CONSOLIDATED EDISON, INC.
1996 STOCK OPTION PLAN, AS AMENDED
AND RESTATED FEBRUARY 24, 1998
ARTICLE 1
Purpose
Section 1.1. Purpose. The purpose of this plan (the "Plan") is to
promote the interests of Consolidated Edison, Inc. (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 and its subsidiaries 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 Directors 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 Long-Term Disability Plan for Management Employees of
Consolidated Edison Company of New York, Inc.
("CECONY"), 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.
Section 2.10. "Shares" means shares of the Company's
common shares, $ .10 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 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 or CECONY 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
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 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
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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 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.
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
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:
(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
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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.
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.
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.
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.
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) May 20, 2006. 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,
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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, consolidation, other business combination, liquidation
or reorganization of the Company, the Committee may provide for appropriate
adjustments, including (i) rescinding or taking any other action with respect to
any Option to the extent necessary to permit the Company to engage in a merger,
consolidation or business combination intended to be accounted for as a pooling
of interests transaction or (ii) accelerating any exercisability or expiration
dates, and settlements of Options either at the time the Option is granted or at
a subsequent date.
ARTICLE 11
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.