Cto Employment Agreement

EMPLOYMENT AGREEMENT


AGREEMENT by and between Consolidated Edison, Inc., a New York Corporation ("CEI"), and Joan S. Freilich (the "Executive"), dated as of September 1, 2000.


WHEREAS, the Executive is currently serving as Executive Vice President and Chief Financial Officer of CEI, and as Executive Vice President and Chief Financial Officer of its subsidiary, Consolidated Edison Company of New York, Inc. ("CECONY"), a New York corporation, (CEI and its subsidiaries and affiliates hereinafter collectively referred to as the "Company");


WHEREAS, the Executive is willing to commit herself to be employed by the Company on the terms and conditions herein set forth; and


WHEREAS, the parties desire to enter into this Agreement setting forth the terms and conditions for the employment relationship of the Executive with the Company during the Employment Period (as hereinafter defined).


NOW, THEREFORE, IN CONSIDERATION of the mutual premises, covenants and agreements set forth below, it is hereby agreed as follows:


1. General.
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(a) Employment. CEI agrees to cause its subsidiaries and affiliates to employ the Executive in a senior executive position, and the Executive agrees to be so employed, in accordance with the terms and provisions of this Agreement during the Employment Period.


(b) Term. The term of the Executive's employment under this Agreement (the "Initial Employment Period") shall commence as of the date hereof (the "Effective Date") and shall continue until August 31, 2005. The Initial Employment Period shall be automatically extended without further action of either party for additional one year periods, unless written notice of either party's intention not to extend has been given to the other party at least six months prior to the expiration of the Initial Employment Period or any such one year extension. Collectively, the Initial Employment Period and each such extension (if any) are herein referred to the "Employment Period".


2. Position, Duties and Powers of the Executive.
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(a) Position. During the Employment Period, the Executive shall serve as Executive Vice President and Chief Financial Officer of CEI and as Executive Vice President and Chief Financial Officer of CECONY or in such other senior executive positions in CEI or its subsidiaries or affiliates to which the Executive may be elected or appointed by the Board or designated or assigned by the chief executive officer of CEI.


(b) Reporting, Duties and Powers. During the Employment Period, the Executive shall report directly to chief executive officer of CEI or to such other person or position as may be designated by the Board or the chief executive officer of CEI.


(c) Board Membership. The Executive shall continue as a member of the Board on the first day of the Employment Period through the end of her current term ending with the Annual Meeting of Stockholders in 2001. Thereafter, the Board shall nominate the Executive for re-election to the Board throughout the Employment Period in accordance with its customary practice for nominations to the Board.


(d) Other Positions. The Executive agrees to serve, if elected, at no additional compensation in the position of officer or director of any direct or indirect subsidiary or affiliate of CEI.


(e) Attention. During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote full attention and time during normal business hours to the business and affairs of the Company and to use her reasonable best efforts to perform such responsibilities in a professional manner. It shall not be a violation of this Agreement for the Executive to (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions and (iii) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an officer and director of the Company in accordance with this Agreement and are in compliance with the Company's Code of Conduct.


(f) Location. During the Employment Period, the Company's headquarters shall be located in New York, New York, and the Executive shall be employed at such headquarters or at any other office or location designated by the Board or the chief executive officer of CEI, except for reasonably required travel on the Company's business.


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3. Compensation.
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Except as modified by this Agreement, the Executive's compensation shall be provided in accordance with the Company's standard compensation and payroll practices as in effect from time to time. The aggregate of Base Salary, Annual Incentive Compensation and Long-Term Incentive Compensation in paragraphs (a), (b) and (c) below shall be determined by the Executive Personnel and Pension Committee of the Board or any subsequent committee of the Board that has primary responsibility for compensation policies (the "Compensation Committee") based upon competitive practices for similarly situated officers of companies in the same industry as CEI and of comparable size and standing.


(a) Base Salary. The annual rate of base salary payable to the Executive during the Employment Period (the "Annual Base Salary") shall be her annual rate of base salary in effect immediately prior to the date hereof. During the Employment Period, the Annual Base Salary shall be reviewed by the Compensation Committee for possible increase at least annually. Any increase in Annual Base Salary shall be approved by the Board. Annual Base Salary shall not be reduced after any such increase, and the term "Annual Base Salary" shall thereafter refer to the Annual Base Salary as so increased.


(b) Annual Incentive Compensation. The Board has established and intends to continue an annual incentive compensation plan for the benefit of the officers and other key employees of the Company, including the Executive, based on competitive practices for companies of comparable size and standing in the same industry. Any performance objectives for the Executive in respect of such incentive compensation plan will be determined by the Compensation Committee in accordance with past practices. Currently, the Executive participates in CECONY's annual incentive plan, the Executive Incentive Plan.


(c) Long-Term Incentive Compensation. CEI currently has, and the Board intends to continue, a long-term incentive compensation program, currently consisting of a stock option plan, for the benefit of the officers and other key employees of the Company, including the Executive, based on competitive practices for companies of comparable size and standing in the same industry. In addition to stock options, such program may in the future provide for stock appreciation rights, restricted stock or stock units, performance stock or units and/or other types of long-term incentive awards. The Board, subject to any required shareholder approval, will determine the Company's long term incentive compensation program, and the type and amount of equity and any other long-term incentive grants provided under the program will be determined by the Compensation Committee from time to time, provided that any such award shall provide by its terms that it will either (i) vest and/or become exercisable upon the Executive's retirement and remain exercisable until the third anniversary of the Executive's date of retirement or (ii) remain outstanding notwithstanding the Executive's termination of employment and continue to vest and/or become exercisable, as though the Executive's employment had not terminated, until the later of (x) the third anniversary of the Executive's date of retirement and (y) 90 days from the date that a stock option or other award (or portion thereof) first becomes exercisable, but in no event beyond the original term thereof.


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(d) Stock Award. In consideration of the commitment she will assume during the Employment Period, the Executive shall be granted an award (the " Restricted Stock Unit Award") of restricted stock units ("Units") with respect to 50,000 shares of the Common Shares ($.10 par value) of CEI ("Stock"), effective as of the Effective Date, in accordance with the following terms and conditions:


(i) Each Unit shall represent the right, upon vesting, to receive
one share of Stock. The shares of Stock issuable in respect of the vesting
of Units shall be shares purchased by the Company or its agent on the open
market. In the event any of the shares issuable in respect of Units
pertaining to the Restricted Stock Unit Award shall be forfeited, CEI may
re-apply such shares for its corporate purposes in its discretion.


(ii) The Executive's Units shall vest in accordance with the
following schedule, provided that the Executive has remained continuously
employed by the Company, or its successor, during the Employment Period
through the dates indicated below:


Date Percentage of Then
Outstanding Non Vested
Units


8/31/2003 50%
8/31/2004 50%
8/31/2005 100%


If, during the Employment Period and prior to a Change in Control, the
Company terminates the Executive's employment for Cause or without Cause
or the Executive terminates his employment, the Executive shall forfeit
all right to Units that are not vested as of the Date of Termination. If,
during the Employment Period and following a Change in Control, the
Company shall terminate the Executive's employment without Cause or the
Executive terminates his employment for Good Reason, the Executive's Units
shall fully and immediately vest as of the Date of Termination. If, during
the Employment Period, the Executive's employment terminates by reason of
death or Disability, the Executive's Units shall fully and immediately
vest as of the Date of Termination.


(iii) Once Units shall vest, CEI shall promptly issue to the
Executive a certificate for the shares of Stock represented thereby
without any legend or restriction (other than may be required by law).
Prior to vesting, Units shall represent an unfunded promise to deliver
Stock upon vesting thereof.


(iv) Units may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of
descent and distribution. Any attempted sale, assignment, transfer,
pledge, hypothecation or disposition in contravention of the foregoing
shall be null and void and of no effect.


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(v) Except as otherwise provided herein, the Executive shall have no
rights of a stockholder with respect to the shares of Stock represented by
Units, including no right to vote the shares, to receive dividends and
other distributions thereon and to participate in any change in
capitalization of CEI. In the event of any change in capitalization
resulting in the issuance of additional shares to CEI's stockholders, the
shares of Stock represented by her Units shall be equitably adjusted as
determined in good faith by the Compensation Committee. Prior to the
delivery of shares of Stock upon vesting of Units, at the time of each
distribution of any regular cash dividend paid by CEI in respect of Stock,
the Executive shall be entitled to receive a cash payment from the Company
equal to the aggregate regular cash dividend payment that would have been
made in respect of the shares of Stock subject to Units which have not yet
vested, as if the shares subject to such Units had been actually delivered
to the Executive, provided, that no such payment in respect of Units shall
be made if, prior to the time such payment is due, the Executive's rights
with respect to such Units have previously terminated under this
Agreement. In the event of a dividend payable in shares of Stock instead
of cash, the Executive shall be entitled to receive on the distribution
date additional Units in such number that would have been received in
respect of the shares of Stock represented by Units that have not yet
vested, as if the shares represented by such Units had actually been
delivered to the Executive. The Executive hereby elects to defer the
receipt of any dividend equivalent cash payments that may become payable
to the Executive prior to December 31, 2001 and have the cash payment
invested under the Company's Deferred Income Plan according to the terms
and conditions of the Deferred Income Plan. Prior to the commencement of a
calendar year, beginning with calendar year 2002, the Executive shall have
the right to elect to defer receipt of any dividend equivalent cash
payments that may become payable to the Executive in the calendar year and
to have such cash payments invested under the Company's Deferred Income
Plan according to the terms and conditions of the Deferred Income Plan.


(vi) Unless the shares of Stock represented by her Units which are
to be issued to the Executive have been registered pursuant to a
registration statement under the Securities Act of 1933, prior to
receiving such shares the Executive shall represent in writing to CEI that
such shares are being acquired for investment purposes only and not with a
view towards the further sale or distribution thereof and shall supply CEI
with such other documentation as may be required by CEI, unless in the
opinion of counsel to the CEI such representation, agreement or
documentation is not necessary to comply with the Securities Act of 1933
and the rules and regulations thereunder.


(vii) CEI shall not be required to deliver any shares subject to
this Restricted Stock Unit Award until they have been listed on each
securities exchange on which shares of Stock are listed or until there has
been qualification under or compliance with such state and federal laws,
rules or regulations that CEI may deem applicable. CEI will use its best
efforts to obtain such listing, qualification and compliance.


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(viii) The Compensation Committee may make such provisions and take
such steps as it may deem necessary or appropriate for the withholding of
any taxes that the Company is required by law or regulation of any
governmental authority, whether federal, state or local, domestic or
foreign, to withhold in connection with the Restricted Stock Unit Award,
including, but not limited to (1) withholding delivery of the certificate
for shares of Stock until the Executive reimburses the Company for the
amount it is required to withhold with respect to such taxes, (2) the
canceling of any number of shares of Stock issuable to the Executive in an
amount necessary to reimburse the Company for the amount it is required to
so withhold, or (3) withholding the amount due from the Executive's other
compensation.


(ix) The Executive may elect to defer all or a portion of the
receipt of Stock in respect of Units according to terms and conditions
established by the Compensation Committee for such deferrals.


(e) Employee Benefit Programs. During the Employment Period, (i) the Executive shall be eligible to participate in all savings and retirement plans, practices, policies and programs to the same extent as other senior executives of the Company and (ii) the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company, other than severance plans, practices, policies and programs but including, without limitation, medical, prescription, dental, disability, salary continuance, employee life insurance, group life insurance, accidental death and travel accident insurance plans and programs, and, upon retirement, all applicable retirement benefit plans to the same extent and subject to the same terms, conditions, cost-sharing requirements and the like, as other senior executives of the Company, as such plans may be amended from time to time, and as supplemented hereby. During the Employment Period, no benefit coverage available to the Executive and/or to his family under any such plan, practice, policy or program shall be materially reduced without the prior written consent of the Executive, unless a substantially equivalent reduction is applied to the other senior executives of the Company, provided, however, that the exception for across-the-board reductions shall not apply following a Change in Control (as defined below) and, further provided, that the Executive shall be provided during the Employment Period with life insurance providing for a death benefit, as a multiple of Annual Base Salary, at least equal to the insurance coverage provided by the Company to the Executive immediately prior to the date hereof.


(f) Supplemental Retirement Benefits. During the Employment Period, the Executive shall participate in CECONY's Retirement Plan for Management Employees, and also in CECONY's Supplemental Retirement Income Plan and such other supplemental executive retirement plans as may be adopted and amended by the Company from time to time ("SERPs"). It is agreed that the Restricted Stock Unit Award (including the grant of Units and any dividend equivalents or other distributions in respect of the Units) shall not be included in the SERP or other any pension calculation.


(g) Expenses. The Executive is authorized to incur reasonable expenses in carrying out her duties and responsibilities under this Agreement. The Company shall promptly reimburse her for all such expenses in accordance with the policies of the Company in effect from time to time for reimbursement of expenses for senior executives, and subject to documentation provided by the Executive in accordance with such Company policies.


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(h) Fringe Benefits. During the Employment Period, the Executive shall participate in all fringe benefits and perquisites available to senior executives of the Company on terms and conditions that are commensurate with her positions and responsibilities at the Company.


(i) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with Company policy as in effect from time to time, but not less than four weeks' vacation per annum.


Termination of Employment.
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(a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 4(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" means that (i) the Executive has been unable, for the period, if any, specified in the Company's disability plan for senior executives, but not less than a period of 180 consecutive days, to perform the Executive's duties under this Agreement and (ii) a physician selected by the Company or its insurers, and acceptable to the Executive or the Executive's legal representative, has determined that the Executive is disabled within the meaning of the applicable disability plan for senior executives.


(b) By the Company.
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(i) The Company may terminate the Executive's employment during the
Employment Period for Cause or without Cause. For purposes of this
Agreement, "Cause" shall mean (A) willful and continued failure by the
Executive to substantially perform her duties under this Agreement or (B)
the conviction of the Executive of a felony or the entering by the
Executive of a plea of nolo contendere to a felony, in either case having a
significant adverse effect on the business and affairs of the Company. No
act or failure to act on the part of the Executive shall be considered
"willful" unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act or failure to act that is
based upon authority given pursuant to a resolution duly adopted by the
Board, or the advice of counsel for the Company, shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith
and in the best interests of the Company. The Company expressly
acknowledges that Cause will not exist merely because of a failure of the
Company or its affiliates to meet budgeted results.


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(ii) A termination of the Executive's employment for Cause shall be
effected in accordance with the following procedures. The Company shall
give the Executive written notice ("Notice of Termination for Cause") of
its intention to terminate the Executive's employment for Cause, setting
forth in reasonable detail the specific conduct of the Executive that it
considers to constitute Cause and the specific provision(s) of this
Agreement on which it relies. Such notice shall be given no later than 60
days after the a ...