ORANGE AND ROCKLAND UTILITIES, INC.
POST-DIRECTOR SERVICE
RETAINER CONTINUATION PROGRAM
Effective: April 8, 1987
Amended as of: April 12, 1989
June 1, 1989
April 5, 1990
April 14, 1993
March 2, 1995
ORANGE AND ROCKLAND UTILITIES, INC.
POST-DIRECTOR SERVICE
RETAINER CONTINUATION PROGRAM
In recognition of the added value of the continued
service of directors who are experienced with the operations
Orange and Rockland Utilities, Inc. (the "Company") because of
their length of service on the Board and to provide a benefit for
such experience so as to encourage directors to continue to
serve, the following Company Post-Director Service Retainer
Continuation Program is hereby created:
1. Eligibility. Any director who is not otherwise
covered by any retirement plan or program sponsored by the
Company and who has served as a member of the Company's Board of
Directors for a period of at least five continuous years shall be
an "Eligible Director."
2. Retainer Continuation. Upon ceasing to be a member
of the Board of Directors, an Eligible Director shall be entitled
to the continuation of one hundred percent (100%) of the annual
Board and Committee service retainers as in effect and being paid
to such Eligible Director at the time the Eligible Director
ceased to be a member of the Board of Directors, subject to the
limitations contained in Paragraph 3 below.
3. Time and Manner of Payment. The retainer
continuation payments shall commence (i) if the Eligible Director
is living, as of the first day of the calendar month next
following the later of the Eligible Director's attaining age 65
or ceasing to be a member of the Board of Directors or (ii) in
the case of the death of an Eligible Director prior to
commencement of payments, as of the first day of the calendar
month next following the later of the 65th anniversary of the
Eligible Director's birth or the Eligible Director's date of
death; provided, however, if the Eligible Director has already
received an installment of the annual retainer for a period
extending beyond when the retainer continuation payments would
otherwise begin as provided herein, the retainer continuation
payments will not commence until the expiration of the period for
which the retainer has been paid. The retainer continuation
payments shall be made in nearly equal monthly installments equal
to one-twelfth (l/12th) the annual retainer specified in
Paragraph 2 above. Such payments shall be made as of the first
day of each month and shall continue for a period equal to the
Eligible Director's full years of service on the Board of
Directors. In the event an Eligible Director dies, either while
serving on the Board or after retiring from the Board, and where
payments remain to be made, the remaining payments shall be made
to the beneficiary last designated by the Eligible Director in
writing to the Retirement Committee, or if none, to the Eligible
Director's estate. In the event of the death of a beneficiary to
whom payments are due, the remaining payments shall be made to
such beneficiary's estate. In the event payments are to be made
to a beneficiary or to the estate of an Eligible Director or a
beneficiary, the Retirement Committee, at its sole discretion and
at any time, may provide for the lump-sum payment of the present
value of the remaining payments, such present value to be
determined by using a discount factor equal to the interest rate
assumption used to calculate the Company's contribution under the
Employees' Retirement Plan of Orange and Rockland Utilities, Inc.
Beginning as of July 1 of the year for which the
cumulative percentage change in the CPI-U (as defined below)
exceeds 20%, but not earlier than July 1, 1993, and as of each
July 1 thereafter, the retainer continuation payments then being
paid to or with respect to an Eligible Director shall be
increased by an adjustment amount, not less than zero, determined
by multiplying the original retainer continuation payment amount,
by a percentage (rounded to the nearest 1/100 of 1%) equal to 75%
of the cumulative percentage change in the CPI-U for the year in
excess of 20%, but not more than the applicable cumulative
maximum percentage (as each is defined below).
The terms specified below which are used above shall
have the following meanings unless the context clearly dictates
another meaning:
(x) "CPI-U" means the annual average figure under the
Consumer Price Index for All Urban Consumers, U.S. City
Average of All Items (1982-1984=100), or its successor,
as published by the United States Bureau of Labor
Statistics.
(y) "cumulative percentage change in the CPI-U" for a
year is calculated by dividing the difference
between the CPI-U for the prior year and the CPI-U
for the year prior to the year in which the retainer
continuation payment originally commenced by the
CPI-U for the year prior to the year in which the
retainer continuation payment originally commenced,
and rounding to the nearest 1/100 of 1% (e.g., for
purposes of determining the cumulative percentage
change in the CPI-U for 1993 for an Eligible
Director whose retainer continuation payment
commenced in 1990, subtract the CPI-U for 1989 from
CPI-U for 1992, then divide the result by the
CPI-U for 1989 and round to the nearest 1/100 of
1%). Notwithstanding any provisions herein to the
contrary, in all cases when the retainer continuation
payment commenced before January 1, 1989, the
cumulative percentage change in the CPI-U for a year
shall be calculated by dividing the difference
between the CPI-U for the prior year and the CPI-U
for 1991 by the CPI-U for 1991, rounding to the
nearest 1/100 of 1%, and adding 20%.
(z) "cumulative maximum percentage" is 3% for the first
year in which an adjustment is first made hereunder
and for each succeeding year is 3% plus 103% of the
prior year's cumulative maximum percentage, rounded
to the nearest 1/100 of 1% (e.g., 3% for the first
year adjustment, 6.09% for the second year, 9.27%
for the third year and so on).
4. Nature of Payment. The retainer continuation
payments are purely personal to the Eligible Director and may not
be assigned, alienated, anticipated or encumbered. Any attempt
to assign, alienate, anticipate or encumber the payments shall
result in the Eligible Director's forfeiture of all rights to any
retainer continuation payments hereunder.
5. Source of Payments. All payments of awards
provided for under the Program shall be paid in cash from the
general funds of the Company; provided, however, that such
payments shall be reduced by the amount of any payments made to
the director or his or her dependents, beneficiaries or estate
from any trust or special or separate fund established by the
Company to assure such payments. The Company shall not be
required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the
Company shall make any investments to aid it in meeting its
obligations hereunder, the director shall have no right, title,
or interest whatever in or to any such investments except as may
otherwise be expressly provided in a separate written instrument
relating to such investments. Nothing contained in this Program
and no action taken pursuant to its provisions, shall create or
be construed to create a trust of any kind between the Company
and any persons. To the extent that any person acquires a right
to receive payments from the Company hereunder, such right shall
be no greater than the right of an unsecured creditor of the
Company.
6. Administration. This Program shall be administered
by the Retirement Committee of the Company which shall have the
full power and authority to construe, interpret and administer
the Program. All decisions, actions or interpretations of the
Retirement Committee shall be final, conclusive and binding on
all parties.
7. Amendment. The Board of Directors reserves the
right to amend the Program in whole or in part at any time
without the specific consent of any Eligible Director; provided,
however, that no such amendment shall adversely affect retainer
continuation payments then being made or the rights of any then
Eligible Directors or to receive retainer continuation payments
earned prior to the amendment, calculated on the basis of such
Eligible Director's continuous service as a director at the time
of the amendment and the annual retainer than in effect.
8. Termination. The Board of Directors reserves the
right to terminate the Program at any time. Termination of the
Program shall not affect the retainer continuation payments then
being made. Such payments shall be continued in accordance with
the terms hereof. In addition, termination of the Program shall
not affect the right of any Eligible Director as of the date of
termination to receive retainer continuation payments which shall
be calculated on the basis of the continuous service of the
Eligible Director as of the time of termination of the Program
and the annual retainer then in effect. Such retainer
continuation payments shall commence and be paid in accordance
with the otherwise applicable provisions of the Program
(Paragraph 3).
9. Change in Control. Notwithstanding anything else
herein to the contrary, in the event of the occurrence of a
Change in Control, if any, each Eligible Director shall have the
right to receive and shall be paid, as soon as practicable after
such occurrence becomes reasonably certain, a lump sum cash
amount equal to the present value of the retainer continuation
payments that would otherwise have been paid pursuant to
Paragraph 3, on the assumption that, (a) payments (including any
payments already made) would be made for a period equal to the
lesser of the Eligible Director's full years of service on the
Board of Directors or 10 years, and (b) that, with respect to
Eligible Directors who were not yet receiving retainer
continuation payments, such payments would commence on the later
of the Eligible Directors's attaining age 65 or the date of the
Change in Control. Such present value shall be determined by
using a discount factor equal to the interest rate assumption
used to calculate the Company's contributions under the
Employees' Retirement Plan of Orange and Rockland Utilities, Inc.
as of the date of the Change in Control.
As used in the Plan, "Change in Control" shall mean the
happening of any of the following:
(a) receipt by the Company of a report on Schedule 13D
filed with the Securities and Exchange Commission pursuant
to the Section 13(d) of the Securities Exchange Act of 1934
(the "1934 Act") disclosing that any person, group,
corporation or other entity is the beneficial owner,
directly or indirectly, of 20 percent or more of the
outstanding stock of the Company;
(b) purchase by any person (as defined in Section
13(d) of the 1934 Act), corporation or other entity, other
than the Company or a wholly-owned subsidiary of the
Company, of shares pursuant to a tender or exchange offer to
acquire any stock of the Company (or securities convertible
into stock) for cash, securities or any other consideration,
provided that, after consummation of the offer, such person,
group, corporation or other entity is the beneficial owner
(as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of 20 percent or more of the outstanding stock
of the Company (calculated as provided in paragraph (d) of
Rule 13d-3 under the 1934 Act in the case of rights to
acquire stock);
(c) approval by the stockholders of the Company of any
(i) consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of stock of the Company would be
converted into cash, securities or other property, other
than a consolidation or merger of the Company in which
holders of its common stock immediately prior to the
consolidation or merger have substantially the same
proportionate ownership of common stock of the surviving
corporation immediately after the consolidation or merger as
immediately before, or (ii) sale, lease, exchange or other
transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the
Company; or
(d) a change in the majority of the members of the
Board of Directors within a 12-month period unless the
election or nomination for election by the Company's
stockholders of each new director was approved by the vote
of two-thirds of the directors then still in office who were
in office at the beginning of the 12-month period.
10. Effective Date. This Program shall be effective
on April 8, 1987.
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