Section 6.1. Terms and Options. An Option granted under
the Plan shall be in such form as the Committee may from time to
time approve. Each Option shall be subject to the terms and
conditions provided in this Article 6 and shall contain such
other or additional terms and conditions as the Committee may
deem desirable, but in no event shall such terms and conditions
be inconsistent with the Plan and, in the case of Incentive
Options, with the provisions of the Code applicable to "incentive
stock options" as described in Section 422 of the Code.
Section 6.2. Option Price. The purchase price per Share
under an Option shall be determined by the Committee, but may not
be less than 100 percent of the Fair Market Value of a Share on
the date the Option is granted; provided, however, that in the
case of any Option granted hereunder prior to either or both of
the shareholder approval and authorization by the New York State
Public Service Commission contemplated by Article 11 hereof, for
the purpose of
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determining the purchase price per share, such Option shall be
deemed to have been granted on the date of the later to occur of
such approval and authorization.
Section 6.3. Option Period. The period during which an
Option may be exercised shall be fixed by the Committee;
provided, that no Option shall be exercisable after the
expiration of ten years from the date such Option is granted,
except that, in the event of the death of an optionee holding one
or more options, the option(s) may remain exercisable for up to
one year following the optionee's death.
Section 6.4 Exercisability of Options. The Committee may
provide in the Option agreement that such Option may be
immediately exercisable, or that such Option shall become
exercisable at such times or upon such events as the Committee
may specify.
Section 6.5. Exercise of Option. (a) An Option may be
exercised in whole or in part from time to time during the Option
period (or, if determined by the Committee, in specified
installments during the Option period) by giving written notice
of exercise to the Secretary of the Company specifying the number
of Shares to be purchased. Notice of exercise of an Option must
be accompanied by payment in full of the purchase price either by
cash or such other method as
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may be permitted by the Committee, including but not limited to
(i) check, (ii) tendering (either actually or by attestation)
Shares owned by the optionee having a Fair Market Value at the
date of exercise equal to such purchase price, (iii) a third-
party exercise procedure, or (iv) in a combination of the
foregoing. The Committee, in its sole discretion, may, in lieu
of delivering Shares covered by an Option upon its exercise,
settle the exercise of the Option by means of a cash payment to
the optionee equal to the positive difference between the Fair
Market Value on the exercise date and the option price, or by
delivering Shares having an aggregate Fair Market Value equal to
such a payment, or by a combination of both.
(b) No Shares shall be delivered in connection with the
exercise of an Option until full payment therefor has been made.
An optionee shall have the rights of a shareholder only with
respect to Shares for which certificates have been issued to such
person.
Section 6.6. Nontransferability of Options. No Option
granted under the Plan shall be transferable by the optionee
otherwise than by will or by the laws of descent and
distribution, except that the Committee may provide for the
transferability of an Option:
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(a) by gift or other transfer to (i) a spouse or other
immediate relative, or (ii) a trust or an estate in which the
original optionee or the optionee's spouse or other immediate
relative has a substantial interest;
(b) pursuant to a qualified domestic relations order; and
(c) as may be otherwise permitted by Rule 16b-3 under the
Exchange Act;
provided, however, that any Option so transferred shall continue
to be subject to all the terms and conditions contained in the
Option agreement. If so permitted by the Committee, an optionee
may designate a beneficiary or beneficiaries to exercise the
rights of the optionee under the Plan upon the death of the
optionee.
Section 6.7. Termination of Employment. The Committee shall
provide in the Option agreement the terms and conditions
applicable to the Option in the event of the optionee's
termination of employment by reason of retirement, death,
Disability or any other reason.
Section 6.8. Annual Limitation. The maximum aggregate Fair
Market Value of Shares (determined as of the date of grant of the
Incentive Option) for which Incentive Options are exercisable for
the first time by an employee during any calendar year (under the
Plan and any other plan of the Company or its subsidiaries) shall
not exceed $100,000 as and to the extent required by Section
422(d) of the Code.
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Section 6.9. Withholding Obligations. (a) As a condition
to the delivery of any Shares pursuant to the exercise of an
Option, the Committee may require that the optionee, at the time
of such exercise, pay to the Company an amount sufficient to
satisfy any applicable tax withholding obligations or such
greater amount of withholding as the Committee shall determine
from time to time, or the Committee may take such other action as
it may deem necessary to satisfy any such withholding
obligations.
(b) The Committee, in its sole discretion, may permit or
require an optionee to satisfy all or a part of the tax
withholding obligations incident to the exercise of an Option by
having the Company withhold a portion of the Shares that would
otherwise be issuable to the optionee. Such Shares shall be
valued based on their Fair Market Value on the date the tax
withholding is required to be made. Any such Share withholding
with respect to an optionee subject to Section 16(a) of the
Exchange Act shall be subject to such limitations as the
Committee may impose to comply with the requirements of Section
16 of the Exchange Act.
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ARTICLE 7
Miscellaneous Provisions
Section 7.1. No Implied Rights. No employee or other
person shall have any claim or right to be granted an Option
under the Plan. Neither the Plan nor any action taken hereunder
shall be construed as giving any employee any right to be
retained in the employ of the Company or any subsidiary or affect
any right of the Company or any subsidiary to terminate any
employee's employment.
Section 7.2. Securities Law Compliance. No Shares shall be
delivered hereunder unless counsel for the Company shall be
satisfied that such delivery will be in compliance with
applicable Federal and state securities laws.
Section 7.3. Ratification of Actions. By accepting any
Option or other benefit under the Plan, each employee and each
person claiming under or through such person shall be
conclusively deemed to have indicated such person's acceptance
and ratification of, and consent to, any action taken under the
Plan by the Company, the Board or the Committee.
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Section 7.4. Unfunded Plan. Unless otherwise determined by
the Committee, the Plan shall be unfunded and shall not create
(or be construed to create) a trust or a separate fund or funds.
The Plan shall not establish any fiduciary relationship between
the Company and any employee, optionee or other person. To the
extent any person holds any rights by virtue of an Option granted
under the Plan, such rights shall constitute general, unsecured
liabilities of the Company and shall not confer upon such person
any right, title or interest in any assets of the Company.
ARTICLE 8
Amendments or Discontinuance
The Plan may be amended at any time and from time to time by
the Board and without the approval of shareholders of the
Company, except that no amendment which increases the aggregate
number of Shares which may be delivered pursuant to the Plan or
which, in the absence of shareholder approval, would cause the
Plan not to comply with Rule 16b-3 under the Exchange Act or
Section 162(m) of the Code shall be effective unless and until
the same is approved by the shareholders of the Company. No
amendment of the Plan shall materially adversely affect any of
the rights or obligations of any person, without such person's
written consent, under any Option theretofore granted under the
Plan.
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ARTICLE 9
Termination
The Plan shall terminate upon the earlier of the following
dates or events to occur:
(a) upon the adoption of a resolution of the Board
terminating the Plan; or
(b) the tenth anniversary of obtaining shareholder approval
provided for in Article 11 hereof.
After termination of the Plan, no Options may be granted. No
termination of the Plan shall materially adversely affect any of
the rights or obligations of any person, without such person's
written consent, under any Option theretofore granted under the
Plan.
ARTICLE 10
Change in Control; Dissolution or Merger
Either in contemplation of the Company's undergoing, or in
the event the Company undergoes, a change in control (as
determined by the Committee) or in the event of a merger or
consolidation in which the Company is not to be the surviving
corporation, or of a liquidation or reorganization of the
Company, the Committee may provide for appropriate adjustments,
including accelerating any exercisability or expiration dates,
and settlements of Options either at the time the Option is
granted or at a subsequent date.
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ARTICLE 11
Shareholder Approval and Adoption
The Plan shall be submitted to the shareholders of the
Company for approval. Shares may not be delivered under the Plan
unless and until such delivery is authorized by the New York
State Public Service Commission. Options may be granted
hereunder prior to such approval and authorization but shall be
contingent upon obtaining such approval and authorization. The
shareholders of the Company shall be deemed to have approved the
Plan only if it is approved at a meeting of the shareholders duly
held by vote taken in the manner required by the laws of the
State of New York.
ARTICLE 12
Governing Law and Interpretation
The provisions of the Plan shall take precedence over any
conflicting provision contained in an Option. The Plan shall be
governed by and construed in accordance with the laws of the
State of New York. If any term or provision of the Plan is held
by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms and provisions will
remain in full force and effect and will in no way be affected,
impaired or invalidated.
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