ORANGE AND ROCKLAND UTILITIES, INC.
POST-DIRECTOR SERVICE
RETAINER CONTINUATION PROGRAM
Effective: April 8, 1987
Amended effective as of: April 12, 1989
June 1, 1989
April 5, 1990
April 14, 1993
March 2, 1995
July 1, 1997
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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 of
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 (the "Program") is hereby created:
1. Eligibility. Any director who is not otherwise covered by
any qualified 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 (5) continuous years
shall be an "Eligible Director".
2. Retainer Continuation. Upon ceasing to he 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, that 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 (1/12th) 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 he 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 the 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 he 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 Director 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 then 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.
(a) Notwithstanding anything else herein to the
contrary, in the event of the occurrence of a Change in Control
or Potential 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, 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: (i) 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 ten (10) years, and (ii) that, with respect to
Eligible Directors who were not yet receiving retainer
continuation payments, such payments would commence on the later
of (A) the Eligible Director's attaining age 65 or (B) the date
of the Change in Control or Potential Change in Control,
whichever is applicable. 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 or Potential Change in
Control, whichever is applicable, and such present value shall be
certified by an enrolled actuary appointed by the Retirement
Committee.
(b) A "Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates
other than in connection with the acquisition by the Company or
its affiliates of a business) representing 20% or more of either
the then-outstanding Company Common Stock, $5 par value per share
(or any successor common stock) ("Shares") or the combined voting
power of the Company's then-outstanding securities;
(ii) the following individuals cease for any
reason to constitute a majority of the number of Directors then
serving: individuals who, on April 1, 1997, constituted the
Board of Directors of the Company and any new Director (other
than a Director whose initial assumption of office is in
connection with an actual or threatened election contest,
including, but not limited to, a consent solicitation, relating
to the election of Directors of the Company (as such terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act))
whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the Directors then still in office
who either were Directors on April 1, 1997 or whose appointment,
election or nomination for election was previously so approved;
(iii) the shareholders of the Company approve a
merger or consolidation of the Company with any other corporation
or approve the issuance of voting securities of the Company in
connection with a merger or consolidation of the Company (or any
direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (A) a merger
or consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least 65% of
the combined voting power of the voting securities of the Company
or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger
or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned
by such Person any securities acquired directly from the Company
or its affiliates other than in connection with the acquisition
by the Company or its affiliates of a business) representing 20%
or more of either the then-outstanding Shares or the combined
voting power of the Company's then-outstanding securities;
(iv) the shareholders of the Company approve a
plan of complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 65% of the combined
voting power of the voting securities of which are owned by
Persons in substantially the same proportions as their ownership
of the Company immediately prior to such sale.
Notwithstanding the foregoing, no "Change in Control"
shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately
following which the record holders of Shares immediately prior to
such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which
owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
(c) "Potential Change in Control" shall be deemed to
have occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces
an intention to take or to consider taking actions which if
consummated, would constitute a Change in Control;
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing
10% or more of either the then-outstanding securities; or the
combined voting power of the Company's then-outstanding
securities; or
(iv) the Board of Directors adopts a resolution
to the effect that, for purposes of any severance agreement to
which the Company is a party, a Potential Change in Control has
occurred.
(d) "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.
(d) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(f) "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its affiliates (as defined in
Rule 12b-2 promulgated under the Exchange Act), (ii) a trustee or
other fiduciary holding securities under an employee benefit plan
of the Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
10. Miscellaneous.
(a) The Program shall be governed by and construed in
accordance with the laws of the State of New York, as from time
to time in effect.
(b) The Company shall deduct from the distributions to
be made to an Eligible Director any Federal, state, or local
withholding or other taxes or charge which the Company is from
time to time required to deduct under applicable law.
(c) All disputes and controversies arising out of or
relating to the Program shall be settled exclusively by
arbitration in New York, New York in accordance with the rules of
the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any State or Federal
Court sitting in the State of New York having jurisdiction
thereof. Notwithstanding any provision of the Program to the
contrary, Eligible Directors and beneficiaries shall be entitled
to seek in any State or Federal Court sitting in the State of New
York having jurisdiction thereof specific performance of their
respective rights to receive distributions provided for in the
Program during the pendency of any such dispute or controversy
arising out of or relating to the Program.
11. Effective Date. This Program was originally effective as of
April 8, 1987. This amendment and restatement of the Program is
effective as of July 1, 1997.