-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GilNHEFfFaoArQONZyeIeWkrD1A7m4HhWF13hkqzP3yk3kK/0AnDQsFfOlrxBLhu K+dLWRrwkTBx4jd4dZ4EjA== 0000074778-97-000027.txt : 19970814 0000074778-97-000027.hdr.sgml : 19970814 ACCESSION NUMBER: 0000074778-97-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORANGE & ROCKLAND UTILITIES INC CENTRAL INDEX KEY: 0000074778 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 131727729 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04315 FILM NUMBER: 97658681 BUSINESS ADDRESS: STREET 1: ONE BLUE HILL PLZ CITY: PEARL RIVER STATE: NY ZIP: 10965 BUSINESS PHONE: 9143526000 MAIL ADDRESS: STREET 1: ONE BLUE HILL PLAZA CITY: PEARL RIVER STATE: NY ZIP: 10965 FORMER COMPANY: FORMER CONFORMED NAME: ROCKLAND LIGHT & POWER CO DATE OF NAME CHANGE: 19681202 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-4315 ORANGE AND ROCKLAND UTILITIES, INC. (Exact name of registrant as specified in its charter) New York 13-1727729 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Blue Hill Plaza, Pearl River, New York 10965 (Address of principal executive offices) (Zip code) (914) 352-6000 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's class of common stock, as of the close of the latest practicable date. Common Stock - $5 Par Value 13,654,668 shares (Class) (Outstanding at July 31, 1997) TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Balance Sheets (Unaudited) at June 30, 1997 and December 31, 1996 1 Consolidated Statements of Income (Unaudited) for the three months and six months ended June 30, 1997 and June 30, 1996 3 Consolidated Cash Flow Statements (Unaudited) for the six months ended June 30, 1997 and June 30, 1996 5 Notes to Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 20 ITEM 5. Other Information 22 ITEM 6. Exhibits and Reports on Form 8-K 22 Signatures 23 PART I. FINANCIAL INFORMATION Item I. Financial Statements ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) Assets
June 30, December 31, 1997 1996 (Thousands of Dollars) Utility Plant: Electric $1,031,927 $1,023,796 Gas 222,990 219,712 Common 60,847 59,589 Utility Plant in Service 1,315,764 1,303,097 Less accumulated depreciation 457,917 440,333 Net Utility Plant in Service 857,847 862,764 Construction work in progress 54,714 36,879 Net Utility Plant 912,561 899,643 Non-utility Property: Non-utility property 11,681 17,818 Less accumulated depreciation, depletion and amortization 1,040 2,344 Net Non-utility Property 10,641 15,474 Current Assets: Cash and cash equivalents 4,821 3,321 Temporary cash investments 520 1,289 Customer accounts receivable, less allowance for uncollectible accounts of $2,391 and $2,391 54,706 60,992 Accrued utility revenue 20,442 22,773 Other accounts receivable, less allowance for uncollectible accounts of $396 and $258 8,932 7,648 Materials and supplies (at average cost) 29,609 35,595 Prepaid property taxes 11,803 20,051 Prepayments and other current assets 39,136 21,540 Total Current Assets 169,969 173,209 Deferred Debits: Income tax recoverable in future rates 73,896 74,198 Deferred revenue taxes 13,110 14,271 Deferred pension and other postretirement benefits 9,145 9,922 IPP settlement costs 19,425 24,065 Unamortized debt expense (amortized over term of securities) 11,011 10,046 Other deferred debits 24,387 37,072 Total Deferred Debits 150,974 169,574 Total $1,244,145 $1,257,900 The accompanying notes are an integral part of these statements.
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) Capitalization and Liabilities
June 30, December 31, 1997 1996 (Thousands of Dollars) Capitalization: Common stock (13,654,783 & 13,654,121 shares outstanding) $ 68,274 $ 68,271 Premium on capital stock 133,627 133,616 Capital stock expense (6,110) (6,097) Retained earnings 169,461 192,060 Total 365,252 387,850 Non-redeemable preferred stock (428,443 shares outstanding) 42,844 42,844 Non-redeemable cumulative preference stock (11,723 and 12,180 shares outstanding) 382 397 Total Non-Redeemable Stock 43,226 43,241 Long-term debt 276,648 281,622 Total Capitalization 685,126 712,713 Non-current Liabilities: Reserve for claims and damages 3,967 3,843 Postretirement benefits 14,802 15,213 Pension costs 39,761 37,421 Obligations under capital leases 1,721 - Total Non-current Liabilities 60,251 56,477 Current Liabilities: Notes payable and obligations due within one year 185,740 161,963 Accounts payable 51,593 67,449 Accrued Federal income and other taxes 1,267 1,024 Refundable fuel and gas costs 6,314 4,943 Refunds to customers 2,481 1,816 Other current liabilities 41,394 35,800 Total Current Liabilities 288,789 272,995 Deferred Taxes and Other: Deferred Federal income taxes 185,418 185,156 Deferred investment tax credits 14,895 15,292 Accrued IPP settlement agreements - 2,000 Accrued Order 636 transition costs 1,390 11,620 Other deferred credits 6,419 7,983 Total Deferred Taxes and Other 208,122 222,051 Net Liabilities (Assets) of Discontinued Operations (Note 8) 1,857 (6,336) Total $1,244,145 $1,257,900 The accompanying notes are an integral part of these statements.
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited)
Three Months Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996 (Thousands of Dollars) Operating Revenues: Electric $111,879$120,772 $218,980$228,791 Gas 25,146 31,148 103,052 110,092 Total Utility Revenues 137,025 151,920 322,032 338,883 Diversified Activities 170 333 482 675 Total Operating Revenues 137,195 152,253 322,514 339,558 Operating Expenses: Operations: Fuel used in electric production 15,770 12,456 28,184 20,201 Electricity purchased for resale 14,004 18,291 32,860 44,227 Gas purchased for resale 13,800 18,011 61,917 65,648 Other expenses of operation 36,321 43,010 68,908 75,775 Maintenance 9,028 8,689 17,987 18,442 Depreciation and amortization 8,838 5,964 18,215 13,890 Taxes other than income taxes 23,435 25,002 49,587 50,844 Federal income taxes 2,931 3,366 10,394 11,049 Total Operating Expenses 124,127 134,789 288,052 300,076 Income from Operations 13,068 17,464 34,462 39,482 Other Income and (Deductions): Investigation costs - (800) (3,390) (800) Other - net 759 (2,486) 786 (2,300) Taxes other than income taxes (66) (92) (132) (148) Federal income taxes (19) 428 1,390 462 Total Other Income &(Deductions) 674 (2,950) (1,346) (2,786) Income Before Interest Charges 13,742 14,514 33,116 36,696 Interest Charges: Interest on long-term debt 6,011 5,867 12,161 12,103 Other interest 1,773 1,579 3,315 2,853 Amortization of debt premium, expense-net 412 366 808 731 Allowance for borrowed funds used during construction (165 (128) (393) (275) Total Interest Charges 8,031 7,684 15,891 15,412 Income from Continuing Operations 5,711 6,830 17,225 21,284
(continued) ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) (continued)
Three Months Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996 (Thousands of Dollars) Discontinued Operations (Note 8): Loss from discontinued operations net of related income taxes (2,140) (510) (6,738) (409) Estimated net loss on disposal of discontinued operations (4,565) - (4,565) - Loss with respect to discontinued operations (6,705) (510) (11,303) (409) Net Income (Loss) (994) 6,320 5,922 20,875 Dividends on preferred and preference stock, at required rates 699 757 1,399 1,513 Earnings applicable to common stock $ (1,693)$ 5,563 $ 4,523$ 19,362 Avg. number of common shares outstanding (000's) 13,654 13,654 13,654 13,654 Earnings Per Average Common Share Outstanding: Continuing Operations $ .37$ .45 $ 1.16$ 1.45 Discontinued Operations (.16) (.04) (.49) (.03) Estimated net loss on disposal (.34) - (.34) - Total $ (.13)$ .41 $ .33$ 1.42 Dividends declared per common share outstanding $ 1.29$ 1.29 $ 1.94$ 1.94 The accompanying notes are an integral part of these statements.
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES Consolidated Cash Flow Statements (Unaudited)
Six Months Ended June 30, 1997 1996 (Thousands of Dollars) Cash Flow from Operations: Net income $ 5,922 $20,875 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 17,991 15,610 Deferred Federal income taxes (873) (717) Deferred investment tax credit (397) (405) Deferred and refundable fuel and gas costs 1,371 5,528 Allowance for funds used during constructio n (427) (284) Other non-cash charges 2,000 2,470 Changes in certain current assets and liabilities: Accounts receivable (net) and accrued utility revenues 7,333 7,417 Materials and supplies 5,986 3,002 Prepaid property taxes 8,248 8,045 Prepayments and other current assets (17,596) (6,386) Operating accounts payable (15,856) (14,660) Accrued Federal Income and other taxes 243 (603) Accrued interest (432) (464) Refunds to customers 665 (11,019) Other current liabilities (3,451) (2,006) Discontinued operations 8,193 693 Other-net 11,901 7,339 Net Cash Provided from Operations 30,821 34,435 Cash Flow from Investing Activities: Additions to plant (29,982) (20,423) Temporary cash investments 769 (21) Allowance for funds used during construction 427 284 Net Cash Used in Investing Activities (28,786) (20,160) Cash Flow from Financing Activities: Proceeds from: Issuance of long-term debt 20,089 - Retirements of: Preference and preferred stock (1,390) - Long-term debt (25,243) (139) Capital lease obligations (129) (275) Net borrowings (repayments) under short-term debt arrangements* 25,181 3,950 Dividends on preferred and common stock (19,043) (19,126) Net Cash Used in Financing Activities 535 (15,590) Net Change in Cash and Cash Equivalents 1,500 (1,315) Cash and Cash Equivalents at Beginning of Period 3,321 3,189 Cash and Cash Equivalents at End of Period $ 4,821 $ 1,874 Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest, net of amounts capitalized $15,858 $14,788 Federal income taxes $10,000 $9,531 *Debt with maturities of 90 days or less. The accompanying notes are an integral part of these statements.
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated balance sheet as of June 30, 1997, the consolidated statements of income for the three month and six month periods ended June 30, 1997 and 1996, and the consolidated cash flow statements for the six month periods then ended have been prepared by Orange and Rockland Utilities, Inc. (the "Company") without an audit. In the opinion of management, all adjustments (which include normal recurring adjustments and the adjustments necessitated by the discontinued operations) necessary to fairly present the financial position and results of operations at June 30, 1997, and for all periods presented, have been made. The amounts in the consolidated balance sheet as of December 31, 1996 have been derived from audited financial statements. 2. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these unaudited consolidated financial statements, notes to consolidated financial statements and the management's discussion and analysis of financial condition and results of operations be read in conjunction with the consolidated financial statements, the review of the Company's results of operations and financial condition and the notes to consolidated financial statements included in the Company's December 31, 1996 Annual Report to Shareholders. The results of operations for the period ended June 30, 1997 are not necessarily indicative of the results of operations for the full year. 3. The consolidated financial statements include the accounts of the Company, all subsidiaries and the Company's pro rata share of an unincorporated joint venture. All intercompany balances and transactions have been eliminated. 4. Contingencies at June 30, 1997 are substantially the same as the contingencies described in the "Notes to Consolidated Financial Statements" included in the Company's December 31, 1996 Annual Report to Shareholders, which material is incorporated by reference to the Company's December 31, 1996 Form 10-K Annual Report, and in Item 3, Legal Proceedings of the Company's Form 10-K Annual Report for the fiscal year ended December 31, 1996, except changes in the status of regulatory matters which are updated in Part I, Item 2 under the caption "Rate Activities" and the status of certain Legal Proceedings which are updated in Part II, Item I, "Legal Proceedings". 5. In February 1997, the Financial Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No. 128"). This statement simplifies the computation of earnings per share ("EPS"). Basic EPS includes no dilution and is computed by dividing income available to common stockholders by the weighted- average number of common shares outstanding for the period. SFAS No. 128 will be effective for financial statements for periods ending after December 15, 1997, and the Company plans to adopt the statement for year-end 1997. If adopted currently, SFAS No. 128 would have a negligible impact on the Company's reported EPS. 6. The Company experienced a major storm on April 1, 1997. On June 27, 1997, the Company filed a petition with the New York Public Service Commission ("NYPSC") to defer and recover the $2.8 million of incremental costs incurred during this event. The Company has deferred these charges pending final resolution by the NYPSC. 7. The Company has entered into a strategic alliance with US Generating Company, an independent power production company based in Bethesda, MD. This alliance, the terms of which are set forth in agreements dated as of May 1, 1997, is primarily designed to expand the wholesale markets for the Company's excess generation and create operating efficiencies and market penetration unattainable by each company individually. 8. NORSTAR Management, Inc. ("NMI"), a wholly-owned indirect subsidiary of the Company has solicited bids to sell certain of the assets of NORSTAR Energy Limited Partnership ("NORSTAR"),a natural gas services and marketing company of which NMI is the general partner. The assets to be sold consist primarily of customer contracts and accounts receivable. NMI's plans call for winding up the remaining portion of the NORSTAR business prior to December 31, 1997. In accordance with Accounting Principles Board Opinion No. 30, the financial results for this segment are reported as "Discontinued Operations." The total losses related to discontinued operations were $(6,705,222)and $(509,970) for the quarters ended June 30,1997 and June 30, 1996, respectively. The 1997 loss includes an estimated loss of $(4,565,370) to be incurred in connection with the disposal of the NORSTAR business. The impact of NORSTAR as reported in "Discontinued Operations" is as follows: Three Months Ended June 30, 1997 1996 Gross Revenue $16,176,631 $60,474,049 Cost and Expenses 20,409,473 61,336,409 Loss Before Income Taxes (4,232,842) (862,360) Provision for Taxes (2,092,990) (352,390) Loss from Discontinued Operations (2,139,852) (509,970) Estimated Loss on Disposal (net of tax benefits of $751,495) (4,565,370) - Total Loss Related to Discontinued Operations $(6,705,222) $ (509,970) June 30, 1997 Dec. 31, 1996 Assets: Current Assets $17,416,665 $49,515,807 Fixed Assets 2,426,178 1,532,565 Other Assets 1,715,041 2,416,712 Total Assets 21,557,884 53,465,084 Liabilities: Current Liabilities 22,480,513 46,054,645 Other Liabilities 934,565 1,073,987 Net Liabilities (Assets) of Discontinued Operations $ 1,857,194 $(6,336,452) 9. On July 18, 1997 the Company filed a petition with the NYPSC for approval to repurchase up to 700,000 shares of its common stock and to issue up to $25 million of unsecured debt obligations. The proceeds from the issuance of debt will be used to finance the common stock purchase. If the petition is approved, the Company will repurchase stock from time to time, not later than December 31, 1999 in the open market or through privately negotiated transactions. 10. An indirect subsidiary of the Company, Millbrook Holdings, Inc.("Millbrook"), pursuant to a long-term leasehold agreement, holds for sale or lease, approximately twelve acres of non-utility real estate in Morris County, New Jersey. In June 1997 the Company wrote off the land leased by Millbrook. The impact of this write-off resulted in an after tax charge to income of $(563,000). 11. On April 24, 1997, O&R Development Inc., a land development subsidiary of the Company, completed the sale of one of its buildings located in Harriman, New York to Kingston Realty Group LLC. The sale produced net income after tax of $465,000. 12. The Company and the members of Local 503 of the International Brotherhood of Electrical Workers have agreed to a new labor contract effective June 1, 1997. Under the terms of the contract, bargaining unit wages will increase by 10 percent over the three-year period covered by the agreement. The agreement calls for pension plan and other retirement-related improvements as well as employee contributions for health care costs and work rule changes which will essentially offset the cost increases. 13. Certain amounts reported for the prior year have been reclassified to conform with the current year presentation. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition: Financial Performance The Company's consolidated earnings per average common share outstanding from continuing operations for the second quarter of 1997 were $0.37 as compared to $0.45 for the second quarter of 1996. The Company's consolidated earnings per average common share outstanding from discontinued operations for the second quarter of 1997 were $(0.50) as compared to $(0.04) for the second quarter of 1996. The Company's combined total consolidated earnings per average common share outstanding for the second quarter of 1997 were $(0.13) as compared to $0.41 for the second quarter of 1996. Fluctuations within the components of earnings are discussed in the "Results of Operations". The average number of common shares outstanding were 13.7 million for the three and six month periods of both 1997 and 1996. The current quarterly dividend rate of $0.645 is equivalent to an annual dividend rate of $2.58 per share. Dividends declared during the twelve months ended June 30, 1997 amounted to $2.58 with a dividend payout ratio of 124.0% as compared to $2.58 a year ago with a payout ratio of 94.5%. The dividend payout ratio excluding discontinued operations was 85.4% and 91.8%, respectively, for the twelve months ended June 30, 1997 and 1996. The return on average common equity for the twelve months ended June 30, 1997 was 7.45% as compared to 9.84% for the twelve months ended June 30, 1996. Capital Resources and Liquidity At June 30, 1997, the Company and its utility subsidiaries had unsecured bank lines of credit totaling $110 million. The Company may borrow under the lines of credit through the issuance of promissory notes to the banks. The Company, however, utilizes such lines of credit to fully support commercial paper borrowings. The aggregate amount of borrowings through the issuance of promissory notes and commercial paper cannot exceed the aggregate lines of credit. In addition, a non-utility subsidiary had a line of credit that provided for borrowing based on the availability of collateral which, at June 30, 1997, amounted to $2,370,000. The average daily balance of short-term borrowings for the six months ended June 30, 1997 amounted to $95.1 million at an effective interest rate of 5.7% as compared to $58.9 million at an effective interest rate of 5.8% for the same period of 1996. The average daily balance of temporary cash investments for the six months ended June 30, 1997 was $1.0 million with an effective interest rate of 5.2% compared to $1.4 million at an effective interest rate of 5.4% for the same period of 1996. The NYPSC has authorized the Company to issue up to 750,000 shares of common stock under its Dividend Reinvestment and Stock Purchase Plan ("DRP") and its Employee Stock Purchase and Dividend Reinvestment Plan ("ESPP"). Under an option of the Company, common stock used to satisfy the requirements of the DRP and ESPP is being purchased by the agent under the plans on the open market. On July 18, 1997, the Company filed a petition with the NYPSC for approval to repurchase up to 700,000 shares of its common stock and to issue up to $25 million of unsecured debt obligations. If the petition is approved, the Company will repurchase stock from time to time, not later than December 31, 1999 in the open market or through privately negotiated transactions. The proceeds of the debt issue will be used to provide funds for the common stock repurchase. The Company currently has no other plans for the issuance of additional debt or equity securities, with the exception of the expected refinancing of $78 million of long-term debt which will mature during 1997. It is expected that all other capital requirements will be met with funds from operations, supplemented with short-term debt as required. Rate Activities New York The Company and the Staff of the NYPSC entered into a settlement agreement("Orange and Rockland Agreement")on March 25, 1997 in Case 96-E-0900, the NYPSC Competitive Opportunities Proceeding. Reference is made to the Company's Form 8-K dated March 25, 1997 for a discussion of the Orange and Rockland Agreement. On July 2, 1997, the Administrative Law Judge ("ALJ") issued his recommended decision in this proceeding. The ALJ recommended that the NYPSC not approve the Orange and Rockland Agreement as submitted. Although the ALJ supported the Orange and Rockland Agreement's retail access implementation schedule and the proposed rate reductions, he was critical of the proposed corporate restructuring provisions of the Agreement, the proposed increase in return on equity revenue sharing threshold and operation of the stranded cost recovery mechanism. Under the current schedule, the Company anticipates that the NYPSC will rule on the Orange and Rockland Agreement in September 1997. The Company is unable to predict the outcome of the NYPSC proceeding or its effect on the Company's consolidated financial position or results of operations, if any. On June 5, 1997, the NYPSC issued an Order Requiring the Filing of Proposals to Ameliorate Gas Price Volatility and Requesting Comments in Case 97-G-0600, In the Matter of the Commission's Request for Gas Distribution Companies to Reduce Gas Cost Volatility and Provide for Alternative Gas Purchasing Mechanisms. Under the Order, gas utilities in New York are required to submit proposals for fixed price gas sales options to be available for use by all customers during the 1997-1998 heating season. In addition, the NYPSC directed the utilities to review their gas procurement practices and to develop an acquisition strategy to include a mix of purchase options comprised of, but not limited to, indices, spot purchases and financial transactions with a view toward fostering gas price stability. On August 4, 1997, the Company filed a multi-part proposal in response to the NYPSC's Order. The proposal provides for the Company to use financial derivatives to hedge an unspecified portion of its system gas supply for the upcoming winter with the costs associated with the hedging activity to be recovered by the Company through its gas adjustment clause. The proposal also includes a new tariff which would allow the Company to negotiate the commodity price of gas with its larger customers. The Company anticipates a ruling on its filing prior to December, 1997. The Company's filing may be accepted or significantly modified by the NYPSC before becoming effective. It is not possible to predict the outcome of this proceeding or its effect on the Company's consolidated financial position or results of operations. New Jersey On April 30, 1997, the New Jersey Board of Public Utilities ("NJBPU") issued an order "Adopting and Releasing Final Report in its Energy Master Plan Phase II Proceeding to Investigate the Future Structure of the Electric Power Industry (Docket No. EX 94120585Y)." The Order required the Company's subsidiary, Rockland Electric Company ("RECO"), and other New Jersey investor owned electric utilities each to file unbundled rates, a stranded cost proposal and a restructuring plan by July 15, 1997. As part of its stranded cost proposal, the NJBPU has recommended that each utility should provide a 5-10% rate reduction. RECO's filing was made on July 15, 1997. The filing includes a Restructuring Plan, a Stranded Costs Filing and an Unbundled Rates Filing. The Restructuring Plan calls for RECO to remain a regulated transmission and distribution company within a registered holding company structure. Standards of Conduct and Affiliate Rules have been proposed in order to promote effective competition and ensure that regulated operations do not subsidize unregulated operations. RECO has proposed to implement full retail competition (energy and capacity) for all customers by May 1, 1999. Under this schedule, full retail access will be achieved 13 months ahead of the NJBPU's proposed phase-in schedule. In its Stranded Costs Filing, RECO has identified two categories of potential stranded costs: generation investment and power purchase contracts with non-utility generators ("NUGS"). RECO proposes to recover stranded generation investment through regulated delivery rates by means of a two-part Market Transition Charge ("MTC"). The MTC would be in effect for an initial four year period during which RECO would recover 90-100% of its annual stranded costs. At the end of the four year period, a market valuation of the generation assets would be performed. Any difference between market and net book value then would be recovered over an appropriate period of time. Stranded NUG contract payments are proposed to be recovered over the remaining life of the contracts through the MTC. RECO has proposed to reduce its annual net revenue (revenue net of fuel, purchased power and gross receipts taxes) by $4.7 million or 5.6% effective in October 1998. RECO also made an Unbundled Rates Filing which separates the components of existing tariffs into production, transmission, distribution and customer cost categories. The Unbundled Rates Filing would serve as the basis to segregate the costs of the generation function from rates in order to facilitate customer choice. In addition, the MTC mechanism would be added to the existing rate structure to allow for recovery of stranded costs, and a non-bypassable societal benefits charge would be created as a billing mechanism for mandated public policy programs. The NJBPU has indicated that it will rule on these filings by October 1998. RECO's filing may be accepted or significantly modified by the NJBPU before becoming effective. It is not possible to predict the outcome of the NJBPU proceeding or its effect on the Company's consolidated financial position or results of operations. QUARTERLY COMPARISON Results of Operations The Company's total consolidated earnings per average common share outstanding for the second quarter of 1997 were $(0.13) as compared to $0.41 for the second quarter of 1996. The majority of this quarter's decline resulted from the operating losses incurred by NORSTAR and the estimated loss to dispose of NORSTAR's discontinued operations. The earnings decrease from continuing operations was the result of lower revenue, higher short-term interest charges and lower income from other diversified activities. Electric and Gas Revenues Electric and gas operating revenues, including fuel cost and purchased gas cost recoveries, decreased by $14.9 million during the second quarter of 1997 as compared to the same quarter of 1996, as a result of the timing of fuel cost recoveries and the regulatory adjustments, recorded in the second quarter of 1996 required by the May 3, 1996 NYPSC Order issued by the NYPSC in Cases 95-E-0491 and 93-6-0779, ("May 3, 1996 Order"). Electric operating revenues during the current quarter were $111.9 million as compared to $120.8 million for the second quarter of 1996. The 1996 revenues also reflect the regulatory adjustments required by the NYPSC's May 3, 1996 Order. The timing of fuel cost recoveries and lower base rate revenues also contributed to this decrease. Total sales of electric energy to retail customers during the second quarter of 1997 were 1,107,458 megawatt hours ("Mwh"), compared with 1,103,959 Mwh during the comparable period a year ago. Revenues from these sales were $110.5 million for the second quarter compared with $107.5 million for the same period in 1996. The 1996 revenues reflect the impact of the Company's Revenue Decoupling Mechanism ("RDM") then in effect. In accordance with the NYPSC's May 3, 1996 Order, electric revenues are no longer governed by an RDM agreement. Sales to other utilities for the second quarter of 1997 amounted to 29,589 Mwh with revenues of $0.6 million compared to 34,172 Mwh and $0.5 million in 1996. Revenue from these sales are primarily a recovery of costs, and under the applicable tariff regulations, have a minimal impact on earnings. Gas operating revenues during the second quarter of 1997 were $25.1 million compared to $31.1 million for the second quarter of 1996. This decrease is primarily the result of lower gas cost recoveries. Sales to firm customers totaled 3,081 million cubic feet ("Mmcf"), compared with 3,169 Mmcf during the same period a year ago. Gas revenues from firm customers were $21.1 million, compared with $25.3 million in the second quarter of 1996. Interruptible gas sales were 844 Mmcf for the second quarter of 1997 compared to 886 Mmcf for the same period of 1996. Revenues from interruptible customers were $3.0 million in 1997 compared to $3.4 million in 1996. Fuel, Purchased Electricity and Purchased Gas Costs The cost of fuel used in the production of electricity and purchased electricity costs decreased by $1.0 million during the second quarter of 1997 when compared to the same quarter of 1996. This decrease reflects the lower cost of fuel used in generation and lower purchased power costs. Purchased gas costs for utility operations were $13.8 million in the second quarter of 1997 compared to $18.0 million in 1996, a decrease of $4.2 million. This decrease is the result of decreases in the cost of purchased gas coupled with a decrease in the volume of gas purchased for resale and deferred costs. Other Operating and Maintenance Expenses The Company's total operating and maintenance expenses excluding fuel, purchased power and gas purchased for resale for the second quarter decreased by $5.5 million compared with the same period in 1996. Utility operating expenses decreased $6.2 million. Diversified operating expenses increased by $0.7 million. The net decrease in utility operating and maintenance expenses of $6.2 million is primarily the result of the implementation of the May 3, 1996 NYPSC Order, which, among other things, provided for the elimination of substantially all of the expense reconciliation items under the previously mandated Revenue Decoupling Mechanism and the recognition of a higher level of Independent Power Producer contract termination costs in the second quarter of 1996. Additionally, depreciation expense increased in the current period as a result of a regulatory adjustment made in the second quarter of 1996 which resulted in a temporary reduction in depreciation expense and tax expense decreased by $1.8 million, primarily as a result of decreased property and revenue taxes. Diversified Activities The Company's diversified activities, excluding the discontinued gas marketing operations, consist of energy related services and business ventures and land development conducted through wholly- owned non-utility subsidiaries. Revenues from continuing diversified activities decreased by $163,000 for the second quarter compared with the same period in 1996. The net loss resulting from the discontinued operations of NORSTAR amounted to $6.7 million or 50 cents per average common share outstanding during the second quarter of 1997 compared to a loss of $0.5 million or 4 cents per share during the second quarter of 1996. Other Income, Deductions and Interest Charges - Net Other income, net of interest charges and other deductions, increased by $3.3 million during the second quarter of 1997 when compared to the same quarter of 1996 as a result of reversals on cumulative RDM balances and lower investigation costs, partially offset by higher interest charges. YEAR TO DATE COMPARISON Results of Operations Earnings per average common share outstanding from continuing operations for the first half of 1997 amounted to $1.16 per share as compared to $1.45 per share for the first six months of 1996. Earnings per average common share outstanding from discontinued operations for the first half of 1997 amounted to $(0.83) per share as compared to $(0.03) per share for the first six months of 1996. The Company's combined total consolidated earnings per average common share outstanding for the first half of 1997 were $0.33 as compared to $1.42 for the first half of 1996. The majority of this year's decline was the impact of the operating losses incurred by NORSTAR's gas marketing activities and the estimated loss to dispose of NORSTAR's discontinued operations. The six-month decrease in earnings from continuing operations is primarily the result of lower energy sales during the mild winter and the balance of costs associated with the arbitration settlement with the Company's former Chief Executive Officer in February 1997. Electric and Gas Revenues Electric and gas operating revenues, including fuel cost and purchased gas cost recoveries, decreased by $16.9 million in the first six months of 1997 as compared to the same period of 1996. Electric operating revenues during the current period were $219.0 million as compared to $228.8 million for the first six months of 1996, a decrease of $9.8 million. This decrease is the result of regulatory adjustments required by the May 3, 1996 NYPSC Order approving the settlement agreement in the Company's electric and investigation cases as well as decreased sales and the timing of fuel cost recoveries. Actual total sales of electric energy to retail customers during the first six months of 1997 were 2,224,176 Mwh, compared to 2,232,657 Mwh during the comparable period a year ago. This decrease is attributable to decreased usage when compared to the same period a year ago. Revenues from these sales during the first six months of 1997 were $215.2 as compared to $215.7 for the same period in 1996. The 1996 revenues reflect the impact of the Company's RDM then in effect. In accordance with the NYPSC's May 3, 1996 Order electric revenues are no longer governed by an RDM agreement. Sales to other utilities for the first six months of 1997 amounted to 97,513 Mwh with revenues of $2.1 million compared to 71,664 Mwh and $1.0 million in 1996. Gas operating revenues during the first six months of 1997 were $103.1 million compared to $110.1 million for the first six months of 1996, a decrease of $7.0 million. Revenues were decreased by lower gas cost recoveries and lower sales volumes from a mild winter. Gas sales to firm customers during the first six months of 1997 totaled 12,077 Mmcf, compared with 13,112 Mmcf during the same period a year ago. Gas revenues from firm customers were $93.7 million, compared with $98.1 million in the first six months of 1996. Fuel, Purchased Electricity and Purchased Gas Costs The cost of fuel used in the production of electricity and purchased electricity costs decreased by $3.4 million during the first six months of 1997 when compared to the same period of 1996. This decrease reflects the decrease in the cost of fuel and purchased power offset by increased demand. Purchased gas costs for utility operations were $61.9 million in the first six months of 1997 compared to $65.6 million in 1996, a decrease of $3.7 million. This decrease in gas costs is attributable to a lower volume of gas purchased for resale offset by higher prices. Other Operating and Maintenance Expenses The Company's total operating and maintenance expenses, excluding fuel, purchased power and gas purchased for resale for the first six months of 1997 decreased by $4.9 million compared with the same period in 1996. The decrease in expenses associated with utility operating expenses amounted to $5.8 million. The change in diversified operation and maintenance expenses was an increase of $0.9 million. The net decrease in utility operating expenses is primarily the result of the implementation of the provisions of the May 3, 1996 NYPSC Order, which, among other things, provided for the elimination of substantially all of the expense reconciliation items under the previously mandated RDM and the recovery of Independent Power Producer contract termination costs. In addition, depreciation expense increased because of a regulatory adjustment made in the first quarter of 1996 which resulted in a temporary reduction in depreciation expense. Diversified Activities Revenues from diversified activities decreased by $193,000 for the first six months of 1997 as compared to the same period of 1996. Revenues for 1996 have been restated to exclude the discontinued operations and estimated loss on disposal of NORSTAR. The net loss resulting from the discontinued operations of NORSTAR amounted to $11.3 million or 83 cents per average common share outstanding during the first six months of 1997 compared to a loss of $0.4 million or 3 cents per share during the same period in 1996. Other Income, Deductions and Interest Charges - Net Other income, net of interest charges and other deductions, increased by $1.0 million during the first six months of 1997 when compared to the same period of 1996. The increase reflects the impact of the reversals of RDM balances and the increase in investigation costs associated with an arbitration settlement, signed in February 1997, with a former Chief Executive Officer. PART II. OTHER INFORMATION Item 1. Legal Proceedings Reference is made to Item 3, Legal Proceedings, in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and to Item I, Legal Proceedings, in the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997, for a description of the litigation entitled Crossroads Cogeneration Corporation v. Orange and Rockland Utilities, Inc. By Opinion and Order ("Order") dated June 30, 1997, the Court dismissed Crossroads' Complaint in its entirety with prejudice and dismissed Crossroads cross-motion for partial summary judgment as moot. On July 23, 1997, Crossroads filed an appeal from the Order. Reference is made to Item 3, Legal Proceedings, in the Company's Annual Report on Form 10-K for the fiscal year ended December 31,1996 for a description of the litigation entitled Town of Wallkill and State of New York v. Tesa Tape, Inc., et al. On July 23, 1997 the Company reached a settlement in principle with the State of New York which, if finalized and approved by the Court, will result in the Company being dismissed from this litigation. Pursuant to the settlement in principle, the Company will pay $125,000 to the State of New York and the State will release the Company, dismiss the litigation and will grant "contribution protection" as to the pending third-party claims and cross-claims asserted by other potentially responsible parties. The settlement will be subject to certain standard limited re-openers. The settlement is in the process of being documented and will be subject to approval of the Court. Reference is made to Item 3, Legal Proceedings, in the Company's Annual Report on Form 10-K for the fiscal year ended December 31,1996 for a description of a remedial investigation of a property owned by the Company in West Nyack, New York. The Company estimates that the remediation related to the contamination of soils for the West Nyack site will cost approximately $1.5 million. This amount has been deferred in the Company's financial statements as approved by the May 3, 1996 NYPSC Order. In addition, the New York State Department of Environmental Conservation will separately address the potential remediation related to groundwater contamination at a later date. The Company does not believe that this matter will have a material effect on the financial condition of the Company. Reference is made to Item 3, Legal Proceedings, in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, and to Item 5, Other Events, in the Company's Current Report on Form 8-K dated March 25, 1997, for a description of the New York Public Service Commission ("NYPSC") Competitive Opportunities Proceeding (Case Nos. 94-E-0952 and 96-E-0900), and a Settlement Agreement entered into on March 25, 1997 between the Company and the Staff of the NYPSC in Case No. 96-E-0900 and to Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, in this Form 10-Q Quarterly Report for a description of the Administrative Law Judge's recommended decision in this proceeding issued on July 2, 1997. The Company is unable to predict the outcome the NYPSC proceeding or its effect on the Company's consolidated financial position or results of operations. Reference is made to Item 3, Legal Proceedings, in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 for a description of the New Jersey Board of Public Utilities ("NJBPU") Energy Master Plan proceedings and to Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, in this Form 10-Q Quarterly Report for a description of the April 30, 1997 NJBPU Order Adopting and Releasing Final Report in its Energy Master Plan Phase II Proceeding to Investigate the Future Structure of the Electric Power Industry (Docket No. EX94120585Y) and the filing made by the Company's subsidiary, Rockland Electric Company on July 15, 1997 in response thereto. It is not possible to predict the outcome of the NJBPU proceeding or its effect on the Company's consolidated financial position or results of operations. Reference is made to Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, in this Form 10-Q Quarterly Report for a description of the June 5, 1997 NYPSC Order Requiring the Filing of Proposals to Ameliorate Gas Price Volatility and Requesting Comments (Case 97-G-0600) and the filing made by the Company on August 4, 1997, in response thereto. It is not possible to predict the outcome of this proceeding or its effect on the Company's consolidated financial position or results of operations. Item 5. Other Information On August 8, 1997, the Company issued a press release announcing the departure of the Company's President and Chief Operating Officer. A copy of the press release is attached as an Exhibit to this Form 10-Q Quarterly Report and is incorporated herein by reference. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits +10.11 Officers' Supplemental Retirement Plan, as amended and restated on June 5, 1997 effective July 1, 1997. +10.20 Orange and Rockland Utilities, Inc. Post Director Service Retainer Continuation Program, as amended on June 5, 1997 and restated effective July 1, 1997. +10.40 Long-Term Performance Share Unit Plan as amended effective July 1, 1997. +10.48 Eligible Employees' Insurance Program, effective July 1, 1997. 99.6 Press Release dated August 8, 1997. + Denotes executive compensatory plans and arrangements. (b) Reports on Form 8-K On June 17, 1997, the Company filed a Current Report on Form 8-K dated June 17, 1997 relating to a press release of the Company dated June 17, 1997. On July 1, 1997, the Company filed a Current Report on Form 8-K dated July 1, 1997 relating to a press release of the Company dated July 1, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ORANGE AND ROCKLAND UTILITIES, INC. (Registrant) Date: August 8, 1997 By ROBERT J. McBENNETT Robert J. McBennett Treasurer Date: August 8, 1997 By EDWARD M. McKENNA Edward M. McKenna Controller SIGNATURES EX-10.11 2 OFFICERS' SUPPLEMENTAL RETIREMENT PLAN OF ORANGE AND ROCKLAND UTILITIES, INC. As Amended and Restated Effective July 1, 1997 OFFICERS' SUPPLEMENTAL RETIREMENT PLAN OF ORANGE AND ROCKLAND UTILITIES, INC. Section 1. PURPOSE The purpose of the Officers' Supplemental Retirement Plan of Orange and Rockland Utilities, Inc. (the "Plan") is to provide additional retirement benefits to Orange and Rockland Officers above that which they might earn from the Employees' Retirement Plan of Orange and Rockland Utilities, Inc. (the "Qualified Plan"), given limitations upon benefits and covered compensation under the Qualified Plan imposed by the Internal Revenue Code of 1986, as amended (the "Code"). The Plan has been intentionally structured to benefit those Officers whose careers at Orange and Rockland have been too short to accumulate appropriate retirement benefits from the Qualified Plan. Benefits payable from the Plan will be offset by payments from the Qualified Plan. The Plan as amended and restated herein shall apply to Officers terminating from service on or after July 1, 1997. Section 2. DEFINITIONS (1) "Affiliated Company" shall mean any corporation which is a member of a controlled group of corporations (within the meaning of Section 1563(a), determined without regard to Section 1563(a)(4) and (e)(3)(C) of the Code) of which the Company is also a member. (2) "Allowance" shall mean a monthly benefit computed in accordance with Section 6. (3) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. (4) "Beneficiary" shall mean the person or persons designated by the Member, in writing filed with the Committee, to receive any Allowance payable hereunder to a Beneficiary; provided, however, that if the Participant has a spouse, the spouse shall be the Participant's Beneficiary unless the spouse consents in a notarized writing, on a form provided by or acceptable to the Committee or its designee, to the designation of the non-spouse Beneficiary. A designation of Beneficiary may be revoked or changed by filing a new designation of Beneficiary with the Committee prior to death, subject to the spousal consent requirements set forth in the preceding sentence. In the event of a failure to designate a Beneficiary or if the designated Beneficiary dies prior to receipt of payment, the Beneficiary shall be deemed to be the Member's spouse; or if none, the Member's then living issue, per stirpes; or if none, the estate of the Member or Contingent Annuitant, whoever is the last to die. With respect to any Allowance payable to a Contingent Annuitant which has a guaranteed payment period, the Member, in a writing filed with the Committee, is permitted to authorize the Contingent Annuitant to designate, or change the designation of, the Beneficiary for the continued payments which would be made in the event of the death of the Contingent Annuitant prior to the expiration of the guaranteed payment period. (5) "Board" shall mean the Board of Directors of Orange and Rockland Utilities, Inc. (6) "Change in Control" shall mean any one of the following events: (A) 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; (B) 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; (C) 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 (1) 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 (2) 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; or (D) 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. (7) "Committee" shall mean the Retirement Committee of Orange and Rockland Utilities, Inc. (8) "Company" shall mean Orange and Rockland Utilities, Inc. and any successor to its business or assets; and, except with respect to the definitions of "Change in Control" and "Potential Change in Control", shall also mean any other company participating in the Plan as provided in Section 3 with respect to its Officers. (9) "Compensation" shall mean the regular rate of remuneration paid to an Officer by the Company, excluding any bonuses, overtime or other special pay, and excluding the Company's cost for any public or private employee benefit plan, including the Plan, but including any amount of Compensation reduction elected by the Officer and contributed or credited by the Company under any such plan. An Officer who is receiving credit for years of Service and years of Service as an Officer under Section 5 on the basis of the receipt of long-term disability benefits under a Company-sponsored program of such benefits shall be credited with Compensation for that period at the same rate of Compensation he or she had been receiving when last actively at work. (A) Notwithstanding the foregoing, for Officers who have completed at least 11 years of Service, Compensation for periods prior to January 1, 1995 shall also include a portion of their corporate performance-based annual award declared under the Annual Incentive Plan provisions of the Orange and Rockland Utilities, Inc. Incentive Compensation Plan ("ICP"). For purposes of this Plan and inclusion in Compensation hereunder, such annual ICP award for each calendar year prior to January 1, 1995 shall be deemed to be declared for each Officer and to be equal to a percentage of that Officer's regular rate of remuneration included in Compensation for such calendar year under the introductory paragraph of this definition. The percentage shall be determined in accordance with Table I of the ICP's Management Compensation Program Administration Guide, as it was in effect from time to time, on the basis of the highest grade or percentage of the Officer for any part of the applicable calendar year. Such annual ICP award will be deemed to have been paid ratably over the calendar year for which it is deemed declared (i.e., 1/12 for each month), and the portion includible in Compensation for purposes hereof shall be determined in accordance with the following schedule, on the basis of the years of Service the Officer has completed as of the end of the last month included in the period over which Final Average Compensation is determined: Years of Service Percentage of Annual Award Included 11 10% 12 20% 13 30% 14 40% 15 50% 16 60% 17 70% 18 80% 19 90% 20 or more 100% (B) Notwithstanding the foregoing, an Officer's Compensation for periods on and after January 1, 1995 shall also include the Officer's annual incentive plan target award under the Orange and Rockland Utilities, Inc. Annual Team Incentive Plan ("ATIP"), or any successor plan. The percentage target award for the purposes of this Plan shall be the highest available percentage for such Officer for the applicable year, as determined in accordance with the ATIP, as amended from time to time, on the basis of the Officer's highest position and/or pay grade for any part of such calendar year. The award for purposes of this Plan equals the following percentage (which shall be effective as of January 1, 1995) multiplied by the Officer's regular rate of remuneration included in Compensation for such calendar year under the introductory paragraph of this definition: Officer's Position Percentage Chief Executive Officer 45% Chief Operating Officer 40% Chief Financial Officer 40% Chief Legal Officer 40% Chief Human Resource Officer 30% Other Officers as specified Such annual ATIP award will be deemed to have been paid ratably over the calendar year for which it is deemed declared (i.e., 1/12 for each month). (C) In all cases, Compensation shall be determined under rules uniformly applicable to all Officers similarly situated. (10) "Contingent Annuitant" shall mean the person designated by the Member, in writing filed with the Committee, to receive any Allowance payable hereunder to a Contingent Annuitant. Except as hereafter provided, without the necessity of obtaining the consent of any person, including specifically the then designated Contingent Annuitant, a designation of a Contingent Annuitant may be revoked or changed by filing a new written designation of a Contingent Annuitant with the Committee prior to the earlier of the Member's death or commencement of payment of the Member's Allowance. Notwithstanding the foregoing, in order for a Member who is married at the time of the designation of Contingent Annuitant or change in a designation of Contingent Annuitant to designate a Contingent Annuitant other than his or her spouse, such designation of Contingent Annuitant must include the signed, written consent of his or her spouse (including specific consent to the Contingent Annuitant designated). In the event of the failure to designate a Contingent Annuitant as herein provided, the Contingent Annuitant shall be deemed to be the Member's spouse, if any, at the earlier of the Member's death or commencement of payment of the Member's Allowance, if surviving. (11) "Disability Retirement Allowance" shall mean an Allowance commuted in accordance with Section 6F. (12) "Early Retirement Allowance" shall mean an Allowance computed in accordance with Section 6E. (13) "Effective Date of the Plan" shall mean originally December 3, 1981, and with respect to this amended and restated Plan, July 1, 1997. (14) "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. (15) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (16) "Final Average Compensation" shall be computed by taking the sum of a Member's Compensation on a monthly basis in each of the three years of highest Compensation during the 10 years immediately preceding the earliest of (a) his or her Retirement Date, (b) his or her termination date pursuant to Section 6(G), or (c) the date the Member ceases to be an Officer, and dividing this sum by 36. For the purpose of determining the three years of highest Compensation, three years shall be 36 consecutive months. (17) "Member" shall mean any person included in the membership of the Plan as provided in Section 4. (18) "Normal Retirement Allowance" shall mean an Allowance computed in accordance with Section 6(D). (19) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the 65th anniversary of a Member's birth. (20) "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. (21) "Plan" shall mean the Officers' Supplemental Retirement Plan of Orange and Rockland Utilities, Inc., as set forth herein and as may be amended from time to time. (22) "Plan Year" shall mean the calendar year. (23) "Potential Change in Control" shall mean any one of the following events: (A) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (B) 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; (C) 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 (D) 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. (24) "Qualified Plan" shall mean the Employees' Retirement Plan of Orange and Rockland Utilities, Inc. as in effect on July 1, 1997, but, except as specifically otherwise provided herein, as amended and as the actuarial equivalencies thereunder may be revised from time to time. (25) "Retired Member" shall mean a Member who has retired under the Plan with an entitlement to a Normal Retirement Allowance, Early Retirement Allowance, or Disability Retirement Allowance. (26) "Service" shall mean service credited under the Plan as provided in Section 5. (27) "Vested Member" shall mean a Member whose employment with the Company or an Affiliated Company has been terminated for reasons other than retirement or death after he or she met the eligibility requirements for a Vested Retirement Allowance pursuant to Section 6(G). (28) "Vested Retirement Allowance" shall mean an Allowance computed in accordance with Section 6(G). Section 3. ELIGIBILITY Only Officers of Orange and Rockland Utilities, Inc. and/or its utility subsidiaries, Rockland Electric Company and Pike County Light & Power Company, may be Members of the Plan. Section 4. MEMBERSHIP A person shall become a Member of the Plan on the day he or she is elected an Officer by the Board, or by the board of the participating utility subsidiary of which he or she is an Officer. Section 5. SERVICE Except as hereafter provided, a year of Service under the Plan shall equal one year of Eligible Service under the Qualified Plan (see Section 4 of the Qualified Plan) as determined on the basis of the Plan Year measuring period only (i.e., 1,000 hours of service in a calendar year is a year of Service). Years of Service as an Officer shall only include those years of Service credited subsequent to a Member's election as an Officer and during which he or she serves as an Officer, and shall include the Plan Year in which the Officer is so elected. Notwithstanding anything to the contrary in the foregoing, service following the Member's ceasing to be an Officer shall not be considered as years of Service for any purpose under the Plan (except as set forth in Section 15), and in particular shall not entitle a Member to become eligible for a Vested or other Retirement Allowance under the Plan even if as a result of such service the Member becomes eligible for a Vested or other Retirement Allowance from the Qualified Plan. To the extent not already credited hereunder as years of Service and years of Service as an Officer, a Member receiving long-term disability benefits under a Company-sponsored program of such benefits shall be entitled to credit for years of Service and years of Service as an Officer (if such disability occurred while the Member was an Officer) as though actively at work for so long as the Member is receiving such disability benefits and is not a Retired Member hereunder. The Board, at its sole discretion, may award a Member additional years of Service for purposes of determining Benefits under Section 6 and eligibility therefor. Section 6. BENEFITS (A) Amount and Payments of Allowance The Allowance determined under the Plan is equal to: (i) the Benefit Formula Percentage multiplied by the Member's Final Average Compensation; less (ii) the Qualified Plan Allowance payable. The Allowance shall be paid for the life of the Member, except as hereafter provided, and shall commence and be paid in accordance with the provisions of the Plan describing the Allowance to be paid. If for any month for which the payment of the Allowance under the Plan is made to a Retired or Vested Member there is no Qualified Plan Allowance payable under the Qualified Plan to the Retired or Vested Member, the Allowance provided for under the Plan shall be paid without any offset by a Qualified Plan Allowance; provided, however, that when the Qualified Plan Allowance is payable to or with respect to such Member, the Allowance then paid under the Plan shall be adjusted to reflect the offset for the Qualified Plan Allowance then payable. (B) Benefit Formula Percentage The Benefit Formula Percentage shall be the sum of the percentages awarded for the Member's years of Service according to the following schedule: For each of the first ten years of Service: Four percent; For each of the second ten years of Service: Two percent; and For each year of Service in excess of twenty: One-half percent. Example: A Member with twenty-seven years of Service has a Benefit Formula Percentage of 63.5%, computed as follows: First ten years of Service (10 x 4%) = 40% Second ten years of Service (10 x 2%) = 20% Remaining seven years of Service (7 x .5%) = 3.5% Total = 63.5% (C) Qualified Plan Allowance For purposes of computing a Plan Allowance only, the Member's Qualified Plan Allowance shall be computed as if he or she had elected Option 3 under Qualified Plan Section 6 (Joint and 50% Survivor Annuity) and had named his or her Contingent Annuitant as contingent annuitant thereunder. (D) Normal Retirement Allowance A Normal Retirement Allowance shall be paid to a Member who has completed five years of Service as an Officer (or was an Officer at the time of a Change in Control or Potential Change in Control, as set forth in Section 15), and who retires on or after his or her Normal Retirement Date. The Normal Retirement Allowance shall be computed in accordance with Section 6(A) above and will commence as of the first day of the calendar month coincident with or next following the Member's retirement. (E) Early Retirement Allowance An Early Retirement Allowance shall be paid to a Member who has completed five years of Service as an Officer (or was an Officer at the time of a Change in Control or Potential Change in Control, as set forth in Section 15), and retires from employment on or after attaining age 55. Such Early Retirement Allowance shall be computed in accordance with Section 6(A) on the basis of the Member's Final Average Compensation and years of Service at his or her retirement. Payment of the Early Retirement Allowance under the Plan will commence as of the first day of the calendar month coincident with or following the Member's retirement as is elected by the Member in writing and filed with the Committee prior to the first day of such calendar month. In the event payment of the Early Retirement Allowance commences prior to the first day of the calendar month coincident with or next following the 60th anniversary of the Member's birth, in calculating the Early Retirement Allowance the Section 6(A)(i) amount will be reduced by 1/3 of 1% for each complete month by which the commencement date precedes the first day of such calendar month; provided, however, that the foregoing reduction will not be made if, as of the date the Member's employment terminates because of retirement, the sum of the Member's age and years of Service is equal to or greater than eighty-five (85). (F) Disability Retirement Allowance (a) Upon written application to the Committee made by the Member or by the Company, a Member disabled in active service as an Officer who has not reached his or her Normal Retirement Date shall be retired on a Disability Retirement Allowance, in lieu of retirement under any other provision of the Plan, on the first day of the calendar month (not less than 30 nor more than 90 days next following the receipt by the Committee of such written application) as designated by the Committee; provided that (i) one or more physicians designated by the Committee shall certify their opinion, and the Committee shall find, that such Member is totally incapacitated, mentally or physically, from the further performance of his or her regular duties or duties comparable thereto, and that such incapacity is likely to be permanent; or (ii) such Member is eligible for and in receipt of a disability benefit under the Social Security Act, as amended from time to time, with respect to a physical or mental incapacity. (b) The Disability Retirement Allowance shall be computed in accordance with Section 6(A) on the basis of the Member's Final Average Compensation and years of Service at retirement. Payment of the Disability Retirement Allowance shall commence upon the Member's retirement and shall continue only so long as the Member remains totally incapacitated as determined by the Committee. Once each year the Committee may require any Member receiving a Disability Retirement Allowance who has not reached his or her Normal Retirement Date to undergo a medical examination by a physician or physicians designated by the Committee. Such examination, to the extent possible, will be made at the residence of the Member or other place mutually agreed upon or otherwise required under the circumstances. Should any Member refuse to submit to such an examination, payment of his or her Disability Retirement Allowance shall be discontinued until his or her withdrawal of such refusal. Should such refusal continue for a year, all rights in and to the Disability Retirement Allowance shall cease. If the Committee finds on the basis of a medical examination or otherwise that a Member who is receiving a Disability Retirement Allowance and who has not reached his or her Normal Retirement Date is no longer totally incapacitated and that the Member has regained his or her earning capacity, in whole or in part, or that the Member is no longer in receipt of a disability benefit under the Social Security Act, the Member's Disability Retirement Allowance will be discontinued or reduced proportionately; provided that he or she shall be entitled to have the Disability Retirement Allowance restored in whole or in part prior to his or her Normal Retirement Date if, on the basis of the certification of one or more physicians designated by the Committee, the Committee finds the Member is again totally incapacitated, or if the Member again becomes eligible for and is in receipt of a disability benefit under the Social Security Act with respect to the physical or mental incapacity which originally entitled the Member to the Disability Retirement Allowance. In the event the Member ceases to be totally and permanently incapacitated and he or she does not return to Service, his or her eligibility for any other Allowance under the Plan shall be determined under the relevant terms of the Plan. (G) Vested Retirement Allowance (a) A Member who has completed five years of Service as an Officer (or was an Officer at the time of a Change in Control or Potential Change in Control, as set forth in Section 15), and who, for reasons other than retirement, approved leave of absence, or death, ceases to be employed by the Company or an Affiliated Company, shall be eligible for a Vested Retirement Allowance on application therefor. (b) The Vested Retirement Allowance shall be a deferred Allowance commencing on the Vested Member's Normal Retirement Date and shall be computed and payable in accordance with Section 6(A) on the basis of his or her Final Average Compensation and years of Service at his or her date of termination. The Vested Member may elect to have payment of his or her Vested Retirement Allowance commence as of the first day of any calendar month coincident with or following his or her attaining age 55 as is specified in his or her written election filed with the Committee prior to the first day of such calendar month. In the event payment of the Vested Retirement Allowance commences prior to the first day of the calendar month coincident with or next following the 60th anniversary of the Member's birth, the Vested Retirement Allowance shall be: (i) the Allowance computed in accordance with Section 6(A)(i) on the basis of his or her Final Average Compensation and years of Service at his or her date of termination; reduced by (ii) 1/3 of 1% for each complete month by which the commencement of payment of the Vested Retirement Allowance precedes the date 5 years prior to his or her Normal Retirement Date; less (iii) the Qualified Plan Allowance payable commencing at the same time. (H) Death of Retired Member or of Vested Member Receiving Payment of Allowance (a) In the event of the death of a Retired Member, an Allowance will be paid during the life of, and to, the Retired Member's Contingent Annuitant. The Allowance paid to the Contingent Annuitant will be equal to (i) the Retired Member's Allowance as calculated in accordance with Section 6(A)(i) at the time of the Retired Member's retirement, subject to the age differential reduction specified below, and subject to any reduction for early commencement of payment as was applied when payment of the Retired Member's Allowance had commenced, or if the Retired Member's Allowance had not commenced, as would have been applied to the Retired Member's Allowance if payment to the Retired Member had commenced when payment of the Allowance hereunder commences; reduced by (ii) the Qualified Plan Allowance then payable to the Contingent Annuitant (under the Qualified Plan Allowance form of payment specified in Section 6(C)). In the event the Retired Member is more than fifteen (15) years older than his or her Contingent Annuitant, the Allowance to be paid hereunder, as calculated prior to reduction by the Qualified Plan Allowance, shall be reduced by three percent (3%) for each full year in excess of fifteen years by which the Retired Member's age exceeds the age of the Contingent Annuitant; provided, however, that the reduction percentage shall not exceed eighty-five percent (85%). If payment of the Retired Member's Allowance had commenced prior to the Retired Member's death, payment to the Contingent Annuitant as provided herein shall commence with the payment for the month following the month in which the Retired Member's death occurs. If payment of the Retired Member's Allowance had not commenced prior to the Retired Member's death, payment to the Contingent Annuitant as provided herein shall commence with the payment for the month following prior election of commencement by the Contingent Annuitant. In the event that the Contingent Annuitant dies after the Retired Member and monthly payments of the Allowance to the Retired Member and Contingent Annuitant have not been made for a total period of at least 120 months at the time of the death of the Contingent Annuitant, the monthly payments being made to the Contingent Annuitant will continue to be made to the Beneficiary for the balance of the 120 monthly payment period. In the event the Retired Member has no Contingent Annuitant at the time of his or her death, and dies prior to having received 120 monthly payments of Allowance, monthly payments that would have been made hereunder to the Contingent Annuitant will be made to the Beneficiary for the balance of the 120 monthly payment period. In addition, in either case, if the Contingent Annuitant hereunder is also the Retired Member's contingent annuitant under the Qualified Plan, the benefit assumed to be paid to the contingent annuitant under the Qualified Plan Allowance form of payment specified in Section 6(C) shall be paid hereunder to the Beneficiary for the balance of the 120 monthly payment period. (b) In the event of the death of a Vested Member receiving payment of a Vested Retirement Allowance, an Allowance will be paid during the life of, and to, the Vested Member's Contingent Annuitant. The Allowance paid to the Contingent Annuitant will be equal to (i) the Vested Member's Vested Retirement Allowance computed in accordance with Section 6(G)(b)(i) at the time of the Vested Member's termination of employment, subject to the age differential reduction specified in Section 6H(a) above and subject to any reduction for early commencement under Section 6(G)(b)(ii) as was applied to the Vested Member's Vested Retirement Allowance when payment of that Vested Retirement Allowance commenced; reduced by (ii) the Qualified Plan Allowance then payable to the Contingent Annuitant (under the Qualified Plan Allowance form of payment specified in Section 6(C)). Payments to the Contingent Annuitant as provided herein shall commence with the payment for the month following the month in which the Vested Member's death occurs. (c) In any event where payments are to be made to the Contingent Annuitant or Beneficiary, the Company, in its sole discretion, may fully satisfy such payments by making a lump sum cash payment of the present value of the remaining payments to be made. In determining such present value, the actuarial assumptions used to calculate the Company's contributions under the Qualified Plan shall be used. (I) Death of Member in Active Service or of Vested Member Prior to Commencement of Vested Retirement Allowance (a) In the event of the death of a Member in active service prior to or after his or her Normal Retirement Date and after he or she has completed five years of Service as an Officer (or was an Officer at the time of a Change in Control or Potential Change in Control, as set forth in Section 15), an Allowance shall be payable during the life of, and to, his or her Contingent Annuitant. The Allowance payable to the Contingent Annuitant in accordance with this Section 6(I)(a) shall commence with the payment for the month following the month in which the Member's death occurs and shall be equal to (i) the Member's Allowance as calculated in accordance with Section 6(A)(i) as if the date of the Member's death had been the 65th anniversary of the Member's birth, but on the basis of the Member's Final Average Compensation and years of Service at death, and subject to the age differential reduction specified in Section 6(H)(a); reduced by (ii) the Qualified Plan Allowance that would then be payable to the Contingent Annuitant if the Contingent Annuitant were the Member's spouse. (b) In the event of the death of a Vested Member prior to the commencement of the Vested Retirement Allowance, an Allowance shall be payable during the life of, and to, his or her Contingent Annuitant. Payment of the Allowance in accordance with this Section 6(I)(b) shall commence as of the first day of the calendar month as is elected by the Vested Member's Contingent Annuitant in writing filed with the Committee prior to the first day of such calendar month, which shall be no sooner than the first day of the calendar month coincident with or next following the later of the Vested Member's death or the 55th anniversary of the Vested Member's birth and no later than the first day of the calendar month coincident with or next following the 65th anniversary of the Vested Member's birth. The Allowance payable hereunder shall be equal to the Vested Member's Vested Retirement Allowance computed in accordance with Section 6(G)(b)(i) at the time of the Vested Member's termination of employment, subject to the age differential reduction specified in Section 6(H)(a) and subject to any reduction for early commencement under Section 6(G)(b)(ii) as would have been applied to the Vested Member's Vested Retirement Allowance if payment of the Vested Retirement Allowance had commenced to the Vested Member when payment of the Allowance hereunder commences, reduced by the Qualified Plan Allowance that would then be payable to the Contingent Annuitant if the Contingent Annuitant were the Vested Member's spouse and had coverage by the Vested Member Spouse's Allowance under the Qualified Plan. (c) In any event where payments are to be made to the Contingent Annuitant, the Company, in its sole discretion, may fully satisfy such payments by making a lump sum cash payment of the present value of the remaining payments to be made. In determining such present value, the actuarial assumptions used to calculate the Company's contributions under the Qualified Plan shall be used. (J) Adjustments to Allowance as A Result of Increases in Cost of Living (a) Beginning as of July 1 of the year for which the cumulative percentage change in the CPI-U (as defined in (b) below) exceeds 20%, but not earlier than July 1, 1993, and as of each July 1 thereafter, the Allowance then being paid to or with respect to a Member (other than a Vested Member whose employment terminated prior to January 1, 1993) shall be increased by an adjustment amount, not less than zero, determined by multiplying: (i) (1) in the case of an Allowance being paid to the Member, the amount of the Allowance originally paid to the Member which is then being paid, or (2) in the case of an Allowance being paid with respect to a Member: (A) and if an Allowance had previously been paid to that Member, the amount of the Allowance originally paid to the Member which is then being paid to the Contingent Annuitant or Beneficiary; or (B) and an Allowance had not previously been paid to that Member, the amount of the Allowance originally paid to the Contingent Annuitant or Beneficiary which is then being paid; by (ii) 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 in (b) below). (b) The terms specified below which are used in (a) above shall have the meanings set forth below, unless the context clearly dictates another meaning. (i) "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. (ii) "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 Allowance originally commenced by the CPI-U for the year prior to the year in which the Allowance 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 a Member whose Allowance 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 Allowance 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%. (iii) "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). (c) The provisions of this Section 6(J) are intended to operate and apply in the same manner and fashion as the Pension Benefit Adjustments under the Qualified Plan. Section 7. ADMINISTRATION OF THE PLAN; POWER AND AUTHORITY The Committee shall have full power and authority to construe, interpret and administer the Plan. All decisions, actions or interpretations of the Committee shall be final, conclusive, and binding upon all parties. If any person objects to any such decision, action or interpretation, formally or informally, the expenses of the Committee and its agents and counsel shall be chargeable against any amounts otherwise payable under the Plan to or on account of the Member. Section 8. NO LIABILITY OF COMMITTEE MEMBERS No member of the Committee shall be personally liable by reason of any contract or other instrument executed by him or her or on his or her behalf in his or her capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other Officer, employee, or Director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated against any cost or expense (including counsel fees) or liability (including any sum paid with the approval of the Board in settlement of a claim) arising out of any act or omission to act in connection with the Plan, unless arising out of such person's own fraud or bad faith. Section 9. RIGHT TO AMEND, SUSPEND, OR TERMINATE PLAN The Board reserves the right at any time to amend, suspend, or terminate the Plan, in whole or in part and for any reason, and without the consent of any Member, Contingent Annuitant or Beneficiary; provided that no such amendment, suspension or termination shall adversely affect rights to receive any amount to which Members, Contingent Annuitants or Beneficiaries have become entitled prior to such amendment, suspension or termination; and further provided, that upon any such amendment, suspension or termination after a Change in Control or Potential Change in Control, any Member who has not completed five years of Service shall become fully vested in the Vested Retirement Benefit as though such Member had completed five years of Service pursuant to Section 15. Section 10. NO ALIENATION OF BENEFITS Except insofar as may otherwise be required by law, no amount payable at any time under the Plan shall be subject in any manner to alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge, or encumbrance of any kind nor in any manner be subject to the debts or liabilities of any person, and any attempt to so alienate or subject any such amount, whether presently or thereafter payable, shall be void. If any person shall attempt to, or shall, alienate, sell, transfer, assign, pledge, attach, charge, or otherwise encumber any amount payable under the Plan, or any part thereof, or if by reason of his or her bankruptcy or other event happening at any such time such amount would be made subject to his or her debts or liabilities or would otherwise not be enjoyed by him or her, then the Committee, if it so elects, may direct that such amount be withheld and that the same or any part thereof be paid or applied to or for the benefit of such person, his or her spouse, children or other dependents, or any of them, in such manner and proportion as the Committee may deem proper. Any such payment or application shall be in complete satisfaction of the payment which otherwise would have been made to or with respect to the Member. Nothing in the foregoing procedure shall preclude the Committee's having the payment entitlement judicially settled. Section 11. PERIODIC REVIEW OF PLAN In order to assure the continued realization of the purposes of the Plan, the Board and the Committee shall review the Plan, and the Committee may suggest amendments to the Board, periodically. Section 12. GENERAL LIMITATIONS AND PROVISIONS Nothing contained in the Plan shall give any Officer the right to be retained in the employment of the Company or affect the right of the Company to dismiss any Officer. The adoption of the Plan shall not constitute a contract of employment between the Company and any Officer. No Officer shall receive any right to be granted an Allowance hereunder nor shall any such Allowance be considered as compensation under any employee benefit plan of the Company, except as otherwise determined by the Company. Section 13. SOURCE OF PAYMENTS All payments of Allowances provided for under the Plan 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 Member or his or her spouse, dependents, Contingent Annuitant, 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 Member 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 Plan, 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 Members. To the extent that any Member 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. Section 14. UNFUNDED PLAN; GOVERNING LAW The Plan is intended to constitute an unfunded deferred compensation arrangement for a select group of management or highly compensated personnel and all rights hereunder shall be governed by and construed in accordance with the laws of the State of New York. Section 15. CHANGE IN CONTROL Notwithstanding anything else herein to the contrary, if after a Change in Control or Potential Change in Control (i) the employment of a Member is terminated (whether by the Company or for Good Reason), or (ii) a Member ceases to be an Officer, then any such Member who has no Vested Retirement Allowance shall be entitled to a Vested Retirement Allowance as though such Member had completed five years of Service as an Officer for purposes of Section 6(G). "Good Reason" shall mean a determination by the Member in good faith that there has been any (i) material change by the Company of the Member's functions, duties or responsibilities which change would cause the Member's position with the Company to become of less dignity, responsibility, importance, prestige or scope including, without limitation, the assignment to the Member of duties and responsibilities inconsistent with his or her positions; (ii) assignment or reassignment by the Company of the Member without the Member's consent, to another place of employment more than 50 miles from the Member's current place of employment; (iii) liquidation, dissolution, consolidation or merger of the Company which has not been approved by a majority of those members of the Board who were members of the Board prior to the Change in Control or Potential Change in Control, or transfer of all or substantially all of its assets, other than a transaction or series of transactions in which the resulting or surviving transferee entity has, in the aggregate, a net worth at least equal to that of the Company and assumes this Plan and all obligations and undertakings of the Company hereunder; or (iv) reduction in the Member's total compensation or any component thereof, by written notice to the Company, specifying the event relied upon for such termination and given at any time within six (6) months after the occurrence of such event. In the event of a Change in Control or Potential Change in Control, the Company shall as soon as possible (but in no event later than 30 days after such Change in Control or Potential Change in Control) make a payment to an irrevocable trust of an amount that, when added to any other amounts in such trust with respect to this Plan, shall result in an amount which is equal to at least 100% (but no more than 120%) of the present value of the benefits payable hereunder as of the date of the Change in Control or the Potential Change in Control (determined using the actuarial factors set forth in the Qualified Plan), as certified by an enrolled actuary appointed by the Committee. Notwithstanding the foregoing, the assets of such trust shall remain subject to the claims of the Company's general creditors. Section 16. PAYMENT OF ALLOWANCE If in the judgment of the Committee, any person entitled to the payment of an Allowance hereunder is incapable of receiving and legally receipting for such payment, payment of the Allowance may be made to such other person, persons or institutions as, in the judgment of the Committee, may then by maintaining or have custody or legal responsibility for such person or his or her property. The determination of the Committee as to the identity of the proper payee in such situation shall be conclusive, and payment in accordance with such determination shall be in complete satisfaction of all rights and entitlements with respect to the Allowance so paid. Section 17. SUCCESSORS Any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company shall be bound by the terms and conditions of the Plan. EX-10.20 3 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 ************** 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. EX-10.40 4 ORANGE AND ROCKLAND UTILITIES, INC. LONG-TERM PERFORMANCE SHARE UNIT PLAN Effective January 1, 1995, as amended through July 1, 1997 ORANGE AND ROCKLAND UTILITIES, INC. LONG-TERM PERFORMANCE SHARE UNIT PLAN 1. Purpose. The purpose of this Long-Term Performance Share Unit Plan (the "Plan") of Orange and Rockland Utilities, Inc. (the "Company") is to provide an additional means to attract, retain, and provide incentives to executive officers and other key employees of the Company and its Affiliates through a compensation program intended (i) to be competitive with the practices of other utility companies; (ii) to provide a strong and direct link between Participants' pay and Company performance on behalf of its shareholders and customers; (iii) to compensate Participants for their successful long-term strategic management of the Company; (iv) to permit actual compensation to be based on the achievement of the Company's long-term strategic objectives and performance; and (v) to more closely align the financial interests of Participants and Company shareholders. 2. Definitions. In addition to the terms defined in Section 1, the following are defined terms for purposes of the Plan: (a) "Affiliate" means an entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Company. (b) "Award" means, with respect to a person selected to become a Participant in respect of a Performance Period, the grant of a number of Target PSUs, the grant of the right to earn Dividend Equivalent PSUs, the grant of the right to earn a number of Bonus PSUs (expressed as a percentage of the number of Target PSUs granted in the Award), the Performance Goal(s) for such Performance Period, and the number, or formula for determining the number, of Target PSUs, Dividend Equivalent PSUs, and Bonus PSUs earned for specified levels of achievement of the Performance Goal(s) for such Performance Period, all in accordance with Section 5(a). (c) "Award Account" means a bookkeeping account maintained by the Company for each Award granted to a Participant. Each Award Account shall from time to time reflect the number of Target PSUs granted and the number of Dividend Equivalent PSUs and Bonus PSUs that the Participant has a right to earn for the Performance Period, as well as other transactions relating to PSUs. At such time as the Committee determines the number of Target PSUs, Dividend Equivalent PSUs, and Bonus PSUs earned by the Participant with respect to the Award, such PSUs earned shall be settled in cash or Shares (subject to Section 11(a)), or deferred in accordance with Section 6. If any voluntary deferral is credited to the Award Account in a form other than a DSU, such deferral shall be credited to such bookkeeping accounts, representing the deemed voluntary investment alternatives that are available to Participants under the Plan, as may be determined from time to time by the Committee ("Deferral Accounts"), which shall reflect the amount of such deferral, including earnings and interest credited in accordance with Section 8(b), as well as other transactions relating to the balances in such Deferral Accounts. If any DSUs are credited to the Award Account through a mandatory or voluntary deferral ("DSU Account"), the DSU Account shall reflect the number of DSUs, including Dividend Equivalent DSUs credited in accordance with Sections 8(c), as well as other transactions relating to the DSUs in such DSU Account. (d) "Beneficiary" means the person or persons, designated by the Participant under Section 11(d), who, from and after the death of the Participant, shall have the rights, if any, of the Participant under the Plan; provided, however, that if no Beneficiary designation under the terms of the Plan is in effect at the time of a Participant's death, or if no Beneficiary survives the Participant, or if such designation violates applicable law, (i) the Participant's spouse, or, (ii) if none, the Participant's estate, shall be deemed to be the Beneficiary. (e) "Board" means the Board of Directors of the Company. (f) "Bonus PSUs" means PSUs that a Participant has a right to earn if the Performance Goal Maximum for the Award is achieved. The number of Bonus PSUs which may be earned in an Award is expressed, for purposes of the Plan, as a percentage of the Target PSUs granted in such Award. Performance that fails to exceed the Performance Goal Target for the Award will result in no Bonus PSUs being earned, and performance that exceeds the Performance Goal Target for the Award but does not equal or exceed the Performance Goal Maximum for the Award will result in a specified portion of the Bonus PSUs being earned. (g) "Cause" for Termination by the Company of a Participant's employment means Termination in the event that (i) the Participant is convicted of a crime or engages in an act of moral turpitude; (ii) the Participant breaches any of his or her obligations under any employment agreement governing his or her employment; (iii) the Participant is grossly negligent or engages in gross misconduct in rendering services to the Company or an Affiliate, and by such action, or failure to act, causes substantial detriment to the Company or an Affiliate; (iv) the Participant repeatedly fails to follow written Company policies or guidelines that have been expressly approved by the Company or an Affiliate, and by such action, or failure to act, causes substantial detriment to the Company or an Affiliate; or (v) the Participant breaches any of his or her fiduciary duties as an officer or director of the Company or an Affiliate. (h) "Change in Control" and certain related terms are defined in Section 9(b). (i) "Committee" means the Compensation Committee of the Board; provided, however, that, if any member of the Compensation Committee fails to qualify as a "Non-Employee Director", as defined in Rule 16b-3 under the Exchange Act, (A) the member who fails to qualify shall not be involved in the administration of the Plan, or (B) the Board may designate another Board committee to serve as the Committee for purposes of administering the Plan, as determined by the Board in its discretion. Other provisions of the Plan notwithstanding, the Board may perform any function of the Committee under the Plan, including, without limitation, for the purpose of ensuring that transactions under the Plan by any Participant who is then subject to Section 16 of the Exchange Act in respect of the Company are exempt under Rule 16b-3. In any case in which the Board is performing a function of the Committee under the Plan, the term "Committee" as used in this Plan shall include the Board. (j) "Deferred Share Unit" or "DSU" means a bookkeeping unit of account under the Plan representing the value of one Share credited to a Participant's DSU Account, subject to the terms and conditions of the Plan. DSUs are accounting measures created and used solely for purposes of the Plan, and do not represent ownership rights in the Company, Shares, or any asset of the Company. (k) "Dividend Equivalent DSUs" means DSUs credited to the Participant's DSU Account, in respect of credited DSUs, including DSUs that were originally credited as Dividend Equivalent DSUs, equivalent in value to dividends or distributions paid on Shares or Shares issued in forward Share splits, the record date for which falls during the time that DSUs are credited to the Participant's DSU Account, all in accordance with Section 8(c). (l) "Dividend Equivalent PSUs" means PSUs that a Participant has the right to earn, in respect of Target PSUs and previously credited Dividend Equivalent PSUs, if the applicable Performance Goal Target is achieved, equivalent in value to dividends or distributions paid on Shares or Shares issued in forward Share splits, the record date for which falls during the Performance Period, or after the Performance Period but prior to the Settlement Date, all in accordance with Section 5(e). (m) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (n) "Fair Market Value" means, in the case of a Share as of a given date, the average of the high and the low sales prices of a Share reported in the table entitled "New York Stock Exchange Composite Transactions" contained in The Wall Street Journal (or an equivalent successor table) for such date or, if no such prices were reported for such date, for the most recent trading day prior to such date for which such prices were reported. In the case of property other than Shares as of a given date, "Fair Market Value" shall be determined in good faith by or at the direction of the Committee. (o) "Grant Date" means, in the case of Awards granted under Section 5(a), the first day of the Performance Period, and in the case of Awards granted during a Performance Period under Section 5(d), the date the Committee authorized the grant of the Award or such other date as may be specified by the Committee. (p) "Latest Quarter's Average FMV" means, in the case of a Share as of a given date, the average of the Fair Market Values of a Share on each trading day during the calendar quarter that ended on the March 31, June 30, September 30, or December 31 nearest to but preceding such date. (q) "Participant" means a person who has been granted an Award with respect to a Performance Period that has not ended, or who has cash credited to his or her Deferral Account(s) or DSUs credited to his or her DSU Account. (r) "Performance Goal(s)" means, with respect to an Award, the targeted business criterion or criteria and targeted level or levels of performance with respect to such criterion or criteria required to be achieved during a Performance Period in order for a Participant to earn PSUs for such Performance Period. The following terms relate to the term "Performance Goal(s)": (i) "Performance Goal Maximum" means the Performance Goal(s) that, if achieved, will result in the Participant's earning all Target PSUs, Dividend Equivalent PSUs, and Bonus PSUs for the Performance Period, subject to the terms and conditions of the Plan. (ii) "Performance Goal Target" means the Performance Goal(s) that, if achieved, will result in the Participant's earning all Target PSUs and Dividend Equivalent PSUs for the Performance Period or, conversely, if not achieved, will result in the Participant's forfeiting a specified portion of Target PSUs and not earning a specified portion of Dividend Equivalent PSUs, and which must be exceeded in order for the Participant to earn any Bonus PSUs for the Performance Period, subject to the terms and conditions of the Plan. (iii) "Performance Goal Threshold" means the Performance Goal(s) that must be achieved for the Participant to earn any Target PSUs and Dividend Equivalent PSUs for the Performance Period or, conversely, if not achieved, will result in the Participant's forfeiting all Target PSUs and not earning any Dividend Equivalent PSUs. Performance that falls between the Performance Goal Threshold and the Performance Goal Target will result in the Participant's earning a specified portion of Target PSUs and Dividend Equivalent PSUs and forfeiting all other Target PSUs and Dividend Equivalent PSUs. (s) "Performance Period" means a specified period, not to exceed three calendar years, over which achievement of Performance Goal(s) is to be measured. Subject to Section 5(c), a Performance Period generally will be a three-year period, unless otherwise determined by the Committee. A given Performance Period may overlap with any other Performance Period. (t) "Performance Share Unit" or "PSU" means a bookkeeping unit of measure of compensation under the Plan, deemed to be equal in value to one Share, which may be earned by a Participant if a Performance Goal Threshold is achieved during a specified Performance Period, subject to the terms and conditions of the Plan. PSUs are accounting measures created and used solely for purposes of the Plan, and do not represent ownership rights in the Company, Shares, or any asset of the Company. (u) "Potential Change in Control" and certain related terms are defined in Section 9(c). (v) "Pro Rata" means, with respect to the number of Target PSUs granted and Dividend Equivalent PSUs and Bonus PSUs that the Participant has the right to earn for a given Performance Period in which there occurs a specified event (e.g., a Termination), a fractional portion of the total number of each such type of PSUs, where the numerator of the fraction is the number of full months elapsed from the Grant Date to the date of such event, and the denominator of the fraction is the number of full months from the Grant Date until the end of the Performance Period. (w) "Retirement" means any time that a Participant is entitled to a "Retirement Allowance", other than a Vested Retirement Allowance, as defined under the Employees' Retirement Plan of Orange and Rockland Utilities, Inc. or the Officers' Supplemental Retirement Plan of Orange and Rockland Utilities, Inc., or an earlier retirement approved for purposes of the Plan by the Committee. (x) "Settlement Date" means that date within 90 days after the end of a given Performance Period that the Committee determines the proper amount of Target, Dividend Equivalent and/or Bonus PSU's earned by a Participant in respect of such Performance Period. (y) "Shares" means shares of the Company's Common Stock, $5 par value per share, and such other securities as may be substituted for Shares or for such other securities under the adjustment provisions of Section 10. (z) "Target PSUs" means PSUs granted to a Participant as of the Grant Date that he or she will earn if the applicable Performance Goal Target is achieved. Performance that fails to equal or exceed the Performance Goal Threshold for the Award will result in the Participant's forfeiting all Target PSUs, and performance that equals or exceeds the Performance Goal Threshold for the Award but does not equal or exceed the applicable Performance Goal Target will result in the Participant's forfeiting a specified portion of the Target PSUs. (aa) "Termination" (and related terms) means termination of a Participant's employment with the Company or any of its Affiliates immediately after which the Participant is no longer performing services for the Company or any of its Affiliates on a salary basis, and without regard to whether the former employee receives any form of severance or termination payments following his or her Termination or is retained to provide services for hire as a consultant or independent contractor. 3. Administration. (a) Authority of the Committee. The Plan shall be administered by the Committee. The Committee shall have full authority in its discretion to take or refrain from taking all actions under the Plan, in each case subject to and consistent with the terms and conditions of the Plan and any outstanding Award, including, without limitation, the following: (i) To take the actions required or permitted under Sections 5 and 6, and determine all other terms and conditions of PSUs, DSUs, Deferral Accounts and DSU Accounts; (ii) To adopt, amend, suspend, waive, and rescind such rules and regulations, prescribe such forms of agreements, notices, elections, and other Plan documents, and appoint such agents, as it may deem necessary or advisable to administer the Plan; (iii) To correct any defect or supply any omission or reconcile any inconsistency in the Plan or any Award, and to construe and interpret the Plan, any Award, and any rule or regulation, agreement, notice, election, or other Plan document; and (iv) To make all other decisions and determinations as may be required under the Plan or as the Committee may deem necessary or advisable for the administration of the Plan. (b) Manner of Exercise of Committee Authority. Any action of the Committee under the Plan shall be final, conclusive, and binding on all persons, including the Company, Participants, Beneficiaries, and shareholders. The express grant of any specific power or authority to the Committee, and the taking or refraining to take of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company and its Affiliates the power and authority, subject to such terms as the Committee shall determine, to perform such functions, including administrative functions, as the Committee may determine, to the extent permitted under applicable law. Each member of the Committee shall be entitled, in good faith, to rely or act, or refrain from relying or acting, upon any report or other information furnished to him or her by any officer or other employee of the Company or its Affiliates, the Company's independent public accountants, compensation consultants, or any other professional retained by the Company to assist in the administration of the Plan. 4. Eligibility. Executive officers and other key employees of the Company and its Affiliates (including any director of the Company who is also an executive officer or other key employee, but excluding directors who are not employees), who the Committee determines hold positions with the potential to impact the long-term strategic performance of the Company and/or any of its Affiliates, and to influence shareholder value, are eligible to be selected to become Participants under the Plan. 5. Awards. (a) General. The Committee may, from time to time, grant Awards by taking the following actions, subject to and consistent with the terms and conditions of the Plan: (i) Establish and determine the period that will constitute a Performance Period in accordance with the terms of the Plan; (ii) Select executive officers and other key employees to be granted Awards in respect of such Performance Period; (iii) Determine the number of Target PSUs granted to each such Participant, and the Dividend Equivalent PSUs and Bonus PSUs (expressed as a percentage of the number of Target PSUs), that may be earned by such Participant in respect of such Performance Period; provided, however, that, except in the case of Awards granted under Sections 5(c) or 5(d), the aggregate number of such Target PSUs and Bonus PSUs shall not exceed 120% of the number of Target PSUs granted to the Participant, or such other percentage less than 120% but greater than 100% that the Committee may deem appropriate; (iv) Determine the Performance Goal(s) that must be achieved in order for a Participant to earn PSUs in respect of the Performance Period, including the Performance Goal Threshold, the Performance Goal Target, and the Performance Goal Maximum, the portion of the Target PSUs and Dividend Equivalent PSUs earned upon achievement of the Performance Goal Threshold, the basis for determining the portion of the Target PSUs and Dividend Equivalent PSUs earned if performance falls between the Performance Goal Threshold and the Performance Goal Target, and the basis for determining the portion of Bonus PSUs earned if performance falls between the Performance Goal Target and the Performance Goal Maximum; and (v) Specify the matters relating to settlement, as set forth in Section 6(b); provided, however, that, except as provided in Sections 5(c) and (d), the Committee shall take the actions specified in (i) through (iv) above not later than 90 days after the beginning of a Performance Period (but in no event after 25% of such Performance Period has elapsed), with the Grant Date for such Awards being the first day of such Performance Period. (b) Performance Goal(s). Performance Goal(s) may incorporate such absolute or relative business criterion or criteria as the Committee may deem necessary or advisable, including, without limitation, average annual total shareholder return (Share price appreciation or depreciation plus dividends, assuming dividend reinvestment), earnings per Share, or other criteria specified by the Committee, to be achieved over the Performance Period, specified either by absolute number or as compared to a specified comparison group of utility companies. Where more than one such criterion is incorporated into a Performance Goal, the Committee shall specify the weighting of each such criterion. (c) Transition Performance Periods. Transition Performance Periods shall be established for the one-year period extending from January 1, 1995 through December 31, 1995, and the two-year period extending from January 1, 1995 through December 31, 1996. Additional Transition Performance Periods shall be established for the one-year period extending from January 1, 1996 through December 31, 1996 and the two-year period extending from January 1, 1996 through December 31, 1997. The Awards for such Transition Performance Periods shall be governed by the applicable provisions of Section 6 and 7. (d) Additional Awards During a Performance Period. The provisions of Section 5(a) notwithstanding, the Committee may grant an Award to a newly hired or promoted executive officer or other key employee at any time during a Performance Period; provided, however, that no such Award may be effective as of a date later than six months before the stated end date of the Performance Period. In granting such an Award, the Committee shall take into account the portion of the Performance Period already elapsed, the performance achieved during the already completed portion of the Performance Period, and such other considerations as the Committee may deem necessary or advisable. (e) Dividend Equivalent PSUs. The Participant shall have the right to earn Dividend Equivalent PSUs, as follows: (i) If the Company declares and pays a dividend or distribution in the form of cash or property other than Shares in respect of Shares, the record date for which falls during a Performance Period or after the Performance Period but prior to the Settlement Date for such Performance Period, then, at the payment date therefor, a number of Dividend Equivalent PSUs shall become potentially earnable in respect of each Target PSU, and each previously credited Dividend Equivalent PSU potentially earnable for such Performance Period in respect of such Target PSU, held as of the record date for such dividend or distribution, equal to (A) the amount of cash plus the Fair Market Value of any property other than Shares actually paid as a dividend or distribution in respect of each Share at such payment date, divided by (B) the Fair Market Value of a Share at such payment date. (ii) If the Company declares and pays a dividend or distribution in the form of additional Shares payable in respect of Shares, or there occurs a forward Share split, the record date for which falls during a Performance Period or after the Performance Period but prior to the Settlement Date, then, at the payment date therefor, a number of Dividend Equivalent PSUs shall become potentially earnable in respect of each Target PSU, and each previously credited Dividend Equivalent PSU potentially earnable in respect of such Target PSU, held as of the record date for such dividend or distribution or split, equal to the number of additional Shares actually paid as a dividend or distribution or issued in such split in respect of each Share. 6. Settlement of Awards. (a) Determination of Number of PSUs Earned. Not later than 90 days after the end of each Performance Period, the Committee shall determine the extent to which the Performance Goal(s) were achieved during such Performance Period, the number of Target PSUs earned (or forfeited), if any, the number of Dividend Equivalent PSUs earned, if any, and the number of Bonus PSUs earned, if any. (b) Settlement Alternatives for PSUs. All PSUs earned in respect of a given one- or two-year Transition Performance Period shall be settled in mandatorily deferred DSUs credited under Section 8(a) until the end of the Performance Period related to such one- and two-year Transition Performance Periods. At the end of such Performance Period, mandatorily deferred DSUs shall be settled in the same manner as earned PSUs. Other than in the case of PSUs earned in respect of Transition Performance Periods, Participants may voluntarily elect to have all or a specified portion of PSUs earned in respect of a Performance Period settled in cash or Shares (subject to Section 11(a)), deferred to Deferral Accounts, or deferred as DSUs in a DSU Account in accordance with Section 8(a); provided, however, that any such election by a Participant shall be in writing and shall be made prior to the December 1 that immediately precedes the end of the Performance Period, may be modified at any time prior to such date, and shall become irrevocable by the Participant as of such date. Notwithstanding the foregoing, no deferral election shall be permitted if the annual amount that is deferred is less than $3,500. If a Participant fails to make an election, the Participant shall be deemed to have elected to be paid in cash. A Participant's election shall apply only to a given Performance Period, so that the Participant must file a separate election with respect to separate Performance Periods. (c) Settlement of PSUs. The Committee shall specify a Settlement Date for each Performance Period. If PSUs earned are to be settled in cash or voluntarily deferred to Deferral Accounts in accordance with Section 8(a), the amount of cash to be paid or the amount of the deferral for each PSU earned to be so settled shall equal the Latest Quarter's Average FMV of a Share as of such Settlement Date. If PSUs earned are to be settled by issuing Shares to the Participant, subject to Section 11(a), or crediting of DSUs to the Participant's DSU Account, one Share shall be issued or one DSU credited to the Participant for each earned PSU to be so settled. 7. Termination of Employment. (a) Termination During Performance Period -- Effect on PSUs. Upon a Participant's Termination prior to the end of a Performance Period, whether voluntary or involuntary, all of the Participant's Target PSUs relating to such Performance Period shall be forfeited, and no Dividend Equivalent PSUs or Bonus PSUs shall be earnable in respect of such Performance Period, except that in the event of a Participant's Termination due to death, disability, or Retirement prior to the end of a Performance Period, but more than six months after the Participant's Grant Date with respect to such Performance Period, a Pro Rata portion of his or her Target PSUs awarded for such Performance Period shall remain outstanding and potentially earnable, and the Pro Rata portion of his or her Dividend Equivalent PSUs and Bonus PSUs in respect of such Performance Period shall remain outstanding and potentially earnable. Such Pro Rata portion of Target PSUs, Dividend Equivalent PSUs, and Bonus PSUs shall, following such Termination, remain subject to all of the terms and conditions of the Plan, including Section 6. Any Target PSUs in excess of such Pro Rata portion shall be forfeited, and any Dividend Equivalent PSUs and Bonus PSUs in excess of such Pro Rata portion shall not be earnable by the Participant (or his or her Beneficiary). (b) Termination After Performance Period -- Effect on PSUs. Upon a Participant's Termination following the end of a Performance Period, but prior to the Settlement Date for such Performance Period: (i) In the event of the Participant's Termination for Cause, all of the Participant's Target PSUs relating to such Performance Period shall be forfeited, and no Dividend Equivalent PSUs or Bonus PSUs shall be deemed to be earned by the Participant in respect of such Performance Period. (ii) In the event of the Participant's Termination for any other reason, such Termination shall have no effect on his or her rights under Section 6, except as provided in Section 7(d). (c) Termination -- Effect on Deferral Accounts and DSU Accounts. Upon a Participant's Termination at a time that the Participant maintains a balance in one or more Deferral Accounts and/or DSU Account, amounts voluntarily deferred in such accounts shall remain subject to all of the terms and conditions of the Plan, including any distribution schedule or Participant election then in effect. In the event of a Participant's Termination for Cause, all DSUs (including DSUs that were originally credited as Dividend Equivalent DSUs) credited to his or her DSU Account then subject to a period of mandatory deferral in respect of a Transition Performance Period shall be forfeited. (d) No Deferral From Award After Termination. If settlement of a Participant's Award is due under the provisions of Section 6(b) after a Termination, any PSUs earned shall be settled in cash or Shares (subject to Section 11(a)), with no voluntary deferral possible. 8. Voluntary Deferrals. (a) Deferral Accounts and DSU Accounts; Switching. If PSUs earned are to be voluntarily settled in Deferral Accounts under this Section 8(a), the amount of such deferral determined in accordance with Sections 6(b) and (c) shall be credited to the Participant's Deferral Accounts as of the Settlement Date. The Participant shall specify in the manner designated by the Committee or its delegate, in whole numbers, the percentage of his or her deferrals to the Deferral Accounts which shall be invested in each available deemed investment alternative; provided, however, that the percentage for each such deemed investment alternative must be at least 10%. If a Participant fails to select a deemed investment alternative, he or she shall be deemed to have failed to make a valid deferral election with respect to any amounts which were credited to the Deferral Accounts. If PSUs earned are to be settled by deferral to the DSU Account under this Section 8(a), the number of DSUs determined in accordance with Sections 6(b) and (c) shall be credited to the Participant's DSU Account as of the Settlement Date. A Participant may, by filing a written quarterly election with the Vice President of Human Resources, reallocate or switch amounts credited to his or her Deferral Accounts between and among different deemed investment alternatives then available for Deferral Account investment. Reallocation shall be made as of the last business day of a calendar quarter, reallocations must be in whole percentages, and the amount allocated to any investment alternative selected must be at least 10% of the value of the Participant's Deferral Accounts as of such last business day of the calendar quarter. At no time may a Participant reallocate or switch amounts from his or her Deferral Accounts to his or her DSU Account, nor reallocate or switch DSUs credited to his or her DSU Account to his or her Deferral Accounts. The election among the available investment alternatives shall be the sole responsibility of each Participant. The Company, the Committee, and their delegates are not authorized to make any recommendations to any Participant with respect to such election. Each Participant assumes all risk in connection with any election of deemed investment alternatives and the adjustment to the value of his or her Deferral Accounts as the result of changes to the value of such deemed investment alternatives. Neither the Company nor the Committee in any way guarantees against loss with respect to Deferral Accounts. All payments from the Deferral Accounts shall be made proportionately from each such Deferral Account, based upon the value of each Deferral Account as of the valuation date used for payment. (b) Crediting of Interest and Other Earnings to Deferral Accounts. Interest and other earnings and appreciation shall be credited on the amounts deferred to Deferral Accounts as of the last business day of each calendar month, and for the purposes of determining the amount to be distributed from a Deferral Account in accordance with Section 8(d), such Account shall be valued, and interest and other earnings shall be credited thereto, as of the final business day of the calendar year which precedes the calendar year of distribution. (c) Crediting of Dividend Equivalent DSUs to DSU Account. Dividend Equivalent DSUs shall be credited to a Participant's DSU Account as follows: (i) If the Company declares and pays a dividend or distribution in the form of cash or property other than Shares in respect of Shares, the record date for which falls while any DSUs are credited to the Participant's DSU Account, then, at the payment date therefor, a number of Dividend Equivalent DSUs shall be credited to the Participant's DSU Account in respect of each DSU, including each DSU that was originally credited as a Dividend Equivalent DSU, credited to such Account as of the record date for such dividend or distribution, equal to (A) the amount of cash plus the Fair Market Value of any property other than Shares actually paid as a dividend or distribution in respect of each Share at such payment date, divided by (B) the Fair Market Value of a Share at such payment date. (ii) If the Company declares and pays a dividend or distribution in the form of additional Shares payable in respect of Shares, or there occurs a forward Share split, the record date for which falls while any DSU's are credited to the Participant's DSU Account, then, at the payment date therefor, a number of Dividend Equivalent DSUs shall be credited to the Participant's DSU Account in respect of each DSU, and each previously credited Dividend Equivalent DSU, credited to such Account as of the record date for such dividend or distribution or split, equal to the number of additional Shares actually paid as a dividend or distribution or issued in such split in respect of each Share. (d) Time of Distributions. The Participant shall make a written election, at the time he or she makes an election under Section 6(b) or such other time as the Committee may specify, with respect to the time of distribution from his or her Deferral Accounts and DSU Account. A Participant may elect to receive such distribution in one lump-sum payment or in some other number of ratable annual installments (not exceeding 10); provided, however, that installments will only be available if, as of the valuation date for the initial distribution, the total of (i) the amounts in his or her Deferral Accounts and DSU Account, and (ii) any accounts maintained under the Orange and Rockland Utilities, Inc. Eligible Employees' Compensation Plan is greater than $25,000. The lump-sum payment or the first installment, as elected by the Participant, shall be distributed as soon as practicable after the following date, as elected by the Participant: (i) the first business day of the calendar year immediately following the calendar year of the Participant's Termination; or (ii) the first business day of such later calendar year as the Participant shall have elected. Subsequent installments, if any, shall be distributed as soon as practicable after the first business day of each succeeding calendar year until the entire amount credited to the Participant's Deferral Account and DSU Account shall have been distributed. The "ratable" amount distributable in any given installment shall equal the sum of the values of the Deferral Account and the DSU Account, divided by the number of installments (including the given installment) remaining to be distributed. Installments shall be paid initially from the Deferral Accounts. When the Deferral Accounts have a zero balance, the remaining payments shall be made from the DSU Account. A Participant may, while an employee of the Company or any of its Affiliates, at any time modify any election then in effect with respect to the distribution of amounts credited to his or her Deferral Accounts or DSU Account without penalty; provided, however, that any such modification may only provide for the further deferral of such amounts. In the event that a Participant has made more than one modification of his or her distribution election with respect to amounts credited to his or her Deferral Accounts and DSU Account, the most recent such modification shall control the distribution of such amounts. Any modification of a Participant's distribution election shall become effective upon the filing of such written election with the Vice President of Human Resources of the Company. (e) Special Distributions. The terms of Section 8(d) notwithstanding, the following special distributions shall be made: (i) If a Participant becomes employed by any governmental agency having jurisdiction over the activities of the Company or any of its Affiliates, then the Company shall distribute to such Participant, in a single lump-sum cash payment, as soon as practicable after the last day of the calendar month in which such employment commences, the entire amount remaining credited to each of the Participant's Deferral Accounts and his or her DSU Account. (ii) If a Participant dies before distribution in full of the entire amount credited to his or her Deferral Accounts and DSU Account, the Company shall distribute to such Participant's Beneficiary, in a single lump-sum cash payment, as of the first business day of the calendar year immediately following the year of death, the entire amount remaining credited to each of the Participant's Deferral Accounts and his or her DSU Account. (f) In-Service Withdrawals. The terms of Section 8(d) notwithstanding, the following in-service withdrawals may be made in accordance with the following provisions: (i) The Committee may permit without penalty a distribution in the form of a withdrawal of all or a portion of the amount credited to the Participant's Deferral Accounts and his or her DSU Account if, upon the written request of the Participant or the Participant's representative, or following the death of the Participant upon the written request of the Participant's Beneficiary or such Beneficiary's representative, the Committee determines that the Participant or Beneficiary, as the case may be, is confronted with an unforeseeable emergency. For this purpose, an unforeseeable emergency is an unanticipated emergency caused by an event that is beyond the control of the Participant or Beneficiary and that would result in severe financial hardship to the Participant or Beneficiary if an early hardship withdrawal were not permitted. The Participant or Beneficiary shall provide to the Committee such evidence as the Committee may require to demonstrate that such emergency exists and financial hardship would occur if the withdrawal were not permitted. Any such withdrawal under this Section 8(f) shall be limited to the amount necessary to meet the emergency. (ii) At any time prior to his or her termination of employment from the Company and all Affiliates, a Participant may elect to withdraw all or any portion of the amount credited to his or her Deferral Accounts and DSU Account (other than amounts in excess of the "Rule 16b-3 Limited Settlement Value"), subject to a 10% withdrawal penalty. Amounts in the Participant's DSU Account in excess of the Rule 16b-3 Limited Settlement Value may also be withdrawn subject to a 10% withdrawal penalty, if such withdrawal is approved by the Committee in its sole discretion. The Participant may make such an election by filing a written notice with the Committee or its designee on a form provided by the Committee or its designee, and the amount withdrawn shall be paid to the Participant in a lump sum payment. Upon the payment of such withdrawal, (A) an amount equal to one-tenth of the amount withdrawn shall be forfeited, and (B) the Participant's deferral election shall be voided through the end of the following calendar year. The "Rule 16b-3 Limited Settlement Value" as of a given distribution date shall mean the number of DSUs originally credited to the DSU Account more than 6 months before such distribution date plus any Dividend Equivalent DSUs that are credited to such DSUs or to previous Dividend Equivalent DSUs with respect to such DSUs. (iii) In-Service Withdrawals shall be made as soon as practicable after the end of the calendar month in which the notice of withdrawal is received by the Committee (or, if later, the end of the calendar month in which any necessary approval is granted by the Committee), and the amounts withdrawn shall be distributed in the following order: (A) the Deferral Accounts, and (B) the DSU Account. (g) Distribution of Cash or Shares. Distributions from a Participant's Deferral Accounts shall be made solely in cash, and distributions from a Participant's DSU Account may be made in cash or, subject to Section 11(a), in Shares. In the case of a distribution relating to a Deferral Account involving an event under Section 8(d) or 8(e)(ii), cash shall be distributed based on the balance credited to the Deferral Account as of the last business day of the calendar year prior to the calendar year of distribution. In the case of a distribution from a Deferral Account relating to an event in Section 8(e)(i) or Section 8(f), cash shall be distributed based on the balance credited to the Deferral Account as of the final business day of the calendar month preceding the calendar month of distribution. In the case of a cash distribution from a DSU Account under Section 8(d) or 8(e), the amount of cash distributed shall equal the Latest Quarter's Average FMV as of such distribution date for each DSU subject to the distribution. In the case of a cash distribution from a DSU Account under Section 8(f), the DSU Account shall be valued based upon the Fair Market Value of a Share as of the final business day of the calendar month prior to the calendar month of distribution. There will be no further distribution from the Plan with respect to such cashed-out DSUs, except as otherwise provided in the final sentence of this paragraph. In the case of a distribution of Shares relating to a DSU Account, one Share shall be issued for each full DSU subject to the distribution, and any fractional shares shall be paid in accordance with Section 11(b). Any distribution from the DSU Account shall be subject to adjustment pursuant to Sections 8(c) and 10. 9. Change in Control; Potential Change in Control. (a) Effect of Change in Control or Potential Change in Control. Other provisions of the Plan notwithstanding, upon the occurrence of a Change in Control or a Potential Change in Control during a Performance Period, all of the Target PSUs and Dividend Equivalent PSUs shall be deemed to be earned as of the date of such event. As soon as practicable after any Change in Control or Potential Change in Control, the Company shall pay to each Participant (or his or her Beneficiary) a lump-sum cash distribution equal to (i) the number of Target PSUs and Dividend Equivalent PSUs deemed earned by the Participant under this Section 9(a), multiplied by the Fair Market Value of a Share as of the date immediately preceding the Change in Control or the Potential Change in Control; plus (ii) the entire unpaid balance of the Participant's Deferral Accounts as of the date immediately preceding the Change in Control or Potential Change in Control; plus (iii) the number of DSUs, including Dividend Equivalent DSUs, credited to the Participant's DSU Account as of the date of the Change in Control or the Potential Change in Control, multiplied by the Fair Market Value of a Share as of the date immediately preceding the Change in Control or the Potential Change in Control; plus (iv) if, in connection with any dividend, distribution, or forward Share split, the record date is before, but the payment date is after, the date of the distribution under this Section 9(a), the amount of cash plus the Fair Market Value of any Shares or other property payable or issuable as a dividend or distribution on each Share multiplied by the number of PSUs and DSUs settled in accordance with clauses (i) and (iii) of this sentence. The payment of the amounts set forth in this Section 9(a) shall constitute a settlement in full of all of a Participant's rights under the Plan (including his or her Award Accounts), and will result in the cancellation of all of the Participant's PSUs, DSUs, Deferral Accounts, and DSU Account. (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 (as hereinafter defined) is or becomes the Beneficial Owner (as hereinafter defined), 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; or (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; or (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; or (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 that owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. (c) A "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 that, 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 Shares 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. (e) "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", (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. Adjustments. If the Committee shall determine that a dividend or other distribution (whether in the form of cash, Shares, or other property) that is unusual and non-recurring, forward or reverse Share split, recapitalization, reorganization, merger, consolidation, share exchange, or other extraordinary transaction affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, the Committee shall make such adjustments as it may deem necessary or advisable (taking into account the operation of Sections 5(e) and 8(c), in connection with dividends, distributions, and forward Share splits), (i) in respect of any Award not yet settled, to the number of Target PSUs granted to each Participant, the right to earn Dividend Equivalent PSUs granted to each Participant, and the right to earn Bonus PSUs granted to each Participant; (ii) to the number of DSUs credited to a Participant's DSU Account; (iii) to the number and kind of securities that constitute a Share; and (iv) to the number of Shares, if any, reserved for issuance under Section 11(a). In addition, the Committee is authorized to make such adjustments as it may deem necessary or advisable in the terms and conditions of Performance Goal(s) and related matters specified under Section 5(a)(iv) in recognition of unusual or non-recurring events (including, without limitation, events described in the preceding sentence, as well as acquisitions and dispositions of businesses and assets) affecting the Company or any of its Affiliates or its or their business units, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations, or business conditions or in view of the Committee's assessment of the business strategy of the Company or any of its Affiliates or its or their business units, performance of comparable organizations, economic and business conditions, and other circumstances deemed relevant. 11. Miscellaneous. (a) Limitations on Use of Shares. Other provisions of the Plan notwithstanding, no Shares may be issued in settlement of earned PSUs or in a distribution of DSUs from a DSU Account unless, prior to such issuance, the Plan has been approved by such vote of shareholders of the Company and by any government or regulatory body as may be necessary or advisable to satisfy all applicable legal requirements, including, without limitation, obligations imposed by any national securities exchange or automated interdealer quotation system on which the Company's equity securities may then be listed or quoted. If Shares become issuable under the Plan, the maximum number of Shares which may be issued shall be as approved by the Company's shareholders, subject to adjustment as provided under Section 10. The foregoing notwithstanding, no PSU earned and no DSU credited prior to August 15, 1996, no Dividend Equivalent DSU credited at any time in respect of either a DSU credited prior to August 15, 1996, or Dividend Equivalent DSUs previously credited on such DSUs or Dividend Equivalent DSUs, and no other PSU or DSU which the Company determines qualifies as an excluded "cash-only" instrument under Rule 16a-1(c)(3) under the Exchange Act in effect immediately prior to August 15, 1996, shall be settled by issuance of Shares. (b) Calculation of PSUs and DSUs; Fractional Shares. The number of PSUs potentially earnable, and the number of DSUs credited to a DSU Account, shall for all purposes be calculated to not less than three decimal places. If Shares are issued under the Plan (subject to Section 11(a)), no fractional shares shall be issued, but in lieu thereof the Company shall pay cash based on the Fair Market Value of a Share at the date of issuance. (c) Tax Withholding. The Company shall deduct from any cash settlement of a Participant's PSUs earned or any cash distribution relating to a Participant's Deferral Accounts or DSU Account any Federal, state, or local withholding or other taxes or charges which the Company is from time to time required to deduct under applicable law. In addition, if any Shares are issued in settlement of a Participant's PSUs earned, or in a distribution from the Participant's DSU Account, the Company may deduct from any other payment due to the Participant, require the Participant to separately pay the amount of, or withhold from the Shares being issued such number of Shares having an aggregate Fair Market Value equal to, any Federal, state, or local withholding or other taxes or charges which the Company is from time to time required to deduct under applicable law. (d) Designation of Beneficiaries. Each Participant may file with the Vice President of Human Resources of the Company a written designation of one or more persons as a Beneficiary; provided, however, that if the Participant has a spouse, the spouse shall be the Participant's Beneficiary unless the spouse consents in a notarized writing, on a form provided by or acceptable to the Committee or its designee, to the designation of the non-spouse Beneficiary. A Participant may at any time and from time to time revoke or change the Participant's Beneficiary designation by filing a new designation with the Vice President of Human Resources, subject to the spousal consent requirements set forth in the preceding sentence. The last such Beneficiary designation received by the Vice President of Human Resources shall be controlling; provided, however, that no designation or revocation or change thereof shall be effective unless received by the Vice President of Human Resources prior to the Participant's death. If the Vice President of Human Resources is in doubt as to the right of any person to receive settlements or distributions under the Plan, the Company may delay the settlement or distribution until the Committee determines the rights thereto, or the Company may pay the settlement or distribution amount into any New York State or Federal Court of appropriate jurisdiction, and such payment shall be a complete discharge of the liability of the Company therefor. (e) Non-Transferability. Neither a Participant nor any Beneficiary shall have the right to, directly or indirectly, alienate, assign, transfer, pledge, anticipate, or encumber (except by reason of death) any PSU, DSU, amount credited to a Deferral Account or a DSU Account, or other right hereunder, nor shall any such PSU, DSU, amount credited to a Deferral Account or a DSU Account, or other right be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or any Beneficiary, or to the debts, contracts, liabilities, engagements, or torts of the Participant or any Beneficiary or transfer by operation of law in the event of bankruptcy or insolvency of the Participant or any Beneficiary, or any legal process. (f) No Rights to Awards; No Shareholder Rights; No Right to Employment. No Participant or employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants and employees. No PSU, DSU, amount credited to a Deferral Account or a DSU Account, or other right under the Plan shall confer on any Participant any of the rights of a shareholder of the Company unless and until Shares are duly issued (subject to Section 11(a)) to the Participant in settlement of PSUs earned or in a distribution from the Participant's DSU Account. Neither the Plan nor any action taken hereunder shall be construed as giving any Participant or employee the right to be retained in the employ of the Company or any of its Affiliates, nor shall it interfere in any way with the right of the Company or any such Affiliate to terminate any employee's employment at any time. (g) Payments Under Plan; Unfunded Status of Plan. All cash settlements or distributions provided for under the Plan shall be made by check from the general funds of the Company as soon as practicable after the applicable valuation date provided in the Plan; provided, however, that such settlements and distributions shall be reduced by the amount of any payments made to the Participant or his or her Beneficiary from the trust (the "Trust") established by the Company to assist it in making such payments. No Participant or Beneficiary shall have any right, title, or interest whatsoever in or to any assets of the Trust. 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. (h) Award Account Statements; Plan Copies. Each Participant or his or her Beneficiary shall receive a statement no less frequently than annually with respect to each of his or her Award Accounts as of the close of the preceding calendar year. In addition, copies of the Plan and any and all amendments thereto shall be made available to all Participants and Beneficiaries at all reasonable times at the office of the Vice President of Human Resources of the Company. (i) Plan Effective Date; Amendments and Termination. The Plan shall be effective as of January 1, 1995. The Board of Directors may at any time amend or terminate the Plan; provided, however, that no amendment or termination of the Plan shall materially impair the rights of any Participant or Beneficiary under the Plan. (j) Compliance with Rule 16a-1(c)(3) and Rule 16b-3. It is the intent of the Company that, in the case of any Participant who is then subject to Section 16 of the Exchange Act with respect to the Company, (i) any PSU earned and DSU credited prior to August 15, 1996, any Dividend Equivalent DSU credited at any time in respect of either a DSU credited prior to August 15, 1996, or a Dividend Equivalent DSU previously credited on such a DSU or Dividend Equivalent DSU, and any other PSU or DSU that the Company determines qualifies as an excluded "cash-only" instrument under Rule 16a-1(c)(3)(i) under the Exchange Act in effect immediately prior to August 15, 1996, shall at all times continue to qualify as an excluded "cash-only" instrument under that Rule; (ii) the grant of any other Award, the earning of any other PSUs, the payment of cash, issuance of Shares, or crediting of any other DSUs in settlement of such other PSUs, the distribution of cash or issuance of Shares from a DSU Account relating to such other PSUs or DSUs, and any other transaction relating to such other PSUs or DSUs, shall be exempt from Section 16(b) liability under Rule 16b-3(d)(1) or (e) under the Exchange Act as in effect on and after August 15, 1996, or such other exemptions from Section 16(b) liability as may be available at the time; and (iii) transactions relating to Dividend Equivalent PSUs and Dividend Equivalent DSUs shall be exempt from Section 16(a) reporting and 16(b) liability under Rule 16a-11. Accordingly, the Plan shall be construed in a manner consistent with the applicable requirements of such Rules under Section 16, and, if any provision of the Plan does not comply with any such applicable requirement, then such provision shall be construed or deemed amended to the extent necessary to conform to such applicable requirement. (k) Arbitration. All disputes and controversies arising out of or relating to the Plan or any Award 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 Plan or any Award to the contrary, Participants 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 settlements and distributions provided for in the Plan during the pendency of any such dispute or controversy arising out of or relating to the Plan. (l) Governing Law; Jurisdiction. The Plan and any Award shall be governed by and construed in accordance with the laws of the State of New York, as from time to time in effect, without regard to the conflicts of law rules thereof, and applicable federal law. By his or her acceptance of an Award under the Plan each Participant and his or her Beneficiary and any other person claiming from or through them shall be deemed to irrevocably submit to the exclusive jurisdiction of any State or Federal Court sitting in the State of New York over any suit, action, or proceeding arising out of or relating to the Plan, and such persons agree and consent that, to the extent provided for under applicable law, all service of process in any such suit, action, or proceeding in any State or Federal Court sitting in the State of New York may be made by certified or registered mail, return receipt requested, directed to him or her at the address indicated in the records of the Company, unless the Company has otherwise been notified in writing of a new address, and service so made shall be complete 10 days after the same shall have been so mailed. EX-10.48 5 ORANGE AND ROCKLAND UTILITIES, INC. ELIGIBLE EMPLOYEES' INSURANCE PROGRAM Effective July 1, 1997 ORANGE AND ROCKLAND UTILITIES, INC. ELIGIBLE EMPLOYEES' INSURANCE PROGRAM 1. Eligibility Each Officer of Orange and Rockland Utilities, Inc. (the "Company"), or an Affiliate (as defined below) which has been designated as a participating entity by the Company's Board of Directors (a "Designated Affiliate"), is eligible to participate in the Orange and Rockland Utilities, Inc. Eligible Employees' Insurance Program (the "Program"). In addition, each non-Officer employee of the Company or a Designated Affiliate who is in salary grade 14 or above and who is designated for participation by the Company's Vice President of Human Resources shall be eligible to participate in the Program. Any individual who is eligible to participate hereunder shall be referred to as an "Eligible Employee". For purposes of this Program, an "Affiliate" is an entity which must be aggregated with the Company in accordance with Sections 414(b), 414(c), 414(m), or 414(o) of the Internal Revenue Code of 1986, as amended. 2. Participation Each Eligible Employee shall become a participant in the Program (a "Participant") immediately upon becoming an Eligible Employee, provided that such Eligible Employee is then insurable at standard life insurance rates. Notwithstanding the foregoing, no Eligible Employee shall become a Participant hereunder prior to the later of (i) July 1, 1997, or (ii) the issuance of an insurance policy providing the benefits payable under the Program with respect to that Eligible Employee. An Eligible Employee who becomes a Participant shall remain a Participant until the earlier of (i) his or her death, or (ii) his or her termination of employment from the Company and all Designated Affiliates prior to retirement under the terms of the qualified retirement plan of the Company or Designated Affiliate that covers the Participant ("Retirement"). 3. Life Insurance Benefit (a) Each Participant shall receive life insurance coverage which will provide a death benefit equal to: (1) two times the Participant's base salary from the Company or a Designated Affiliate as in effect at the date of the Participant's death, if the Participant dies while employed by the Company or a Designated Affiliate; or (2) $25,000, if the Participant dies after Retirement. A Participant under the Program will not be eligible to participate in the basic group life insurance program that is maintained for other employees of the Company or its Affiliates, but will be eligible to purchase supplemental life insurance coverage in accordance with the terms of the separate supplemental life insurance program that is maintained for employees of the Company or its Affiliates. (b) Any life insurance policy purchased to provide benefits under this Section 3 (a "Policy") shall be subject to certain conditions set forth in a "Split-Dollar Life Insurance Agreement" between the Participant, the Company, and the trustee of any trust which holds the Policy, pursuant to which the Participant may designate a beneficiary (the "Beneficiary") with respect to the portion of the Policy proceeds payable in accordance with the preceding paragraph in the event the Participant dies while life insurance coverage is in effect. The Participant shall have the right to designate and change such Beneficiary in accordance with the terms of the Split-Dollar Life Insurance Agreement, with such change to be effective when received by the insurance company. If no such Beneficiary designation is on file with the insurance company as of the Participant's date of death, the death benefit described in the preceding paragraph shall be paid in accordance with the terms of the Policy. (c) The death benefit payable pursuant to paragraph (a) shall not be paid if the insurance company fails to issue a Policy on the life of the Participant and shall be subject to all conditions and exceptions set forth in the applicable Policy. (d) Notwithstanding any provision of this Program or any other document to the contrary, the life insurance death benefit provided under paragraph (a) shall be payable solely from the proceeds of the Policy, if any. 4. Miscellaneous (a) Each Participant is responsible for the payment of any current taxes which are imposed upon such Participant as a result of the life insurance coverage provided to such Participant under this Program. (b) Copies of the Program and any and all amendments thereto shall be made available to all Participants and Beneficiaries at all reasonable times at the office of the Vice President of Human Resources. (c) The Program shall be administered by the Orange and Rockland Utilities, Inc. Retirement Committee (the "Committee"), which shall have full power, discretion, and authority to interpret, construe, and administer the Program and any part thereof. The Committee's interpretations and constructions of the Program, and the actions taken thereunder by the Committee, shall, except as otherwise determined by the Board of Directors of the Company, be binding and conclusive on all persons for all purposes. Any Participant or Beneficiary claims, except for those claims regarding the benefits payable under a Policy, shall be resolved by the Committee in accordance with procedures which it shall establish. To the extent that a Participant or Beneficiary has a claim regarding the benefits payable under a Policy, such claim shall be filed with the insurance company issuing such policy, and such insurance company shall be responsible for making a decision with respect to such claim. (d) The Board of Directors may at any time prior to a Change in Control or Potential Change in Control (as defined in Section 5) amend or terminate the Program. After a Change in Control or Potential Change in Control, the Board of Directors may not terminate or amend the Program, other than to make amendments which are necessary in order to comply with applicable law. (e) The Company, its officers, and its Board of Directors shall have the right to rely upon a written opinion of legal counsel, which may be independent legal counsel or legal counsel regularly employed by the Company, if any question should arise as to any obligation under the Program. (f) All elections, designations, requests, notices, instructions and other communications from an Eligible Employee, Participant, Beneficiary, or other person to the Committee or the Board of Directors of the Company, required or permitted under the Program, shall be in such form as is prescribed from time to time by the Committee and shall be mailed by first class mail or delivered to such location as shall be specified by the Committee. (g) The terms of the Program shall be binding upon the Company and its successors and assigns. (h) 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, and any applicable federal laws. (i) The Program is effective as of July 1, 1997. 5. 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, the Company shall continue to make premium payments to keep life insurance coverage in force with respect to each Participant, for so long as that Participant remains entitled to coverage hereunder. (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; or (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. (e) "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. EX-27 6
UT THIS SCHEDULE CONSTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ORANGE AND ROCKLAND UTILITIES, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JUN-30-1997 PER-BOOK 912,561 10,641 169,969 150,974 0 1,244,145 68,274 127,517 169,461 365,252 0 43,226 276,648 0 0 107,551 78,025 0 1,721 164 371,558 1,244,145 322,514 10,394 277,658 288,052 34,462 (12,649) 21,813 15,891 5,922 1,399 4,523 17,614 12,161 28,806 0.33 0
EX-99 7 ORANGE AND ROCKLAND PRESIDENT AND CHIEF OPERATING OFFICER LEAVES COMPANY Pearl River, NY, August 8, 1997 - Effective today, Larry S. Brodsky, Orange and Rockland's President and Chief Operating Officer, has left the Company to pursue other interests. Mr. Brodsky had been with the Company in that capacity since January 1996. The decision whether to fill the vacancy created by Mr. Brodsky's departure is under consideration. Orange and Rockland serves an area of 1,350 square miles and an estimated population of 671,000 in southeastern New York State, northern New Jersey and northeastern Pennsylvania. It generates, distributes and sells electricity, and distributes and sells natural gas. -----END PRIVACY-ENHANCED MESSAGE-----