UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
---------------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended......................December 31, 1999
Commission file number: 0-30512
CH ENERGY GROUP, INC.
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(Exact name of registrant as specified in its charter)
New York 14-1804460
- ------------------------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
284 South Avenue, Poughkeepsie, New York 12601-4879
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 452-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $0.10 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
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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.
No [ X ] Yes [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting and non-voting
common equity held by non-affiliates of the Registrant as of
February 18, 2000, was $465,815,153 based upon the lowest price
at which Registrant's Common Stock was traded on such date, as
reported on the New York Stock Exchange listing of composite
transactions.
The number of shares outstanding of Registrant's Common
Stock, as of February 18, 2000 was 16,862,087.
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's definitive Proxy Statement, to be dated
March 1, 2000, and to be used in connection with its Annual
Meeting of Shareholders to be held on April 25, 2000, is
incorporated by reference in Part III hereof.
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TABLE OF CONTENTS
Page
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Table of Contents
- ----------------- PART I
------
ITEM 1 BUSINESS 1
- ------
ITEM 2 PROPERTIES 16
- ------
ITEM 3 LEGAL PROCEEDINGS 24
- ------
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
- ------ HOLDERS 26
PART II
-------
ITEM 5 MARKET FOR THE CORPORATION'S COMMON EQUITY
- ------ AND RELATED STOCKHOLDER MATTERS 26
ITEM 6 SELECTED FINANCIAL DATA OF THE CORPORATION AND
- ------ ITS AFFILIATES 27
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------ FINANCIAL CONDITION AND RESULTS OF OPERATIONS 29
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
- ------- MARKET RISK 48
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 49
- ------
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- ------ ON ACCOUNTING AND FINANCIAL DISCLOSURE 103
PART III
--------
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE
- ------- CORPORATION 103
ITEM 11 EXECUTIVE COMPENSATION 103
- -------
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
- ------- OWNERS AND MANAGEMENT 104
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 104
- -------
PART IV
-------
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND
- ------- REPORTS ON FORM 8-K 104
SIGNATURES 107
(i)
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PART I
------
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 ("Form 10-K Annual Report") and the documents
incorporated by reference may contain statements which, to the
extent they are not recitations of historical fact, constitute
"forward-looking statements" within the meaning of the Securities
Litigation Reform Act of 1995 ("Reform Act"). These statements
will contain words such as "believes," "expects," "intends,"
"plan," and other similar words. All such forward-looking
statements are intended to be subject to the safe harbor
protection provided by the Reform Act. A number of important
factors affecting the Corporation's business and financial
results could cause actual results to differ materially from
those stated in the forward-looking statements. Those factors
include weather, energy supply and demand, developments in the
legislative, regulatory and competitive environment, electric and
gas industry restructuring and cost recovery, future market
prices for energy, capacity and ancillary services, nuclear
industry regulation, the outcome of pending litigation, and
certain environmental matters, particularly ongoing development
of air quality regulations and industrial waste remediation
requirements.
ITEM 1 - BUSINESS
-----------------
Holding Company
CH Energy Group, Inc. ("Corporation") was formed in April
1998 as a wholly-owned subsidiary of Central Hudson Gas &
Electric Corporation ("Central Hudson"). On December 15, 1999,
effective upon a one-for-one common stock share exchange between
the Corporation and the shareholders of Central Hudson, the
Corporation became the holding company parent corporation of
Central Hudson and its existing subsidiary companies ("Holding
Company Restructuring"). Central Hudson's preferred stock and
debt were not exchanged and remain securities of Central Hudson.
As a result of the Corporation becoming the holding company
parent of Central Hudson on December 15, 1999, the prior years'
Consolidated Financial Statements herein represent the accounts
of Central Hudson on a consolidated basis as predecessor of the
Corporation. For further information regarding the Holding
Company Restructuring and/or the Amended and Restated Settlement
Agreement, dated January 2, 1998, among Central Hudson, the Staff
of the Public Service Commission of the State of New York ("PSC")
and certain others ("Agreement") entered into in the PSC's
Competitive Opportunities Proceeding, which Agreement permitted
the Holding Company Restructuring and which Agreement may affect
future operations of the Corporation, see Item 7 hereof, under
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the caption "Competition/Deregulation" and the caption
"Competitive Opportunities Proceeding Settlement Agreement" in
Note 2 - "Regulatory Matters" of the Notes to the Financial
Statements referred to in Item 8 of this Form 10-K Annual Report
(each such Note being hereinafter called the "Note").
Because of its ownership of Central Hudson, the Corporation
is a "public utility holding company" under the Public Utility
Holding Company Act of 1935 ("PUHCA"). However, the Corporation
is exempt from the provisions of PUHCA under the intrastate
exemption provisions of Section 3(a)(1) of PUHCA, except that, under
Section 9(a)(2) of such Act, the approval of the Securities and
Exchange Commission ("SEC") is required for a direct or indirect
acquisition by a public utility holding company of five percent
(5%) or more of the voting securities of any electric or gas
utility company subject to PUHCA.
The Corporation is not an operating company, but merely
holds stock in its affiliates.
On November 3, 1999, Central Hudson Energy Services, Inc.
("Services") was formed as a wholly-owned subsidiary of the
Corporation for the purpose of becoming, upon the effective date
of the Holding Company Restructuring, the sub-holding company
parent corporation for each of the Corporation's competitive
business affiliates. Effective as of the Holding Company
Restructuring date, the Corporation acquired each of Central
Hudson's then existing wholly-owned subsidiary companies (with
the exception of Phoenix Development Company, Inc. which remains
a subsidiary of Central Hudson). Also upon the Holding Company
Restructuring, Services became the parent corporation of each of
the Corporation's directly and indirectly owned subsidiaries:
namely, Central Hudson Enterprises Corporation, SCASCO, Inc.,
Prime Industrial Energy Services, Inc., CH Resources, Inc., CH
Syracuse Properties, Inc., CH Niagara Properties, Inc. and Greene
Point Development Corporation ("competitive business
affiliates"). For further information regarding affiliates of
the Corporation, see Part 1, Item 1 of this Form 10-K Annual
Report under the captions "Central Hudson" and "Other Affiliates
of the Corporation."
Central Hudson
Generally: Central Hudson is the principal affiliate of the
Corporation. Central Hudson is a New York gas and electric
corporation formed on December 31, 1926, as a consolidation of
several operating utilities which had been accumulated under one
management during the previous 26 years. Central Hudson
generates, purchases, sells at wholesale and distributes
electricity, and purchases and distributes gas in New York State.
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Central Hudson, in the opinion of its general counsel, has,
with minor exceptions, valid franchises, unlimited in duration,
to serve a territory extending about 85 miles along the Hudson
River and about 25 to 40 miles east and west from such River.
The southern end of the territory is about 25 miles north of New
York City, and the northern end is about 10 miles south of the
City of Albany. The territory, comprising approximately 2,600
square miles, has a population estimated at 623,500. Electric
service is available throughout the territory, and natural gas
service is provided in and about the cities of Poughkeepsie,
Beacon, Newburgh and Kingston and in certain outlying and
intervening territories. The number of Central Hudson employees,
at December 31, 1999, was 1,107.
Central Hudson's territory reflects a diversified economy,
including manufacturing industries, research firms, farms,
governmental agencies, public and private institutions, resorts
and wholesale and retail trade operations. For information
concerning revenues, certain expenses, earnings per share and
information regarding assets for the Central Hudson Electric,
Gas, and Other segments, which are currently the most significant
industry segments of the Corporation, see Note 10 - "Segments and
Related Information."
In 1999, the competitive marketplace continued to develop
for electric utilities and certain Central Hudson electric
customers were given the opportunity to purchase energy and
related services from sources other than their local utility.
These opportunities also exist for Central Hudson natural gas
customers.
Rates - Central Hudson
Generally: The electric and gas rates of Central Hudson
applicable to service supplied to retail customers within the
State of New York are regulated by the PSC. Transmission rates
and rates for electricity sold for resale in interstate commerce
by Central Hudson are regulated by the Federal Energy Regulatory
Commission ("FERC").
Central Hudson's present full-service retail rate structure
consists of various service classifications covering residential,
commercial and industrial customers. During 1999, the average
price of electricity to such customers was 8.51 cents per
kilowatthour ("kWh"), representing a 0.7% increase from the 1998
average price.
Rate Proceedings - Electric and Gas: For information
regarding Central Hudson's most recent electric and gas cases
filed with the PSC, see Item 7 hereof under the caption "Rate
Proceedings - Central Hudson."
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Cost Adjustment Clauses: For information with respect to
Central Hudson's electric and gas cost adjustment clauses, see
Note 1 - "Summary of Significant Accounting Policies" hereof
under the caption "Rates, Revenues and Cost Adjustment Clauses."
Regulation
Generally: Central Hudson is subject to regulation by the
PSC with respect to, among other things, service rendered
(including the rates charged), major transmission facility
siting, accounting procedures and issuance of securities. For
certain restrictions on Central Hudson's activities imposed by
the Agreement, see Note 2 hereof under the caption "Competitive
Opportunities Proceeding Settlement Agreement."
Certain of the Central Hudson and affiliate activities,
including accounting and the acquisition and disposition of
certain property, are subject to regulation by the FERC, under
the Federal Power Act, by reason of Central Hudson's transmission
facilities and Central Hudson's and certain affiliates' sales for
resale of electric energy in interstate commerce.
Central Hudson is not subject to the provisions of the
Natural Gas Act.
In the opinion of general counsel for Central Hudson,
Central Hudson's major hydroelectric facilities are not required
to be licensed under the Federal Power Act.
Construction Program and Financing - Central Hudson
For estimates of construction expenditures, internal funds
available, mandatory and optional redemption of long-term
securities, and working capital requirements of Central Hudson
for the year 2000, see the subcaption "Central Hudson
Construction Program" in Item 7 hereof under the caption "Capital
Resources and Liquidity."
For a discussion of Central Hudson's capital structure,
financing program and short-term borrowing arrangements, see
Notes 5, 6 and 7 "Short-Term Borrowing Arrangements,"
"Capitalization - Capital Stock" and "Capitalization - Long-Term
Debt," respectively, and Item 7 hereof under the subcaptions
"Capital Structure," "Financing Program of the Corporation and
Central Hudson" and "Short-Term Debt" of the caption "Capital
Resources and Liquidity."
Central Hudson's Certificate of Incorporation and its
various debt instruments do not contain any limitations upon the
issuance of authorized, but unissued, preferred stock or of
unsecured short-term debt.
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Central Hudson's various debt instruments include
limitations as to the amount of additional funded indebtedness
which Central Hudson can issue. The Corporation believes such
limitations will not impair Central Hudson's ability to issue any
or all of the debt described under the above-referenced
subcaption "Financing Program of the Corporation and Central
Hudson."
Fuel Supply and Cost - Central Hudson
Central Hudson's two primary fossil fuel-fired electric
generating stations are the Roseton Steam Electric Generating
Plant ("Roseton Plant") (described in Item 2 hereof under the
subcaptions "Central Hudson - Electric" and "Central Hudson -
Roseton Plant") and the Danskammer Point Steam Electric
Generating Station ("Danskammer Plant") (referred to in Item 2
hereof under the subcaption "Central Hudson - Electric"). Units
1 and 2 of the Roseton Plant are fully equipped to burn both
residual oil and natural gas. Units 1 and 2 of the Danskammer
Plant, which are equipped to burn residual oil or natural gas,
are operated when economical. Units 3 and 4 of the Danskammer
Plant, which are operated predominantly, are capable of burning
coal, natural gas, or residual oil. For a discussion of Central
Hudson's plan under the Agreement to sell, by auction, its
interests in the Roseton and Danskammer Plants, see Note 2 hereof
under the caption "Competitive Opportunities Proceeding
Settlement Agreement."
For the 12 months ended December 31, 1999, the sources and
related costs of electric generation for Central Hudson were as
follows:
Aggregate
Sources of Percentage of Costs in 1999
Generation Energy Generated ($000)
- ---------- ---------------- -------------
Purchased Power 25.7% $ 48,051
Coal 33.3 34,747
Gas 7.9 13,978
Nuclear 12.5 3,760
Oil 18.9 31,322
Hydroelectric 1.7 200
-----
100.0%
=====
Nitrogen Oxide ("NOx") Allowances 645
Fuel Handling Costs 1,438
Deferred Fuel Cost (2,562)
-----
$131,579
=======
Residual Oil: At December 31, 1999, there were 1,038,775
barrels of fuel oil in inventory in Central Hudson-owned tanks
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for use in the Danskammer and Roseton Plants, which aggregate
amount represents an average daily supply for 42 days at an
average of 25,000 barrels per day. The total oil storage
capacity as of December 31, 1999, for these Plants was 16,251 and
1,079,000 barrels, respectively. Central Hudson's share of the
Roseton Plant's oil storage capacity is 377,650 barrels.
During 1999, Central Hudson purchased 6,185 barrels of fuel
oil for the Danskammer Plant.
During 1999, the Roseton Plant's fuel oil requirements were
supplied by spot market purchases. The prices under these spot
contracts were determined on the basis of published market
indices in effect at the time of delivery. During 1999, Central
Hudson purchased just over six million barrels of fuel oil for
the Roseton Plant.
Coal: In order to provide for its future requirements for
coal to be burned in Units 3 and 4 at the Danskammer Plant,
Central Hudson entered into three supply contracts for the
purchase of an aggregate of 720,000 tons per year of low-sulfur
(0.7% maximum) coal.
Two contracts provide for the delivery of coal by water from
sources in Venezuela and Colombia, South America. The third
contract provides for the delivery of domestic coal by water.
The base price of purchases under all three contracts is
renegotiated by the parties on an annual basis. The contracts,
as last renegotiated, cover the term through December 31, 2001.
All three contracts can be terminated, effective December 31,
2000, with six-months written notice to the supplier.
In 1999, Central Hudson purchased 856,000 tons of coal which
arrived by water. Central Hudson purchased 36,000 tons of this
coal on the spot market, with the remainder being provided under
its three supply contracts.
Nuclear: For information regarding fuel reloading at Unit
No. 2 of the Nine Mile Point Nuclear Station ("Nine Mile 2
Plant"), of which Central Hudson owns a 9% interest, see Item 7
hereof under the subcaption "Nuclear Operations" of the caption
"Results of Operations."
Environmental Quality Regulation - Central Hudson
Central Hudson is subject to regulation by federal, state
and, to some extent, local authorities with respect to the
environmental effects of its operations, including regulations
relating to air and water quality, aesthetics, levels of noise,
hazardous wastes, toxic substances, protection of vegetation and
wildlife and limitations on land use. In connection with such
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regulation, certain permits are required with respect to Central
Hudson's facilities, which permits have been obtained and/or are
in the renewal process. Generally, the principal environmental
areas and requirements to which Central Hudson is subject are as
follows:
Air: State regulations affecting Central Hudson's existing
electric generating plants govern the sulfur content of fuel used
therein, the emission of particulate matter and certain other
pollutants therefrom and the visibility of such emissions. In
addition, federal and state ambient air quality standards for
sulfur dioxide ("SO2"), NOx and suspended particulates must be
complied with in the area surrounding Central Hudson's generating
plants. Based on the operation of continuous emission stack
monitoring systems, the Corporation believes that present air
quality standards for NOx, SO2 and particulates are satisfied in
those areas.
Beginning in 1997 the New York State Department of
Environmental Conservation ("NYSDEC") began an initiative seeking
penalties from all New York electric utilities for past opacity
variances and requiring various opacity reduction measures and
stipulated penalties for future excursions after execution of a
consent order. Each New York State electric utility, including
Central Hudson, is in the process of negotiating, or has
negotiated, the various terms and conditions of a draft consent
order with the NYSDEC. Central Hudson and the NYSDEC entered
into an Order on Consent, effective April 26, 1999, pursuant to
which Central Hudson, in settlement of a claim by the NYSDEC that
emissions from the Roseton and Danskammer Plants exceeded
applicable opacity emissions standards, agreed to a civil penalty
of $1.5 million for both Plants, of which $500,000 was paid to
the NYSDEC, and the remaining $1.0 million of such penalty was
suspended upon Central Hudson causing certain environmentally
beneficial projects in Dutchess and Orange Counties, New York to
be implemented as set forth in said Order. Said Order also
provides for (i) a new level of stipulated penalty provisions for
future opacity exceedences and (ii) an Opacity Reduction Program,
all with respect to said Plants.
The Danskammer Plant burns coal having a maximum sulfur
content of 0.7%, fuel oil having a maximum sulfur content of 1%
and natural gas. The sulfur content of the oil burned at the
Roseton Plant is limited by stipulation with, among others, the
NYSDEC, to an amount not exceeding 1.5% maximum and 1.3% weighted
annual average. Such sulfur content limitation at the Roseton
Plant can be modified by the NYSDEC in the event of technological
changes at such Plant, provided that the SO2 and NOx emissions
are limited to that which would have been generated by the use of
oil with a sulfur content of 1.3% on a weighted annual average.
Natural gas is also burned at the Roseton Plant.
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For information on the impact of the (i) Clean Air Act
Amendments of 1990 ("CAA Amendments") on Central Hudson's efforts
to attain and maintain national ambient air quality standards for
emissions from its fossil-fueled electric power plants, (ii) the
proposal of the federal Environmental Protection Agency ("EPA")
to modify emission standards for NOx and suspended particulates,
(iii) the proposal of the NYSDEC to modify NOx standards for
generating facilities operating in New York State, (iv)
settlements with the NYSDEC by Central Hudson of alleged opacity
violations, (v) the New York State Governor's initiatives
relating to air quality standards and (vi) an investigation
started by the New York State Attorney General regarding air
emissions from coal-fired generating plants, see Note 9 -
"Commitments and Contingencies," hereof under the caption,
"Environmental Matters - Air."
Water: Central Hudson is required to comply with applicable
state and federal laws and regulations governing the discharge of
pollutants into receiving waters.
The discharge of any pollution into navigable waterways is
prohibited except in compliance with a permit issued by the EPA
under the National Pollutant Discharge Elimination System
("NPDES") established under the Clean Water Act. Likewise, under
the New York Environmental Conservation Law, pollutants cannot be
discharged into state waters without a State Pollutant Discharge
Elimination System ("SPDES") permit issued by the NYSDEC.
Issuance of a SPDES permit satisfies the NPDES permit
requirement.
Central Hudson has received SPDES permits for both the
Roseton Plant and the Danskammer Plant, its Eltings Corners
maintenance and warehouse facility, and its Rifton Recreation and
Training Center. The SPDES permits for the Roseton and
Danskammer Plants expired on October 1 and November 1, 1992,
respectively, and such permit renewal applications for such
permits are pending before the NYSDEC. It is the Corporation's
belief that the expired SPDES permits continue in full force and
effect pending issuance of the new SPDES permits. Restriction on
use of water for cooling purposes at the Roseton Plant is being
considered as part of the Roseton Plant application (as referred
to in Item 3 hereof under the caption "Environmental
Litigation").
For further discussion of Central Hudson's compliance with
the Clean Water Act and Central Hudson's SPDES permit renewal
proceeding, see Note 9 - "Commitments and Contingencies," hereof
under the caption "Environmental Matters - Water."
For a description of litigation commenced against Central
Hudson for alleged violation of the Endangered Species Act with
respect to the Roseton and Danskammer Plants, see Item 3 hereof.
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Toxic Substances and Hazardous Wastes: Central Hudson is
subject to state and federal laws and regulations relating to the
use, handling, storage, treatment, transportation and disposal of
industrial, hazardous and toxic wastes.
The NYSDEC, in 1986, added to the New York State Registry of
Inactive Hazardous Waste Disposal Sites ("Registry") six
locations at which gas manufacturing plants owned or operated by
Central Hudson or by predecessors to Central Hudson were once
located. Two other sites, which formerly contained gas
manufacturing plants, were identified by Central Hudson but not
placed on the Registry. Central Hudson studied these eight sites
to determine whether they contain any hazardous wastes which
could pose a threat to the environment or public health and, if
such wastes were located at such sites, to determine the remedial
actions which may be appropriate.
All of these eight sites were studied by Central Hudson
using the Phase I guidelines of the NYSDEC and five such sites
were studied using the more extensive Phase II guidelines of the
NYSDEC. As a result of these studies, Central Hudson concluded
that no remedial actions were required at any of these sites. In
1991, the NYSDEC advised Central Hudson that four of the six
sites which had been originally placed on the Registry had been
deleted from such Registry. In 1992, the NYSDEC advised Central
Hudson that the two remaining sites listed on the Registry had
been deleted from the Registry. The NYSDEC also indicated that
such deletions of the sites were subject to reconsideration in
the future, at which time new analytical tests could be required
to determine whether or not wastes on site are hazardous. In
February 1999, Central Hudson was notified by the NYSDEC that it
suspected that hazardous waste has been disposed at three of the
previously identified sites, one located in Beacon, New York and
two located in Poughkeepsie, New York. The Corporation expects
Central Hudson will perform preliminary site assessments itself
under consent orders reached with the NYSDEC. If the NYSDEC
determines that significant quantities of residues are not
present or that the residues pose no threat to public health or
the environment given the current uses of these three sites,
NYSDEC will not require additional investigations and/or
remediation at such sites. If, after its review of each such
site assessment, NYSDEC determines that significant residues are
present, or the residues pose a threat to public health or the
environment at a site, Central Hudson will likely be responsible
for any required remediation. The Corporation can make no
prediction as to the outcome of this matter.
If, as a result of such potential new analytical tests, or
otherwise, remedial actions are ultimately required at any of
these eight sites by the NYSDEC, the cost thereof could have a
material adverse effect (the extent of which cannot be reasonably
estimated) on the financial condition of the Corporation if
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Central Hudson could not recover all, or a substantial portion
thereof, through insurance and rates. Central Hudson has put its
insurers on notice as to this matter and it intends to seek
reimbursement from such carriers for amounts for which it may
become liable.
For a discussion of litigation filed by the City of
Newburgh, New York against Central Hudson involving one of
Central Hudson's eight former manufactured gas sites and a court
ruling related thereto, see Note 9 - "Commitments and
Contingencies," hereof under the subcaption "Environmental
Matters - Former Manufactured Gas Plant Facilities."
In August 1992, the NYSDEC notified Central Hudson that the
NYSDEC suspected that Central Hudson's offices at Little Britain
Road in New Windsor, New York, may constitute an inactive
hazardous waste disposal site. As a result of the NYSDEC's
review of a site assessment report prepared by Central Hudson's
consultant and submitted to the NYSDEC in 1996, Central Hudson
agreed to perform additional testing, which testing detected a
limited amount of subsurface soil contamination near one corner
of the site and contaminants in the groundwater beneath the site.
Operations conducted on the site by Central Hudson since it
purchased the property in 1978 are not believed to have
contributed to either the soil or the groundwater contamination.
Central Hudson and the NYSDEC have reached an agreement in
principle that Central Hudson will conduct a voluntary clean-up
of the site on terms to be further negotiated between the
parties. The Corporation believes that the cost of such site
assessment and remediation will not be material.
Other: Central Hudson expenditures attributable, in whole
or in substantial part, to environmental considerations totaled
$10.2 million in 1999, of which approximately $1.5 million
related to capital projects and $8.7 million were charged to
expense. It is estimated that in 2000 the total of such
expenditures will be approximately $10.6 million. Neither the
Corporation nor Central Hudson is involved as a defendant in any
court litigation with respect to environmental matters and, to
the best of its knowledge, no litigation against it is threatened
with respect thereto, except with respect to the litigation
described in Item 3 "Legal Proceedings" hereof under the
subcaption "Environmental Litigation - Roseton and Danskammer
Plants," and as described in Note 9 - "Commitments and
Contingencies," hereof under the subcaption "Environmental
Matters - Former Manufactured Gas Plant Facilities."
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Other Central Hudson Matters
Labor Relations: Central Hudson has agreements with the
International Brotherhood of Electrical Workers ("IBEW") for its
779 unionized employees, representing production and maintenance
employees, customer representatives, service workers and clerical
employees (excluding persons in managerial, professional or
supervisory positions), which agreements were renegotiated
effective July 1, 1998. An agreement with each of Locals 2218
and 320 of the IBEW Non-Production Plant Workers continues
through April 30, 2003, and an agreement with IBEW Local 320
Production Plant Workers expires on August 31, 2003. The
agreements provide for an average annual general wage increase of
3.0% and certain additional fringe benefits. Effective August 1,
1999, Local 2218 merged with Local 320 and Local 320 assumed the
agreement between Central Hudson and Local 2218.
Phoenix Development Company, Inc.: Phoenix Development
Company, Inc. ("Phoenix"), a New York corporation, is a wholly-
owned subsidiary of Central Hudson. Phoenix was established to
hold or lease real property for the future use of Central Hudson,
or to participate in energy-related ventures. Currently, the
assets held by Phoenix are not material.
Other Affiliates of the Corporation
Central Hudson Energy Services, Inc.: As set forth above
under the caption "Holding Company Restructuring," Services was
established on November 3, 1999 as a New York corporation and
became a wholly-owned subsidiary of the Corporation on
November 19, 1999. Services was formed for the purpose of
becoming, effective upon the Holding Company Restructuring, the
holding company parent for each of the Corporation's competitive
business affiliates, other than Phoenix Development Corporation.
Services is not an operating company.
Central Hudson Enterprises Corporation: Central Hudson
Enterprises Corporation ("CHEC"), a New York corporation, is a
wholly-owned subsidiary of Services, and is engaged in the
business of marketing electricity, gas and oil and related
services to retail and wholesale customers; conducting energy
audits; providing services including, but not limited to, the
design, financing, installation and maintenance of energy
conservation measures and generation systems for private
businesses, institutional organizations and governmental
entities; and participating in cogeneration, small hydro,
alternate fuel and energy production projects and services.
Prime Industrial Energy Services, Inc.: In June 1999, CHEC
formed Prime Industrial Energy Services, Inc. ("Prime"), a New
York corporation, as a wholly-owned subsidiary, to acquire the
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assets of an ongoing business engaged in project construction and
providing services with respect to electric generators installed
on customers' property, heating, ventilation and air
conditioning.
SCASCO, Inc.: SCASCO, Inc. ("SCASCO"), a Connecticut
corporation, is a wholly-owned subsidiary of CHEC. SCASCO
conducts a fuel oil distribution business in Connecticut. In
February 1999, SCASCO purchased Island Sound Commercial Energy
Sales, Inc. ("Island Sound"), a Delaware corporation which held
contracts to sell natural gas to customers in Connecticut and
Rhode Island. In December 1999, Island Sound merged into SCASCO.
In December 1999, SCASCO acquired the assets of Lindstedt Oil
Company, an oil distribution company, to expand its fuel oil
sales in Connecticut. SCASCO operates Lindstedt Oil Company as a
division.
CH Resources, Inc.: CH Resources, Inc. ("Resources"), a New
York corporation, is a wholly-owned subsidiary of Services
established for the purpose of acquiring, developing and
operating electric generation facilities, the output of which is
sold at the wholesale level to CHEC and other energy services
companies, as well as through the New York State Independent
System Operator described in the caption "New York Power Pool/
Independent System Operator" of Item 2 herein. For a description
of the electric generating assets operated by Resources, see
Item 2 under the caption "Resources."
CH Syracuse Properties, Inc. and CH Niagara Properties,
Inc.: CH Syracuse Properties, Inc. ("CH Syracuse") and CH
Niagara Properties, Inc. ("CH Niagara"), are New York
corporations and wholly-owned subsidiaries of Resources used to
lease real property for the Niagara Falls and Syracuse (Solvay,
New York) electric generating facilities owned and operated by
Resources.
Greene Point Development Corporation: Greene Point
Development Corporation ("Greene Point"), a New York corporation,
is a wholly-owned subsidiary of Services, which develops and
evaluates business opportunities for the affiliate companies of
Services. The current assets held by this subsidiary are not
material.
12
<PAGE>
Executive Officers of the Corporation
The names of the current officers of the Board of Directors
and the executive officers of the Corporation, their positions
held and business experience during the past five (5) years and
ages (at December 31, 1999) are as follows:
Principal Occupation or Employment
Name of Officer, Age and Positions and Offices
and Position Held during the past five (5) years
- -------------------- -------------------------------------
Officers of the Board
---------------------
Paul J. Ganci, 61, Present position since November 2,
Chairman of the 1999; a director of Central Hudson
Board, President since 1994; Chairman of the Board and
and Chief Executive Chief Executive Officer of Central
Officer Hudson, April 1999 to present;
President and Chief Executive Officer
of Central Hudson, August 1998 - April
1999; President and Chief Operating
Officer of Central Hudson, December
1994 - August 1998; a director of
Services since November 1999; Chairman
of the Board and Chief Executive
Officer of Services since November
1999.
John E. Mack III, 65, Present position since November 19,
Chairman of the 1999; Chairman of the Board and Chief
Committee on Finance Executive Officer of the Corporation,
April 1998 - November 2, 1999; a
director of Central Hudson from
December 1994 - December 15, 1999;
Chairman of the Board of Central
Hudson, August 1998 - April 1999.
Chairman of the Board and Chief
Executive Officer of Central Hudson,
December 1994 - August 1998.
Jack Effron, 66, Present position since November 19,
Chairman of 1999; a director of Central Hudson
Committee on from December 1994 - December 15,
Compensation and 1999; Chairman of the Board of EFCO
Succession/Retirement Products, a bakery ingredients
corporation; member of the St. Francis
Health Care Foundation.
13
<PAGE>
Principal Occupation or Employment
Name of Officer, Age and Positions and Offices
and Position Held during the past five (5) years
- -------------------- -------------------------------------
Officers of the Board (Cont'd)
---------------------
Heinz K. Fridrich, 66, Present position since November 19,
Chairman of the 1999; Courtesy Professor, University
Committee on Audit of Florida at Gainesville since 1994.
Executive Officers of the Corporation
-------------------------------------
Carl E. Meyer, 52, Present position since November 19,
Executive Vice 1999. For Central Hudson - a director
President since December 15, 1999; President
and Chief Operating Officer, April
1999 to present; Executive Vice
President, April 1998 - April 1999;
Senior Vice President - Customer
Services, April 1996 - April 1998;
Vice President - Customer Services,
December 1994 - April 1996.
Allan R. Page, 52, Present position since November 19,
Executive Vice 1999. For Central Hudson - Vice
President President, November 1999 to present;
Executive Vice President, April 1998 -
November 1999; Senior Vice President -
Corporate Services, April 1996 - April
1998; Vice President - Corporate
Services, December 1994 - April 1996;
For Services - a director since
November 12, 1999; President and Chief
Operating Officer since December 3,
1999.
Principal Occupation or Employment
Arthur R. Upright, 56 Present position since November 19,
Senior Vice President 1999. For Central Hudson - a director
since December 15, 1999; Senior Vice
President - November 1998 to present;
Assistant Vice President - Cost & Rate
and Financial Planning, December 1994
- November 1998; a director of
Services since November 1999.
14
<PAGE>
Principal Occupation or Employment
Name of Officer, Age and Positions and Offices
and Position Held during the past five (5) years
- -------------------- -------------------------------------
Executive Officers of the Corporation (Cont'd)
-------------------------------------
Steven V. Lant, 42, Present position since November 19,
Chief Financial 1999; except Chief Financial Officer,
Officer and Treasurer Treasurer and Secretary, November 2,
1999 - November 19, 1999. For Central
Hudson - a director since December 15,
1999; Chief Financial Officer and
Treasurer, November 1999 to present;
Chief Financial Officer, Treasurer and
Corporate Secretary, November 1998 -
November 1999; Treasurer and Assistant
Corporate Secretary, December 1994 -
November 1998; a director of Services
since November 1999.
Donna S. Doyle, 51, Present position since November 19,
Vice President - 1999; except Controller, November 2,
Accounting and 1999 - November 19, 1999. For Central
Controller Hudson - Vice President - Accounting
and Controller, November 1999 to
present; Controller, April 1995 -
November 1999; Assistant Controller
and Manager of Taxes, Budgets &
Customer Accounting, December 1994 -
April 1995.
Gladys L. Cooper, 48, Present position since November 19,
Corporate Secretary 1999; except Assistant Secretary,
and Assistant Vice November 2, 1999 - November 19, 1999.
President - For Central Hudson - Corporate
Governmental Secretary and Assistant Vice President
Relations - Governmental Relations, November
1999 to present; Assistant Vice
President - Governmental Relations,
September 1995 - November 1999; leave
of absence for educational purposes,
December 1994 - September 1995.
15
<PAGE>
Principal Occupation or Employment
Name of Officer, Age and Positions and Offices
and Position Held during the past five (5) years
- -------------------- -------------------------------------
Executive Officers of the Corporation (Cont'd)
-------------------------------------
Denise D. VanBuren, 38 Present position since November 19,
Assistant Vice 1999; Manager - Corporate
President - Corporate Communications, October 1998 -
Communications November 19, 1999; Director - Media
Relations, December 1994 - October
1998.
There are no family relationships existing among any of the
executive officers of the Corporation.
Each of the above executive officers is elected or appointed
annually by the Board of Directors.
ITEM 2 - PROPERTIES
-------------------
Central Hudson
Electric: The net capability of Central Hudson's electric
generating plants as of December 31, 1999, the net output of each
plant for the year ended December 31, 1999, and the year each
plant was placed in service or rehabilitated are as set forth
below:
16
<PAGE>
<TABLE>
Megawatt ("MW")*
Electric Net Capability 1999 Unit
Generating Year Placed (99) (98-99) Net Output
Plant Type of Fuel In Service Summer Winter (MWh)
- ---------- ------------ ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C>
Danskammer Residual Oil, Natural 1951-1967 500 501 2,393,799
Plant ** Gas and Coal
Roseton Plant Residual Oil 1974 425 413 1,367,433
(35% share)** and Natural Gas
Neversink Water 1953 23 22 45,170
Hydro Station
Dashville Water 1920 5 5 10,527
Hydro Station
Sturgeon Pool Water 1924 16 16 46,916
Hydro Station
High Falls Water 1986 3 3 5,343
Hydro Station
Coxsackie Gas Kerosene or 1969 19 24 4,161
Turbine ("GT") Natural Gas
So. Cairo GT Kerosene 1970 18 22 2,856
Nine Mile 2 Nuclear 1988 103 105 786,507
Plant (9%
share) ----- ----- ---------
Total 1,112 1,111 4,662,712
===== ===== =========
* Reflects maximum one-hour net capability of Central Hudson's ownership of generation
resources and, therefore, does not include firm purchases or sales.
** Plants subject to auction based on the Agreement as described in Item 7
hereof under the caption "Competition/Deregulation - Competitive Opportunities
Proceeding Settlement Agreement" and in Note 2 - "Regulatory Matters" hereof under the
caption "Competitive Opportunities Proceeding Settlement Agreement."
</TABLE>
17
<PAGE>
Central Hudson has a contract with the Power Authority of
the State of New York ("PASNY") which entitles Central Hudson to
49 MW net capability from the Blenheim-Gilboa Pumped Storage
Hydroelectric Plant through 2002.
Central Hudson owns 83 substations having an aggregate
transformer capacity of 4.9 million kVa. The transmission system
consists of 588 pole miles of line and the distribution system of
7,333 pole miles of overhead lines and 881 trench miles of
underground lines.
Load and Capacity: Central Hudson's maximum one-hour demand
within its own territory, for the year ended December 31, 1999,
occurred on July 6, 1999, and amounted to 1,015 MW. Central
Hudson's maximum one-hour demand within its own territory, for
that part of the 1999-2000 winter capability period, through
February 18, 2000, occurred on January 17, 2000 and amounted to
860 MW.
Based on current projections of peak one-hour demands for
the 2000 summer capability period, it is estimated that Central
Hudson will have capacity available to satisfy its projected peak
demands plus the estimated installed reserve generating capacity
requirements Central Hudson is required to maintain as a member
of the New York State Independent System Operator ("ISO").
See Note 2 under the caption "Independent System Operator"
for information regarding the termination of the New York Power
Pool ("NYPP") and the formation of the ISO and the New York State
Reliability Council ("Reliability Council") to coordinate
reliability and operation of New York State's bulk power
transmission systems.
Central Hudson plans to sell by auction its interests in the
Roseton and Danskammer Plants under the terms of the Agreement.
This sale is expected to occur by early 2001. For further
information regarding the Agreement and such auction and sale,
see Note 2 - "Regulatory Matters" and the captions thereunder of
"Competitive Opportunities Proceeding Settlement Agreement" and
"Auction of Fossil Generation Plants." Following such sale,
Central Hudson will no longer own sufficient capacity to serve
the peak demands of its transmission and distribution customers
and will need to rely on purchased capacity from third party
providers to meet such demands.
18
<PAGE>
<TABLE>
<CAPTION>
The following table sets forth the amounts of any excess capacity of Central Hudson by
summer and winter capability periods for 2000 and 2001:
Forecasted Forecasted
Peak - Peak - Peak Plus Excess of Capacity
Total Full Installed over Peak Plus NYSISO
Delivery Service Reserve of Available Installed Reserve
Capability Rqts. (MW) Rqts. Only 18% (MW) Capacity Requirements
Period (1) (2) (3) (MW) (MW)(3) Percent(3)
<S> <C> <C> <C> <C> <C> <C> <C>
2000 Summer 985 935 1,103 1,178 75 6.2
2000-2001 Winter 840 800 1,103* 1,177 74 6.7
* Summer period peak plus reserve requirements carry over to the following winter
period.
(1) Total delivery requirements include requirements for both full service (delivery and
energy) and retail access (delivery only) customers
(2) Excludes retail access customer requirements
(3) Based on full service requirements
</TABLE>
19
<PAGE>
Roseton Plant: The Roseton Plant is located in Central
Hudson's franchise area at Roseton, New York, and is owned by
Central Hudson, Consolidated Edison Company of New York, Inc.
("Con Edison") and Niagara Mohawk Power Corporation ("Niagara
Mohawk") as tenants-in-common. The Roseton Plant, placed in
commercial operation in 1974, has a generating capacity of 1,200
MW consisting of two 600 MW generating units, both of which are
capable of being fired either by residual oil or natural gas (see
subcaption below entitled "Gas - Sufficiency of Supply and Future
Gas Supply"). Central Hudson is acting as agent for the owners
with respect to operation of the Roseton Plant. Generally, the
owners share the costs and expenses of the operation of such
Plant in accordance with their respective ownership interests.
Central Hudson, under a 1968 agreement, has the option to
purchase the interests of Niagara Mohawk (25%) and of Con Edison
(40%) in the Roseton Plant in December 2004. The exercise of
this option is subject to PSC approval. In December 1999,
Central Hudson, in conjunction with the proposed auction and sale
of Central Hudson's interest in the Roseton Plant, notified Con
Edison of its intention to exercise its option, as defined in the
May 14, 1969 Option Agreement among the Roseton Plant co-tenants,
to purchase the interest of Con Edison in the Roseton Plant on
December 31, 2004.
For information with respect to Central Hudson's PSC
obligation to sell its interest in the Roseton and Danskammer
Plants, see Note 2 - "Regulatory Matters," under the captions
"Competitive Opportunities Proceeding Settlement Agreement" and
"Auction of Fossil Generation Plants."
The 345 kV transmission lines and related facilities to
connect the Roseton Plant with other points in the system of
Central Hudson and with the systems of Con Edison and Niagara
Mohawk to the north and west of such Plant are 100%-owned by
Central Hudson. The share of each of the parties in the output
of the Roseton Plant is transmitted over these lines pursuant to
a certain transmission agreement relating to such Plant, which
provides, among other things, for compensation to Central Hudson
for such use by the other parties. In addition, Central Hudson
has contract rights which entitle Central Hudson to the lesser of
300 MW, or one quarter of the capacity in a 345 kV transmission
line owned by PASNY, which connects the Roseton Plant with a Con
Edison substation to the east of such Plant in East Fishkill, New
York. In exchange for these rights, Central Hudson agreed to
provide PASNY capacity in the 345 kV transmission lines Central
Hudson owns from the Roseton Plant, to the extent it can do so
after satisfying its obligations to Con Edison and Niagara
Mohawk.
Nine Mile 2 Plant: For a discussion of Central Hudson's
ownership interest in, costs for, proposals of certain other
20
<PAGE>
owners to sell their interests in and certain operating matters
relating to the Nine Mile 2 Plant, see Item 7 hereof under the
subcaption "Nuclear Operations," Note 3 - "Nine Mile 2 Plant,"
and Note 1 - "Summary of Significant Accounting Policies," under
the subcaption "Jointly-Owned Facilities."
Gas: Central Hudson's gas system consists of 161 miles of
transmission pipelines and 996 miles of distribution pipelines.
During 1999, natural gas was available to firm gas customers
at a price competitive with that of alternative fuels. As
compared to 1998, in 1999 firm retail gas sales, normalized for
weather, decreased by 2% and the average number of firm gas
customers increased by 1%. Sales to interruptible sales and
transportation customers increased 5% in 1999 as compared to
1998. As compared to 1998, in 1999 firm retail transportation
sales, normalized for weather, increased by 116% due to the
average number of customers using firm retail transportation
service increasing to 190 customers. In total, as compared with
1998 normalized, firm gas sales plus firm transportation
increased by 1% in 1999.
For further information regarding Central Hudson's incentive
arrangements for interruptible gas sales, see Item 7 hereof under
the subcaption "Sales - Central Hudson - Interruptible Gas
Sales."
For the year ended December 31, 1999, the total amount of
gas purchased by Central Hudson from all sources was 20,812,937
thousand cubic feet ("Mcf."), which includes 2,145,478 Mcf.
purchased directly for use as a boiler fuel at the Roseton Plant.
Central Hudson also owns two propane-air mixing facilities
for emergency and peak shaving purposes located in Poughkeepsie
and in Newburgh, New York. Each facility is capable of supplying
8,000 Mcf. per day with propane storage capability adequate to
provide maximum facility sendout for up to three consecutive
days.
Sufficiency of Supply and Future Gas Supply: The peak daily
demand for natural gas by Central Hudson's customers for the year
ended December 31, 1999, occurred on January 14, 1999, and
amounted to 109,676 Mcf. Central Hudson's firm peak-day gas
capability in 1999 was 116,918 Mcf. The peak daily demand for
natural gas by Central Hudson's customers for that part of the
1999-2000 heating season through February 18, 2000, occurred on
January 27, 2000, and amounted to 107,964 Mcf.
Other Gas Matters: FERC permits non-discriminatory access
to the pipeline facilities of interstate gas pipeline
transmission companies subject to the jurisdiction of FERC under
the Natural Gas Act. This rule allows access to such pipelines
21
<PAGE>
by the pipeline transmission company's customers enabling them to
transport gas purchased directly from third parties and spot
sources through such pipelines. Such access also permits
industrial customers of gas distribution utilities to connect
directly with the pipeline transmission company and to contract
directly with the pipeline transmission companies to transport
gas, thereby bypassing the distribution utility. None of Central
Hudson's customers have elected this bypass option.
The PSC has authorized New York State distribution gas
utilities to transport customer-owned gas through their
facilities upon request of a customer. Currently, interstate
pipeline transmission companies are located in certain areas
where Central Hudson provides retail gas service (the Towns of
Carmel, Pleasant Valley, Coxsackie, and LaGrange in New York
State).
For a discussion of the PSC proceeding relating to issues
associated with the restructuring of the natural gas market, see
Item 7 hereof under the subcaption "Natural Gas - PSC
Restructuring Policy Statement."
Other Central Hudson Matters: The Danskammer Plant and the
Roseton Plant and all of the other principal generating plants
and important property units of Central Hudson are held by it in
fee simple, except (1) certain rights-of-way, and (2) a portion
of the property used in connection with the hydroelectric plants
of Central Hudson consisting of flowage or other riparian
rights. Central Hudson's present interests in the Roseton Plant
and the Nine Mile 2 Plant are owned as undivided interests as a
tenant-in-common with the other utility owners thereof. Certain
of the properties of Central Hudson are subject to rights-of-way
and easements which do not interfere with Central Hudson's
operations. In the case of certain distribution lines, Central
Hudson owns only a part interest in the poles upon which its
wires are installed, the remaining interest being owned by
telephone companies. Certain electric transmission facilities
owned by others are used by Central Hudson pursuant to long-term
contractual arrangements.
All of the physical properties of Central Hudson, other than
property such as material and supplies excluded in Central
Hudson's First Mortgage Bond Indenture ("Mortgage") and its
franchises, are subject to the lien of the Mortgage under which
all of its Mortgage Bonds are outstanding. Such properties are
from time to time subject to liens for current taxes and
assessments which Central Hudson pays regularly as and when due.
During the three-year period ended December 31, 1999,
Central Hudson made gross property additions of $136.0 million
and property retirements and adjustments of $27.7 million,
22
<PAGE>
resulting in a net increase (including Construction Work in
Progress) in utility plant of $108.3 million, or 7.3%.
Resources
Resources owns a 100 MW combined cycle gas turbine facility
in Solvay, New York ("Syracuse Plant"), a 100 MW combined cycle
gas turbine facility in Beaver Falls, New York ("Beaver Falls
Plant"), and in June 1999 acquired a 50 MW fluidized bed, coal-
fired plant in Niagara County, New York ("Niagara Falls Plant").
Because these electric generating facilities are used exclusively
for selling electricity at wholesale, Resources is an "exempt
wholesale generator" under Section 32(e) of PUHCA and, therefore,
is exempt from the provisions of the Act.
The Niagara Falls Plant burns coal with a maximum sulfur
content of 5% in a fluidized-bed boiler that effectively captures
90% of the sulfur or more. Total annual usage is 200,000 tons of
coal, all of which is bought on the spot market. In addition,
the Niagara Falls Plant is permitted under applicable
environmental regulations to burn petroleum coke (with a maximum
sulfur content of 5%), a solid fuel derived from the distillation
of crude oil, up to a maximum of 70% of that Plant's total fuel
consumption. NOx emissions from such Plant are limited to 0.30
pounds per Million British Thermal Units. Upon the purchase of
the Niagara Falls Plant in June 1999, Resources assumed a NYSDEC
Consent Order from the prior owner which required such owner to
install a $350,000 ammonia DeNOx system to effect compliance.
Resources expects to have such system in place by May 1, 2000 as
required in such Consent Order, the cost of which is not
material.
The Syracuse Plant and the Beaver Falls Plant each burn
natural gas and No. 2 fuel oil.
SPDES permits are in effect for the Beaver Falls Plant and
the Syracuse Plant with expiration dates of May 1, 2003 and
December 1, 2001, respectively. All of the Niagara Falls Plant's
discharge flows into the local municipal wastewater system
subject to local permit (which have been obtained) limits.
The operation of these Plants by Resources is subject to the
same environmental quality regulations to which Central Hudson is
subject, as described under the caption "Central Hudson -
Environmental Quality Regulation - Central Hudson" in Item 1
hereof.
23
<PAGE>
ITEM 3 - LEGAL PROCEEDINGS
--------------------------
Asbestos Litigation
For a discussion of litigation against Central Hudson
involving asbestos, see Note 9 - "Commitments and Contingencies,"
hereof under the caption "Asbestos Litigation."
Environmental Litigation
Roseton Plant: On March 23, 1992, a Consent Order was
approved by the Supreme Court of the State of New York, Albany
County, in an action against the NYSDEC and Central Hudson
brought in 1991 by the Natural Resources Defense Council, Inc.,
the Hudson River Fisherman's Association and Scenic Hudson, Inc.
Such Consent Order provides for certain operating
restrictions at the Roseton Plant relating to the use of river
water for plant cooling purposes, which restrictions have not,
and are not expected to impose material additional costs on the
Corporation. The Consent Order has since lapsed; however, both
the NYSDEC and Central Hudson continue to consider themselves
bound by its terms. For a description of the pending NYSDEC
proceeding involving the renewal of the SPDES permit for the
Roseton Plant, see Item 1 hereof under the subcaption
"Environmental Quality Regulation - Central Hudson - Water," and
Note 9 - "Commitments and Contingencies," under the caption
"Environmental Matters - Water." For a description of Central
Hudson's negotiations with the NYSDEC on a consent order for
alleged opacity violations, see Item 1 hereof under the
subcaption "Environmental Quality Regulation - Central Hudson -
Air."
Roseton and Danskammer Plants: In 1999, Riverkeeper, Inc.,
commenced a citizen suit, in the United States District Court for
the Southern District of New York, against Central Hudson under
Section 11 of the Endangered Species Act, 16 U.S.C. Section 1540,
seeking injunctive relief from Central Hudson's alleged
unpermitted takings of the endangered shortnose sturgeon through
the Roseton and Danskammer Plants on the Hudson River.
Although the Corporation believes Central Hudson has not
violated such Act, if the court were to grant the relief
requested by plaintiffs, Central Hudson could be required
temporarily to cease operations of the Roseton and Danskammer
Plants. If Central Hudson were required to cease such operations
for a substantial period of time, it could have a material
adverse effect on the Corporation's financial position and
results of operations.
24
<PAGE>
Newburgh Manufactured Gas Site: For a discussion of
litigation filed against Central Hudson by the City of Newburgh,
New York, on May 26, 1995, in the United States District Court,
Southern District of New York, and Central Hudson's response
thereto, see Note 9 - "Commitments and Contingencies," under the
subcaption "Environmental Matters - Former Manufactured Gas Plant
Facilities."
Catskill Incident
An explosion occurred in a dwelling in Central Hudson's gas
service territory in Catskill, New York in November, 1992 which
resulted in personal injuries, the death of an occupant and
property damage. Lawsuits were commenced against Central Hudson
arising out of such incident. All but one of these suits were
settled during 1999 on terms which will not have a material
effect on Central Hudson.
The remaining lawsuit was commenced by complaint, dated
October 18, 1993, and filed in the Supreme Court of the State of
New York, Greene County, by Frank Reyes for unspecified personal
injuries and property damage alleged to have been caused by the
Catskill explosion described above. The complaint seeks $2
million in compensatory damages and $2 million in punitive
damages from Central Hudson, based on theories of negligence and
gross negligence. In January 2000, the Court dismissed this suit
on the merits because of the plaintiff's failure to prosecute the
case, but the time to appeal has not expired.
Central Hudson believes it has adequate insurance with
regard to the above Reyes claim for compensatory damages.
Central Hudson's insurance, however, does not extend to punitive
damages. If the Reyes lawsuit were to be reinstated and if
punitive damages were ultimately awarded, such award could have a
material adverse effect on the financial condition of the
Corporation.
Wappingers Falls Incident
Two consecutive fires and explosions occurred on
February 12, 1994, destroying a residence and commercial
establishment in the Village of Wappingers Falls, New York, in
Central Hudson's service territory. Lawsuits have been commenced
against Central Hudson arising out of such incident, including
the following:
On August 31, 1994, Central Hudson was served with a summons
and complaint in an action brought by John DeLorenzo against
Central Hudson and the Village of Wappingers Falls in the Supreme
Court of the State of New York, County of Dutchess. The
complaint seeks unspecified amounts of damages, based on a theory
25
<PAGE>
of negligence, for personal injuries and property damage alleged
to have been caused by the incident.
On March 9, 1995, Central Hudson was served with a summons
and complaint in an action brought in the Supreme Court of the
State of New York, County of Dutchess, by Cengiz Ceng, indivi-
dually and as executor under the last will and testament of
Nizamettin Ceng, and Tarkan Thomas Ceng against Central Hudson
and the Village of Wappingers Falls. The complaint seeks
recovery of $250,000 from Central Hudson, based on the theory of
negligence, for property damages alleged to have been caused by
the incident.
The above lawsuits have been consolidated into one action
against Central Hudson; however, no trial date has been set.
The Corporation continues to investigate the Wappingers
Falls claims and presently has insufficient information on which
to predict their outcome. The Corporation believes that it has
adequate insurance with regard to the claims for compensatory
damages.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
------ HOLDERS
-------------------------------------------
By unanimous written consent, dated November 19, 1999, of
Central Hudson as sole shareholder of the Corporation, effective
on such date, the appointment of Paul J. Ganci and John E. Mack
III as directors of the Corporation were ratified, confirmed and
approved and the following individuals were appointed as
directors of the Corporation until the first annual meeting of
shareholders of the Corporation or until his/her successor is
elected and qualified: Jack Effron, Heinz K. Fridrich, Edward P.
Swyer, Edward F. X. Gallagher, Stanley J. Grubel, Charles LaForge
and Frances D. Fergusson.
PART II
-------
ITEM 5 - MARKET FOR THE CORPORATION'S COMMON EQUITY AND
------ RELATED STOCKHOLDER MATTERS
----------------------------------------------
For information regarding the market for the Corporation's
common stock and related stockholder matters, see Item 7 hereof
under the captions "Capital Resources and Liquidity - Financing
Program of the Corporation and Central Hudson" and "Common Stock
Dividends and Price Ranges" and Note 6 - "Capitalization -
Capital Stock."
Pursuant to applicable statutes and its Certificate of
Incorporation, Central Hudson may pay dividends on shares of its
Preferred Stock only out of surplus.
26
<PAGE>
<TABLE>
<CAPTION>
ITEM 6 - SELECTED FINANCIAL DATA OF THE CORPORATION AND ITS AFFILIATES
------ -------------------------------------------------------------
FIVE-YEAR SUMMARY OF CONSOLIDATED OPERATIONS AND SELECTED FINANCIAL DATA*
(In Thousands)
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Revenues
Electric........................................ $ 427,809 $ 418,507 $ 416,429 $ 418,761 $ 409,445
Gas............................................. 94,131 84,962 103,848 95,210 102,770
------- ------- ------- ------- -------
Total......................................... 521,940 503,469 520,277 513,971 512,215
------- ------- ------- ------- -------
Operating Expenses
Operations...................................... 284,149 266,472 284,714 267,779 274,665
Maintenance..................................... 28,213 26,904 27,574 28,938 29,440
Depreciation and amortization................... 46,913 45,560 43,864 42,580 41,467
Taxes, other than income tax.................... 64,269 63,458 64,879 66,145 66,709
Federal income tax.............................. 27,758 29,775 29,190 32,700 29,040
------- ------- ------- ------- -------
Total......................................... 451,302 432,169 450,221 438,142 441,321
------- ------- ------- ------- -------
Operating Income.................................. 70,638 71,300 70,056 75,829 70,894
------- ------- ------- ------- -------
Other Income
Equity Earnings - Competitive Business
Affiliates..................................... 4 756 362 792 201
Allowance for equity funds
used during construction....................... - 585 387 466 986
Federal income tax.............................. (1,167) 1,187 2,953 1,632 353
Other - net..................................... 11,942 6,070 7,717 4,023 8,685
------ ------ ------ ------ ------
Total......................................... 10,779 8,598 11,419 6,913 10,225
------ ------ ------ ------ ------
Income before Interest Charges.................... 81,417 79,898 81,475 82,742 81,119
Interest Charges.................................. 29,614 27,354 26,389 26,660 28,397
------ ------ ------ ------ ------
Premium on Preferred Stock Redemption - Net....... - - - 378 169
Preferred Stock Dividends of Central Hudson....... 3,230 3,230 3,230 3,230 4,903
------ ------ ------ ------ ------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
FIVE-YEAR SUMMARY OF CONSOLIDATED OPERATIONS AND SELECTED FINANCIAL DATA*, (CONT'D)
(In Thousands)
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Income........................................ $ 48,573 49,314 51,856 52,474 47,650
Dividends Declared on Common Stock................ 36,422 36,567 37,137 37,128 36,459
------- ------- ------- ------- -------
Amount Retained in the Business................... 12,151 12,747 14,719 15,346 11,191
Common Stock Retirement........................... (12,642) - - - -
Retained Earnings - beginning of year............. 133,287 120,540 105,821 90,475 79,284
------- ------- ------- ------- -------
Retained Earnings - end of year................... $ 132,796 $ 133,287 $ 120,540 $ 105,821 $ 90,475
======= ======= ======= ======= =======
Common Stock
Average shares outstanding (000s)............... 16,862 17,034 17,435 17,549 17,380
Earnings per share on
average shares outstanding..................... $2.88 $2.90 $2.97 $2.99 $2.74
Dividends declared per share.................... $2.16 $2.155 $2.135 $2.115 $2.095
Book value per share (at year-end).............. $28.80 $28.00 $27.61 $26.87 $25.96
Total Assets...................................... $1,335,899 $1,316,038 $1,252,090 $1,249,106 $1,250,092
Long-term Debt.................................... 335,451 356,918 361,829 362,040 389,245
Cumulative Preferred Stock........................ 56,030 56,030 56,030 56,030 69,030
Common Equity..................................... 484,406 472,180 477,104 471,709 454,239
* This summary should be read in conjunction with the Consolidated Financial Statements and Notes
thereto included in Item 8 of this Form 10-K Annual Report.
</TABLE>
28
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
------ FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
COMPETITION/DEREGULATION
CH Energy Group, Inc.
As part of the Holding Company Restructuring, all of the
outstanding shares of Central Hudson common stock were exchanged
on a share-for-share basis for shares of the Corporation and
Central Hudson became a subsidiary of the Corporation.
Certificates for shares of Central Hudson common stock are
automatically valid as certificates of the Corporation and do not
have to be replaced. The transfer does not affect the value of
the stock or the Corporation's dividend policy. The Corporation
trades on the New York Stock Exchange under the symbol "CHG."
The holding company structure was formed to permit quick
response to changes in the evolving competitive energy industry.
The new structure permits the use of financing techniques that
are better suited to the particular requirements, characteristics
and risks of competitive operations without affecting the capital
structure or creditworthiness of Central Hudson. This increases
the Corporation's financial flexibility by allowing it to
establish different capital structures for each of its individual
lines of business.
The Corporation is not an operating entity. The
Corporation's operations are being conducted through its
principal affiliates, Central Hudson and Services as described
under the captions "Central Hudson" and "Other Affiliates of the
Corporation" in Item 1 hereof.
Central Hudson remains subject to regulation of retail rates
by the PSC and wholesale rates by the FERC. However, as a result
of competition/deregulation initiatives and policy changes
instituted by these agencies, Central Hudson is experiencing
increased electric and gas competition as described in Item 1
hereof.
Competitive Opportunities Proceeding Settlement Agreement
For a discussion of the Agreement approved by the PSC in its
Competitive Opportunities Proceeding and a discussion of the
impact of the Agreement on the Corporation's Accounting Policies,
see the caption "Competitive Opportunities Proceeding Settlement
Agreement" in Note 2 - "Regulatory Matters" hereof.
29
<PAGE>
FERC - Electric
For information with respect to the establishment of the ISO
and Reliability Council and termination of the NYPP, the caption
"Independent System Operator" of Note 2 herein.
Natural Gas - PSC Restructuring Policy Statement
In November 1998, the PSC, by Order, issued its "Policy
Statement Concerning the Future of the Natural Gas Industry in
New York State and Order Terminating Capacity Assignment" which
sets forth the PSC's view of how best to ensure a competitive
market for natural gas in New York State. That Order required
local distribution companies ("LDCs") to cease assigning capacity
to migrating customers no later than April 1, 1999, and indicated
LDCs will also be provided a reasonable opportunity to recover
strandable capacity costs. LDCs are also required to develop
individual plans to effectuate the changes required by the PSC
and each LDC must address gas supply and stranded cost
strategies, rates and customer education. In such Order, the PSC
also identified several generic issues related to the gas
industry which must be addressed. The PSC has indicated a desire
to address these issues through collaborative sessions on a
state-wide basis.
The Year 2000 Issue - Central Hudson
Certain computer systems and programs were designed to
identify the year with two digits. Concern existed prior to 2000
that such systems might read dates in the year 2000 and
thereafter as if those dates represent the year 1900 or
thereafter. As a result, errors would occur because computers
would not distinguish between 1900 and 2000. All mainframe and
personal computers, and related system, application code and
process control systems using embedded chip technology could have
been adversely affected by the use of two digit definitions for
the identification of the year component of date information. If
such adverse effects were not successfully remediated before
December 31, 1999, interruption to Central Hudson's electric
and/or natural gas service could have occurred, with attendant
lost revenues and adverse customer relations impacts.
Central Hudson, in 1998, began a project ("Project") to
remediate the year 2000 computer problems affecting all aspects
of its operations. As a result of the Project, Central Hudson
did not experience any interruptions to its critical operational
or customer systems on January 1, 2000 or thereafter as a result
of this year 2000 computer problem.
The total cost of the Project was estimated not to exceed
$3.0 million. The actual cost of the Project was approximately
30
<PAGE>
$2.8 million, of which $1.3 million was expended in 1999 and $1.5
million was expended in 1998.
None of the Corporation's other competitive business
affiliates were affected as a result of the Year 2000 issue.
Rate Proceedings - Central Hudson
Electric
See the caption "Competitive Opportunities Proceeding
Settlement Agreement" in Note 2 hereof.
Gas
Central Hudson currently does not have a gas rate case on
file with the PSC. Central Hudson will continue to monitor the
financial position of its gas business to determine the necessity
of filing a gas rate case in the future.
CAPITAL RESOURCES AND LIQUIDITY
Construction Program - Central Hudson
As shown in the Consolidated Statement of Cash Flows, the
cash expenditures related to Central Hudson's construction
program amounted to $46.5 million in 1999, a $1.4 million
increase from the $45.1 million expended in 1998. As shown in
the table below, cash construction expenditures for 2000 are
estimated to be $59.1 million, an increase of $12.6 million
compared to 1999 expenditures.
In 2000, Central Hudson expects to satisfy its external
funding requirements, either through short-term borrowings or
issuances of Medium Term Notes.
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<PAGE>
Central Hudson's estimates of construction expenditures,
internal funds available, mandatory and optional redemption or
repurchase of long-term securities, and working capital
requirements for 2000 are set forth in the following table:
2000
----
(In Thousands)
Construction Expenditures*
Cash Construction Expenditures.................. $59,100
Internal Funds Available.......................... 55,200
------
Balance of Construction Requirements to be
Financed.......................................... 3,900
------
Mandatory Refunding of Long-Term Securities
Long-Term Debt................................... 35,100
Other Cash Requirements............................ 3,000
Equity Transfers to the Corporation for Competitive
Business Affiliates............................... 38,000
------
Total Cash Requirements........................ $80,000
======
* Excluding the equity portion of Allowance for Funds Used During
Construction ("AFDC"), a noncash item.
Estimates of construction expenditures are subject to
continuous review and adjustment, and actual expenditures may
vary from estimates. These construction expenditures include
capitalized overheads, nuclear fuel and the debt portion of AFDC
and assume that the planned divestiture of the Roseton and
Danskammer Plants occurs on or about January 1, 2001. The actual
date of divestiture is likely to occur in the first quarter of
2001 at the earliest.
As shown in the table above, it is presently estimated that
funds available from internal sources will finance 93% of Central
Hudson's cash construction expenditures in 2000. During this
same period, total external financing requirements of Central
Hudson are projected to amount to $80 million, of which
$35.1 million is related to mandatory redemption of long-term
securities and $38.0 million is related to the equity transfers
to the Corporation for allocation to the Corporation's
competitive business affiliates.
32
<PAGE>
Capital Structure
Since 1996 Central Hudson maintained its common equity ratio
between 50-53%, which range was targeted in order to maintain a
solid A senior debt rating. Central Hudson's senior debt
ratings, all reaffirmed during 1999, are A2 by Moody's Investors
Service and A by Standard and Poor's Corporation, Duff & Phelps
Credit Rating Company and Fitch/IBCA.
Central Hudson, under the terms of the Agreement, will
divest its fossil generation assets no later than June 30, 2001.
A portion of the proceeds of such divestiture is planned to be
used to redeem a portion of the existing debt of Central Hudson.
While the total proceeds to be realized and portion of such
proceeds to be used for debt reduction cannot be accurately
predicted, Central Hudson intends to redeem sufficient debt to
maintain a strong investment grade rating after divestiture. The
capital structure required to realize this goal will depend on
the still-evolving policies of the credit rating agencies, the
perceived risk profile of Central Hudson after divestiture, and
its prospective financial ratios.
Central Hudson represents 93% of the Corporation's capital
structure, which is set forth below at the end of 1999, 1998 and
1997:
Year-end Capital Structure
--------------------------
1999 1998 1997
---- ---- ----
Long-term debt........... 38.6% 41.0%(a) 40.5%
Short-term debt.......... 5.2 1.9 -
Preferred stock.......... 5.8 6.1 6.3
Common equity............ 50.4 51.0 53.2
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
(a) Excludes $16.7 million of bonds issued through the New York
Energy Research and Development Authority ("NYSERDA") on
December 2, 1998, see Note 7 - "Capitalization - Long-Term
Debt."
Financing Program of the Corporation and Central Hudson
Central Hudson's Stock Purchase Plan, which can be either an
original issue plan or an open market purchase plan and is
currently an open-market purchase plan, was assumed by the
Corporation upon the Holding Company Restructuring.
Central Hudson has petitioned the PSC to amend the Agreement
to extend the time in which it may transfer up to $100 million to
its competitive business affiliates. Currently, such transfer
must be made prior to the Holding Company Restructuring. The
petition requests an extension prior to the receipt of proceeds
33
<PAGE>
from the auction of Central Hudson's fossil generation assets.
Approximately $51.5 million has been transferred to such
affiliates as of December 31, 1999. Central Hudson may, pursuant
to this authorization, issue, not later than June 30, 2001, up to
$100 million of new securities, including up to one million
shares of common stock in furtherance of its business plan.
The Corporation has established a program to repurchase up
to one million shares of its Common Stock and future repurchases
will be established as conditions warrant.
For a discussion of Central Hudson's refinancings on
August 3, 1999 of its 1984 7 3/8% Series and 1985 and 1987 Series
A and B Pollution Control Revenue Bonds, and the issuance and
sale of unsecured Medium Term Notes, Series C, on January 15,
1999 and January 31, 2000, see Note 7 hereof.
During 2000, two Central Hudson debt series totaling $35
million will mature. Additionally, Central Hudson will be
required to finance a portion of its planned construction
expenditures externally, as discussed above, along with potential
transfers of up to $50 million of additional equity to the
competitive business affiliates. These cash requirements will be
financed by a combination of temporary cash reserves, short-term
borrowing and the issuance of Medium Term Notes.
In addition to the potential equity transfers from Central
Hudson, the competitive business affiliates will fund their
acquisitions in 2000 through the Corporation's $50 million
revolving credit agreement, discussed under the subcaption
"Short-Term Debt."
For more information with respect to Central Hudson's
financing program in general, see Note 6 - "Capitalization -
Capital Stock" and Note 7 - "Capitalization - Long-Term Debt."
Short-Term Debt
As part of the Holding Company Restructuring, the
Corporation has established a revolving credit agreement with
three commercial banks for borrowing up to $50 million through
December 4, 2001.
As more fully discussed in Note 5 - "Short-Term Borrowing
Arrangements" hereof, Central Hudson has a revolving credit
agreement with four commercial banks for borrowing up to $50
million through October 23, 2001. In addition, Central Hudson
has several committed and uncommitted bank facilities ranging
from $.5 million to $50 million from which it may obtain short-
term financing. Such agreements give Central Hudson competitive
options to minimize its cost of short-term borrowing.
Authorization from the PSC limits the amount Central Hudson may
have outstanding at any time under all of its short-term
borrowing arrangements to $52 million in the aggregate.
34
<PAGE>
Services has short-term lines of credit totaling
$10.5 million.
RESULTS OF OPERATIONS
The following discussion and analysis includes an
explanation of the significant changes in revenues and expenses
when comparing the 1998 results of Central Hudson to the 1999
results of the Corporation and the 1998 results of Central Hudson
to the 1997 results of Central Hudson. Additional information
relating to changes between these years is provided in the Notes.
Earnings
Earnings per share of common stock are shown after provision
for dividends on preferred stock and are computed on the basis of
the average number of common shares outstanding during the year.
The number of common shares, the earnings per share and the rate
of return earned on average common equity are as follows:
1999 1998 1997
---- ---- ----
Average shares outstanding (000s).. 16,862 17,034 17,435
Earnings per share*................ $ 2.88 $ 2.90 $ 2.97
Return earned on common equity
per financial statements.......... 10.0% 10.3% 10.8%
*See Note 10 - "Segments and Related Information" for earnings
per share of the competitive business affiliates.
Earnings per share in 1999, when compared to 1998, decreased
$.02 per share. This decrease resulted primarily from increased
employee welfare costs due to a favorable premium adjustment
recorded in 1998, plus an increase in 1999 in labor costs charged
to operations expense instead of capital construction costs. In
addition, the decrease was due to increased depreciation on
Central Hudson's plant and equipment and an increase in
maintenance costs due largely to scheduled maintenance performed
on one of the electric generating plants.
The decreased earnings in 1999 were partially offset by the
net effect of various nonrecurring items, including the sale of
the Corporation's New York Stock Exchange symbol in 1999 and, in
1998, the write-off of nonrecoverable purchased power expenses.
Additional offsets include increases in electric net operating
revenues from an increase in own-territory sales due largely to
warmer summer weather (cooling degree days were 32% higher than
last year) and from sales of electricity for resale. These
increases were reduced, in accordance with the Agreement's return
on equity cap provision, by the deferral of revenues in excess of
35
<PAGE>
the cap. Gas net operating revenues remained flat compared to
last year. Firm gas sales increased by 8%; however, the
resulting increase in net operating revenues in 1999 was offset
by the effect of a favorable reconciling gas cost adjustment
recorded in 1998. A further offsetting item is the favorable
impact of Central Hudson's common stock repurchase program of
$.03.
Earnings per share in 1998 when compared to 1997 decreased
$.07 per share. This decrease resulted primarily from the net
effect of nonrecurring items recorded in 1998 and 1997. The 1998
nonrecurring items are the final provision for the nonrecoverable
portion of a purchased power contract and the gain on the sale of
an investment. Nonrecurring items in 1997 included the recording
of tax adjustments from the favorable settlement of various
Internal Revenue Service ("IRS") audits and the initial provision
for the nonrecoverable portion of a purchased power contract.
Also contributing to the decrease was increased depreciation on
Central Hudson's plant and equipment and decreased net operating
revenues. The reduction in net operating revenues was primarily
from a decrease in gas usage by residential, commercial and
industrial customers due to milder weather. Heating billing
degree days, as compared to 1997, were 11% lower in 1998.
These decreased earnings in 1998 were partially offset by
the favorable earnings impact of decreased operation and
maintenance expenses, including a reduction in employee
compensation due to fewer employees and associated employee
welfare costs and the favorable impact of Central Hudson's common
stock repurchase program of $.07.
The Corporation has established a projection for earnings in
calendar year 2000 of $2.97 per share. This projected level,
which is $.09 per share above the actual 1999 level of $2.88 per
share, reflects the planned transfer of equity capital from
Central Hudson's operations to competitive business affiliates
over the course of the year. These transfers will fund expansion
of competitive business affiliates into new competitive energy
markets to take advantage of opportunities expected to develop
due to industry restructuring. As a result of the Corporation's
strong financial condition and conservative dividend policy, the
Corporation expects that new business development activities will
not impact the Corporation's ability to maintain the current
level of dividend, although no assurances can be given.
36
<PAGE>
<TABLE>
<CAPTION>
Operating Revenues
Total operating revenues increased $18.5 million (4%) in 1999 as compared to 1998 and
decreased $16.8 million (3%) in 1998, as compared to 1997.
See the table below for details of the variations:
Increase or (Decrease) from Prior Year
--------------------------------------
1999 1998
-------------------------------- --------------------------------
Electric Gas Total Electric Gas Total
-------- --- ----- -------- --- -----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues*
Customer sales............. $ 7,527 $ 8,432 $ 15,959 $ 770 $(12,797) $(12,027)
Sales to other utilities... 2,254 (436) 1,818 6,991 561 7,552
Fuel cost adjustment....... 8,473 2,727 11,200 1,743 (8,172) (6,429)
Deferred revenues.......... (10,195) (1,844) (12,039) (7,013) 1,563 (5,450)
Miscellaneous.............. 1,243 290 1,533 (412) (42) (454)
------ ----- ------ ------ ------ ------
Total................ $ 9,302 $ 9,169 $ 18,471 $ 2,079 $(18,887) $(16,808)
====== ===== ====== ====== ====== ======
*These operating revenues reflect only Central Hudson revenues since the competitive
business affiliates' earnings are included based on the equity method of accounting.
</TABLE>
37
<PAGE>
Sales - Central Hudson
Central Hudson's sales vary seasonally in response to
weather. Generally, electric revenues peak in the summer and gas
revenues peak in the winter.
Sales of electricity within Central Hudson's service
territory, including electricity supplied by others, increased 4%
in 1999 compared to 1998 primarily due to the hotter weather in
1999. Cooling degree days in 1999 were 32% higher than in 1998.
In 1998, electric sales to residential, commercial and industrial
customers increased 1%, 3% and 2%, respectively.
Sales of firm natural gas within Central Hudson's service
territory, including gas supplied by others, increased by 8% from
1998 to 1999 resulting, in part, from a 3% increase in heating
degree days due to colder weather experienced in 1999.
Firm sales of natural gas (which excludes interruptible and
transportation sales) decreased 10% in 1998 due primarily to a
decrease in usage by residential and commercial customers largely
due to the unseasonable weather conditions experienced in 1998.
Changes in sales from prior years by major customer
classification, including interruptible gas sales are set forth
below. Also included are the changes related to energy delivery
service.
% Increase (Decrease) from Prior Year
-------------------------------------
Electric (MWh) Gas (Mcf)
-------------- ---------
1999 1998 1999 1998
---- ---- ---- ----
Residential........... 6 1 6 (11)
Commercial............ 5 3 7 (7)
Industrial............ 1 2 11 (15)
Interruptible......... N/A N/A 14 (15)
Residential and Commercial Sales: Residential electric and
gas sales are primarily affected by the growth in the number of
customers and the change in customer usage. In 1999, sales of
electricity to residential customers increased 6% due to an
increase in usage per customer. Commercial sales increased 5%
resulting primarily from a 3% increase in usage per customer.
Hotter weather conditions (cooling degree days were 32% higher)
contributed to the increase in residential and commercial sales
of electricity. Sales of gas to residential customers increased
6% due primarily to a 5% increase in usage per customer.
Commercial sales increased 7% due to a 5% increase in usage per
customer and a 2% increase in the number of customers.
In 1998, sales of electricity to residential customers
increased 1% due primarily to an increase in usage per customer.
Commercial electric sales increased 3% which was largely the
38
<PAGE>
result of an increase in the number of customers. Unseasonable
weather conditions (billing degree days were 11% lower) was a
significant factor in the decrease in residential and commercial
sales of gas. Sales of gas to residential customers decreased
11% due to the net effect of a 12% decrease in usage per customer
and a 1% increase in the number of customers. Commercial sales
decreased 7% due to the net effect of a 10% decrease in usage per
customer and a 3% increase in the number of customers.
Industrial Electric Sales: In 1999, as compared to 1998,
industrial electric sales increased 1%. In 1998, as compared to
1997, industrial electric sales increased 2% primarily due to
increases in usage by several large industrial customers.
Industrial Gas Sales: In 1999, firm gas sales to industrial
customers increased 11% primarily because of an increase in usage
by a large industrial customer. Firm gas sales to industrial
customers for 1998 decreased 15% primarily because of decreased
usage by a large industrial customer and conversion of several
customers to firm transportation service.
Interruptible Gas Sales: In 1999, interruptible gas sales,
including transportation and boiler fuel, increased 14% largely
due to an increase in boiler gas usage for electric generation.
Interruptible gas sales decreased 15% in 1998, due largely to a
decrease in natural gas sold for use as a boiler fuel for
electric generation. The use of gas as a boiler fuel at the
Roseton Plant is dependent upon its economic benefit as compared
to the use of oil for generation or the purchase of electricity
to meet Central Hudson's load requirements. Due to sharing
arrangements, as described in the caption "Incentive
Arrangements" of Item 7 hereof that are in place for
interruptible gas sales and interruptible transportation of
customer-owned gas, variations from year to year typically have a
minimal impact on earnings.
Incentive Arrangements
Pursuant to certain incentive formulas approved by the PSC,
Central Hudson either shares with its customers, certain revenues
and/or cost savings exceeding defined predetermined levels, or is
penalized in some cases for shortfalls from the targeted levels
or defined performance standards.
Incentive formulas are in place for fuel cost variations,
sales of electricity to other utilities, interruptible gas sales,
gas capacity release transactions and customer satisfaction,
electric reliability and keeping customer appointments.
39
<PAGE>
The net results of these incentive formulas were to increase
pretax earnings by $2.3 million, $1.0 million and $700,000 during
1999, 1998, and 1997, respectively.
Operating Expenses
Changes from the prior year in the components of Central
Hudson's operating expenses are listed below:
Increase or (Decrease)
from Prior Year
----------------------------------------
1999 1998
---- ----
Amount % Amount %
------ --- ------ ---
(In Thousands)
Operating Expenses*:
Fuel and purchased
electricity............... $ 6,318 5 $ 3,280 3
Purchased natural gas...... 8,993 20 (16,550) (27)
Other expenses of
operation................. 2,366 3 (4,972) (5)
Maintenance................ 1,309 5 (670) (2)
Depreciation and
amortization.............. 1,353 3 1,696 4
Taxes, other than
income tax................ 811 1 (1,421) (2)
Federal income tax......... (2,017) (17) 585 2
------ -- ------ --
Total.............. $19,133 4% $(18,052) (4)%
====== == ====== ==
*These operating expenses reflect only Central Hudson expenses
since the competitive business affiliates' earnings are included
in other income based on the equity method of accounting.
The most significant elements of operating expenses are fuel
and purchased electricity in Central Hudson's electric department
and purchased natural gas in Central Hudson's gas department.
Approximately 31% in 1999, and 30% in 1998 of every revenue
dollar billed by Central Hudson's electric department was
expended for the combined cost of fuel used in electric
generation and purchased electricity. The corresponding figures
in Central Hudson's gas department for the cost of purchased gas
were 57% and 53%, respectively.
In an effort to keep the cost of electricity at the lowest
reasonable level, Central Hudson purchases energy from sources
such as the ISO, Canadian hydro sources and energy marketers
whenever energy can be purchased at a unit cost lower than the
incremental cost of generating the energy in Central Hudson's
plants.
Fuel and purchased electricity increased $6.3 million (5%)
in 1999 due to the increase in electric sales as well as sales of
electricity for resale.
40
<PAGE>
Purchased natural gas costs increased $9.0 million (20%) in
1999 largely due to higher firm and interruptible gas sales,
including gas used as a boiler fuel. Purchased natural gas
decreased $16.6 million (27%) in 1998 primarily due to lower firm
and interruptible gas sales, including gas used as a boiler fuel.
Other expenses of operation increased by $2.4 million (3%) in
1999 largely due to an increase in employee welfare costs and an
increase in the amount of labor costs charged to operations
instead of capital construction activities. The increase in
employee welfare costs is primarily due to the effect of a
favorable premium adjustment recorded in 1998. In 1998 other
expenses of operations decreased $5.0 million (5%) resulting from
decreased employee compensation due to fewer employees and
associated fringe benefits. See Note 4 - "Federal Income Tax,"
hereof for an analysis and reconciliation of the federal income
tax.
Other Income and Interest Charges
Other income and deductions increased $2.2 million in 1999
as compared to 1998. The net increase results primarily from
income (nonrecurring) derived from the sale of the Corporation's
stock symbol; interest earned on proceeds held in escrow from
debt issued for the scheduled refinancing of existing debt and an
increase in carrying charges due Central Hudson on accumulated
pension expense credits (noncash) used to reduce customer rates.
The net increase in other income was also offset by increases in
federal income tax, a reduction in allowance for funds used
during construction and a reduction in equity earnings from
competitive business affiliates. The reduction in competitive
business affiliates' earnings is due to start-up costs of the
generating plants acquired by Resources and a nonrecurring item
recorded in 1998 for the gain on the sale of an investment. In
1998 other income and deductions decreased $3 million (27%),
primarily due to interest refunded in 1997 from the settlement of
various IRS audits.
Total interest charges (excluding AFDC) increased $2.3
million (8%) in 1999 and increased $1.0 million (4%) in 1998
because of an increase in financing activity. Interest earned on
the escrow funds discussed above largely offset the increase in
interest on debt in 1999.
41
<PAGE>
The following table sets forth some of the pertinent data on
the Corporation's outstanding debt:
1999 1998 1997
---- ---- ----
(In Thousands)
Long-term debt:
Debt retired................ $ 25,818 $ 90 $ 85
Outstanding at year-end:*
Amount (including current
portion).................. 371,180 396,998 363,744
Effective rate............. 6.43% 6.56% 6.78%
Short-term debt:
Average daily amount
outstanding ............... $ 10,274 $ 1,171 $ 1,692
Weighted average
interest rate ............. 6.22% 5.51% 5.54%
*Including debt of competitive business affiliates of $9.0
million in 1998 and $7.6 million in 1997.
See Note 5 - "Short-Term Borrowing Arrangements" and Note 7 -
"Capitalization - Long-Term Debt" hereof for additional
information on short-term and long-term debt of the Corporation.
Nuclear Operations
Nine Mile 2 Plant: The Nine Mile 2 Plant is owned, as
tenants-in-common, by Central Hudson, Niagara Mohawk, New York
State Electric & Gas Company ("NYSEG"), Long Island Lighting
Company ("LILCO"), a subsidiary of the Long Island Power
Authority ("LIPA"), and Rochester Gas and Electric Corporation
("Rochester"). Niagara Mohawk operates the Nine Mile 2 Plant.
Central Hudson owns a 9% interest of the Nine Mile 2 Plant,
which is discussed in Note 3 - "Nine Mile 2 Plant."
Central Hudson's share of operating expenses, taxes and
depreciation pertaining to the operation of the Nine Mile 2 Plant
are included in the Corporation's financial results. In both
1999 and 1998, underruns in costs of operations and maintenance
expenses were entirely deferred for the future benefit of
customers (see Note 2 - "Regulatory Matters").
For a discussion of the agreements among and proposals of
Niagara Mohawk, NYSEG and Rochester regarding disposition of
their interests in the Nine Mile 2 Plant, see Note 3 hereof.
In August 1997, the PSC Staff issued a "Notice Soliciting
Comments on Nuclear Generation" requesting comments and
alternative approaches by interested parties on a "Staff Report
on Nuclear Generation" ("Nuclear Report"). The Nuclear Report
concludes that nuclear generation along with non-nuclear
42
<PAGE>
generation facilities, should be subject to the discipline of
market-based pricing.
In March 1998, the PSC initiated a proceeding to examine a
number of issues raised by the Nuclear Report and the comments
received in response to it. In reviewing the Nuclear Report and
parties' comments, the PSC, among others: (a) adopted, as a
rebuttable presumption, the premise that nuclear power should be
priced on a market basis to the same degree as power from other
sources, with parties challenging that premise having to bear a
substantial burden of persuasion, (b) characterized the proposals
in the Staff paper as by and large consistent in concept with the
PSC's goal of a competitive, market-based electricity industry,
and (c) questioned PSC Staff's position that would leave funding
and other decommissioning responsibilities with the sellers of
nuclear power interests. The parties in this proceeding
developed a consensus report that discusses ownership and rate-
making alternatives for future consideration, which report was
submitted to the PSC in June 1999.
For information on the NRC Plant Performance Review of Nine
Mile 1 and Nine Mile 2 Plants, see Note 3 - "Nine Mile 2 Plant"
hereof.
Nuclear Decommissioning: A decommissioning study for the
Nine Mile 2 Plant was completed in 1995. The study's estimate of
the cost to decommission that Plant is significantly higher than
previous estimates. The Corporation believes that
decommissioning costs, if higher than currently estimated, will
ultimately be recovered in rates by Central Hudson, although no
such assurance can be given. However, future developments in the
utility industry, including the effects of deregulation and
increasing competition, could change this conclusion. The
Corporation cannot predict the outcome of these developments.
For further information on decommissioning, see Note 3 - "Nine
Mile 2 Plant."
In February 1996, the Financial Accounting Standards Board
("FASB") issued an exposure draft entitled "Accounting for
Certain Liabilities Related to Closure and Removal of Long-Lived
Assets," which includes nuclear plant decommissioning. Over the
past four years, this exposure draft has been the source of
continual debate. The FASB has committed to completing this
project and is proceeding toward issuance of another exposure
draft expected in the first quarter of 2000 with an effective
date for financial statements for fiscal years beginning after
June 15, 2001. If the accounting standard proposed in such
exposure draft is adopted, it could result in higher annual
provisions for removal or decommissioning to be recognized
earlier in the operating life of nuclear and other generating
units and an accelerated recognition of the decommissioning
obligation. The FASB is continuing to explore various issues
43
<PAGE>
associated with this project including liability measurement and
recognition issues. The FASB is deliberating this issue and the
resulting final pronouncement could be different from that
proposed in the exposure draft. The Corporation can make no
prediction at this time as to the ultimate form of such proposed
accounting standard, assuming it is adopted, nor can it make any
prediction as to its ultimate effect(s) on the financial
condition of the Corporation.
The NRC issued a policy statement on the Restructuring and
Economic Deregulation of the Electric Utility Industry ("Policy
Statement") in 1997. The Policy Statement addresses NRC's
concerns about the adequacy of decommissioning funds and about
the potential impact on operational safety and reserves. It
gives the NRC the right, in highly unusual situations where
adequate protection of public health and safety would be
compromised, to consider imposing joint and several liability on
minority co-owners when one or more co-owners have defaulted on
their contractual obligations. On January 5, 1999, the NRC
commenced a rulemaking proceeding initiated by a group of
utilities which are non-operating joint owners of nuclear plants.
These utilities request that the enforcement provisions of the
NRC regulations be amended to clarify NRC policy regarding the
potential liability of joint owners if other joint owners become
financially incapable of bearing their share of the burden for
safe operation or decommissioning of a nuclear power plant.
Current NRC regulations allow a utility to set aside
decommissioning funds annually over the estimated life of a
plant. In addition to the above Policy Statement, the NRC is
proposing to amend its regulations on decommissioning funding to
reflect conditions expected from deregulation of the electric
power industry. Central Hudson is unable to predict how such
increased stringency may affect the results of operations or
financial condition of the Nine Mile 2 Plant.
Refueling Outage: The Nine Mile 2 Plant is scheduled to
commence its seventh refueling outage March 3, 2000.
Other Matters
New Accounting Standards: In June 1998, the FASB issued
Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS 133").
This Statement establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires
that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at
fair value. Any gain or loss resulting from changes in such fair
value is required to be recognized in earnings to the extent the
derivatives are not effective as hedges. The Corporation
currently owns derivative instruments under an energy trading
44
<PAGE>
risk management program implemented in 1999 to manage the price
risks associated with fuel purchases for generation, natural gas
purchases for native load customers and wholesale power
transactions. The Corporation uses various financial
instruments, such as futures, options, swaps, caps, floors and
collars to stabilize the price volatility of these commodities.
At this time, the Corporation believes that the hedging program
will not have a material impact on its financial position or
results of operations.
The FASB issued Statement No. 137 "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133" in June 1999, amending SFAS 133
to defer the effective date by one year to all fiscal quarters of
all fiscal years beginning after June 15, 2000. This proposed
change is made in response to requests to consider delaying the
effective date to provide more time to study, understand and
implement the provisions of the SFAS 133.
For information about market risk and activities relating to
derivative financial instruments and other financial instruments,
see Item 7A - "Quantitative and Qualitative Disclosure about
Market Risk."
Other Issues: On an ongoing basis, Central Hudson assesses
environmental issues which could impact Central Hudson and its
customers. Note 3 - "Nine Mile 2 Plant" and Note 9 -
"Commitments and Contingencies" discuss current environmental
issues affecting Central Hudson, including (i) the 1995
decommissioning cost study of the Nine Mile 2 Plant, (ii) the
Clean Water Act and the CAA Amendments, which Amendments require
control of emissions from fossil-fueled electric generating
units, and air opacity settlements, (iii) a lawsuit filed against
Central Hudson by the Riverkeeper, Inc., (iv) the environmental
initiatives of the New York State Governor, (v) the investigation
by the New York State Attorney General of older New York State
power plants for possible violation of air emission rules and
(vi) a legal action filed in 1995 against Central Hudson by the
City of Newburgh, New York.
45
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL INDICES
Selected financial indices for the last five years are set forth in the following
table:
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Pretax coverage of total interest charges:
Including AFDC..................................... 3.59x 3.83x 3.94x 4.08x 3.68x
Excluding AFDC..................................... 3.30x 3.54x 3.69x 3.83x 3.43x
Funds from Operations.............................. 4.34x 4.39x 5.18x 5.29x 4.69x
Pretax coverage of total interest
charges and preferred stock dividends.................. 3.09x 3.27x 3.37x 3.47x 2.97x
Percent of construction expenditures
financed from internal funds........................... 100% 100% 100% 100% 100%
AFDC and Mirror CWIP* as a percentage
of income available for common stock................... 19% 17% 13% 13% 16%
Effective tax rate...................................... 36% 35% 32% 36% 35%
*Refer to Note 2 - "Regulatory Matters" under the caption "Summary of Regulatory Assets
and Liabilities" and the subcaptions "Deferred Finance Charges and Deferred Nine Mile 2
Plant Costs" for a definition of Mirror CWIP.
</TABLE>
46
<PAGE>
COMMON STOCK DIVIDENDS AND PRICE RANGES
Central Hudson and its principal predecessors have paid
dividends on its common stock in each year commencing in 1903,
and such common stock has been listed on the New York Stock
Exchange since 1945. The price ranges and the dividends paid for
each quarterly period during the last two fiscal years are as
follows:
1999 1998
------------------------------ --------------------------
High Low Dividend High Low Dividend
---- --- -------- ---- --- --------
1st Quarter $45 35 3/4 .54 $43 3/4 $39 5/8 $.535
2nd Quarter 42 3/8 35 15/16 .54 46 38 7/8 .535
3rd Quarter 42 3/4 38 7/8 .54 47 1/16 40 7/8 .54
4th Quarter* 40 1/4 31 7/8 .54 45 1/8 39 7/8 .54
*On December 15, 1999, the Holding Company Restructuring took
place.
On June 26, 1998, Central Hudson increased its quarterly
dividend rate to $.54 per share from $.535 per share. In 1999,
Central Hudson maintained its quarterly dividend rate at $.54 per
share.
Following the Holding Company Restructuring, all future
declarations of dividends will be made by the Corporation. Any
determination with regard to future dividend declarations, and
the amounts and dates of such dividends, will depend on the
circumstances at the time of consideration of such declaration.
The Agreement provides certain dividend payment restrictions
on Central Hudson, including the following: in the event of a
downgrade of Central Hudson senior debt rating below BBB+ by more
than one credit rating agency, if the stated reason(s) for the
downgrade is the performance of, or concerns about, the financial
condition of the Corporation or any affiliate other than Central
Hudson, dividends will be limited to a rate of not more than 75%
of the average annual income available for dividends on a two-
year rolling average basis. In the event that Central Hudson's
senior debt is placed on "Credit Watch" (or the equivalent) for a
rating below BBB by more than one credit rating agency, if the
stated reason(s) for the downgrade is the performance of, or
concerns about, the financial condition of the Corporation or any
affiliate other than Central Hudson, dividends will be limited to
a rate of not more than 50% of the average annual income
available for dividends on a two-year rolling average basis. In
the event of a downgrade of Central Hudson's senior debt rating
below BBB- by more than one credit rating agency, if the action
is stated as being due in substantial part to the performance of,
or concerns about, the financial condition of the Corporation or
47
<PAGE>
any affiliate other than Central Hudson, no dividends will be
paid by Central Hudson until Central Hudson's senior debt rating
has been restored to BBB- or higher by all credit rating agencies
then rating Central Hudson.
The number of registered holders of common stock of the
Corporation as of December 31, 1999, was 20,472. Of these,
19,757 were accounts in the names of individuals with total
holdings of 4,746,116 shares, or an average of 240 shares per
account. The 715 other accounts, in the names of institutional
or other non-individual holders, for the most part, hold shares
of common stock for the benefit of individuals.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
------- MARKET RISK
---------------------------------------------
The Corporation's primary market risks are commodity price
risk and interest rate risk and, lie principally, in terms of
materiality, with Central Hudson, its principal affiliate
company. However, Central Hudson's exposure to commodity price
risk related to its purchases of natural gas, fuel for electric
generation and other power supplies is mitigated by its electric
and gas cost adjustment clauses. These adjustment mechanisms
provide for the return or collection of costs to or from
customers for costs below or in excess of base costs included in
rates charged to customers. Additionally, variations in electric
fuel costs are subject to a fuel costs incentive mechanism with
an annual exposure of up to $3.0 million in additional revenues
or costs.
In 1999, Central Hudson implemented an energy risk
management program (assumed by the Corporation upon the Holding
Company Restructuring) with its primary goal being to further
manage, through the use of defined risk management practices,
price risk associated with commodity purchases in its operations.
The Corporation's written policy and procedures for this program
allows for the use of derivative financial instruments to hedge
price risk and prohibits the use of these instruments for
speculative purposes. Additionally, the PSC in a Memorandum and
Resolution ("Resolution"), effective April 13, 1999, authorized
the inclusion of risk management costs as a recoverable component
of the Gas Adjustment Clause ("GAC"). The Resolution defines
these costs as "costs associated with transactions that are
intended to reduce price volatility or reduce overall costs to
customers. These costs include transaction costs, and gains and
losses associated with other risk management entities."
Central Hudson, starting in September 1999, purchased
derivative instruments to hedge a small portion of its total gas
supply requirements for the period November 1999 through October
2000. The fair value of these derivative financial instruments
48
<PAGE>
at December 31, 1999 is not material to the Corporation's
financial position or results of operations. Additionally,
resultant transaction gains and losses actually realized in 1999
were included in Central Hudson's GAC, as authorized by the PSC.
With regard to electric energy operations, Central Hudson and
Services have begun to enter into derivative instruments to hedge
purchased electric transactions. There were no electric
derivative instruments outstanding at December 31, 1999, and the
transactions occurring in 1999 were not material to the
Corporation's financial position or results of operations.
Central Hudson manages its interest rate risk through the
issuance of fixed-rate debt with varying maturities and through
economic refundings of debt through optional refunding. A
portion of Central Hudson's long-term debt consists of variable
rate debt for which interest is reset on a periodic basis
reflecting current market conditions. The difference between
costs associated with actual interest rates and costs embedded in
customer rates are deferred for eventual passback or recovery to
or from customers.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
------ -------------------------------------------
I - Index to Financial Statements: Page
----
Report of Independent Accountants 50
Statement of Management's Responsibility 51
Consolidated Statement of Income for the
three years ended December 31, 1999 53
Consolidated Statement of Retained Earnings
for the three years ended December 31, 1999 55
Consolidated Balance Sheet at
December 31, 1999 and 1998 56
Consolidated Statement of Cash Flows for the
three years ended December 31, 1999 58
Notes to Consolidated Financial Statements 60
Selected Quarterly Financial Data (Unaudited) 101
II - Schedule II - Reserves
All other schedules are omitted because they are not
applicable or the required information is shown in the
Consolidated Financial Statements or the Notes thereto.
Supplementary Data
Supplementary data is included in "Selected Quarterly
Financial Data (Unaudited)" referred to in I above and reference
is made thereto.
49
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of CH Energy Group,
Inc.
In our opinion, the consolidated financial statements listed
in the accompanying index present fairly, in all material
respects, the financial position of CH Energy Group, Inc. and its
subsidiaries at December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
These financial statements are the responsibility of the
Corporation's management; our responsibility is to express an
opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States
which require that we plan and perform the audit to obtain
reasonable assurance about whether or not the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the
opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
New York, New York
January 28, 2000
50
<PAGE>
STATEMENT OF MANAGEMENT'S RESPONSIBILITY
Management is responsible for the preparation, integrity and
objectivity of the consolidated financial statements of CH Energy
Group, Inc. and its competitive business affiliates
(collectively, the "Corporation") as well as all other
information contained in this Form 10-K Annual Report for the
fiscal year ended December 31, 1999. The consolidated financial
statements have been prepared in conformity with generally
accepted accounting principles and, in some cases, reflect
amounts based on the best estimates and judgements of the
Corporation's Management, giving due consideration to
materiality.
The Corporation maintains adequate systems of internal
control to provide reasonable assurance, that, among other
things, transactions are executed in accordance with Management's
authorization, that the consolidated financial statements are
prepared in accordance with generally accepted accounting
principles and that the assets of the Corporation are properly
safeguarded. The systems of internal control are documented,
evaluated and tested by the Corporation's internal auditors on a
continuing basis. Due to the inherent limitations of the
effectiveness of internal controls, no internal control system
can provide absolute assurance that errors will not occur.
Management believes that the Corporation has maintained an
effective system of internal control over the preparation of its
financial information including the consolidated financial
statements of the Corporation as of December 31, 1999.
Independent accountants were engaged to audit the
consolidated financial statements of the Corporation and issue
their report thereon. The Report of Independent Accountants,
which is presented above, does not limit the responsibility of
Management for information contained in the consolidated
financial statements and elsewhere in this Form 10-K Annual
Report.
The Corporation's Board of Directors maintains a Committee
on Audit which is composed of Directors who are not employees of
the Corporation. The Committee on Audit meets with Management,
the Internal Auditing Manager, and the Corporation's independent
51
<PAGE>
accountants several times a year to discuss internal controls and
accounting matters, the Corporation's consolidated financial
statements, the scope and results of the audits performed by the
independent accountants and the Internal Auditing Department.
The independent accountants and the Internal Auditing Manager
have direct access to the Committee on Audit.
PAUL J. GANCI DONNA S. DOYLE
Chairman of the Board, President Vice President - Accounting
and Chief Executive Officer and Controller
February 4, 2000
52
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
(In Thousands)
Year ended December 31,
1999 1998 1997
---- ---- ----
Operating Revenues
Electric................... $427,809 $418,507 $416,429
Gas........................ 94,131 84,962 103,848
------- ------- -------
Total Operating Revenues. 521,940 503,469 520,277
------- ------- -------
Operating Expenses
Operation:
Fuel used in electric
generation................ 85,848 84,688 66,117
Purchased electricity...... 45,731 40,573 55,864
Purchased natural gas...... 53,957 44,964 61,514
Other expenses of operation 98,613 96,247 101,219
Maintenance................. 28,213 26,904 27,574
Depreciation and amortization
(Note 1).................... 46,913 45,560 43,864
Taxes, other than income
tax........................ 64,269 63,458 64,879
Federal income tax
(Note 4).................... 27,758 29,775 29,190
------- ------- -------
Total Operating Expenses. 451,302 432,169 450,221
------- ------- -------
Operating Income............. 70,638 71,300 70,056
------- ------- -------
Other Income
Equity Earnings - Competitive
Business Affiliates....... 4 756 362
Allowance for equity funds
used during construction
(Note 1).................. - 585 387
Federal income tax (Note 4) (1,167) 1,187 2,953
Other - net................ 11,942 6,070 7,717
------ ------ ------
Total Other Income....... 10,779 8,598 11,419
------ ------ ------
Income before Interest
Charges.................... 81,417 79,898 81,475
------ ------ ------
The Notes to Consolidated Financial Statements are an integral
part hereof.
53
<PAGE>
CONSOLIDATED STATEMENT OF INCOME (CONT'D)
(In Thousands)
Year ended December 31,
1999 1998 1997
---- ---- ----
Interest Charges
Interest on long-term debt.. 24,151 23,115 23,097
Other interest.............. 4,860 3,639 2,647
Allowance for borrowed
funds used during
construction (Note 1)...... (390) (324) (261)
Amortization of expense on
debt....................... 993 924 906
------ ------ ------
Total Interest Charges.... 29,614 27,354 26,389
------ ------ ------
Preferred Stock Dividends of
Central Hudson.............. 3,230 3,230 3,230
------ ------ ------
Net Income................... $ 48,573 $ 49,314 $ 51,856
====== ====== ======
Common Stock:
Average shares outstanding
(000s)..................... 16,862 17,034 17,435
Earnings per share (basic
and diluted).............. $2.88 $2.90 $2.97
The Notes to Consolidated Financial Statements are an integral
part hereof.
54
<PAGE>
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(In Thousands)
Year ended December 31,
1999 1998 1997
---- ---- ----
Balance at beginning of
year........................ $133,287 $120,540 $105,821
Net Income................... 48,573 49,314 51,856
Common Stock Retirement
(cancellation)............. (12,642) - -
Dividends declared:
On common stock ($2.16 per
share 1999; $2.155 per
share 1998; $2.135 per
share 1997................ (36,422) (36,567) (37,137)
------- ------- -------
Balance at end of year....... $132,796 $133,287 $120,540
======= ======= =======
The Notes to Consolidated Financial Statements are an integral
part hereof.
55
<PAGE>
CONSOLIDATED BALANCE SHEET
(In Thousands)
December 31,
ASSETS 1999 1998
---- ----
Utility Plant
Electric............................... $1,250,456 $1,222,743
Gas.................................... 164,767 158,165
Common................................. 100,659 94,271
Nuclear fuel........................... 42,847 42,317
--------- ---------
1,558,729 1,517,496
Less: Accumulated depreciation......... 638,910 597,383
Nuclear fuel amortization........ 38,354 35,381
--------- ---------
881,465 884,732
Construction work in progress.......... 39,951 43,512
--------- ---------
Net Utility Plant.................... 921,416 928,244
--------- ---------
Other Property and Plant................. 31,544 19,059
--------- ---------
Investments and Other Assets
Prefunded pension costs................ 46,038 40,218
Other.................................. 21,226 18,209
--------- ---------
Total Investments and Other Assets... 67,264 58,427
--------- ---------
Current Assets
Cash and cash equivalents.............. 20,385 10,499
Accounts receivable from customers -
net of allowance for doubtful accounts;
$2.9 million in 1999 and $2.4 million
in 1998............................... 57,600 45,564
Accrued unbilled utility revenues...... 16,327 15,233
Other receivables...................... 4,092 4,555
Materials and supplies, at average cost:
Fuel................................. 19,053 11,797
Construction and operating........... 12,432 11,790
Special deposits and prepayments....... 17,533 34,823
--------- ---------
Total Current Assets................. 147,422 134,261
--------- ---------
Deferred Charges
Regulatory assets (Note 2)............. 137,487 149,261
Unamortized debt expense............... 5,016 5,062
Other.................................. 25,750 21,724
--------- ---------
Total Deferred Charges............... 168,253 176,047
--------- ---------
TOTAL ASSETS $1,335,899 $1,316,038
========= =========
The Notes to Consolidated Financial Statements are an integral
part hereof.
56
<PAGE>
CONSOLIDATED BALANCE SHEET (CONT'D)
(In Thousands)
December 31,
CAPITALIZATION AND LIABILITIES 1999 1998
---- ----
Capitalization
Common Stock Equity
Common stock, $.10 par value
(Note 6)............................. $ 1,686 $ 87,775
Paid-in capital (Note 6).............. 351,230 284,465
Retained earnings..................... 132,796 133,287
Reacquired capital stock (Note 6)..... - (27,143)
Capital stock expense................. (1,306) (6,204)
--------- ---------
Total Common Stock Equity............ 484,406 472,180
--------- ---------
Cumulative Preferred Stock (Note 6)
Not subject to mandatory redemption... 21,030 21,030
Subject to mandatory redemption....... 35,000 35,000
--------- ---------
Total Cumulative Preferred Stock..... 56,030 56,030
--------- ---------
Long-term Debt (Note 7)................. 335,451 356,918
--------- ---------
Total Capitalization................. 875,887 885,128
--------- ---------
Current Liabilities
Current maturities of long-term debt.... 35,100 39,507
Notes payable........................... 50,000 18,000
Accounts payable........................ 36,746 23,591
Dividends payable....................... 9,913 9,913
Accrued taxes and interest.............. (162) 6,334
Accrued vacation ....................... 4,344 4,400
Customer deposits....................... 4,471 4,248
Other................................... 7,545 7,932
--------- ---------
Total Current Liabilities............ 147,957 113,925
--------- ---------
Deferred Credits and Other Liabilities
Regulatory liabilities (Note 2)......... 87,039 81,065
Operating reserves...................... 6,294 5,995
Other................................... 19,101 27,251
Total Deferred Credits and --------- ---------
Other Liabilities..................... 112,434 114,311
--------- ---------
Deferred Income Tax (Note 4)............. 199,621 202,674
--------- ---------
Commitments and contingencies
(Notes 2, 3 and 9)..................... --------- ---------
TOTAL CAPITALIZATION AND LIABILITIES $1,335,899 $1,316,038
========= =========
The Notes to Consolidated Financial Statements are an integral
part hereof.
57
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands) Year ended December 31,
1999 1998 1997
---- ---- ----
Operating Activities
Net Income....................... $ 48,573 $ 49,314 $ 51,856
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization
including nuclear fuel
amortization............... 51,186 49,011 48,348
Deferred income taxes, net.... 4,219 (116) 14,077
Allowance for equity funds used
during construction.......... - (585) (387)
Nine Mile 2 Plant deferred
finance charges, net......... (4,855) (4,855) (4,855)
Provisions for uncollectibles. 2,930 2,639 3,493
Net accrued deferred pension
costs........................ (10,968) (12,277) (8,555)
Deferred gas costs........... 3,080 1,072 3,475
Deferred gas refunds.......... (19) (1,640) 1,695
Other - net................... 9,423 4,888 7,233
Changes in current assets and
liabilities, net:
Accounts receivable and unbilled
utility revenues............. (15,474) (46) (4,420)
Materials and supplies........ (7,898) 513 3,995
Special deposits and
prepayments.................. 17,291 (20,613) (770)
Accounts payable.............. 13,155 (777) (1,769)
Accrued taxes and interest.... (6,665) 3,094 (2,107)
Other current liabilities..... (175) 1,695 (61)
Net cash provided by operating ------- ------- -------
activities...................... 103,803 71,317 111,248
------- ------- -------
The Notes to Consolidated Financial Statements are an integral
part hereof.
58
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT'D)
(In Thousands) 1999 1998 1997
---- ---- ----
Investing Activities
Additions to plant............... (46,495) (45,661) (43,868)
Allowance for equity funds used
during construction............. - 585 387
Net additions to plant........... (46,495) (45,076) (43,481)
------ ------ ------
Competitive Business Affiliates
fixed asset additions........... (11,945) (19,460) -
Nine Mile 2 Plant decommissioning
trust fund...................... (868) (868) (868)
Other - net...................... (589) (801) 396
Net cash used in investing ------ ------ ------
activities...................... (59,897) (66,205) (43,953)
------ ------ ------
Financing Activities
Proceeds from issuance of:
long-term debt................. 176,250 35,250 2,000
Net borrowings (repayments) of
short-term debt................. 32,000 18,000 (15,600)
Retirement & redemption
of long-term debt............... (201,318) (2,466) (2,282)
Dividends paid on common
stock........................... (36,422) (36,706) (37,196)
Debt issuance costs.............. (4,530) - -
Reacquired capital stock......... - (17,745) (9,398)
Net cash used in financing ------ ------ ------
activities...................... (34,020) (3,667) (62,476)
------ ------ ------
Net Change in Cash and Cash
Equivalents....................... 9,886 1,445 4,819
Cash and Cash Equivalents at
Beginning of Year................. 10,499 9,054 4,235
Cash and Cash Equivalents at End ------ ------ ------
of Year........................... $ 20,385 $ 10,499 $ 9,054
====== ====== ======
Supplemental Disclosure of Cash
Flow Information
Interest paid (net of amounts
capitalized)................... $ 26,307 $ 24,002 $ 24,309
Federal income taxes paid...... 29,025 26,900 17,111
The Notes to Consolidated Financial Statements are an integral
part hereof.
59
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of
CH Energy Group, Inc. ("Corporation"), and its subsidiaries.
Intercompany balances and transactions have been eliminated.
The Corporation's subsidiaries are each directly or
indirectly wholly owned and their businesses are comprised of an
electric and gas utility landholding, cogeneration, fuel oil,
electric generating or energy management companies and electric
and gas sales. The net income of the Corporation's subsidiaries,
other than Central Hudson, is reflected in the Consolidated
Statement of Income as "Equity Earnings - Competitive Business
Affiliates."
In April 1998, Central Hudson Gas & Electric Corporation
("Central Hudson") formed a wholly-owned subsidiary named CH
Energy Group, Inc., which, after a one-for-one share exchange on
December 15, 1999 ("Holding Company Restructuring"), became the
holding company parent of Central Hudson and its existing
subsidiaries (with the exception of Phoenix Development Company,
Inc., which remains a subsidiary of Central Hudson). On
November 3, 1999, Central Hudson Energy Services, Inc.
("Services") was formed as a New York corporation, and on
November 19, 1999, Services became a wholly-owned subsidiary of
the Corporation for the purpose of becoming, upon the Holding
Company Restructuring, the holding company parent of Central
Hudson Enterprises Corporation, SCASCO, Inc., Prime Industrial
Energy Services, Inc., CH Resources, Inc., CH Syracuse Properties,
Inc., CH Niagara Properties, Inc. and Greene Point Development
Corporation ("competitive business affiliates"). See Note 2 -
"Regulatory Matters," under the caption "Competitive Opportunities
Proceeding Settlement Agreement" for further details.
Rates, Revenues and Cost Adjustment Clauses
Central Hudson's electric and gas retail rates are regulated
by the Public Service Commission of the State of New York ("PSC").
Transmission rates, facilities charges and rates for electricity
sold for resale in interstate commerce are regulated by the
Federal Energy Regulatory Commission ("FERC").
Central Hudson's tariff for retail electric service includes
a fuel cost adjustment clause pursuant to which electric rates are
adjusted to reflect changes in the average cost of fuels used for
electric generation and in certain purchased power costs, from the
average of such costs included in base rates. Central Hudson's
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tariff for gas service contains a comparable clause to adjust gas
rates for changes in the price of purchased natural gas.
Utility Plant
The costs of additions to utility plant and replacements of
retired units of property are capitalized at original cost.
Central Hudson's share of the costs of Unit No. 2 of the Nine Mile
Point Nuclear Station ("Nine Mile 2 Plant") are capitalized at
original cost, less the disallowed investment of $169.3 million
which was recorded in 1987. Capitalized costs include labor,
materials and supplies, indirect charges for such items as
transportation, certain taxes, pension and other employee benefits
and Allowance for the Cost of Funds Used During Construction
("AFDC"), a noncash item, or capitalized interest. Replacement of
minor items of property is included in maintenance expenses.
The original cost of property, together with removal cost,
less salvage, is charged to accumulated depreciation at such time
as the property is retired and removed from service.
Jointly-Owned Facilities
Central Hudson has a 9%, or 103 megawatt ("MW"), undivided
interest in the 1,143 MW Nine Mile 2 Plant (see Note 3 - "Nine
Mile 2 Plant") and a 35%, or 420 MW, undivided interest in the
1,200 MW Roseton Electric Generating Station ("Roseton Plant").
Central Hudson's share of the respective investments in the
Nine Mile 2 Plant and the Roseton Plant, as included in its
Consolidated Balance Sheet at December 31, 1999 and 1998, were:
1999 1998
---- ----
(In Thousands)
Nine Mile 2 Plant
Plant in service.................. $314,844 $315,358
Accumulated depreciation.......... (81,799) (77,178)
------- -------
Net Plant....................... 233,045 238,180
Construction work in progress..... 2,204 2,132
Roseton Plant
Plant in service.................. $135,561 $135,197
Accumulated depreciation.......... (83,754) (80,486)
------- -------
Net Plant....................... 51,807 54,711
Construction work in progress..... 325 213
Allowance For Funds Used During Construction
Central Hudson's regulated utility plant includes AFDC, which
is defined in applicable regulatory systems as the net cost of
borrowed funds used for construction purposes and a reasonable
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rate on other funds when so used. The concurrent credit for the
amount so capitalized is reported in the Consolidated Statement of
Income as follows: the portion applicable to borrowed funds is
reported as a reduction of interest charges while the portion
applicable to other funds (the equity component, a noncash item)
is reported as other income. The AFDC rate was 6.25% in 1999,
8.5% in 1998 and 8.0% in 1997.
For a discussion of the effect of Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of
Certain Types of Regulation ("SFAS 71"), as issued by the
Financial Accounting Standards Board ("FASB"), on Central Hudson's
fossil-fueled generating plants, see Note 2 - "Regulatory
Matters," under the caption "Impact of Settlement Agreement on
Accounting Policies." Accordingly, beginning in 1998, significant
capital projects relating to the fossil-fueled generating plants
include capitalized interest instead of AFDC. For 1999 and 1998,
no such projects met the criteria for capitalized interest.
Depreciation and Amortization
For financial statement purposes, Central Hudson's
depreciation provisions are computed on the straight-line method
using rates based on studies of the estimated useful lives and
estimated net salvage value of properties, with the exception of
the Nine Mile 2 Plant which is depreciated on a remaining life
amortization method. The year 2026, the year in which the Nine
Mile 2 Plant operating license expires, is used as the end date in
the development of the remaining life amortization. Central
Hudson performs depreciation studies on a continuing basis and,
upon approval by the PSC, periodically adjusts the rates of its
various classes of depreciable property.
Central Hudson's composite rates for depreciation were 3.22%
in 1999, 3.21% in 1998 and 3.16% in 1997 of the original cost of
average depreciable property. The ratio of the amount of
accumulated depreciation to the cost of depreciable property at
December 31 was 41.0% in 1999, 39.6% in 1998 and 38.2% in 1997.
For federal income tax purposes, the Corporation uses an
accelerated method of depreciation and generally uses the shortest
life permitted for each class of assets.
The cost of the Nine Mile 2 Plant nuclear fuel assemblies and
components is amortized to operating expense based on the quantity
of heat produced for the generation of electric energy.
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Cash and Cash Equivalents
For purposes of the Consolidated Statement of Cash Flows, the
Corporation considers temporary cash investments with a maturity,
when purchased, of three months or less to be cash equivalents.
Federal Income Tax
The Corporation and its affiliates file a consolidated
federal income tax return. Federal income taxes are allocated to
operating expenses and other income and deductions in the
Consolidated Statement of Income. Federal income taxes are
deferred under the liability method in accordance with Financial
Accounting Standard No. 109, "Accounting for Income Taxes," ("SFAS
109"). Under the liability method, deferred income taxes are
provided for all differences between financial statement and tax
basis of assets and liabilities. Additional deferred income taxes
and offsetting regulatory assets or liabilities are recorded by
Central Hudson to recognize that income taxes will be recoverable
or refundable through future revenues.
Use of Estimates
Preparation of the financial statements in accordance with
generally accepted accounting principles includes the use of
estimates and assumptions by management that affect the reported
amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and
reported amount of revenues and expenses during the reporting
period. Actual results may differ from those estimates.
New Accounting Standards and Other FASB Projects
In June 1998, the FASB issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). This Statement
establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities
in the balance sheet and measure those instruments at fair value.
Any gain or loss resulting from changes in such fair value is
required to be recognized in earnings to the extent the
derivatives are not effective as hedges. The Corporation has
implemented an energy trading risk management program to manage
the price risks associated with fuel purchases for generation,
natural gas purchases for native load customers, and wholesale
power transactions. The Corporation may utilize various financial
instruments, such as futures, options, swaps, caps, floors and
collars to stabilize the price volatility of these commodities.
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At this time, the Corporation believes that the hedging program
will not have a material impact on its financial position or
results of operations.
In June 1999, the FASB issued FASB Statement No. 137
"Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133,"
amending SFAS 133 to defer the effective date by one year to all
fiscal quarters of all fiscal years beginning after June 15, 2000.
This proposed change is made in response to requests to consider
delaying the effective date to provide more time to study,
understand and implement the provisions of the SFAS 133.
Plant Decommissioning: In February 1996, the FASB issued an
exposure draft entitled "Accounting for Certain Liabilities
Related to Closure and Removal of Long-Lived Assets," which
includes nuclear plant decommissioning. Over the past four years,
this exposure draft has been the source of continual debate. The
FASB has committed to completing the project and is proceeding
toward issuance of another exposure draft expected in the first
quarter of 2000 with an effective date for financial statements
for fiscal years beginning after June 15, 2001. If the accounting
standard proposed in such exposure draft were adopted, it could
result in higher annual provisions for removal or decommissioning
to be recognized earlier in the operating life of nuclear and
other generating units and an accelerated recognition of the
decommissioning obligation. The FASB is continuing to explore
various issues associated with this project, including liability
measurement and recognition issues. The FASB is deliberating this
issue and the resulting final pronouncement could be different
from that proposed in the exposure draft. The Corporation can
make no prediction at this time as to the ultimate form of such
proposed accounting standard, assuming it is adopted, nor can it
make any prediction as to its ultimate effect(s) on the financial
condition of the Corporation.
NOTE 2 - REGULATORY MATTERS
Competitive Opportunities Proceeding Settlement Agreement
In response to the May 1996 Order of the PSC issued in its
generic Competitive Opportunities Proceeding ("Proceeding"),
Central Hudson, the PSC Staff and certain other parties entered
into an Amended and Restated Settlement Agreement, dated
January 2, 1998, ("Agreement"). The PSC approved the Agreement by
its final Order issued and effective June 30, 1998.
Shortly after the PSC issued its May 1996 Order, Central
Hudson and other electric utilities filed a court challenge to
such Order. The challenge was denied and Central Hudson and other
electric utilities appealed such denial. The Public Utility Law
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Project ("PULP"), which had intervened in the proceeding, filed a
similar appeal. PULP subsequently filed a court challenge to the
PSC's Order approving the Agreement of Central Hudson and filed
similar challenges to similar agreements of other electric
utilities. Central Hudson subsequently moved to dismiss PULP's
challenge to the Agreement. In August 1999, Central Hudson and
other electric utilities filed with the court a request to
withdraw their appeal with respect to the denial of the challenge
to the PSC's May 1996 Order without prejudice to restoration of
such appeal should PULP's challenge to the restructuring agreement
of any of the electric utilities be successful. Said request to
withdraw the appeal without prejudice was granted by the Appellate
Court on January 12, 2000. The appeal of PULP remains pending at
this time, and the Corporation can make no prediction as to the
potential outcome.
The Agreement generally includes the following provisions:
(i) continuation of a basic electric rate freeze, along with a
phase-in of retail access, for residential, commercial and small
industrial customers through June 2001; (ii) a 5% reduction in
base electric rates for large industrial customers; (iii) a 10.6%
return on equity ("ROE") cap with excess earnings, if any,
deferred for stranded cost mitigation (as of December 31, 1999,
Central Hudson has recorded an estimated regulatory liability of
$3.5 million due to excess earnings); (iv) a reasonable
opportunity to recover all prudently incurred strandable costs,
defined as "production expenditures made by Central Hudson in
fulfilling its obligation to serve and provide safe, reliable
electric service to customers within its franchise territory which
are not expected to be recoverable in a competitive electricity
market"; (v) functional separation of Central Hudson's Danskammer
Steam Generating Station ("Danskammer Plant") and its interest in
the Roseton Plant in 1998; (vi) transfer of title by an auction of
Central Hudson's Danskammer Plant and its interest in the Roseton
Plant to be completed by June 30, 2001 (an affiliate of Central
Hudson's was given the option to bid, and the PSC reserved its
authority to require an auction and transfer of Central Hudson's
fossil-fueled electric generating assets prior to June 30, 2001 if
such action is found by the PSC to be in the public interest);
(vii) approval to effect a holding company restructuring not later
than June 30, 2001; and (viii) certain regulation of Central
Hudson's operations; (ix) standards of conduct in transactions
between Central Hudson and its competitive business affiliates
including the Corporation; (x) prohibitions against Central Hudson
making loans to the Corporation or any other affiliate or Central
Hudson guaranteeing debt of the Corporation or any other
affiliate; (xi) limitations on the transfer of Central Hudson
employees to affiliates and on the use of Central Hudson officers
in common with affiliates and (xii) permission for Central Hudson
to transfer up to $100 million of equity to competitive business
affiliates prior to such holding company restructuring; however,
Central Hudson has petitioned the PSC to extend such period until
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receipt of the proceeds from the auction of its fossil generation
assets.
In addition, the PSC directed the PSC Staff to provide
assurance that Central Hudson does not incur imprudent generation
costs which could be avoided by divestiture of fossil-fueled
electric generating assets prior to June 30, 2001, and added a
provision dealing with mergers and acquisitions; namely, pursuant
to a petition filed jointly or individually by Central Hudson,
Central Hudson will have the flexibility to retain, on a
cumulative basis, all savings associated with an acquisition or
merger with another utility for a period of five years from the
date of closing of any merger or acquisition, up to the amount of
the acquisition premium paid over the lesser of book value or fair
market value of assets merged or acquired. Savings in excess of
the recovery of such premium will be disposed of by the PSC for
the benefit of customers.
The consideration received by Central Hudson in an auction,
referred to in (vi) of the second preceding paragraph above, will,
up to the net book value of the assets sold, be available for
disposition for the benefit of shareholders without PSC approval.
Any excess over such net book value will be required to be used to
offset Central Hudson's fossil-fueled generation related
regulatory assets and, to the extent of any remaining
consideration, to reduce the book cost of Central Hudson's
investment in the Nine Mile 2 Plant. In the event that the sale
price of any such assets is below Central Hudson's then current
net book value, the difference will be preserved for recovery as
strandable costs. Central Hudson's potential strandable costs are
those prior utility investments and commitments that may not be
recoverable in a competitive energy market, which are
predominantly related to Central Hudson's investment in the Nine
Mile 2 Plant. During the period ending June 30, 2001, Central
Hudson will continue to recover its potential electric strandable
costs in the rates it charges its transmission and distribution
customers. Following June 30, 2001, Central Hudson will be given
a reasonable opportunity to recover, through a non-bypassable
charge to customers, all prudently incurred, verifiable and
appropriately mitigated electric strandable costs.
In November 1999 Central Hudson filed a proposal with the PSC
that no Central Hudson affiliate would bid in its auction,
provided that the PSC approve Central Hudson's auction plan and
certain related accounting and rate-making proposals. For further
information, see the subcaption below "Auction of Fossil
Generation Plants."
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After such divestiture, Central Hudson expects to be
obligated to continue to serve a portion of its electric
customers. The Corporation cannot predict the amount of such
service which Central Hudson will be obligated to provide or the
cost or availability of electricity to satisfy customer service
obligations.
Impact of Settlement Agreement on Accounting Policies
The Agreement created certain changes to the Corporation's
accounting policies. The Corporation's accounting policies
conform to generally accepted accounting principles, which, for
regulated public utilities, include SFAS 71. Under SFAS 71,
regulated companies apply AFDC to the cost of construction
projects. Because Central Hudson's fossil-fueled generating
plants are no longer subject to SFAS 71, capitalized interest will
be applied instead of AFDC. Under SFAS 71, regulated companies
defer costs and credits on the balance sheet as regulatory assets
and liabilities when it is probable that those costs and credits
will be allowed in the rate-making process in a period different
from when they otherwise would have been reflected in income.
These deferred regulatory assets and liabilities are then
reflected in the income statement in the period in which the same
amounts are reflected in rates. If some of an enterprise's
operations are regulated and meet the appropriate criteria, SFAS
71 is applied only to the regulated portion of the enterprise's
operations.
During 1997, the FASB Emerging Issues Task Force ("EITF")
concluded that an entity should discontinue application of
SFAS 71, to any portion of its business when a deregulation
transition plan is in place and the terms are known. However, the
EITF further qualified, in its Issue No. 97-4, that regulatory
assets and liabilities should be evaluated based on where the cash
flows are to be derived in the determination of the applicability
of SFAS 71. When the cash flows are from rates to be charged to
customers of the regulated business for recovery and settlement,
respectively, of regulatory assets and liabilities, they should
not be eliminated until: a) they are recovered or settled through
the regulated cash flows or b) they are individually impaired or
the regulator eliminates the individual obligation or c) the
portion of the business providing the regulated cash flows no
longer meets the criteria of SFAS 71. None of these conditions
has occurred as it applies to Central Hudson's fossil-fueled
generation regulatory assets and liabilities even though the
Agreement put into place a deregulation transition plan with the
ultimate goal of divesting Central Hudson's fossil-fueled
generating plant assets. Therefore, these balances continue to be
reflected in the total for regulatory assets and liabilities in
the Corporation's Consolidated Balance Sheet. At December 31,
1999 and 1998, net regulatory assets associated with the fossil-
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fueled generating assets totaled $1.0 million and $2.5 million,
respectively. The fossil-fueled generating assets continue to be
recorded as utility plant.
Summary of Regulatory Assets and Liabilities
The following table sets forth Central Hudson's regulatory
assets and liabilities:
At December 31, 1999 1998
- -----------------------------------------------------------------------------
Regulatory Assets (Debits): (In Thousands)
- ---------------------------
Deferred finance charges -
Nine Mile 2 Plant..................... $ 66,181 $ 67,326
Income taxes recoverable
through future rates.................. 26,426 35,221
Deferred Newburgh Gas Site (Note 9)..... 15,114 22,679
Other................................... 29,766 24,035
------- -------
Total Regulatory Assets............... $ 137,487 $ 149,261
------- -------
Regulatory Liabilities (Credits):
Deferred finance charges -
Nine Mile 2 Plant..................... $ 4,431 $ 10,431
Income taxes refundable................. 15,978 17,574
Deferred Nine Mile 2 Plant costs........ 20,895 15,790
Deferred pension costs overcollection
(Note 8)............................... 6,545 11,693
Deferred OPEB costs overcollection
(Note 8)............................... 13,035 9,796
Customer benefits account............... 9,158 5,447
Other................................... 16,997 10,334
------- -------
Total Regulatory Liabilities.......... 87,039 81,065
------- -------
Net Regulatory Assets.............. $ 50,448 $ 68,196
======= =======
Some of the significant regulatory assets and liabilities
include:
Deferred Finance Charges - Nine Mile 2 Plant: During the
construction of the Nine Mile 2 Plant, the PSC authorized the
inclusion in rate base of increasing amounts of Central Hudson's
investment in that Plant. Central Hudson did not accrue AFDC on
any of the Nine Mile 2 Plant construction work in progress
("CWIP") which was included in rate base and for which a cash
return was being allowed; however, the PSC ordered, effective
January 1, 1983, that amounts be accumulated in deferred debit and
credit accounts equal to the amount of AFDC which was not being
accrued on the CWIP included in rate base ("Mirror CWIP"). The
balance in the deferred credit account is available to reduce
future revenue requirements by amortizing portions of the deferred
credit to other income or by the elimination through writing off
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other deferred balances as directed by the PSC. The Corporation
expects such application of the deferred credit will occur over a
period substantially shorter than the life of the Nine Mile 2
Plant. When amounts of such deferred credit are applied in order
to reduce revenue requirements, amortization is started for a
corresponding amount of the deferred debit, which amortization
continues on a level basis over the remaining life of the Nine
Mile 2 Plant, resulting in recovery of such corresponding amount
through rates. Mirror CWIP is expected to be exhausted by the end
of the useful life of the Nine Mile 2 Plant either through the
amortization or write-off procedures described above or through
the write-off of the remaining debit and credit as directed by the
PSC. The net effect of this procedure is that at the end of the
amortization period for the deferred credit, the accounting and
rate-making treatment will be the same as if the Nine Mile 2 Plant
CWIP had not been included in rate base during the construction
period.
Pursuant to a PSC Order issued and effective February 11,
1994, in an electric rate proceeding, Central Hudson was
authorized to amortize $6 million annually of the deferred credit
beginning in December 1993.
The $6 million amortization of the deferred credit will be
continued unless changed by a future PSC rate order or until it is
exhausted. Under provisions of the Agreement, this amortization
will be replaced with other deferred credits to the extent
necessary to provide for full replacement of the expiring Mirror
CWIP credits. The current level of the deferred debit
amortization of $1.1 million is based on the level of deferred
credits that have been utilized through the most recent rate year.
Credit amounts utilized subsequently are included in the deferred
debit amortization level at the time of the next PSC rate order
for the new rate year based on the then remaining life of the Nine
Mile 2 Plant.
Income Taxes Recoverable/Refundable: The adoption of SFAS
109 in 1993 increased Central Hudson's net deferred tax
obligation. As it is probable that the increase will be recovered
from customers, Central Hudson established a net regulatory asset
for the recoverable future taxes.
Deferred Nine Mile 2 Plant Costs: The existing rate-making
for the Nine Mile 2 Plant, as directed by the PSC in its Order on
Nine Mile 2 Operating and Capital Forecast for 1996 ("Supplement
No. 5"), provides for the deferral of the difference between
actual and authorized operating and maintenance expense.
Supplement No. 5 continues in effect until changed by a subsequent
rate order. For 1999 and 1998, the Nine Mile 2 Plant incurred
less actual expense than authorized, and Central Hudson's share
has been recorded as a regulatory liability in accordance with
Supplement No. 5.
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Customer Benefits Account: The Agreement requires that
Central Hudson set aside $10.0 million per calendar year in a
Customer Benefits Account to fund rate reductions and retail
access options. Funding sources include $3.0 million from
shareholder sources, $3.5 million from fuel cost savings generated
by the installation of Central Hudson's coal dock unloading
facility at its Danskammer Plant and $3.5 million from deferred
credits related to the reconciliation of pension and OPEB costs.
The Agreement also stipulates that unused funding accumulated to
the end of the Agreement term is to be used for offsetting
strandable costs or providing other ratepayer benefits.
Auction of Fossil Generation Plants
Under the Agreement, Central Hudson is required to sell its
fossil generation plants and transfer title by June 30, 2001.
Central Hudson has provided for the necessary internal and
external resources to carry out the auction that is called for in
the Agreement. Central Hudson has agreements with Niagara Mohawk
Power Corporation ("Niagara Mohawk") and Consolidated Edison
Company of New York, Inc. ("Consolidated Edison") for the
disposition of their co-tenancy interests in the Roseton Plant in
conjunction with such auction. On November 19, 1999, Central
Hudson filed with the PSC, for review and approval, an auction
plan for a combined auction of the Roseton Plant and the
Danskammer Plant ("Auction Plan"). The Auction Plan is intended
to maximize the value received by the assets and provide for an
orderly process and an objective bid evaluation. The Auction Plan
filing also requests the PSC's approval for certain accounting and
rate-making proposals relating to the Agreement.
In the Agreement, the consideration received by Central
Hudson, after transaction costs, in the sale of its interest in
such Plants is available to Central Hudson, up to the net book
value of such Plants, for investment in competitive business
affiliates or other disposition for the benefit of shareholders
without PSC approval ("Unregulated Investments"). In the
Agreement, Central Hudson also retained the right for an affiliate
to participate in the auction process of such Plants. In the
event that no such affiliate were to bid in such auction, Central
Hudson would retain, for Unregulated Investments, an additional
amount of such consideration equal to 10% of the consideration of
such sale in excess of the net book value of its interest in such
Plants; such excess being hereinafter called the "Earned Auction
Incentive." However, the aggregate of all such consideration to
be so available to Central Hudson cannot exceed $17.5 million
("Cap"). In the Auction Plan filing, Central Hudson stated to the
PSC that it is willing to waive the right of an affiliate of
Central Hudson to participate in such auction if the PSC approves
all the of the accounting and rate-making proposals described in
the Auction Plan filing, including the following: (i) an increase
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in the Cap, on a formula basis, not to exceed $18.5 million; (ii)
any Earned Auction Incentive recognized as income over a period of
three to five years and (iii) the Earned Auction Incentive would
apply not just to Central Hudson's interest in the Roseton Plant
and the Danskammer Plant, but would apply to the gross
consideration received from a combined auction of these Plants
less the gross proceeds to be provided to the other owners of the
Roseton Plant.
On February 9, 2000, the PSC approved the Auction Plan
filing, subject to the issuance of one or more Orders which have
not yet been issued. The Corporation can make no prediction as to
the terms of such Order(s). Selection of the winning bidder(s) is
anticipated later in 2000, with the actual sale to take place in
early 2001 after all regulatory approvals are obtained.
Independent System Operator
Central Hudson was a member of the New York Power Pool
("NYPP"), whose members, major investor-owned State electric
utility companies, Long Island Lighting Company ("LILCO"), as a
subsidiary of the Long Island Power Authority ("LIPA") and the
Power Authority of the State of New York ("PASNY"), by agreement,
provided for coordinated operation of their bulk power electric
systems.
As part of the ongoing discussions regarding the
restructuring of the electric industry in New York State referred
to under the caption "Competitive Opportunities Proceeding
Settlement Agreement" of this Note 2, proposals were made to
terminate the NYPP and establish the following: a new market
structure that included as its key elements the establishment of
an Independent System Operator ("ISO") and the New York State
Reliability Council ("Reliability Council"), collectively to
replace the NYPP. On September 15, 1999, FERC gave its final
approval for the ISO and the Reliability Council. In November
1999, the NYPP was terminated and the ISO and Reliability Council
began operations.
The ISO is open to buyers, sellers, consumers and
transmission providers; each of these groups is represented on the
Board of Directors of the ISO, which is a not-for-profit New York
corporation. The Reliability Council's mission is to promote and
preserve the reliability of the bulk power system within New York
State through its primary responsibility for the promulgation of
reliability rules; the ISO will develop the procedures necessary
to operate the system within these reliability rules. The
Reliability Council is governed by a committee comprised of
transmission providers and representatives of buyers, sellers and
consumer and environmental groups.
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The Corporation does not expect that such NYPP restructuring
will have a material adverse effect on its financial position or
results of operations.
NOTE 3 - NINE MILE 2 PLANT
General
The Nine Mile 2 Plant is located in Oswego County, New York,
and is operated by Niagara Mohawk. The Nine Mile 2 Plant is owned
as tenants-in-common by Central Hudson (9% interest), Niagara
Mohawk (41% interest), New York State Electric & Gas Corporation
("NYSEG") (18% interest), LILCO, as a subsidiary of LIPA (18%
interest) and Rochester Gas and Electric Corporation ("Rochester")
(14% interest). The output of the Nine Mile 2 Plant, which has a
rated net capability of 1,143 MW, is shared, and the operating
expenses of the Plant are allocated to the co-tenants in the same
proportions as the co-tenants' respective ownership interests.
Central Hudson's share of direct operating expense for the Nine
Mile 2 Plant is included in the appropriate expense
classifications in the accompanying Consolidated Statement of
Income.
Under the Operating Agreement entered into by the co-tenants
in January 1993, Niagara Mohawk acts as operator of the Nine
Mile 2 Plant, and all five co-tenants share certain policy, budget
and managerial oversight functions. The Operating Agreement
remains in effect subject to termination on six months notice.
On September 30, 1999, the Nuclear Regulatory Commission
("NRC") issued a Plant Performance Review on the Nine Mile 2 and
Nine Mile 1 (wholly owned by Niagara Mohawk) Plants. The NRC
stated that it will increase its scrutiny of the operation of the
Nine Mile Plants over the next six months as a result of a decline
in the performance of those Plants due to weaknesses in areas such
as plant maintenance, work planning and scheduling and engineering
support. Niagara Mohawk has announced significant management
changes at the Nine Mile Plants, including the reassignment of
several experienced employees to the site. If operating
performance of the Nine Mile 2 Plant deteriorates further,
significant expenditures may be required to improve performance,
the impact of which on the Corporation cannot now be predicted.
Niagara Mohawk and NYSEG have each entered into an agreement
to sell their interest in the Nine Mile 2 Plant to AmerGen Energy
Company, L.L.C. ("AmerGen"). AmerGen would replace Niagara Mohawk
as the operator of the Nine Mile 2 Plant. Niagara Mohawk has also
entered into an agreement to sell its 100% interest in the
adjacent Nine Mile Point Unit No. 1 Nuclear Plant ("Nine Mile 1
Plant") to AmerGen.
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The co-tenant owners of the Nine Mile 2 Plant have rights of
first refusal under the Basic Agreement, dated September 22, 1975,
creating the tenancy-in-common ownership of the Nine Mile 2 Plant.
Pursuant to such rights, each co-tenant has the right to acquire
all or a proportional share of another co-tenant's interest in the
Nine Mile 2 Plant by matching the terms of the co-tenant's sale of
its interest in the Nine Mile 2 Plant to a third party.
In July 1999, AmerGen, Niagara Mohawk and NYSEG filed joint
petitions with the PSC, pursuant to Section 70 of the Public
Service Law of New York seeking the PSC's consent for the transfer
of such interests in the Nine Mile 2 Plant and Nine Mile 1 Plant.
In July 1999, Niagara Mohawk, NYSEG and AmerGen jointly filed for
requisite approvals with FERC with respect to such transfers. In
September 1999, Niagara Mohawk, NYSEG and AmerGen filed jointly
with the NRC for requisite approvals with respect to such
transfers. In early December 1999, NYSEG petitioned the PSC for
an emergency declaratory ruling as to whether Rochester may
acquire additional interests in the Nine Mile 1 Plant and the Nine
Mile 2 Plant. By Order issued in December 1999, the NRC suspended
its proceeding pending the determination of Rochester, Central
Hudson and LILCO of their rights of first refusal with respect to
the proposed transfer to AmerGen.
On December 21, 1999, Rochester exercised its right of first
refusal under the Nine Mile 2 Plant Basic Agreement to match the
AmerGen offer to purchase the collective 59% interests of Niagara
Mohawk and NYSEG in the Nine Mile 2 Plant. Rochester would also
match AmerGen's offer to purchase Niagara Mohawk's 100% interest
in the Nine Mile 1 Plant. Rochester publicly announced that it
had entered into arrangements with a subsidiary of Entergy
Corporation to operate the Nine Mile 2 Plant and the Nine Mile 1
Plant. In December 1999, Central Hudson elected not to exercise
its right of first refusal with respect to the Nine Mile 2 Plant.
The Corporation can make no prediction as to the outcome of
the proposed acquisition of interests in the Nine Mile 1 and Nine
Mile 2 Plants by AmerGen or Rochester or the effect of any such
acquisition on Central Hudson.
Radioactive Waste
Niagara Mohawk has contracted with the U.S. Department of
Energy ("DOE") for disposal of high-level radioactive waste
("spent fuel") from the Nine Mile 2 Plant. Despite a court order
reaffirming the DOE's obligation to accept spent nuclear fuel by
January 31, 1998, the DOE has forecasted the start of operations
of its high-level radioactive waste repository to be no earlier
than 2010. Central Hudson has been advised by Niagara Mohawk that
the Nine Mile 2 Plant spent fuel storage pool has a capacity for
spent fuel that is adequate until 2012. If DOE schedule slippage
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<PAGE>
should occur, facilities that extend the on-site storage
capability for spent fuel at the Nine Mile 2 Plant beyond 2012
would need to be acquired.
Nuclear Plant Decommissioning Costs
Central Hudson's 9% share of costs to decommission the Nine
Mile 2 Plant is estimated to be approximately $209.6 million
($83.3 million in 1999 dollars) and assumes that decommissioning
will begin shortly after the operating license expires in the year
2026. This estimate is based upon a site-specific study completed
in December 1995.
In order to assist Central Hudson in meeting this obligation,
Central Hudson makes annual contributions of $868,000 to a
qualified external decommissioning trust fund. The total annual
amount allowed in rates is $999,000, but the maximum annual tax
deduction allowed is $868,000. Currently, the difference between
the rate allowance ($999,000) and the amount contributed to the
external qualified fund ($868,000) is recorded as an internal
reserve ($131,000), and the funds are held by Central Hudson.
The qualified external decommissioning trust fund at
December 31, 1999 and 1998, amounted to $17.4 million and $13.9
million, respectively, including net reinvested earnings to date
of $9.0 million. The qualified external decommissioning trust
fund is reflected in the Consolidated Balance Sheet in
"Investments and Other Assets-Other." At December 31, 1999, the
external decommissioning trust fund investments carrying value
approximated fair market value. The amount of accumulated
decommissioning costs recovered through rates (including both the
external fund and the internal reserve) and the net earnings of
the external decommissioning trust fund are reflected in
accumulated depreciation in the Consolidated Balance Sheet and
amount to $19.3 million and $15.6 million at December 31, 1999 and
1998, respectively.
Reference is made to the subcaption "New Accounting Standards
and Other FASB Projects - Plant Decommissioning" in Note 1 -
"Summary of Significant Accounting Policies" for details of the
proposed changes in accounting for nuclear decommissioning costs.
The Corporation believes that if decommissioning costs are
greater than currently estimated, such revised costs would be
recovered in Central Hudson's rates. However, future developments
in the utility industry, including the effects of deregulation and
increasing competition, could change this belief.
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<PAGE>
NOTE 4 - FEDERAL INCOME TAX
Components of Federal Income Tax
The following is a summary of the components of federal
income tax as reported in the Consolidated Statement of Income:
1999 1998 1997
---- ---- ----
(In Thousands)
Charged to operating expense:
Federal income tax.......... $22,160 $28,408 $19,004
Deferred income tax......... 5,598 1,367 10,186
Income tax charged to ------ ------ ------
operating expense....... 27,758 29,775 29,190
------ ------ ------
Charged (credited) to other
income and deductions:
Federal income tax.......... 2,545 296 (6,844)
Deferred income tax......... (1,378) (1,483) 3,891
Income tax (credited) ------- ------ ------
to other income and
deductions.............. 1,167 (1,187) (2,953)
------ ------ ------
Total federal income tax.. $28,925 $28,588 $26,237
====== ====== ======
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Reconciliation: The following is a reconciliation between the
amount of federal income tax computed on income before taxes at
the statutory rate and the amount reported in the Consolidated
Statement of Income:
1999 1998 1997
---- ---- ----
(In Thousands)
Net income.................... $48,573 $49,314 $51,856
Preferred Stock Dividend...... 3,230 3,230 3,230
Federal income tax............ 24,705 28,704 12,160
Deferred income tax........... 4,220 (116) 14,077
------ ------ ------
Income before taxes......... $80,728 $81,132 $81,323
====== ====== ======
Computed tax @ 35%
statutory rate............... $28,255 $28,396 $28,463
Increase (decrease) to computed
tax due to:
Pension expense............. (3,697) (4,486) (2,855)
Deferred finance charges -
Nine Mile 2 Plant.......... (1,699) (1,700) (1,699)
Deferred environmental
remediation costs.......... (1,683) (578) (286)
Alternative minimum tax..... - (1,048) (7,350)
Tax depreciation............ (550) 4,248 (4,225)
Customer Benefits Account... 1,299 1,906 -
Nine Mile 2 settlement costs 1,402 1,282 1,567
Deferred gas costs.......... 1,078 375 1,216
Deferred storm costs........ - - (2,257)
Other....................... 300 309 (414)
------ ------ ------
Federal income tax............ 24,705 28,704 12,160
Deferred income tax........... 4,220 (116) 14,077
------ ------ ------
Total federal income tax.... $28,925 $28,588 $26,237
====== ====== ======
Effective tax rate........... 35.8% 35.2% 32.3%
====== ====== ======
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<PAGE>
The following is a summary of the components of deferred
taxes at December 31, 1999 and 1998, as reported in the
Consolidated Balance Sheet:
1999 1998
---- ----
(In Thousands)
Accumulated Deferred Income
Tax Assets:
Future tax benefits on
investment tax credit basis
difference................. $ 13,229 $ 14,033
Unbilled revenues............ 5,718 5,261
Other........................ 37,844 32,938
Accumulated Deferred Income ------- -------
Tax Assets..................... $ 56,791 $ 52,232
------- -------
Accumulated Deferred Income
Tax Liabilities:
Tax depreciation............. $179,927 $180,339
Accumulated deferred investment
tax credit................. 24,569 26,062
Future revenues - recovery of
plant basis differences.... 8,787 11,319
Other........................ 43,129 37,186
Accumulated Deferred Income ------- -------
Tax Liabilities................ 256,412 254,906
------- -------
Net Accumulated Deferred Income
Tax Liability.................. $199,621 $202,674
======= =======
NOTE 5 - SHORT-TERM BORROWING ARRANGEMENTS
As part of its establishment as a holding company, the
Corporation has established a $50 million revolving credit
agreement with three commercial banks through December 4, 2001.
At December 31, 1999, the Corporation had no outstanding short-
term debt.
In addition, Central Hudson has in effect a revolving credit
agreement with four commercial banks which allows it to borrow up
to $50 million through October 23, 2001, ("Borrowing Agreement").
The Borrowing Agreement gives Central Hudson the option of
borrowing at either the higher of the prime rate or the sum of the
federal funds rate plus 1/2 of 1%, or three other money market
rates, if such rates are lower. Compensating balances are not
required under the Borrowing Agreement. In addition, Central
Hudson maintains confirmed lines of credit totaling $1.5 million
with regional banks. There were no outstanding loans under the
Borrowing Agreement or the line of credit at December 31, 1999 or
1998. In order to diversify its sources of short-term financing,
Central Hudson has entered into short-term credit facilities
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<PAGE>
agreements with several commercial banks. At December 31, 1999,
Central Hudson had outstanding short-term debt of $50 million.
Authorization from the PSC limits the amount Central Hudson
may have outstanding, at any time, under all of its short-term
borrowing arrangements to $52 million in the aggregate.
The subsidiaries of Services have lines of credit totaling
$10.5 million. There were no borrowings against these lines of
credit at December 31, 1999.
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<TABLE>
<CAPTION>
NOTE 6 - CAPITALIZATION - CAPITAL STOCK
Common Stock, $.10 par value; 30,000,000 shares authorized:
Reacquired
Common Stock Paid-In Capital
Shares Amount Capital Stock
Outstanding ($000) ($000) ($000)
----------- -------- -------- ----------
<S> <C> <C> <C> <C>
January 1, 1997..................... 17,554,987 $ 87,775 $284,465 $ -
Repurchased under common
stock repurchase plan............. (275,200) - - (9,398)
---------- ------- ------- -------
December 31, 1997................... 17,279,787 87,775 284,465 (9,398)
Repurchased under common
stock repurchase plan............. (417,700) - - (17,745)
---------- ------- ------- -------
December 31, 1998................... 16,862,087 87,775 284,465 (27,143)
Cancellation - Reacquired Stock.... - (3,465) (11,227) 27,143
Share Exchange - Formation of Holding
Company
Reduction in par value............ - (82,624) 82,624 -
Transfer of capital stock expense. - - (4,632) -
---------- ------- ------- -------
December 31, 1999................... 16,862,087 $ 1,686 $351,230 $ -
========== ======= ======= =======
</TABLE>
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<PAGE>
Cumulative Preferred Stock, Central Hudson, $100 par value;
1,200,000 shares authorized:
Final Redemption Shares Outstanding
Redemption Price December 31,
Series Date 12/31/99 1999 1998
------ ---------- ---------- -------------------
Not Subject to Mandatory
Redemption:
4 1/2% $107.00 70,300 70,300
4.75% 106.75 20,000 20,000
4.35% 102.00 60,000 60,000
4.96% 101.00 60,000 60,000
------- -------
210,300 210,300
------- -------
Subject to Mandatory
Redemption:
6.20% 10/1/08 (a) 200,000 200,000
6.80% 10/1/27 (b) 150,000 150,000
------- -------
350,000 350,000
------- -------
Total 560,300 560,300
======= =======
(a) Cannot be redeemed prior to October 1, 2003. Subject to
mandatory annual sinking fund payment of $1.0 million
commencing October 1, 2003 with final payment of $15.0
million on the final redemption date.
(b) Cannot be redeemed prior to October 1, 2003. Subject to
mandatory annual sinking fund payment of $600,000 commencing
October 1, 2003 through final redemption date.
Central Hudson had no cumulative preferred stock redemptions
or issuances during 1999 and 1998.
Expenses incurred on issuance of capital stock are
accumulated and reported as a reduction in common stock equity.
These expenses are not being amortized, except that, as directed
by the PSC, certain issuance and redemption costs and unamortized
expenses associated with certain issues of preferred stock that
were redeemed have been deferred and are being amortized over the
remaining lives of the issues subject to mandatory redemptions.
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<PAGE>
NOTE 7 - CAPITALIZATION - LONG-TERM DEBT
Details of long-term debt are as follows:
Series Maturity Date December 31,
------ ------------- -----------------
First Mortgage Bonds: 1999 1998
---- ----
(In Thousands)
6.10% (a) April 28, 2000 $ 10,000 $ 10,000
7.70% (a) June 12, 2000 25,000 25,000
7.97% (a) June 11, 2003 8,000 8,000
7.97% (a) June 13, 2003 8,000 8,000
6.46% (a) Aug. 11, 2003 10,000 10,000
6 1/4%(b) June 1, 2007 4,230 4,325
9 1/4% May 1, 2021 70,000 70,000
8.12% (a) Aug. 29, 2022 10,000 10,000
8.14% (a) Aug. 29, 2022 10,000 10,000
8.375%(b)(d) Dec. 1, 2028 - 16,700
------- -------
155,230 172,025
Promissory Notes:
1984 Series A (7 3/8%)(c)(e) Oct. 1, 2014 - 16,700
1984 Series B (7 3/8%)(c)(e) Oct. 1, 2014 - 16,700
1985 Series A (Var. rate)(c)(f) Nov. 1, 2020 - 36,250
1985 Series B (Var. rate)(c)(f) Nov. 1, 2020 - 36,000
1987 Series A (Var. rate)(c)(g) June 1, 2027 - 33,700
1987 Series B (Var. rate)(c)(g) June 1, 2027 - 9,900
1998 Series A (4.20%)(c) Dec. 1, 2028 16,700 16,700
5.38% (a) Jan. 15,1999 - 20,000
5.93% (a) Sept.10,2001 15,000 15,000
7.85% (a) July 2, 2004 15,000 15,000
1999 Series C (6%)(a) Jan. 15,2009 20,000 -
1999 Series A (5.45%)(c) Aug. 1, 2027 33,400 -
1999 Series B (Var. rate)(c) July 1, 2034 33,700 -
1999 Series C (Var. rate)(c) Aug. 1, 2028 41,150 -
1999 Series D (Var. rate)(c) Aug. 1, 2028 41,000 -
------- -------
215,950 215,950
Secured Notes Payable of Services - 9,023
Unamortized Discount on Debt (629) (573)
------- -------
Total long-term debt $370,551 $396,425
------- -------
Less Current Portion (35,100) (39,507)
------- -------
$335,451 $356,918
======= =======
(a) Issued under Central Hudson's Medium Term Note Program.
(b) First Mortgage Bonds issued in connection with the sale by
the New York State Energy Research and Development Authority
("NYSERDA") of tax-exempt pollution control revenue bonds.
(c) Promissory Notes issued in connection with the sale by
NYSERDA of tax-exempt pollution control revenue bonds.
(d) Redeemed March 1, 1999.
(e) Redeemed October 1, 1999.
(f) Redeemed November 1, 1999.
(g) Redeemed September 1, 1999.
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<PAGE>
The subsidiaries of Services had no long-term debt as of
December 31, 1999.
Long-Term Debt Maturities
The aggregate principal amounts of Central Hudson long-term
debt maturing for the next five years, including sinking fund
requirements, and thereafter are as follows: $35.1 million in
2000, $22.6 million in 2001, including $7.5 million Medium Term
Notes issued January 31, 2000, $.1 million in 2002, $26.1 million
in 2003, $15.1 million in 2004 and $279.7 million thereafter.
First Mortgage Bonds
Central Hudson, on December 2, 1998, refinanced the 8.375%
Series of pollution control bonds, issued on its behalf by NYSERDA
in 1988 in the aggregate principal amount of $16.7 million, which
bonds are supported by Central Hudson's First Mortgage Bonds of
like principal amount. Such bonds were refinanced with lower cost
NYSERDA pollution control bonds, which bonds are supported by
Central Hudson's Promissory Note of like principal amount, at a
fixed rate of 4.20% for their initial term of five years and
thereafter are subject to repricing. The 8.375% Series was
redeemed on March 1, 1999, in order to coordinate with the Article
XXI Mortgage Indenture requirements noted below under the
subcaption "Mortgage Indenture Covenant." Accordingly, these
bonds have been included in the "Current Maturities of Long-Term
Debt" on the Corporation's Balance Sheet at December 31, 1998.
Medium Term Notes
On January 15, 1999, Central Hudson issued and sold a $20
million tranche of its unsecured Medium Term Notes, Series C,
under its Medium Term Note program. Such notes bear a fixed
annual interest rate of 6.00%, mature on January 15, 2009, and are
not redeemable at the option of Central Hudson prior to maturity.
The net proceeds to Central Hudson from the sale of such notes
were $19,875,000 or 99.875% (before deducting expenses). Such
proceeds were applied to the payment at maturity on January 15,
1999, of a $20 million tranche of Central Hudson's unsecured
Medium Term Notes, Series A, that bore interest at a fixed annual
interest rate of 5.38%.
On January 31, 2000, Central Hudson issued and sold a $7.5
million tranche of its unsecured Medium Term Notes, Series C,
under its Medium Term Note program. Such notes bear a fixed
annual interest rate of 7.05%, mature June 30, 2001, and are not
redeemable prior to maturity. The net proceeds to Central Hudson
from the sale of such notes were $7,488,750 or 99.85% (before
deducting expenses). Such proceeds were applied to the payment of
working capital requirements of Central Hudson.
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Settlement Agreement
Central Hudson has petitioned the PSC to amend the Agreement
to extend the time in which it may transfer up to $100 million to
its competitive business affiliates. Currently, such transfer
must be made prior to the Holding Company Restructuring. The
petition requests an extension prior to the receipt of proceeds
from the auction of Central Hudson's fossil generation assets.
Approximately $51.5 million has been transferred to such
affiliates as of December 31, 1999. Central Hudson may, pursuant
to this authorization, issue, no later than June 30, 2001, up to
$100 million of new securities, including up to one million shares
of common stock in furtherance of its business plan. Central
Hudson expects to issue Medium Term Notes to finance such fund
transfers; however, the amount and timing of any such issuance is
not determinable at this time.
NYSERDA
As discussed in the subcaption "First Mortgage Bonds" above,
Central Hudson refunded certain of its outstanding NYSERDA Bonds
in 1999. On August 3, 1999, Central Hudson refinanced its 7 3/8%
Series pollution control bonds issued on its behalf in 1984 in the
aggregate principal amount of $33.4 million by NYSERDA by
refunding such bonds with the proceeds of the issuance and sale on
that date of $33.4 million aggregate principal amount of a new
series of NYSERDA bonds (the "1999 NYSERDA Bonds, Series A"). The
1999 NYSERDA Bonds, Series A carry an effective interest rate of
5.47%, are unsecured and are insured as to payment of principal
and interest as they become due by a municipal bond insurance
policy issued by AMBAC Assurance Corporation. As a part of such
refinancing, the maturity of these bonds was extended from
October 1, 2014 to August 1, 2027.
On August 3, 1999, Central Hudson refinanced its 1985 Series
A and B and its 1987 Series A and B NYSERDA Bonds, $115.85 million
aggregate principal amount, all of which series were subject to
weekly repricing, with three new series of NYSERDA Bonds: 1999
Series B, $33.7 million principal amount, 1999 Series C, $41.15
million principal amount and 1999 Series D, $41.0 million
principal amount (the "1999 NYSERDA Bonds, Series B, C, D"). The
1999 NYSERDA Bonds, Series B, C, D are in multi-modal form, which
allows Central Hudson to convert these series to various variable
rate modes as well as to fix the rate of interest for periods of
time up to the remaining life of the bonds. The 1999 NYSERDA
Bonds, Series B, C, D were initially issued in Dutch Auction mode,
under which the rate of interest is determined every 35 days by an
auction process. The 1999 NYSERDA Bonds, Series B, C, D are
unsecured and insured as to payment of principal and interest as
they become due by a municipal bond insurance policy issued by
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<PAGE>
AMBAC Assurance Corporation. As part of the refinancing, the
maturities of such refinanced series were extended to August 1,
2028, except that the maturity date of the 1987 Series B, which is
subject to alternative minimum tax, was extended to July 1, 2034.
In its rate orders, the PSC has authorized deferred accounting for
the interest costs on Central Hudson's variable rate NYSERDA
Bonds. The authorization provides for full recovery of the actual
interest costs supporting utility operations. The percent of
interest costs supporting utility operations represents
approximately 95% of the total costs. The deferred balances under
such accounting were $5.9 million and $4.9 million at December 31,
1999 and 1998, respectively, and were included in "Regulatory
Assets" in the Corporation's Consolidated Balance Sheet. Such
deferred balances are to be addressed in future rate cases.
Letters of Credit
Central Hudson had in place irrevocable letters of credit
which supported certain payments required to be made on the 1985
and 1987 NYSERDA Bonds. Such letters of credit were terminated in
1999 as part of the refunding of the underlying NYSERDA bonds in a
format that does not require such letters of credit.
Debt Expense
Expenses incurred on debt issues and any discount or premium
on debt are deferred and amortized over the lives of the related
issues. Expenses incurred on debt redemptions prior to maturity
have been deferred and are generally being amortized over the
shorter of the remaining lives of the related extinguished issues
or the new issues as directed by the PSC.
Debt Covenants
Certain debt agreements require the maintenance by Central
Hudson of certain financial ratios and contain other restrictive
covenants.
Mortgage Indenture Covenant
Article XXI of Central Hudson's Indenture of Mortgage,
pursuant to which Central Hudson's First Mortgage Bonds are
outstanding (the "Mortgage"), requires generally that, to the
extent that the cost of property additions (as defined in the
Mortgage) acquired by Central Hudson during a calendar year is
less than the allowance for depreciation on property subject to
the Mortgage (calculated pursuant to the Mortgage) for such
calendar year, Central Hudson must deposit cash with the Mortgage
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<PAGE>
Trustee in the amount of such deficiency, less certain credits
available to Central Hudson under the Mortgage (the "Article XXI
Deficiency").
Any cash deposited with the Mortgage Trustee as a result of
an Article XXI Deficiency may be withdrawn by Central Hudson in an
amount equal to the cost of property additions acquired by Central
Hudson subsequent to such calendar year, or may be applied by the
Mortgage Trustee, at the request of Central Hudson, to redeem or
purchase outstanding mortgage bonds in accordance with the
provisions of the Mortgage. If any such cash left on deposit with
the Mortgage Trustee for 12 consecutive months or more is in
excess of $350,000, the amount of such cash in excess of $250,000
must be applied by the Mortgage Trustee to redeem or purchase
mortgage bonds, subject to certain exceptions set forth in the
Mortgage. Article XXI of the Mortgage will remain in effect so
long as any of Central Hudson's mortgage bonds of any series
created prior to 1994 are outstanding under the Mortgage.
For calendar year 1998, Central Hudson experienced an Article
XXI Deficiency in the approximate amount of $16.3 million, in
satisfaction of which it deposited with the Mortgage Trustee cash
in that amount received by Central Hudson from the proceeds of the
1998 NYSERDA Bonds. Such cash deposited was applied by the
Mortgage Trustee, at the request of Central Hudson, to the
redemption, on March 1, 1999, of Central Hudson's First Mortgage
Bonds, 8.375% Series due 2028. For calendar year 1999, Central
Hudson experienced an Article XXI Deficiency in the approximate
amount of $7.6 million, in satisfaction of which it deposited with
the Mortgage Trustee cash in that amount. Such cash deposited
will be applied by the Mortgage Trustee, at the request of Central
Hudson to the redemption, on April 28, 2000, of the 6.10% Series
Mortgage Bonds.
NOTE 8 - POSTEMPLOYMENT BENEFITS
Pension Benefits
Central Hudson has a non-contributory retirement income plan
("Retirement Plan") covering substantially all of its employees
and certain employees of Central Hudson Enterprises Corporation
("CHEC"), a wholly-owned subsidiary of Services. The Retirement
Plan provides pension benefits that are based on the employee's
compensation and years of service. It has been Central Hudson's
practice to provide periodic updates to the benefit formula stated
in the Retirement Plan.
Central Hudson's funding policy is to make annual
contributions equal to the amount of net periodic pension cost,
but not in excess of the maximum allowable tax-deductible
contribution under the federal income tax law nor less than the
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<PAGE>
minimum requirement under the Employee Retirement Income Security
Act of 1974.
The accounting for pension benefits reflects adoption of PSC-
prescribed provisions which, among other things, requires ten-year
amortization of actuarial gains and losses and deferral of
differences between actual pension expense and rate allowances.
In addition to the Retirement Plan, Central Hudson sponsors
an Executive Deferred Compensation Plan for eligible officers and
a nonqualified Retirement Benefit Restoration Plan.
Other Postretirement Benefits
Central Hudson provides certain health care and life
insurance benefits for retired employees through its
postretirement benefit plan ("Benefit Plan") (this includes
retirees of CHEC). Substantially all of Central Hudson's
employees may become eligible for these benefits if they reach
retirement age while working for Central Hudson. These and
similar benefits for active employees are provided through
insurance companies whose premiums are based on the benefits paid
during the year. In order to reduce the total costs of these
benefits, Central Hudson requires employees who retired on or
after October 1, 1994, to contribute toward the cost of such
benefits.
The Corporation is fully recovering its net periodic
postretirement costs in accordance with PSC guidelines. Under
these guidelines, the difference between the amounts of
postretirement benefits recoverable in rates and the amounts of
postretirement benefits determined by the actuary under SFAS 106,
"Employers Accounting for Postretirement Benefits Other Than
Pensions," are deferred as either a regulatory asset or liability,
as appropriate.
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<PAGE>
<TABLE>
<CAPTION>
Reconciliations of Pension and OPEB Plans' benefit obligation, plan assets and funded
status, as well as the components of net periodic pension cost and the weighted average
assumptions are as follows:
Pension Benefits Other Benefits
---------------- --------------
1999 1998 1999 1998
---- ---- ---- ----
In Thousands In Thousands
<S> <C> <C> <C> <C>
Change in Benefit
Obligation:
Benefit obligation at
beginning of year $270,504 $225,038 $ 93,471 $ 78,953
Service cost 6,417 5,205 2,525 2,076
Interest cost 17,546 16,234 5,832 5,610
Participant contributions - - 206 -
Plan amendments 10,633 14,439 - -
Benefits paid (13,344) (12,433) (3,396) (2,973)
Actuarial (gain)or loss (38,629) 22,021 (18,641) 9,805
Benefit Obligation at End of ------- ------- ------- -------
Year $253,127 $270,504 $ 79,997 $ 93,471
Change in Plan Assets:
Fair value of plan assets at
beginning of year $309,037 $316,852 $ 57,180 $ 45,109
Actual return on plan assets 46,487 6,040 5,166 10,607
Employer contributions 188 72 4,448 5,489
Participant contributions - - 206 -
Benefits paid (13,344) (12,433) (2,733) (3,569)
Administrative Expenses (995) (1,494) (259) (456)
Fair Value of Plan Assets at ------- ------- ------- -------
End of Year $341,373 $309,037 $ 64,008 $ 57,180
</TABLE>
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<TABLE>
Pension Benefits Other Benefits
---------------- --------------
1999 1998 1999 1998
---- ---- ---- ----
In Thousands In Thousands
<S> <C> <C> <C> <C>
Reconciliation of Funded status
Funded status $ 88,246 $ 38,533 $(15,989) $(36,291)
Unrecognized actuarial (gain) (73,051) (18,985) (28,862) (9,800)
Unrecognized transition
(asset) or obligation (1,430) (2,065) 40,465 43,579
Unamortized prior service cost 29,309 20,179 (119) (129)
------- ------- ------- -------
Accrued Benefit Cost $ 43,074 $ 37,662 $ (4,505) $ (2,641)
Components of Net Periodic
Benefit Cost
Service cost $ 6,417 $ 5,205 $ 2,525 $ 2,076
Interest cost 17,546 16,234 5,832 5,610
Expected return on plan assets (24,314) (27,325) (3,756) (2,867)
Amortization of prior service
cost 1,503 552 (10) (10)
Amortization of transitional
(asset) or obligation (635) (635) 3,114 3,114
Recognized actuarial (gain) or
loss (5,742) (10,162) (1,686) (1,789)
------- ------- ------- -------
Net Periodic Benefit Cost $ (5,225) $(16,131) $ 6,019 $ 6,134
Weighted-average assumptions as
of December 31
Discount rate 7.75% 6.50% 7.75% 6.50%
Expected long-term rate of
return on plan assets 9.75% 8.50% 6.80% 6.80%
Rate of compensation increase 4.00% 4.00% 4.00% 4.00%
</TABLE>
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For measurement purposes, a 9.0% (9.4% for participants over
age 65) annual rate of increase in the per capita cost of covered
health benefits is assumed for 2000. The rate is assumed to
decrease gradually to 5.5% for 2008 and remain at that level
thereafter.
Assumed health care cost trend rates have a significant
effect on the amounts reported for the health care plan. A one-
percentage-point change in assumed health care cost trend rates
would have the following effects:
One-Percentage- One-Percentage-
Point Decrease Point Increase
--------------- ---------------
Effect on total of service
and interest cost compo-
nents for 1999 $ 1,254,000 $(1,086,000)
Effect on year-end 1999
postretirement benefit
obligation $10,480,000 $(9,266,000)
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Nuclear Liability Insurance
The Price-Anderson Act is a federal law which limits the
public liability which can be imposed with respect to a nuclear
incident at a licensed nuclear electric generating facility. Such
Act also provides for assessment of owners of all licensed nuclear
units in the United States for losses in excess of certain limits
in the event of a nuclear incident at any such licensed unit.
Under the provisions of the Price-Anderson Act, Central Hudson's
potential assessment (based on its 9% ownership interest in the
Nine Mile 2 Plant and assuming that the other Nine Mile 2 Plant
co-tenants were to contribute their proportionate shares of the
potential assessments) would be $7.6 million (subject to
adjustment for inflation) and Central Hudson could be assessed
$380,000 (subject to adjustment for inflation) as an additional
surcharge, but would be limited to a maximum assessment of
$900,000 in any year with respect to any nuclear incident. The
public liability insurance coverage of $200 million required under
the Price-Anderson Act for the Nine Mile 2 Plant is provided
through Niagara Mohawk.
Central Hudson also carries insurance to cover the additional
costs of replacement power (under a Business Interruption and/or
Extra Expense Insurance Policy) incurred by Central Hudson in the
event of a prolonged accidental outage of the Nine Mile 2 Plant.
This insurance arrangement provides for payments of up to $409,000
per week if the Nine Mile 2 Plant experiences a continuous
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accidental outage which extends beyond 12 weeks. Such payments
will continue for 52 weeks after expiration of the 12-week
deductible period, and thereafter the insurer shall pay 80% of the
weekly indemnity for a second and third 52-week period. Subject
to certain limitations, Central Hudson may request prepayment, in
a lump sum amount, of the insurance payments which would otherwise
be paid to it with respect to said third 52-week period,
calculated on a net present value basis.
Central Hudson is insured as to its respective interest in
the Nine Mile 2 Plant under property damage insurance provided
through Niagara Mohawk. The insurance coverage provides $500
million of primary property damage coverage for both Units of the
Nine Mile Point Nuclear Station and $2.25 billion of excess
property damage coverage solely for Unit 2 of that station. Such
insurance covers decontamination costs, debris removal and repair
and/or replacement of property.
The Corporation intends to maintain, or cause to be
maintained, insurance against such risks at the Nine Mile 2 Plant,
provided such coverage can be obtained at an acceptable cost.
Environmental Matters
General: On an ongoing basis, Central Hudson assesses
environmental issues which could impact Central Hudson and its
customers.
Water: In 1992 Central Hudson filed renewal applications for
the State Pollution Discharge Elimination System ("SPDES") permits
for its Roseton and Danskammer Plants. Such permits are required
to operate the Plants' cooling water systems and wastewater
treatment systems. Central Hudson is a party to an active
proceeding with other New York utilities before the New York State
Department of Environmental Conservation ("NYSDEC") related to the
processing of the SPDES permit renewal application for the Roseton
Plant. The utility participants in the proceeding prepared and
submitted a revised Draft Environmental Impact Statement ("DEIS")
on December 15, 1999. At this stage of the proceeding, the
Corporation can make no determination as to the outcome of the
proceeding or the impact, if any, on the Corporation's financial
position.
In 1999 Riverkeeper, Inc., commenced a citizen suit, in the
United States District Court for the Southern District of New
York, against Central Hudson under Section 11 of the Endangered
Species Act, 16 U.S.C. Section 1540, seeking injunctive relief
from Central Hudson's alleged unpermitted takings of the
endangered shortnose sturgeon through Central Hudson's Roseton and
Danskammer Plants on the Hudson River. Central Hudson does not
believe it has violated such Act and intends to vigorously defend
this action. The
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Corporation can make no prediction as to the outcome of this litigation.
Air: The Clean Air Act Amendments of 1990 ("CAA Amendments")
added several new programs which address attainment and
maintenance of national ambient air quality standards. These
include control of emissions from fossil-fueled electric
generating plants that affect "acid rain" and ozone. As of
December 31, 1999, Central Hudson believes it is in full
compliance with regulations promulgated to date under the CAA
Amendments. Ongoing federal and state clean air initiatives may
require Central Hudson to reduce its emissions in the future.
Central Hudson's emissions of nitrogen oxides ("NOx") were
subject to additional controls, effective May 31, 1995 and May 1,
1999, under Title I of the CAA Amendments. Central Hudson has
installed appropriate controls in compliance with the May 31, 1995
requirements. The 1999 requirements were addressed by fuels and
operation management. Backend controls were not required. The
NYSDEC has recently promulgated regulations requiring a third
round of NOx reductions to go into effect in 2003.
In July 1997, the Environmental Protection Agency ("EPA")
promulgated proposed revisions to the National Ambient Air Quality
Standards for ozone and particulates. These regulations have been
stayed by the courts. Further action by the EPA is pending.
Beginning in 1997 the NYSDEC, began an initiative seeking
penalties from all New York electric utilities for past opacity
variances and requiring various opacity reduction measures and
stipulated penalties for future excursions after execution of a
consent order. Each New York State electric utility, including
Central Hudson, is in the process of negotiating, or has
negotiated, the various terms and conditions of a draft consent
order with the NYSDEC. Central Hudson and the NYSDEC entered into
an Order on Consent, effective April 26, 1999, pursuant to which
Central Hudson, in settlement of a claim by the NYSDEC that
emissions from the Roseton and Danskammer Plants exceeded
applicable opacity emissions standards, agreed to a civil penalty
of $1.5 million for both Plants, of which $500,000 was paid to the
NYSDEC. The remaining $1.0 million of such penalty was suspended
upon Central Hudson causing certain environmentally beneficial
projects in Dutchess and Orange Counties, New York to be
implemented, as set forth in said Order. Said Order also provides
for (i) a new level of stipulated penalty provisions for future
opacity exceedences and (ii) an Opacity Reduction Program, all
with respect to said Plants.
In October 1999, New York State Governor Pataki indicated he
will cause a rulemaking proceeding to be initiated intended to
lead to regulations requiring electric generation plants in New
York State to reduce sulfur dioxide and nitrogen dioxide emissions
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beyond the reductions mandated by federal law. Until the issuance
and analysis of any such regulations, the Corporation can make no
prediction as to the effect of such regulations, on the cost of
operating the Danskammer and Roseton Plants or whether or not
capital improvements would be required.
In October 1999, the New York State Attorney General
indicated he is investigating eight older New York State power
plants for possible violations of federal and state air emission
rules. By letter dated October 12, 1999 from the Office of said
Attorney General, Central Hudson was notified that such
investigation indicates that Central Hudson, "may have
constructed, and continues to operate, major modifications to its
Danskammer [Plant...] without obtaining [certain] requisite
preconstruction permits." Such letter requests that Central
Hudson provide certain information with respect to such
investigation. The NYSDEC, by subpoena dated January 13, 2000,
has requested substantially the same information from Central
Hudson. The Corporation believes that the NYSDEC has assumed
responsibility for such investigation, but Central Hudson has not
received formal notification thereof. Central Hudson is reviewing
this matter in depth, and believes any required permits were
obtained.
Former Manufactured Gas Plant Facilities
City of Newburgh: In October 1995, Central Hudson and the
NYSDEC entered into an Order on Consent regarding the development
and implementation of an investigation and remediation program for
Central Hudson's former coal gasification plant ("Central Hudson
Site"), the City of Newburgh, New York's ("City") adjacent and
nearby property and the adjoining areas of the Hudson River.
Initial remediation investigations were completed in September
1997. The investigations revealed the presence of contaminants in
the soil in portions of the study area. In the majority of the
study area contaminants were found deep within the ground and are
not a threat to the public. Contaminated ground water is
associated with the contaminated soil but it is not used as a
drinking water supply. Impacted sediments were also present
within the Hudson River adjacent to the City's property which is
the location of its sewage treatment plant.
In May 1995, the City filed suit against Central Hudson in
the United States District Court for the Southern District of New
York. The City alleged that Central Hudson released certain
allegedly hazardous substances without a permit from the Central
Hudson Site in Newburgh, New York into the ground and into
adjacent and nearby property of the City, in violation of the
federal Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the federal Resources Conservation and
Recovery Act ("RCRA") and the federal Emergency Planning and
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Community Right to Know Act ("EPCRA"). The City also alleged a
number of nuisance, trespass, damage and indemnification claims
pursuant to New York State law.
The City sought injunctive relief against such alleged
disposal, storage or release of hazardous substances at the
Central Hudson Site, remediation and abatement of the conditions
alleged to lead to endangerment of the City's property, payment of
restitution of clean-up costs and monetary damages of at least $70
million, assessment of certain civil penalties under RCRA, CERCLA
and EPCRA, and recovery of the City's costs and attorneys' fees in
such action.
Among the City's allegations was that the presence of
contamination on its site was preventing it from making required
improvements to its sewage treatment plant ("STP") on the site.
In partial settlement of the City's claims against Central Hudson,
the City and Central Hudson entered into an agreement, in July
1998, whereby the City would construct a clarifier at the STP and
deal appropriately with any contaminants that were encountered
during the construction, and Central Hudson would fund these
construction and related activities. Construction of the
clarifier was completed in July 1999; however, all invoices for
the construction costs and related work have not yet been
received. It is expected that the total cost will be
approximately $2.9 million.
The trial on this matter began in November 1998, and in
December 1998, the jury made its determination that the proper
cost of environmental remediation on the City's property is $20
million and Central Hudson's share is 80% (or $16 million). In
addition, the jury awarded the City $435,000 in damages for
increased costs of future operations of the City's STP due to the
existence of contaminants.
Subsequent to the December 1998 jury award referred to above,
Central Hudson and the City entered into a Settlement Agreement,
dated May 4, 1999, which received court approval on the same date.
Under the Settlement Agreement (i) said lawsuit was disposed
of and the City's claims were dismissed with prejudice; (ii) the
City waived its right to have the $16 million awarded by the jury
for the cost of said environmental remediation on the City's
property and Central Hudson agreed to remediate the City's
property at Central Hudson's cost pursuant to said NYSDEC's
October 1995 Order on Consent; (iii) Central Hudson paid the City
$2 million and will pay the City $500,000 in the future on the
occurrence of certain events; (iv) if the total cost of such
remediation is less than $16 million, Central Hudson will pay the
City an additional amount on a formula basis up to $500,000
depending on the extent to which the cost of remediation is less
than $16 million and (v) Central Hudson agreed to indemnify and
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hold harmless the City against claims or lawsuits by any third
party against the City alleging injury, damages or violation of
law caused by or arising from the alleged contamination in said
lawsuit having migrated from Central Hudson's to the City's
property.
Pursuant to said October 1995 Order on Consent with the
NYSDEC, Central Hudson conducted additional studies as part of the
required remedial investigation. The results of these studies
were provided to the NYSDEC which determined that the contaminants
found in such investigation may pose a significant threat to human
health or the environment. As a result, Central Hudson developed
a draft Feasibility Study Report ("Report") which was filed with
the NYSDEC on December 28, 1999. The Report summarizes the nature
and location of the contamination at and around the City's
property, evaluates the potential ecological and human health
risks associated with that contamination and discusses clean-up
alternatives. The Report recommends (1) limited soil removal from
the southern portion of the City's property, where there is
elevated contamination and (2) capping of contaminated sediments
in the Hudson River. The estimated costs for the proposed
remediation activities are $3 million for the soil removal and
$2.5 million for the capping of sediment in the Hudson River.
Central Hudson, in December 1999, provided the Report to NYSDEC
and to the City. Central Hudson expects that both NYSDEC and the
City will respond with comments on the Report. Subject to
anticipated additional negotiations among Central Hudson, the City
and NYSDEC, NYSDEC will issue a Proposed Remedial Action Plan, for
public review and comment, which is expected to be issued in the
second quarter of 2000. Following such public review, NYSDEC will
issue a Record of Decision which will specify a remediation plan
for Central Hudson's implementation. Such remediation plan is not
expected to be issued until late in 2000.
As of December 31, 1999, the Corporation recorded liabilities
of $6.5 million regarding this matter which are included in
"Deferred Credits and Other Liabilities - Other" in the
Corporation's Consolidated Balance Sheet.
By letter dated June 3, 1997, Central Hudson received
authorization from the PSC to defer costs related to this matter,
including legal defense costs but excluding Central Hudson's
labor, related to environmental site investigation and remediation
actions. Central Hudson has deferred costs expended to date that
it expects to be recovered in future rates. The cumulative
deferred costs through 1999 amounted to $15.1 million and were
included in "Deferred Charges - Regulatory Assets" in the
Corporation's Consolidated Balance Sheet.
The Corporation can make no prediction as to the full
financial effect this matter will have on it, including the
extent, if any, of insurance reimbursement and including
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implementation of environmental clean-up under said Order on
Consent. However, the Corporation has put its insurers on notice
of this matter and the Corporation intends to seek reimbursement
from such insurers for the cost of any such liability. Two of
such insurers have denied coverage.
Former Manufactured Gas Plant Sites: In February 1999 the
NYSDEC informed Central Hudson of its intention to perform site
assessments at the sites of three manufactured gas plants formerly
operated by Central Hudson, two of which are located in
Poughkeepsie, New York and one in Beacon, New York. Central
Hudson will conduct the site assessments under agreements
negotiated with NYSDEC for each site. The purpose of the site
assessments will be to determine if there are significant
quantities of residues from the manufactured gas operations on the
sites. If NYSDEC determines that significant quantities of
residues are not present or that the residues pose no threat to
public health or the environment given the current uses of the
sites, NYSDEC will not require additional investigations and/or
remediation at the respective sites. If, after its review of each
site assessment, NYSDEC determines that significant residues are
present, or that residues pose a threat to public health or the
environment at a site, Central Hudson will likely be responsible
for any required remediation. The Corporation can make no
prediction as to the outcome of these matters at present. Central
Hudson has put its comprehensive general liability insurers on
notice of these matters, and Central Hudson intends to seek
reimbursement from its insurance carriers for amounts for which it
may become liable.
Central Hudson has requested from the PSC permission to defer
the incremental costs of the investigations and potential
remediation of these sites.
Asbestos Litigation
Since 1987, Central Hudson, along with many other parties,
has been joined as a defendant or third-party defendant in 1,972
asbestos lawsuits commenced in New York State and federal courts.
The plaintiffs in these lawsuits have each sought millions of
dollars in compensatory and punitive damages from all defendants.
The cases were brought by or on behalf of individuals who have
allegedly suffered injury from exposure to asbestos, including
exposure which allegedly occurred at Central Hudson facilities.
To date, of the 1,972 cases that had been brought against
Central Hudson, 1,035 remained pending against Central Hudson. Of
the 937 cases no longer pending against Central Hudson, 810 have
been dismissed or discontinued, and Central Hudson has settled 127
cases. The Corporation is presently unable to assess the validity
of the remaining asbestos lawsuits; accordingly, it cannot
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determine the ultimate liability relating to these cases. Based
on information known to the Corporation at this time, including
Central Hudson's experience in settling asbestos cases and in
obtaining dismissals of asbestos cases, the Corporation believes
that the cost to be incurred in connection with the remaining
lawsuits will not have a material adverse effect on the
Corporation's financial position or results of operations.
Central Hudson is insured under successive comprehensive
general liability policies issued by a number of insurers, has put
such insurers on notice of the asbestos lawsuits and has demanded
indemnification reimbursement for its defense costs and liability.
In December 1994, Central Hudson commenced a lawsuit against eight
such insurers in the New York State Supreme Court, Dutchess
County. By order dated October 2, 1998, the Court granted a
motion by Central Hudson against one insurer, Travelers Casualty
and Surety Company (f/k/a The Aetna Casualty and Surety Company)
("Travelers"), seeking a declaration that Travelers owed Central
Hudson the cost of defense in the underlying asbestos litigation.
Travelers has since paid Central Hudson approximately $3.2
million, consisting of the undisputed portion of Central Hudson's
past defense costs together with prejudgment interest. Travelers
has made this payment subject to the October 2, 1998 order of the
Court and without prejudice to its rights to appeal or to seek
contribution from the other insurers and from Central Hudson.
Purchased Power Commitments
Under federal and New York State laws and regulations,
Central Hudson is required to purchase the electrical output of
unregulated cogeneration facilities ("IPPs") which meet certain
criteria for Qualifying Facilities, as such term is defined in the
appropriate legislation. Purchases are made under long-term
contracts which require payment at rates higher than what can be
purchased on the wholesale market. These costs are currently
fully recoverable through Central Hudson's electric fuel
adjustment clause, with one exception, for which the impaired
portion of the contract has been recognized as a reduction to
income. IPPs with which Central Hudson has contracts represent 6%
of Central Hudson's energy purchases in 1999.
Other Matters
Central Hudson is involved in various other legal and
administrative proceedings incidental to its business which are in
various stages. While these matters collectively involve
substantial amounts, it is the opinion of management that their
ultimate resolution will not have a material adverse effect on the
Corporation's financial position or results of operations.
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Included in such proceedings are lawsuits against Central
Hudson arising from a November 1992 explosion in a dwelling in
Catskill, New York. One of these lawsuits involving claims for
personal injury and property damages was settled in December 1999
in amounts not considered material to the Corporation. A lawsuit
alleging personal injuries and property damage and compensatory
and punitive damages in the sum of $4 million remains. In January
2000, the court dismissed this lawsuit on the merits because of
plaintiff's failure to prosecute the case, but the time to appeal
has not expired.
In addition to the above, on February 12, 1994, a fire and an
explosion destroyed a residence in the Village of Wappingers
Falls, New York, in Central Hudson's service territory. A short
time later, a second explosion and fire destroyed a nearby
commercial facility. Lawsuits commenced against Central Hudson
arising out of the Wappingers Falls incident include one alleging
property damage and seeking recovery of $250,000 in compensatory
damages and one alleging personal injuries and property damage and
seeking an unspecified amount of damages against Central Hudson.
All such lawsuits have been consolidated; however, no trial date
has been set.
The Corporation is investigating the Wappingers Falls claims
and presently has insufficient information on which to predict
their outcome. The Corporation believes that Central Hudson has
adequate insurance to cover any compensatory damages that might be
awarded.
NOTE 10 - SEGMENTS AND RELATED INFORMATION
The Corporation's primary reportable operating segments are
the regulated electric and gas operations of Central Hudson. The
Corporation's "Other" segment consists of the competitive business
affiliates of Services. For 1999, "Other" also includes the
activity of CH Energy Group, Inc. prior to the formation of the
holding company on December 15, 1999. The "Other" earnings per
share for 1999 is due to the sale of the Corporation's New York
Stock Exchange symbol. All of the segments currently operate in
the Northeast region of the United States.
Certain additional information regarding these segments is
set forth in the following table. General corporate expenses,
property common to both segments and depreciation of such common
property have been allocated to the segments in accordance with
practice established for regulatory purposes.
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CH Energy Group, Inc.
Segment Disclosure - FAS 131
Year Ended December 31,
1999
----
(In Thousands) Electric Gas Other Total
-------------- -------- ---- ----- -----
Revenues from
external customers $ 427,729 $ 93,099 $ - $ 520,828
Intersegment
revenues 80 1,032 - 1,112
--------- ------- ------- ---------
Total revenues 427,809 94,131 - 521,940
Depreciation and
amortization 42,157 4,756 - 46,913
Interest expense 25,803 4,201 - 30,004
Interest income 2,133 314 - 2,447
Income tax (credit)
expense 24,850 4,075 - 28,925
Earnings per share 2.47 0.33 0.08 2.88
Segment assets 1,078,945 180,357 76,597 1,335,899
Construction
Expenditures 38,346 8,149 - 46,495
1998
----
(In Thousands) Electric Gas Other Total
-------------- -------- ---- ----- -----
Revenues from
external customers $ 418,427 $ 83,899 $ - $ 502,326
Intersegment
revenues 80 1,063 - 1,143
--------- ------- ------- ---------
Total revenues 418,507 84,962 - 503,469
Depreciation and
amortization 40,996 4,564 - 45,560
Interest expense 23,803 3,875 - 27,678
Interest income 695 87 - 782
Income tax (credit)
expense 24,910 3,678 - 28,588
Earnings per share 2.51 0.35 0.04 2.90
Segment assets 1,093,455 169,587 52,996 1,316,038
Construction
Expenditures 39,183 6,478 - 45,661
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CH Energy Group, Inc.
Segment Disclosure - FAS 131
Year Ended December 31,
1997
----
(In Thousands) Electric Gas Other Total
--------- ------- ------- ---------
Revenues from
external customers $ 416,346 $103,044 $ - $ 519,390
Intersegment -
revenues 83 804 887
--------- ------- ------- ---------
Total revenues 416,429 103,848 - 520,277
Depreciation and
amortization 39,480 4,384 - 43,864
Interest expense 23,186 3,464 - 26,650
Interest income 1,970 290 - 2,260
Income tax (credit)
expense 21,405 4,832 - 26,237
Earnings per share 2.58 0.37 0.02 2.97
Segment assets 1,067,042 163,021 22,027 1,252,090
Construction
Expenditures 36,685 7,183 - 43,868
NOTE 11 - FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which it
is practicable to estimate that value:
Cash and Temporary Cash Investments: The carrying amount
approximates fair value because of the short maturity of those
instruments.
Cumulative Preferred Stock Subject to Mandatory Redemption:
The fair value is estimated based on the quoted market price of
similar instruments.
Long-Term Debt: The fair value is estimated based on the
quoted market prices for the same or similar issues or on the
current rates offered to Central Hudson for debt of the same
remaining maturities and quality. Long-term debt of Services also
approximates fair value.
Notes Payable: The carrying amount approximates fair value
because of the short maturity of those instruments.
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The estimated fair values of the Corporation's financial
instruments are as follows:
December 31, 1999
-----------------
Carrying Fair
Amount Value
-------- -----
(In Thousands)
Cumulative preferred stock subject
to mandatory redemption............. $ 35,000 $ 34,455
Long-term debt (including
current maturities)................. 370,551 365,741
December 31, 1998
-----------------
Carrying Fair
Amount Value
-------- -----
Cumulative preferred stock subject
to mandatory redemption............. $ 35,000 $ 37,083
Long-term debt (including
current maturities)................. 396,425 413,905
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<TABLE>
<CAPTION>
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected financial data for each quarterly period within 1999 and 1998 are presented
below:
Earnings Per
Average
Share of
Common
Operating Operating Net Stock
Revenues Income Income Outstanding
--------- --------- ------ -----------
(In Thousands) (Dollars)
------------------------------------------ -----------
Quarter Ended:
1999
----
<S> <C> <C> <C> <C>
March 31............ $146,471 $24,991 $18,297 $1.09
June 30............. 117,035 14,439 8,630 .51
September 30........ 134,323 18,100 13,064 .77
December 31......... 124,111 13,108 8,582 .51
1998
----
March 31............ $143,882 $24,003 $18,360 $1.06
June 30............. 112,106 14,404 9,234 .54
September 30........ 125,723 18,350 13,003 .77
December 31......... 121,758 14,543 8,717 .53
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULE II - Reserves
Additions
Payments Balance
Balance at Charged to Charged to Charged at End
Beginning Cost and Other to of
Description of Period Expenses Accounts Reserves Period
- ----------- ---------- ---------- ---------- -------- -------
YEAR ENDED DECEMBER 31, 1999
<S> <C> <C> <C> <C> <C>
Operating Reserves........ $5,994,600 $2,158,546 $ 520,700 $2,380,188 $6,293,658
========= ========= ========= ========= =========
Reserve for Uncollectible
Accounts................. $2,400,000 $2,972,556 $ - $2,472,556 $2,900,000
========= ========= ========= ========= =========
YEAR ENDED DECEMBER 31, 1998
Operating Reserves........ $6,581,614 $7,474,979 $ 103,700 $8,165,693 $5,994,600
========= ========= ========= ========= =========
Reserve for Uncollectible
Accounts................. $2,800,000 $2,638,719 $ - $3,038,719 $2,400,000
========= ========= ========= ========= =========
YEAR ENDED DECEMBER 31, 1997
Operating Reserves........ $4,755,264 $2,142,391 $ 334,700 $ 650,741 $6,581,614
========= ========= ========= ========= =========
Reserve for Uncollectible
Accounts................. $3,200,000 $3,493,405 $ - $3,893,405 $2,800,000
========= ========= ========= ========= =========
</TABLE>
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ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
------ ACCOUNTING AND FINANCIAL DISCLOSURE
------------------------------------------------
None.
PART III
--------
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION
------- ---------------------------------------------------
The information with respect to the Directors of the
Corporation required hereunder is incorporated by reference to the
caption "Proposal No. 1 - Election of Directors" in the
Corporation's definitive proxy statement, to be dated March 1,
2000, and to be used in connection with its Annual Meeting of
Shareholders to be held on April 25, 2000, which proxy statement
will be submitted to the SEC pursuant to that Commission's
Regulation S-T.
The information with respect to the executive officers of the
Corporation required hereunder is incorporated by reference to
Item 1 herein, under the caption "Executive Officers of the
Corporation."
Pursuant to Section 727(d) of the New York Business
Corporation Law, notice is hereby given to shareholders that the
Corporation has provided Directors' and Officers' Liability
Insurance through various contracts. These contracts became
effective June 1, 1999 and provide aggregate coverage of $60
million with the following carriers: Chubb Group of Insurance
Companies, Associated Electric & Gas Insurance Services, Ltd. and
American Casualty Excess Insurance, Ltd.
The aggregate premium costs for this insurance, which covers
the Corporation and its directors and executive officers, are
approximately $238,000, a decrease of $165,000 when compared to
1998.
ITEM 11 - EXECUTIVE COMPENSATION
The information required hereunder is incorporated by
reference to the caption "Executive Compensation" in the
Corporation's definitive proxy statement, to be dated March 1,
2000, and to be used in connection with its Annual Meeting of
Shareholders to be held on April 25, 2000.
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ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
------- AND MANAGEMENT
-----------------------------------------------
The information required hereunder is incorporated by
reference to the caption "Security Ownership of Directors and
Officers" in the Corporation's definitive proxy statement, to be
dated March 1, 2000, and to be used in connection with its Annual
Meeting of Shareholders to be held on April 25, 2000.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
------- ----------------------------------------------
There were no relationships or transactions of the type
required to be described by this Item.
PART IV
-------
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND
------- REPORTS ON FORM 8-K
-------------------------------------------
(a) Documents filed as part of this Report
1. and 2. All Financial Statements and Financial Statement
Schedules filed as part of this Report are included in Item 8
of this Form 10-K and reference is made thereto.
3. Exhibits
Incorporated herein by reference to the Exhibit Index for
this Report. Such Exhibits include the following management
contracts or compensatory plans or arrangements required to
be filed as an Exhibit pursuant to Item 14(c) hereof:
Description in the Exhibit List and Exhibit Nos. for this
Report
Central Hudson Directors' Deferred Compensation Plan,
effective October 1, 1980, together with Amendment thereto,
effective October 1, 1999, merged into the Directors and
Executives Deferred Compensation Plan, effective January 1,
2000. (Exhibit (10)(iii)1 and 19)
Executive Deferred Compensation Plan, effective March 1,
1992, together with Amendments thereto effective December 17,
1993 and December 1, 1998 and an instrument of assumption by
the Corporation, dated December 15, 1999. (Exhibits
(10)(iii)2, 5, 17 and 20)
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Central Hudson Retirement Benefit Restoration Plan, effective
May 1, 1993, together with Amendments thereto effective
July 23, 1993 and December 1, 1998. (Exhibits (10)(iii)3, 4
and 18)
Agreement, made March 14, 1994, by and between Central Hudson
and Mellon Bank, N.A., amending and restating, effective
April 1, 1994, Central Hudson's Savings Incentive Plan and
related Trust Agreement with The Bank of New York, together
with amendments dated July 22, 1994, and December 16, 1994.
(Exhibits (10)(iii)7, 8 and 9)
Central Hudson Executive Incentive Compensation Plan,
effective January 3, 1993, as amended and restated, effective
April 4, 1995 and terminated effective January 1, 2000.
(Exhibits (10)(iii)6 and 10)
Amended and Restated Stock Plan for Outside Directors, together
with a form of assumption by the Corporation thereof, effective
December 15,1999. (Exhibit (10)(iii)11 and 21)
Central Hudson Management Incentive Program, effective
April 1, 1994, together with Amendment thereto, dated
July 25, 1997. (Exhibits (10)(iii)12 and 13)
Change-of-Control Severance Policy, effective December 1,
1998, for all management employees, and a form of instrument
of assumption by the Corporation, dated December 15, 1999.
(Exhibit (10)(iii)14 and 22)
Form of Central Hudson Employment Agreement, dated
October 23, 1998, effective December 1, 1998, for all
officers, and a form of instrument of assumption by the
Corporation, dated December 15, 1999. (Exhibit (10)(iii)15
and 23)
Central Hudson Employment Agreement, dated October 23, 1998,
effective December 1, 1998, for Paul J. Ganci, and a form of
instrument of assumption by the Corporation, dated
December 15, 1999. (Exhibit (10)(iii)16 and 24)
Directors and Executives Deferred Compensation Plan, dated
December 17, 1999, effective January 1, 2000.
Trust and Agency Agreement, dated December 17, 1999 and
effective January 1, 2000, between this Corporation and First
America Trust Company for the Corporation's Directors and
Executives Deferred Compensation Plan.
Long-Term Performance-Based Incentive Plan, dated October 22, 1999,
effective January 1, 2000.
105
<PAGE>
(b) Reports on Form 8-K
During the last quarter of the period covered by this Report
and including the period to the date hereof, the following
Reports on Form 8-K were filed by Central Hudson and/or the
Corporation:
1) Report dated November 12, 1999 for Central Hudson,
relating to the change of Central Hudson's stock trading
symbol from "CNH" to "CHG."
2) Report dated November 23, 1999 for Central Hudson,
relating to the auction of the Roseton and Danskammer
Plants, as reported in the caption, "Auction of Fossil
Generation Plants," in Note 2 of the Notes to Financial
Statements of this Annual Report on Form 10-K; and the
appointment of officers of the Corporation.
3) Reports dated December 15, 1999 for the Corporation and
Central Hudson, relating to the reorganization of
Central Hudson into a holding company structure pursuant
to an Agreement and Plan of Exchange between Central
Hudson and the Corporation as more fully described in
Item I hereof under the caption "Holding Company" and in
Note 2 hereof under the caption "Competitive
Opportunities Proceeding Settlement Agreement."
4) Report dated February 1, 2000 relating to Central
Hudson's sale of a tranche of Medium Term Notes in the
aggregate principal amount of $110 million, such sale
being authorized under Central Hudson's shelf
registration statement on Form S-3 (Registration No.
333-65597), as filed with the SEC.
(c) Exhibits Required by Item 601 of Regulation S-K
Incorporated herein by reference to subpart (a)-3 of Item 14,
above.
106
<PAGE>
(d) Financial Statement Schedule required by Regulation S-X which
is excluded from the Corporation's Annual Report to
Shareholders for the fiscal year ended December 31, 1999
Not applicable, see Item 8 hereof.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Corporation has duly
caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CH ENERGY GROUP, INC.
By /s/ Paul J. Ganci
-------------------------------
Paul J. Ganci
Chairman of the Board, President
and Chief Executive Officer
Dated: March 1, 2000
107
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this Report has been signed below by the following
person on behalf of the Corporation and in the capacities and on
the date indicated:
Signature Title Date
--------- ----- ----
(a) Principal Executive
Officer or Officers:
/s/ Paul J. Ganci
- --------------------------
(Paul J. Ganci) Chairman of
the Board, President
and Chief Executive
Officer March 1, 2000
(b) Principal Accounting
Officer:
/s/ DONNA S. DOYLE
- --------------------------
(Donna S. Doyle) Vice President -
Accounting and
Controller March 1, 2000
(c) Chief Financial
Officer:
/s/ STEVEN V. LANT
- --------------------------
(Steven V. Lant) Chief Financial
Officer and
Treasurer March 1, 2000
(d) A majority of Directors:
Jack Effron*, Frances D. Fergusson*,
Heinz K. Fridrich*, Edward F.X.Gallagher*,
Paul J. Ganci*, John E. Mack III* and
Edward P. Swyer*, Directors
By /s/ Paul J. Ganci
- --------------------------
(Paul J. Ganci) March 1, 2000
108
<PAGE>
- --------------------------------
*Paul J. Ganci, by signing his name hereto, does thereby sign this
document for himself and on behalf of the persons named above
after whose printed name an asterisk appears, pursuant to powers
of attorney duly executed by such persons and filed with the SEC
as Exhibit 24 hereof.
109
EXHIBIT INDEX
Following is the list of Exhibits, as required by Item 601 of
Regulation S-K, filed as a part of this Annual Report on Form 10-K, including
Exhibits incorporated herein by reference (1):
Exhibit No.
(Regulation S-K
Item 601
Designation) Exhibits
(3) Articles of Incorporation and Bylaws:
(i) 1-- Restated Certificate of Incorporation of
the Corporation under Section 807 of the
Business Corporation Law, filed
November 12, 1998. ((37); Exhibit (3)1)
(i) 2-- Restated Certificate of Incorporation of
Central Hudson under Section 807 of the
Business Corporation Law, filed
August 14, 1989. ((1); Exhibit (3)1)
(i) 3-- Certificate of Amendment to the
Certificate of Incorporation of Central
Hudson under Section 805 of the Business
Corporation Law, filed April 5, 1990.
((1); Exhibit (3)2)
(i) 4-- Certificate of Amendment to the Certificate of
Incorporation of Central Hudson under Section 805
of the Business Corporation Law, filed October 19,
1993 ((1); Exhibit (3)3)
(ii) 1-- By-laws of the Corporation in effect on
the date of this Report.
(ii) 2-- By-laws of Central Hudson in effect on
the date of this Report.
(4) Instruments defining the rights of security holders, including
indentures (see also Exhibit (3) above):
- --------------------
(1) Exhibits which are incorporated by reference to other filings
are followed by information contained in parentheses, as follows: The first
reference in the parenthesis is a numeral, corresponding to a numeral set forth
in the Notes which follow this Exhibit list, which identifies the prior filing
in which the Exhibit was physically filed; and the second reference in the
parenthesis is to the specific document in that prior filing in which the
Exhibit appears.
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<PAGE>
*(ii) 1-- Indenture dated January 1, 1927 between
Central Hudson and American Exchange
Irving Trust Company, as Trustee. ((2);
Exhibit (4)(ii)1)
*(ii) 2-- Supplemental Indenture dated March 1,
1935 between Central Hudson and Irving
Trust Company, as Trustee. ((2);
Exhibit (4)(ii)2)
*(ii) 3-- Second Supplemental Indenture dated
June 1, 1937 between Central Hudson and
Irving Trust Company, as Trustee. ((2);
Exhibit (4)(ii)3)
*(ii) 4-- Third Supplemental Indenture dated
April 1, 1940 between Central Hudson and
Irving Trust Company, as Trustee. ((2);
Exhibit (4)(ii)4)
*(ii) 5-- Fourth Supplemental Indenture dated
March 1, 1941 between Central Hudson and
Irving Trust Company, as Trustee. ((2);
Exhibit (4)(ii)5)
*(ii) 6-- Fifth Supplemental Indenture dated
December 1, 1950 between Central Hudson
and Irving Trust Company, as Trustee.
((2); Exhibit (4)(ii)6)
*(ii) 7-- Sixth Supplemental Indenture dated
December 1, 1952 between Central Hudson
and Irving Trust Company, as Trustee.
((2); Exhibit (4)(ii)7)
*(ii) 8-- Seventh Supplemental Indenture dated
October 1, 1954 between Central Hudson
and Irving Trust Company, as Trustee.
((2); Exhibit (4)(ii)8)
*(ii) 9-- Eighth Supplemental Indenture dated
May 15, 1958 between Central Hudson and
Irving Trust Company, as Trustee. ((2);
Exhibit (4)(ii)9)
(ii) 10-- Ninth Supplemental Indenture dated
December 1, 1967 between Central Hudson
and Irving Trust Company, as Trustee.
((2); Exhibit (4)(ii)10)
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<PAGE>
(ii) 11-- Tenth Supplemental Indenture dated as of
January 15, 1969 between Central Hudson
and Irving Trust Company, as Trustee.
((3); Exhibit 2.12)
(ii) 12-- Eleventh Supplemental Indenture dated as
of June 1, 1970 between Central Hudson
and Irving Trust Company, as Trustee.
((4); Exhibit 1.13)
(ii) 13-- Twelfth Supplemental Indenture dated as
of February 1, 1972 between Central
Hudson and Irving Trust Company, as
Trustee. ((2); Exhibit (4)(ii)13)
(ii) 14-- Thirteenth Supplemental Indenture dated
as of April 15, 1974 between Central
Hudson and Irving Trust Company, as
Trustee. ((2); Exhibit (4)(ii)14)
(ii) 15-- Fourteenth Supplemental Indenture dated
as of November 1, 1975 between Central
Hudson and Irving Trust Company, as
Trustee. ((2); Exhibit (4)(ii)15)
(ii) 16-- Fifteenth Supplemental Indenture dated
as of June 1, 1977 between Central
Hudson and Irving Trust Company, as
Trustee. ((2); Exhibit (4)(ii)16)
(ii) 17-- Sixteenth Supplemental Indenture dated
as of September 15, 1979 between Central
Hudson and Irving Trust Company, as
Trustee. ((4); Exhibit 1.18)
(ii) 18-- Seventeenth Supplemental Indenture dated
as of May 15, 1980 between Central
Hudson and Irving Trust Company, as
Trustee. ((5); Exhibit (4)(a)18)
(ii) 19-- Eighteenth Supplemental Indenture dated
as of November 15, 1980 between Central
Hudson and Irving Trust Company, as
Trustee. ((2); Exhibit (4)(ii)19)
(ii) 20-- Nineteenth Supplemental Indenture dated
as of August 15, 1981 between Central
Hudson and Irving Trust Company, as
Trustee. ((2); Exhibit (4)(ii)20)
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<PAGE>
(ii) 21-- Twentieth Supplemental Indenture dated
as of September 1, 1982 between Central
Hudson and Irving Trust Company, as
Trustee. ((2); Exhibit (4)(ii)21)
(ii) 22-- Twenty-First Supplemental Indenture
dated as of November 22, 1982 between
Central Hudson and Irving Trust Company,
as Trustee. ((2); Exhibit (4)(ii)22)
(ii) 23-- Twenty-Second Supplemental Indenture
dated as of May 24, 1984 between Central
Hudson and Irving Trust Company, as
Trustee. ((2); Exhibit (4)(ii)23)
(ii) 24-- Twenty-Third Supplemental Indenture
dated as of June 15, 1985 between
Central Hudson and Irving Trust Company,
as Trustee. ((2); Exhibit (4)(ii)24)
(ii) 25-- Twenty-Fourth Supplemental Indenture
dated as of September 1, 1986 between
Central Hudson and Irving Trust Company,
as Trustee. ((2); Exhibit (4)(ii)25)
(ii) 26-- Twenty-Fifth Supplemental Indenture
dated as of December 1, 1988 between
Central Hudson and Irving Trust Company,
as Trustee. ((2); Exhibit (4)(ii)26)
(ii) 27-- Twenty-Sixth Supplemental Indenture
dated as of May 1, 1991 between Central
Hudson and The Bank of New York, as
Trustee. ((2); Exhibit (4)(ii)27)
(ii) 28-- Twenty-Seventh Supplemental Indenture
dated as of May 15, 1992 between Central
Hudson and The Bank of New York, as
Trustee. ((2); Exhibit (4)(ii)28); and
Prospectus Supplement Dated May 28, 1992 (To
Prospectus Dated April 13, 1992) relating to
$125,000,000 principal amount of First Mortgage
Bonds, designated Secured Medium-Term Notes,
Series A, and the Prospectus Dated April 13, 1992,
relating to $125,000,000 principal amount of
Central Hudson's debt securities attached thereto,
as filed pursuant to Rule 424(b) in connection
with Registration Statement No. 33-46624.
((6)(a)), and, as
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<PAGE>
applicable to a tranche of such Secured
Medium-Term Notes, one of the following:
(a) Pricing Supplement No. 1, Dated
June 4, 1992 (To Prospectus Dated
April 13, 1992, as supplemented
by a Prospectus Supplement Dated
May 28, 1992) filed pursuant to
Rule 424(b) in connection with
Registration Statement No. 33-
46624. ((6)(b))
(b) Pricing Supplement No. 2, Dated
June 4, 1992 (To Prospectus Dated
April 13, 1992, as supplemented
by a Prospectus Supplement Dated
May 28, 1992) filed pursuant to
Rule 424(b) in connection with
Registration Statement No. 33-
46624. ((6)(c))
(c) Pricing Supplement No. 3, Dated
June 4, 1992 (To Prospectus Dated
April 13, 1992, as supplemented
by a Prospectus Supplement Dated
May 28, 1992) filed pursuant to
Rule 424(b) in connection with
Registration Statement No. 33-
46624. ((6)(d))
(d) Pricing Supplement No. 4, Dated
August 20, 1992 (To Prospectus
Dated April 13, 1992, as
supplemented by a Prospectus
Supplement Dated May 28, 1992)
filed pursuant to Rule 424(b) in
connection with Registration
Statement No. 33-46624. ((6)(e))
(e) Pricing Supplement No. 5, Dated
August 20, 1992 (To Prospectus
Dated April 13, 1992, as
supplemented by a Prospectus
Supplement Dated May 28, 1992)
filed pursuant to Rule 424(b) in
connection with Registration
Statement No. 33-46624. ((6)(f))
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<PAGE>
(f) Pricing Supplement No. 6, Dated
July 26, 1993 (To Prospectus
Dated April 13, 1992, as
supplemented by a Prospectus
Supplement Dated May 28, 1992)
filed pursuant to Rule 424(b) in
connection with Registration
Statement No. 33-46624. ((6)(g))
(g) Pricing Supplement No. 7, Dated
July 26, 1993 (To Prospectus
Dated April 13, 1992, as
supplemented by a Prospectus
Supplement Dated May 28, 1992)
filed pursuant to Rule 424(b) in
connection with Registration
Statement No. 33-46624. ((6)(h))
(ii) 29-- Twenty-Eighth Supplemental Indenture
dated as of May 1, 1995 between Central
Hudson and The Bank of New York, as
Trustee. ((27); Exhibit (4)(ii)33)
Prospectus Supplement Dated May 15, 1995 (To
Prospectus Dated April 4, 1995) relating to
$80,000,000 principal amount of First Mortgage
Bonds, designated Secured Medium-Term Notes,
Series B, and the Prospectus Dated April 4, 1995,
relating to (i) $80,000,000 of Central Hudson's
Debt Securities and Common Stock, $5.00 par value,
but not in excess of $40 million aggregate initial
offering price of such Common Stock and (ii)
250,000 shares of Central Hudson's Cumulative
Preferred Stock, par value $100 per share, which
may be issued as 1,000,000 shares of Depositary
Preferred Shares each representing 1/4 of a share
of such Cumulative Preferred Stock attached
thereto, as filed pursuant to Rule 424(b) in
connection with Registration Statement No.
33-56349). (9)
(ii) 30-- Indenture, dated as of April 1, 1992, between
Central Hudson and Morgan Guaranty Trust Company
of New York, as Trustee. ((7); Exhibit (4)(ii)29);
and Prospectus Supplement Dated May 28, 1992 (To
Prospectus Dated April 13, 1992) relating to
$125,000,000 principal
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<PAGE>
amount of Medium-Term Notes, Series A, and the
Prospectus Dated April 13, 1992, relating to
$125,000,000 principal amount of Central Hudson's
debt securities attached thereto, as filed
pursuant to Rule 424(b) in connection with
Registration Statement No. 33- 46624. ((8)(a)),
and, as applicable to a tranche of such
Medium-Term Notes, one of the following:
(a) Pricing Supplement No. 1, Dated
June 26, 1992 (To Prospectus
Dated April 13, 1992, as
supplemented by a Prospectus
Supplement Dated May 28, 1992)
filed pursuant to Rule 424(b) in
connection with Registration
Statement No. 33-46624. ((8)(b))
(b) Pricing Supplement No. 2, Dated
October 6, 1993 (To Prospectus
Dated April 13, 1992, as
supplemented by a Prospectus
Supplement Dated May 28, 1992)
filed pursuant to Rule 424(b) in
connection with Registration
Statement No. 33-46624.
((8)(c)); and
Prospectus Supplement Dated August 24, 1998 (To
Prospectus Dated April 4, 1995) related to
$80,000,000 principal amount of Medium-Term Notes,
Series B, and the Prospectus Dated April 4, 1995,
relating to (i) $80,000,000 of Central Hudson's
Debt Securities and Common Stock, $5.00 par value,
but not in excess of $40 million aggregate initial
offering price of such Common Stock and (ii)
250,000 shares of Central Hudson's Cumulative
Preferred Stock, par value $100 per share, which
may be issued as 1,000,000 shares of Depositary
Preferred Shares each representing 1/4 of a share
of such Cumulative Preferred Stock attached
thereto, as filed pursuant to Rule 424(b) in
connection with Registration Statement No.
33-56349). ((10)(a)), and, as applicable to a
tranche of such Medium-Term Notes, one of the
following:
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<PAGE>
Pricing Supplement No. 1, Dated
September 2, 1998 (To Prospectus
Dated April 4, 1995, as
supplemented by a Prospectus
Supplement Dated August 24, 1998)
filed pursuant to Rule 424(b) in
connection with Registration
Statement No. 33-56349.
((10)(b)); and
Prospectus Supplement Dated January 8, 1999 (To
Prospectus Dated January 7, 1999) relating to
$110,000,000 principal amount of Medium-Term
Notes, Series C, and the Prospectus Dated January
7, 1999, relating to $110,000,000 principal amount
of Central Hudson's debt securities attached
thereto, as filed pursuant to Rule 424(b) in
connection with Registration Statement Nos. 333-
65597 and 33-56349. ((36)(a)), and, as applicable
to a tranche of such Medium- Term Notes, one of
the following:
(a) Pricing Supplement No. 1, Dated
January 12, 1999 (To Prospectus
Dated January 7, 1999, as
supplemented by a Prospectus
Supplement Dated January 8, 1999)
filed pursuant to Rule 424(b) in
connection with Registration
Statement Nos. 333-65597 and 33-
56349. ((36)(b))
(b) Pricing Supplement No. 2, Dated
January 31, 2000 (To Prospectus
Dated January 7, 1999, as
supplemented by a Prospectus
Supplement Dated January 31,
2000) filed pursuant to Rule
424(b) in connection with
Registration Statement Nos.
333-65597 and 33-56349.
((41)(5))
(ii) 31-- Participation Agreement, dated as of
November 1, 1985, by and between New
York State Energy Research and
Development Authority and Central
Hudson. ((2); Exhibit (4)(ii)31)
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<PAGE>
(ii) 32-- Central Hudson has entered into certain
other instruments with respect to long-
term debt of Central Hudson. No such
instrument relates to securities
authorized thereunder which exceed 10%
of the total assets of the Corporation
and its other affiliates on a
consolidated basis. The Corporation
agrees to provide the Commission, upon
request, copies of any instruments
defining the rights of holders of long-
term debt of Central Hudson and other
affiliates for which consolidated or
unconsolidated financial statements are
required to be filed with the
Commission.
(10) Material contracts:
(i) 1-- Agreement dated October 31, 1968 between
Central Hudson and Consolidated Edison
Company of New York, Inc. and Niagara
Mohawk Power Corporation. ((3); Exhibit
5.1)
(i) 2-- Agreement dated as of April 4, 1977
between Central Hudson, Consolidated
Edison Company of New York, Inc., Long
Island Lighting Company, New York State
Electric & Gas Corporation, Niagara
Mohawk Power Corporation, Orange and
Rockland Utilities, Inc., Rochester Gas
and Electric Corporation and the Power
Authority of the State of New York.
((3); Exhibit 5.6)
(i) 3-- Agreement dated April 27, 1973 between
Central Hudson and the Power Authority
of the State of New York. ((11);
Exhibit 5.19)
(i) 4-- Agreement dated as of September 22, 1975
between Central Hudson, Niagara Mohawk
Power Corporation, Long Island Lighting
Company, New York State Electric & Gas
Corporation, and Rochester Gas and
Electric Corporation. ((12); Exhibit
5.21)
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<PAGE>
(i) 5-- Agreement dated November 23, 1976
between Central Hudson and Consolidated
Edison Company of New York, Inc. ((13);
Exhibit 5.29)
(i) 6-- Agreement dated December 29, 1975
between Central Hudson and Niagara
Mohawk Power Corporation, Long Island
Lighting Company, New York State
Electric & Gas Corporation, and
Rochester Gas & Electric Corporation.
((14); Exhibit (10)(i)18)
(i) 7-- Assignment and Assumption dated as of
October 24, 1975 between Central Hudson
and New York State Electric & Gas
Corporation. ((12); Exhibit 5.25)
(i) 8-- Amendment to Assignment and Assumption
dated October 30, 1978 between Central
Hudson and New York State Electric & Gas
Corporation. ((3); Exhibit 5.34)
(i) 9-- Agreement dated as of May 12, 1977
between Central Hudson and Niagara
Mohawk Power Corporation. ((15);
Exhibit 5.34)
(i) 10-- Agreement, dated May 8, 1980, by and
between Central Hudson and Jersey
Central Power & Light Company. ((16);
Exhibit (10)(i)21)
(i) 11-- Purchase Agreement, dated as of June 1,
1980, by and between Central Hudson and
Consolidated Edison Company of New York,
Inc. ((16); Exhibit (10)(i)22)
(i) 12-- Purchase Agreement, dated as of June 16,
1980, by and between Central Hudson and
Philadelphia Electric Company. ((16);
Exhibit (10)(i)23)
(i) 13-- Purchase Agreement, dated as of June 18,
1980, by and between Central Hudson and
Public Service Electric and Gas Company.
((16); Exhibit (10)(i)24)
(i) 14-- Purchase Agreement, dated as of July 1,
1980, by and between Central Hudson and
Connecticut Light and Power Company.
((16); Exhibit (10)(i)25)
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<PAGE>
(i) 15-- Letter Amendment Agreement, dated
December 16, 1980, by and between
Central Hudson and Niagara Mohawk Power
Corporation. ((16); Exhibit (10)(i)26)
(i) 16-- Settlement Agreement, dated December 19,
1980, by and among the United States
Environmental Protection Agency, The
Department of Environmental Conservation
of the State of New York, The Attorney
General of the State of New York, Hudson
River Fisherman's Association, Inc.,
Scenic Hudson Preservation Conference,
Natural Resources Defense Council, Inc.,
Central Hudson, Consolidated Edison
Company of New York, Inc., Orange and
Rockland Utilities, Inc., Niagara Mohawk
Power Corporation and Power Authority of
the State of New York. ((16); Exhibit
(10)(i)27)
(i) 17-- Agreement dated April 2, 1980 by and
between Central Hudson and the Power
Authority of the State of New York.
((2); Exhibit (10)(i)24)
(i) 18-- Purchase Agreement, dated April 19,
1983, between Central Hudson and New
York State Electric & Gas Corporation.
((2); Exhibit (10)(i)29)
(i) 19-- Transmission Agreement, dated
October 25, 1983, between Central Hudson
and Niagara Mohawk Power Corporation.
((2); Exhibit (10)(i)30)
(i) 20-- Underground Storage Service Agreement,
dated June 30, 1982, between Central
Hudson and Penn-York Energy Corporation.
((2); Exhibit (10)(i)32)
(i) 21-- Interruptible Transmission Service
Agreement, dated December 20, 1983,
between Central Hudson and Power
Authority of the State of New York.
((2); Exhibit (10)(i)33)
(i) 22-- Agreement, dated December 7, 1983,
between Central Hudson and the Power
Authority of the State of New York.
((2); Exhibit (10)(i)34)
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<PAGE>
(i) 23-- Specification of Terms and Conditions of
Settlement in State of New York Public
Service Commission Proceeding - Case
29124, dated September 3, 1985. ((2);
Exhibit (10)(i)35)
(i) 24-- Reimbursement Agreement, dated as of
November 1, 1985, between Central Hudson
and the Bank named therein. ((2);
Exhibit (10)(i)36)
(i) 25-- General Joint Use Pole Agreement between
Central Hudson and the New York
Telephone Company effective January 1,
1986 (not including the Administrative
and Operating Practices provisions
thereof). ((2); Exhibit (10)(i)37)
(i) 26-- Agreement, dated June 3, 1985, between
Central Hudson, Consolidated Edison
Company of New York, Inc. and the Power
Authority of the State of New York
relating to Marcy South Real Estate -
East Fishkill, New York. ((2); Exhibit
(10)(i)38)
(i) 27-- Agreement, dated June 11, 1985, between
Central Hudson and the Power Authority
of the State of New York relating to
Marcy South Substation - East Fishkill,
New York. ((2); Exhibit (10)(i)39)
(i) 28-- Agreement, dated as of April 9, 1986,
among Central Hudson, Consolidated
Edison Company of New York, Inc.,
Niagara Mohawk Power Corporation and the
Power Authority of the State of New York
relating to Real Estate - Roseton/
Danskammer. ((2); Exhibit (10)(i)40)
(i) 29-- Agreement, dated as of April 9, 1986,
between Central Hudson, for itself and
as agent for itself, Niagara Mohawk
Power Corporation and Consolidated
Edison Company of New York, Inc., and
the Power Authority of the State of New
York relating to Supplemental Land Use -
Roseton/Danskammer. ((2); Exhibit
(10)(i)41)
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<PAGE>
(i) 30-- Roseton Amendment Agreement, dated as of
September 9, 1987, between Central
Hudson and Niagara Mohawk Power
Corporation, for the purchase of
interests in the Roseton Steam Electric
Generating Plant. ((17); Exhibit
(19)(10)(i)76)
(i) 31-- Memorandum of Understanding, dated as of
March 22, 1988, by and among Central
Hudson, Alberta Northeast Gas, Limited,
the Brooklyn Union Gas Company, New
Jersey Natural Gas Company and
Connecticut Natural Gas Corporation.
((17); Exhibit (20)(10)(i)98)
(i) 32-- Restatement of Purchase and
Administration Agreement, dated as of
April 4, 1989, between Central Hudson
and CSW Credit, Inc., amending and
restating the Purchase and
Administration Agreement, dated as of
November 25, 1987, between such parties
providing for the sale of Central
Hudson's accounts receivables. ((18);
Exhibit (28) (10)(i)101)
(i) 33-- Credit Agreement, dated as of
December 17, 1990, among Central Hudson
and the Banks named therein. ((19);
Exhibit (19)(10)(i)74)
(i) 34-- Agreement, effective as of November 1,
1989, between Columbia Gas Transmission
Corporation and Central Hudson. ((19);
Exhibit (19)(10)(i)75)
(i) 35-- Agreement, dated as of November 1, 1989,
between Columbia Gas Transmission
Corporation and Central Hudson. ((19);
Exhibit (19)(10)(i)77)
(i) 36-- Agreement, dated as of November 1, 1989,
between Columbia Gas Transmission
Corporation and Central Hudson. ((19);
Exhibit (19)(10)(i)78)
(i) 37-- Agreement, dated as of November 1, 1989,
between Columbia Gulf Transmission
Company and Central Hudson. ((19);
Exhibit (19)(10)(i)79)
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<PAGE>
(i) 38-- Agreement, dated October 9, 1990,
between Texas Eastern Transmission
Corporation and Central Hudson. ((19);
Exhibit (19)(10)(i)80)
(i) 39-- Agreement, dated July 2, 1990, between
Texas Eastern Transmission Corporation
and Central Hudson. ((19); Exhibit
(19)(10)(i)81)
(i) 40-- Agreement, dated December 28, 1989,
between Texas Eastern Transmission
Corporation and Central Hudson. ((19);
Exhibit (19)(10)(i)82)
(i) 41-- Agreement, dated December 28, 1989,
between Texas Eastern Transmission
Corporation and Central Hudson. ((19);
Exhibit (19)(10)(i)83)
(i) 42-- Agreement, dated November 3, 1989,
between Texas Eastern Transmission
Corporation and Central Hudson. ((19);
Exhibit (19)(10)(i)84)
(i) 43-- Agreement, dated September 4, 1990,
between Algonquin Gas Transmission
Company and Central Hudson. ((19);
Exhibit (19)(10)(i)87)
(i) 44-- Storage Service Agreement, dated July 1,
1989, between CNG Transmission
Corporation and Central Hudson. ((19);
Exhibit (19)(10)(i)91)
(i) 45-- Agreement dated as of February 7, 1991
between Central Hudson and Alberta
Northeast Gas, Limited for the purchase
of Canadian natural gas from ATCOR Ltd.
to be delivered on the Iroquois Gas
Transmission System. ((19); Exhibit
(19)(10)(i)92)
(i) 46-- Agreement dated as of February 7, 1991
between Central Hudson and Alberta
Northeast Gas, Limited for the purchase
of Canadian natural gas from AEC Oil and
Gas Company, a Division of Alberta
Energy Company, Ltd. to be delivered on
the Iroquois Gas Transmission System.
((19); Exhibit (19)(10)(i)93)
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<PAGE>
(i) 47-- Agreement dated as of February 7, 1991
between Central Hudson and Alberta Northeast Gas,
Limited for the purchase of Canadian natural gas
from ProGas Limited to be delivered on the
Iroquois Gas Transmission System. ((19); Exhibit
(19)(10)(i)94)
(i) 48-- Agreement No. 2 dated as of February 7,
1991 between Central Hudson and Alberta
Northeast Gas, Limited for the purchase
of Canadian natural gas from TransCanada
Pipelines Limited under Precedent
Agreement No. 2 to be delivered on the
Iroquois Gas Transmission System.
((19); Exhibit (19)(10)(i)95)
(i) 49-- Agreement No. 1 dated as of February 7,
1991 between Central Hudson and Alberta
Northeast Gas, Limited for the purchase
of Canadian natural gas from TransCanada
Pipelines Limited under Precedent
Agreement No. 1 to be delivered on the
Iroquois Gas Transmission System.
((19); Exhibit (19)(10)(i)96)
(i) 50-- Agreement dated as of February 7, 1991
between Central Hudson and Iroquois Gas
Transmission System to transport gas
imported by Alberta Northeast Gas,
Limited to Central Hudson. ((19);
Exhibit (19)(10)(i)97)
(i) 51-- Service Agreement, dated September 30,
1986, between Central Hudson and
Algonquin Gas Transmission Company, for
firm storage transportation under Rate
Schedule SS-III. ((20); Exhibit
(19)(10)(i)95)
(i) 52-- Service Agreement, dated March 12, 1991,
between Central Hudson and Algonquin Gas
Transmission Company, for firm
transportation of 5,056 dth. of Texas
Eastern Transmission Corporation
incremental volume. ((20); Exhibit
(19)(10)(i)99)
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<PAGE>
(i) 53-- Agreement, dated December 28, 1990 and
effective February 5, 1991, between
Central Hudson and National Fuel Gas
Supply Corporation for interruptible
transportation. ((20); Exhibit
(19)(10)(i)100)
(i) 54-- Utility Services Contract, effective
October 1, 1991, between Central Hudson
and the U.S. Department of the Army, for
the provision of natural gas service to
the U.S. Military Academy at West Point
and Stewart Army Subpost, together with
an Amendment thereto, effective
October 10, 1991. ((20); Exhibit
(19)(10)(i)101)
(i) 55-- Service Agreement, effective December 1,
1990, between Central Hudson and Texas
Eastern Transmission Corporation, for
firm transportation service under Rate
Schedule FT-1. ((20); Exhibit
(19)(10)(i)103)
(i) 56-- Service Agreement, dated February 25,
1991, between Central Hudson and Texas
Eastern Transmission Corporation, for
incremental 5,056 dth. under Rate
Schedule CD-1. ((20); Exhibit
(19)(10)(i)104)
(i) 57-- Service Agreement, dated January 7,
1992, between Central Hudson and Texas
Eastern Transmission Corporation, for
the firm transportation of 6,000
dth./day under Rate Schedule FTS-5.
((20); Exhibit (19)(10)(i)106)
(i) 58-- Agreement dated as of July 1, 1992
between Central Hudson and Tennessee Gas
Pipeline Company for storage of natural
gas. ((21); Exhibit (10)(i)114)
(i) 59-- Agreement dated as of July 1, 1992
between Central Hudson and Tennessee Gas
Pipeline Company for firm transportation
periods. ((21); Exhibit (10)(i)115)
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<PAGE>
(i) 60-- Agreement, dated November 1, 1990,
between Tennessee Gas Pipeline and
Central Hudson for transportation of
third-party gas for injection into and
withdrawal from Penn York storage. ((2);
Exhibit (19)(10)(i)100)
(i) 61-- Agreement, dated December 1, 1991,
between Central Hudson and Iroquois Gas
Transmission System for interruptible
gas transportation service. ((2);
Exhibit (19)(10)(i)101)
(i) 62-- Letter Agreement, dated August 24, 1992,
between Central Hudson and Iroquois Gas
Transmission System amending that certain
Agreement, dated December 1, 1991 between said
parties for interruptible gas transportation
service. ((19); Exhibit (19)(10)(i)102)
(i) 63-- Agreement, dated as of July 16, 1993,
between Central Hudson, Consolidated
Edison Company of New York, Inc., Long
Island Lighting Company, New York State
Electric & Gas Corporation, Niagara
Mohawk Power Corporation, Orange and
Rockland Utilities, Inc., Rochester Gas
and Electric Corporation and the Power
Authority of the State of New York.
((2); Exhibit (19)(10)(i)104)
(i) 64-- Nine Mile Point Nuclear Station Unit 2
Operating Agreement, effective
January 1, 1993, between and among
Central Hudson, Niagara Mohawk Power
Corporation, Long Island Lighting
Company, New York State Electric & Gas
Corporation and Rochester Gas and
Electric Corporation. ((2); Exhibit
(19)(10)(i)105)
(i) 65-- Gas Transportation Agreement, dated as
of September 1, 1993, by and between
Tennessee Gas Pipeline Company and
Central Hudson. ((1); Exhibit
(19)(10)(i)108)
(i) 66-- Agreement, dated as of May 20, 1993,
between Central Hudson and New York
State Electric & Gas Corporation. ((24);
Exhibit (10)(i)93)
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<PAGE>
(i) 67-- Agreement for the Sale and Purchase of
Coal, dated as of December 1, 1996,
among Central Hudson, Inter-American
Coal N.V. and Inter-American Coal, Inc.
[Certain portions of the agreement
setting forth or relating to pricing
provisions are omitted and filed
separately with the Securities and
Exchange Commission pursuant to a
request for confidential treatment under
the rules of said Commission.] ((30);
Exhibit (10)(i)107)
(i) 68-- Credit Agreement, dated as of
October 23, 1996, among Central Hudson
and The Banks listed herein and Morgan
Guaranty Trust Company of New York, as
Agent. ((30); Exhibit (10)(i)110)
(i) 69-- Settlement Agreement, dated March 20,
1997, among Central Hudson, the
Staff of the Public Service Commission
of the State of New York and the New
York State Department of Economic
Development. ((31); Exhibit (10)(i)111)
(i) 70-- Amended and Restated Settlement
Agreement, dated January 2, 1998, among
Central Hudson, the Staff of the Public
Service Commission of the State of New
York and the New York State Department
of Economic Development. ((32); Exhibit
(10)(i)112)
(i) 71-- Amendment, dated as of March 20, 1994,
to the Agreement, dated as of
September 9, 1987, between Central
Hudson and Niagara Mohawk Power
Corporation relating to the purchase of
interests in the Roseton Steam Electric
Generating Plant (Exhibit (19)(10)(i)76)
[Certain portions of said Amendment set
forth and relate to confidential terms
of said Amendment and will be filed
separately with the Securities and
Exchange Commission pursuant to a
request for confidential treatment under
the rules of said Commission.] ((33);
Exhibit (10)(i)112)
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<PAGE>
(i) 72-- Amendment, dated as of November 1, 1997,
to the Agreement for the Sale and
Purchase of Coal, dated December 1,
1996, among Central Hudson, Inter-
American Coal N.V. and Inter-American
Coal, Inc. [Certain portions of said
Amendment set forth and relate to
pricing provisions and will be filed
separately with the Securities and
Exchange Commission pursuant to a
request for confidential treatment under
the rules of said Commission.] ((33);
Exhibit (10)(i)113)
(i) 73-- Order of the Public Service Commission
of the State of New York, issued and
effective February 19, 1998, adopting
the terms of Central Hudson's Amended
Settlement Agreement, subject to certain
modifications and conditions. ((34);
Exhibit (10)(i)114)
(i) 74-- Modification to the Amended and Restated
Settlement Agreement, dated February 26,
1998, signed by Central Hudson, the
Staff of the Public Service Commission
of the State of New York, the New York
State Consumer Protection Board and Pace
Energy Project. ((34); Exhibit
(10)(i)115)
(i) 75-- Order of the Public Service Commission
of the State of New York, issued and
effective June 30, 1998, explaining in
greater detail and reaffirming its
Abbreviated Order, issued and effective
February 19, 1998, which February 19,
1998 Order modified, and as modified,
approved the Amended and Restated
Settlement Agreement, dated January 2,
1998, entered into among Central Hudson,
the PSC Staff and others as part of the
PSC's "Competitive Opportunities"
proceeding (ii) the Order, dated
June 24, 1998, of the Federal Energy
Regulatory Commission conditionally
authorizing the establishment of an
Independent System Operator by the
member systems of the New York Power
Pool and (iii) disclosing, effective
August 1, 1998, Paul J. Ganci's
appointment by Central Hudson's Board of
E-19
<PAGE>
Directors as President and Chief
Executive Officer and John E. Mack III's
(formerly Chairman of the Board and
Chief Executive Officer) continuation as
Chairman of the Board. ((35); Exhibit
(10)(i)116)
(i) 76-- Amendment II, dated as of November 1,
1998, to the Agreement for the Sale and
Purchase of Coal, dated December 1,
1996, among Central Hudson, Inter-
American Coal N.V. and Inter-American
Coal, Inc. [Certain portions of said
Amendment setting forth or relating to
pricing provisions are omitted and filed
separately with the Securities and
Exchange Commission pursuant to a
request for confidential treatment under
the rules of said Commission.]
(i) 77-- Agreement, dated as of November 1, 1998,
between Central Hudson and Glencore
Ltd., for the Sale and Purchase of Coal.
[Certain portions of said Agreement
setting forth or relating to pricing
provisions are omitted and filed
separately with the Securities and
Exchange Commission pursuant to a
request for confidential treatment under
the rules of said Commission.]
(i) 78-- Participation Agreement, dated as of
December 1, 1998, by and between New
York State Energy Research and
Development Authority and Central
Hudson.
(i) 79-- Reimbursement Agreement, dated as of
July 1, 1987, between Central Hudson and
the Bank named therein. ((17); Exhibit
(19) (10)(i)90)
(i) 80-- First Amendment, dated as of
September 1, 1987, to the Reimbursement
Agreement, dated as of November 1, 1985,
between Central Hudson and the Bank
named therein. ((17); Exhibit
(19)(10)(i)72)
(i) 81-- Second Amendment, dated as of July 1,
1990, to the Reimbursement Agreement,
dated as of November 1, 1985, between
E-20
<PAGE>
Central Hudson and the Bank named
therein. ((19); Exhibit (19)(10)(i)93)
(i) 82-- First Amendment, dated as of July 1,
1990, to the Reimbursement Agreement,
dated as of July 1, 1987, between
Central Hudson and the Bank named
therein. ((19); Exhibit (19)(10)(i)73)
(i) 83-- Third Amendment, dated as of July 29,
1992, to the Reimbursement Agreement,
dated as of November 1, 1985, between
Central Hudson and the Bank named
therein. ((2); Exhibit (19)(10)(i)106)
(i) 84-- Second Amendment, dated as of July 29,
1992, to the Reimbursement Agreement,
dated as of July 1, 1987, between
Central Hudson and the Bank named
therein. ((2); Exhibit (19)(10)(i)107)
(i) 85-- Credit Agreement, dated December 4,
1998, among the Corporation certain
lenders and Bank One N.A. (formerly the
First National Bank of Chicago), as
agent. ((37); Exhibit (4))
(i) 86-- Agreement, dated April 1, 1999, between
Central Hudson and Arch Coal Sales
Company, Inc. for the Sale and Purchase
of Coal. [Certain portions of the
Agreement setting forth or relating to
pricing provisions are omitted and filed
separately with the Securities and
Exchange Commission pursuant to a
request for confidential treatment under
the rules of said Commission.] ((38);
Exhibit (10)(i)89)
(i) 87-- Agreement and Plan of Exchange by and
between Central Hudson and the
Corporation (Incorporated by reference
to Exhibit A to the Proxy Statement and
Prospectus in Part 1 of Registration
Statement on Form S-4 of the Corporation
(No. 333-52797). ((39; Exhibit 2.1)
(i) 88-- Amendment No. 3, dated as of November 1,
1999, to the Agreement for the Sale and
Purchase of Coal, dated December 1,
1996, between Central Hudson and Inter-
American Coal, Inc. [Certain portions of
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<PAGE>
said Amendment set forth and relate to pricing
provisions and will be filed separately with the
Securities and Exchange Commission pursuant to a
request for confidential treatment under the rules
of said Commission.] (Exhibit (10)(i)88)
(i) 89-- Amendment No. 1, dated as of November 1,
1999, to the Agreement for the Sale and
Purchase of Coal, dated November 1,
1998, between Central Hudson and
Glencore, Ltd. [Certain portions of
said Amendment set forth and relate to
pricing provisions and will be filed
separately with the Securities and
Exchange Commission pursuant to a
request for confidential treatment under
the rules of said Commission.] (Exhibit
(10)(i)89)
(i) 90-- Amendment No. 1, dated as of November 1,
1999, to the Agreement for the Sale and
Purchase of Coal, dated April 1, 1999
between Central Hudson and Arch Coal.
[Certain portions of said Amendment set
forth and relate to pricing provisions
and will be filed separately with the
Securities and Exchange Commission
pursuant to a request for confidential
treatment under the rules of said
Commission.] (Exhibit (10)(i)90)
(i) 91-- Amendment No. 1, dated June 11, 1999, to
the Corporation's Credit Agreement,
dated December 4, 1998, among the
Corporation, certain lenders and Bank
One N.A. (formerly the First National
Bank of Chicago), as agent. (Exhibit
(10)(i)91)
(iii) 1-- Directors' Deferred Compensation Plan of
Central Hudson, effective October 1,
1980. ((16); Exhibit (10)(iii)1)
(iii) 2-- Executive Deferred Compensation Plan of
Central Hudson, effective March 1, 1992.
((20); Exhibit (19)(10)(iii)8)
(iii) 3-- Retirement Benefit Restoration Plan of
Central Hudson, effective May 1, 1993.
((22); Exhibit (10)(iii)10)
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<PAGE>
(iii) 4-- Amendment, dated July 23, 1993, to
Retirement Benefit Restoration Plan of
Central Hudson. ((22); Exhibit
(10)(iii)11)
(iii) 5-- First Amendment, dated December 17,
1993, to Central Hudson's Executive
Deferred Compensation Plan. ((29);
Exhibit (10)(iii)15)
(iii) 6-- Executive Incentive Compensation Plan of
Central Hudson, effective January 1,
1993. ((24); Exhibit (10)(iii)17)
(iii) 7-- Agreement, made March 14, 1994, by and
between Central Hudson and Mellon Bank,
N.A., amending and restating, effective
April 1, 1994, Central Hudson's Savings
Incentive Plan and related Trust
Agreement with The Bank of New York.
((25); Exhibit (10)(iii)18)
(iii) 8-- Amendment 1, dated July 22, 1994
(effective April 1, 1994) to the Amended
and Restated Savings Incentive Plan of
Central Hudson. ((26); Exhibit
(10)(iii)19)
(iii) 9-- Amendment 2, dated December 16, 1994
(effective January 1, 1995) to the
Amended and Restated Savings Incentive
Plan of Central Hudson, as amended.
((26); Exhibit (10)(iii)20)
(iii) 10-- Amendment, dated April 4, 1995, to the
Executive Incentive Compensation Plan of
Central Hudson. ((30); Exhibit
(10)(iii)21)
(iii) 11-- Stock Plan for Outside Directors of
Central Hudson, dated November 17, 1995.
((30); Exhibit (10)(iii)22)
(iii) 12-- Management Incentive Program of Central
Hudson, effective April 1, 1994. ((30);
Exhibit (10)(iii)23)
(iii) 13-- Amendment, dated July 25, 1997, to the
Management Incentive Program of Central
Hudson, effective August 1, 1997.
((33); Exhibit (10)(iii)24)
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<PAGE>
(iii) 14-- Change-of-Control Severance Policy, as
approved by the Board of Directors
October 23, 1998 and, effective
December 1, 1998, for all management
employees of the Company. ((40);
Exhibit (10)(iii)14)
(iii) 15-- Form of Employment Agreement, dated
October 23, 1998, effective December 1,
1998, for all officers of the Company.
((40); Exhibit (10)(iii)15)
(iii) 16-- Employment Agreement, dated October 23,
1998, effective December 1, 1998, for
the President and Chief Executive
Officer of the Company. ((40; Exhibit
(10)(iii)16)
(iii) 17-- Amendment, dated December 1, 1998, to
the Executive Deferred Compensation Plan
of Central Hudson. ((40); Exhibit
(10)(iii)17)
(iii) 18-- Amendment, dated December 1, 1998, to
the Retirement Benefit Restoration Plan
of Central Hudson. ((40; Exhibit
(10)(iii)18)
(iii) 19-- Amendment, dated October 1, 1999 to
Central Hudson's Directors Deferred
Compensation Plan, effective October 1,
1980, which Plan was merged into the
Corporation's Directors and Executives
Deferred Compensation Plan, effective
January 1, 2000. (Exhibit(10)(iii)19)
(iii) 20-- Form of Instrument of Assignment and
Assumption, dated December 15, 1999, by the
Corporation of the Executive Deferred Compensation
Plan of Central Hudson, dated March 1, 1992 and as
amended, December 17, 1993 and December 1, 1998.
(Exhibit (10)(iii)20)
(iii) 21-- Amended and Restated Stock Plan for Outside
Directors of Central Hudson, together with Form of
Instrument of Assignment and Assumption by the
Corporation, dated December 15, 1999. (Exhibit
(10)(iii)21).
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<PAGE>
(iii) 22-- Form of Instrument of Assignment and
Assumption, dated December 15, 1999, by
the Corporation of the Change of Control
Severance Policy of Central Hudson,
dated December 1, 1998.
(Exhibit (10)(iii)22)
(iii) 23-- Form of Instrument of Assignment and
Assumption, dated December 15, 1999, by
the Corporation of Central Hudson
Employment Agreements, effective
December 1, 1998, covering all officers
of the Corporation and Central Hudson.
(Exhibit (10)(iii)23)
(iii) 24-- Form of Instrument of Assignment and
Assumption, dated December 15, 1999, by
the Corporation of Central Hudson
Employment Agreement, effective
December 1, 1998, covering Paul J.
Ganci. (Exhibit (10)(iii)24)
(iii) 25-- Directors and Executives Deferred
Compensation Plan of the Corporation,
dated December 17, 1999 and effective
January 1, 2000. (Exhibit (10)(iii)25)
(iii) 26-- Trust and Agency Agreement, dated
December 17, 1999 and effective
January 1, 2000, between the Corporation
and First America Trust Company for the
Corporation's Directors and Executives
Deferred Compensation Plan.
(Exhibit (10)(iii)26)
(iii) 27-- Long-Term Performance-Based Incentive
Plan of the Corporation, dated
October 22, 1999 and effective
January 1, 2000 and Form of Instrument
of Assignment and Assumption, dated
December 15, 1999. (The long-term
incentive portion of such Plan subject
to Shareholder approval 4/25/99.)
(Exhibit (10)(iii)27)
(12) -- Statement showing the computation of the ratio of earnings to
fixed charges and ratio of earnings to fixed charges and preferred
dividends.
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<PAGE>
(21) -- Affiliates of the Corporation:
State or other Name under which
Jurisdiction of Affiliate conducts
Name of Affiliate Incorporation Business
- ----------------- -------------- ------------------
Central Hudson Gas New York Central Hudson Gas
& Electric Corporation Electric Corporation
Central Hudson Energy New York Central Hudson
Services, Inc. Energy Services, Inc.
Phoenix Development New York Phoenix Development
Company, Inc. Company, Inc.
Greene Point New York Greene Point
Development Corporation Development Corporation
CH Resources, Inc. New York CH Resources, Inc.
CH Syracuse New York CH Syracuse Properties,
Properties, Inc. Inc.
CH Niagara New York CH Niagara Properties,
Properties, Inc. Inc.
Central Hudson New York Central Hudson
Enterprises Enterprises Corporation
Corporation
SCASCO, Inc. Connecticut SCASCO, Inc.
Island Sound Delaware Island Sound Commercial
Commercial Energy Energy Sales, Inc.
Sales, Inc. (merged into SCASCO,
Inc. 12/31/99)
Prime Industrial New York Prime Industrial Energy
Energy Services, Inc. Services, Inc.
(23) -- Consent of Experts:
The consents of PricewaterhouseCoopers LLP.
(24) -- Powers of Attorney:
Powers of Attorney for each of the directors comprising a majority
of the Board of Directors of Central Hudson authorizing execution
and filing of this Annual Report on Form 10-K by Paul J. Ganci.
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<PAGE>
(27) -- Financial Data Schedule
(99) -- Additional Exhibits:
(i) 1-- Stipulation and Order on Consent signed on
behalf of the Department of Environmental
Protection of the City of New York,
Environmental Defense Fund, Inc., Department of
Environmental Conservation of the State of New
York, Central Hudson Gas & Electric Corporation
and Consolidated Edison Company of New York,
Inc. ((23); Exhibit 28.1)
(i) 2-- Settlement Agreement on Issues Related to Nine
Mile Two Nuclear Plant, dated June 6, 1990,
among the Staff of the Department of Public
Service, the Consumer Protection Board, the
Attorney General of the State of New York,
Assemblyman Maurice Hinchey, Multiple
Intervenors, Central Hudson, Long Island
Lighting Company, New York State Electric & Gas
Corporation, Niagara Mohawk Power Corporation
and Rochester Gas and Electric Corporation.
((19); Exhibit (19)(28)(i)4)
(i) 3-- Order on Consent signed on behalf of the New York
State Department of Environmental Conservation and
Central Hudson relating to Central Hudson's former
manufactured gas site located in Newburgh, New York.
((28); Exhibit (99)(i)5)
(i) 4-- Summary of principal terms of the Amended and
Restated Settlement Agreement, dated January 2, 1998,
among Central Hudson, the Staff of the Public Service
Commission of the State of New York and the New York
State Department of Economic Development. ((32); Exhibit
99(i)9)
(i) 5-- Central Hudson's acceptance, dated February 26, 1998,
of the Order of the Public Service Commission of the
State of New York, issued and effective February 19,
1998, adopting the terms of Central Hudson's Amended and
Restated Settlement subject to modifications and
conditions. ((34); Exhibit 99(i)10)
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<PAGE>
The following are notes to the Exhibits listed above:
(1) Incorporated herein by reference to Central
Hudson's Quarterly report on Form 10-Q for
fiscal quarter ended September 30, 1993 (File
No. 1-3268).
(2) Incorporated herein by reference to Central
Hudson's Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1992 (File No. 1-
3268).
(3) Incorporated herein by reference to Central
Hudson's Registration Statement No. 2-65127.
(4) Incorporated herein by reference to Central
Hudson's Registration Statement No. 2-67537.
(5) Incorporated herein by reference to Central
Hudson's Registration Statement No. 2-69640
(6) (a) Incorporated herein by reference to Prospectus
Supplement Dated May 28, 1992 (To Prospectus
Dated April 13, 1992) relating to $125,000,000
principal amount of First Mortgage Bonds,
designated Secured Medium-Term Notes, Series A,
and to the Prospectus Dated April 13, 1992
relating to $125,000,000 principal amount of
Central Hudson's debt securities attached
thereto, as filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(5)
under the Securities Act of 1933, in connection
with Registration Statement No. 33-46624.
(b) Incorporated herein by reference to Pricing Supplement
No. 1, Dated June 4, 1992 (To Prospectus Dated April 13,
1992, as supplemented by a Prospectus Supplement Dated
May 28, 1992), as filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 in connection with Registration
Statement No. 33-46624.
(c) Incorporated herein by reference to Pricing Supplement
No. 2, Dated June 4, 1992 (To Prospectus Dated April 13,
1992, as supplemented by a Prospectus Supplement Dated
May 28, 1992), as filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 in connection with Registration
Statement No. 33-46624.
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<PAGE>
(d) Incorporated herein by reference to Pricing Supplement
No. 3, Dated June 4, 1992 (To Prospectus Dated April 13,
1992, as supplemented by a Prospectus Supplement Dated
May 28, 1992), as filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 in connection with Registration
Statement No. 33-46624.
(e) Incorporated herein by reference to Pricing Supplement
No. 4, Dated August 20, 1992 (To Prospectus Dated April
13, 1992, as supplemented by a Prospectus Supplement
Dated May 28, 1992), as filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 in connection with Registration
Statement No. 33-46624.
(f) Incorporated herein by reference to Pricing Supplement
No. 5, Dated August 20, 1992 (To Prospectus Dated April
13, 1992, as supplemented by a Prospectus Supplement
Dated May 28, 1992), as filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 in connection with Registration
Statement No. 33-46624.
(g) Incorporated herein by reference to Pricing Supplement
No. 6, Dated July 26, 1993 (To Prospectus Dated April 13,
1992, as supplemented by a Prospectus Supplement Dated
May 28, 1992), as filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 in connection with Registration
Statement No. 33-46624.
(h) Incorporated herein by reference to Pricing Supplement
No. 7, Dated July 26, 1993 (To Prospectus Dated April 13,
1992, as supplemented by a Prospectus Supplement Dated
May 28, 1992), as filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 in connection with Registration
Statement No. 33-46624.
(7) Incorporated herein by reference to Central
Hudson's Current Report on Form 8-K, dated
May 27, 1992 (File No. 1-3268).
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<PAGE>
(8) (a) Incorporated herein by reference to Prospectus
Supplement Dated May 28, 1992 (To Prospectus
Dated April 13, 1992) relating to $125,000,000
principal amount of Medium-Term Notes, Series A,
and to the Prospectus Dated April 13, 1992,
relating to $125,000,000 principal amount of
Central Hudson's debt securities attached
thereto, as filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(5)
under the Securities Act of 1933, in connection
with Registration Statement No. 33-46624.
(b) Incorporated herein by reference to Pricing Supplement
No. 1, Dated June 26, 1992 (To Prospectus Dated April 13,
1992, as supplemented by a Prospectus Supplement Dated
May 28, 1992), as filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 in connection with Registration
Statement No. 33-46624.
(c) Incorporated herein by reference to Pricing Supplement
No. 2, Dated October 6, 1993 (To Prospectus Dated April
13, 1992, as supplemented by a Prospectus Supplement
Dated May 28, 1992), as filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 in connection with Registration
Statement No. 33-46624.
(9) Incorporated herein by reference to Prospectus Supplement
Dated May 15, 1995 (To Prospectus Dated April 4, 1995)
relating to $80,000,000 principal amount of First
Mortgage Bonds, designated Secured Medium-Term Notes,
Series B, and the Prospectus Dated April 4, 1995,
relating to (i) $80,000,000 of Central Hudson's Debt
Securities and Common Stock, $5.00 par value, but not in
excess of $40 million aggregate initial offering price of
such Common Stock and (ii) 250,000 shares of Central
Hudson's Cumulative Preferred Stock, par value $100 per
share, which may be issued as 1,000,000 shares of
Depositary Preferred Shares each representing 1/4 of a
share of such Cumulative Preferred Stock attached
thereto, as filed pursuant to Rule 424(b) in connection
with Registration Statement No. 33-56349.
E-30
<PAGE>
(10) (a) Incorporated herein by reference to Prospectus
Supplement Dated August 24, 1998 (To Prospectus Dated
April 4, 1995) relating to $80,000,000 principal amount
of Medium-Term Notes, Series B, and the Prospectus Dated
April 4, 1995, relating to (i) $80,000,000 of Central
Hudson's Debt Securities and Common Stock, $5.00 par
value, but not in excess of $40 million aggregate initial
offering price of such Common Stock and (ii) 250,000
shares of Central Hudson's Cumulative Preferred Stock,
par value $100 per share, which may be issued as
1,000,000 shares of Depositary Preferred Shares each
representing 1/4 of a share of such Cumulative Preferred
Stock attached thereto, as filed pursuant to Rule 424(b)
in connection with Registration Statement No. 33-56349.
(b) Incorporated herein by reference to Pricing Supplement
No. 1, Dated September 2, 1998 (To Prospectus Dated April
4, 1995, as supplemented by a Prospectus Supplement Dated
August 24, 1998), as filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(2) under the
Securities Act of 1933 in connection with Registration
Statement No. 33-56349.
(11) Incorporated herein by reference to Central
Hudson's Registration Statement No. 2-50276.
(12) Incorporated herein by reference to Central
Hudson's Registration Statement No. 2-54690.
(13) Incorporated herein by reference to Central
Hudson's Registration Statement No. 2-58500.
(14) Incorporated herein by reference to Central
Hudson's Annual Report on Form 10-K for the
fiscal year ended December 31, 1986 (File No. 1-
3268).
(15) Incorporated herein by reference to Central
Hudson's Registration Statement No. 2-60496.
(16) Incorporated herein by reference to Central
Hudson's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989 (File No. 1-
3268).
E-31
<PAGE>
(17) Incorporated herein by reference to Central
Hudson's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987 (File No. 1-
3268).
(18) Incorporated herein by reference to Central
Hudson's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1989 (File No. 1-
3268).
(19) Incorporated herein by reference to Central
Hudson's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990 (File No. 1-
3268).
(20) Incorporated herein by reference to Central
Hudson's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 (File No. 1-
3268).
(21) Incorporated herein by reference to Central
Hudson's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1992 (File
No. 1-3268).
(22) Incorporated herein by reference to Central Hudson's
Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1993 (File No. 1-3268).
(23) Incorporated herein by reference to Central
Hudson's Current Report on Form 8-K, dated
May 15, 1987 (File No. 1-3268).
(24) Incorporated herein by reference to Central Hudson's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 (File No. 1-3268).
(25) Incorporated herein by reference to Central Hudson's
Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1994 (File No. 1-3268).
(26) Incorporated herein by reference to Central Hudson's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (File No. 1-3268).
(27) Incorporated herein by reference to Central
Hudson's Current Report on Form 8-K, dated
May 15, 1995 (File No. 1-3268).
E-32
<PAGE>
(28) Incorporated herein by reference to Central
Hudson's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1995 (File
No. 1-3268).
(29) Incorporated herein by reference to Central
Hudson's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1996 (File
No. 1-3268).
(30) Incorporated herein by reference to Central Hudson's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (File No. 1-3268).
(31) Incorporated herein by reference to Central
Hudson's Current Report on Form 8-K, dated
April 1, 1997 (File No. 1-3268).
(32) Incorporated herein by reference to Central
Hudson's Current Report on Form 8-K, dated
January 7, 1998 (File No. 1-3268).
(33) Incorporated herein by reference to Central Hudson's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, as amended December 8, 1998 (File No.
1-3268).
(34) Incorporated herein by reference to Central
Hudson's Current Report on Form 8-K, dated
February 10, 1998 (File No. 1-3268).
(35) Incorporated herein by reference to Central
Hudson's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1998 (File No. 1-
3268).
(36) (a) Incorporated herein by reference to Prospectus
Supplement Dated January 8, 1999 (To Prospectus
Dated January 7, 1999) relating to $110,000,000
principal amount of Medium-Term Notes, Series C,
and to the Prospectus Dated January 7, 1999,
relating to $110,000,000 principal amount of
Central Hudson's debt securities attached
thereto, as filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(2)
under the Securities Act of 1933, in connection
with Registration Statement Nos. 333-65597 and
33-56349.
E-33
<PAGE>
(b) Incorporated herein by reference to Pricing Supplement
No. 1, Dated January 12, 1999 (To Prospectus Dated
January 7, 1999, as supplemented by a Prospectus
Supplement Dated January 8, 1999), as filed with the
Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933 in connection
with Registration Statement Nos. 333-65597 and 33-56349.
(37) Incorporated herein by reference to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (File No.
333-52797).
(38) Incorporation herein by reference to Central
Hudson's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1999 (File No.
1-3268).
(39) Incorporated herein by reference to Central Hudson's
Current Report on Form 8-K dated December 15, 1999 (File
No. 1-3268)
(40) Incorporated herein by reference to Central
Hudson's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (File No.
1-3268).
(41) Incorporated herein by reference to Pricing
Supplement No. 2, Dated January 31, 2000 (To
Prospectus dated January 7, 1999, as
supplemented by a Prospectus Supplement Dated
January 31, 2000, as filed with the Securities
and Exchange Commission pursuant to Rule 424(b)
under the Securities Act of 1933 in connection
with Registration Statement Nos. 333-65597 and
33-56349.
* Exhibits preceded by an asterisk have heretofore been classified as
basic documents under previous Rule 24(b) of the SEC Rules of
Practice.
E-34
<PAGE>
EXHIBIT 3 (ii) 1
BY-LAWS
CH ENERGY GROUP, INC.
POUGHKEEPSIE, NEW YORK
<PAGE>
BY-LAWS
CH ENERGY GROUP, INC.
POUGHKEEPSIE, NEW YORK
INDEX
PAGE
----
ARTICLE I MEETINGS OF SHAREHOLDERS
Section 1.1 Annual Meetings............................................. 1
Section 1.2 Special Meetings............................................ 1
Section 1.3 Place of Meetings........................................... 1
Section 1.4 Presiding at Meetings....................................... 1
Section 1.5 Quorum...................................................... 1
Section 1.6 Adjournment................................................. 2
Section 1.7 Notice of Meetings.......................................... 2
Section 1.8 Waiver and Consent.......................................... 3
Section 1.9 Fixing Record Date.......................................... 3
Section 1.10 List of Shareholders at Meetings............................ 3
Section 1.11 Proxies..................................................... 3
Section 1.12 Notice of Shareholder Business and Nominations.............. 4
Section 1.13 Inspectors of Elections.................................... 7
Section 1.14 Vote of Shareholders........................................ 7
ARTICLE II BOARD OF DIRECTORS
Section 2.1 Number of Directors......................................... 7
Section 2.2 Elections, Terms and Vacancies.............................. 8
Section 2.3 Meetings of the Board....................................... 8
Section 2.4 Notice and Adjournment...................................... 8
(i)
<PAGE>
PAGE
----
ARTICLE II BOARD OF DIRECTORS (Continued)
Section 2.5 Quorum...................................................... 9
Section 2.6 Unanimous Written Consent................................... 9
Section 2.7 Resignation of Directors.................................... 9
Section 2.8 Removal of Directors........................................ 9
Section 2.9 Compensation of Directors.................................. 10
Section 2.10 Time and Place of Meetings................................. 10
Section 2.11 Special Meetings........................................... 10
Section 2.12 Telephonic Meetings........................................ 10
ARTICLE III COMMITTEES
Section 3.1 Organization and Authority................................. 10
Section 3.2 Executive Committee........................................ 11
Section 3.3 Action by a Committee...................................... 11
Section 3.4 Quorum..................................................... 11
Section 3.5 Reports to Board of Directors.............................. 12
Section 3.6 Compensation of Committee Members.......................... 12
Section 3.7 Resignation and Removal of Committee Members............... 12
Section 3.8 Unanimous Written Consent.................................. 12
Section 3.9 Place of Committee Meetings................................ 12
Section 3.10 Notice..................................................... 12
ARTICLE IV OFFICERS AND THEIR DUTIES
Section 4.1 Officers................................................... 13
Section 4.2 Term of Office; Resignation; Removal; Vacancies............ 13
Section 4.3 Powers and Duties.......................................... 13
Section 4.4 Salaries................................................... 14
Section 4.5 Chairman................................................... 14
Section 4.6 Vice Chairman.............................................. 14
Section 4.7 Vice President............................................. 14
Section 4.8 Secretary.................................................. 15
Section 4.9 Treasurer.................................................. 15
Section 4.10 Controller................................................. 15
Section 4.11 Other Officers............................................. 16
(ii)
<PAGE>
PAGE
----
ARTICLE V SHARES CERTIFICATED SHARES
Section 5.1 Certificates, Registrar and Transfer Agent................. 16
Section 5.2 Authorization of Facsimile Signatures and Seal............. 16
Section 5.3 Transfer of Certificated Shares............................ 16
Section 5.4 Lost, Stolen or Destroyed Share Certificates............... 17
ARTICLE VI INDEMNIFICATION
Section 6.1 General Applicability...................................... 17
Section 6.2 Scope of Indemnification................................... 17
Section 6.3 Other Indemnification Provisions........................... 18
Section 6.4 Survival of Indemnification................................ 18
Section 6.5 Inability to Limit Indemnification......................... 18
Section 6.6 Severability............................................... 18
ARTICLE VII OTHER MATTERS
Section 7.1 Books to be Kept........................................... 19
Section 7.2 Corporate Seal............................................. 19
Section 7.3 When Notice or Lapse of Time Unnecessary................... 19
Section 7.4 Contracts, etc., How Executed.............................. 20
Section 7.5 Loans...................................................... 20
Section 7.6 Deposits................................................... 20
Section 7.7 General and Special Bank Accounts.......................... 20
Section 7.8 Fiscal Year................................................ 21
ARTICLE VIII AMENDMENTS TO BY-LAWS
Section 8.1 By Directors............................................... 21
Section 8.2 By Shareholders............................................ 21
(iii)
<PAGE>
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.1 ANNUAL MEETINGS
The annual meeting of the shareholders, for the election of directors and
the transaction of such other business as may be brought before the meeting,
shall be held each year on the fourth Tuesday in April (or if said day be a
legal holiday, then on the next succeeding business day), at such time of day as
the directors may determine.
SECTION 1.2 SPECIAL MEETINGS
Subject to the rights of the holders of any series of stock having a
preference over the Common Stock of the Company as to dividends or upon
liquidation ("Preferred Stock") with respect to such series of Preferred Stock,
special shareholders' meetings may be called by holders of a majority of the
votes of the outstanding shares of common stock of the Company entitled to vote
or act with respect thereto upon the business to be brought before such meeting,
or by the Chairman of the Board of Directors, President and Chief Executive
Officer pursuant to a resolution adopted by a majority of the total number of
directors which the Company would have if there were no vacancies. At any
special meeting, only such business may be transacted which is related to the
purpose(s) set forth in the notice of such special meeting given pursuant to
Section 1.7 of these By-Laws.
SECTION 1.3 PLACE OF MEETINGS
Shareholders' meetings shall be held at the principal office of the
Company or at such other place as designated by the Board of Directors and
stated in the notice of such meeting.
SECTION 1.4 PRESIDING AT MEETINGS
At all shareholders' meetings, the Chairman of the Board of Directors,
President and Chief Executive Officer, Vice Chairman or a Vice President, shall
act as Chairman of the meeting as provided for in Sections 4.5, 4.7 and 4.8 and
the Secretary or Assistant Secretary shall act as Secretary of the meeting as
provided for in Section 4.9.
SECTION 1.5 QUORUM
Holders of a majority of the votes of the shares of the Company entitled
to vote must be present, in person or by proxy, at each shareholders' meeting to
constitute a quorum at such meeting. When a specified item of business is
required to be voted on by a class or series, voting as a class, the holders of
a majority of the votes of the shares of such class or series shall constitute a
quorum for the transaction of such specified item of business. When a quorum is
1
<PAGE>
once present to organize a meeting, it is not broken by the subsequent
withdrawal of any shareholders.
Except as may be provided by or pursuant to the Certificate of
Incorporation, at all shareholders' meetings each shareholder entitled to vote
shall be entitled to one vote for each share held by him or her, and may vote
and otherwise act either in person or by proxy, as provided for in Section 1.11.
SECTION 1.6 ADJOURNMENT
The Chairman of the meeting, or a majority of the shares so represented at
the meeting, may adjourn the meeting despite the absence of a quorum. When a
shareholders' meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
However, if after the adjournment the Board of Directors fixes a new record date
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each shareholder of record on the new record date entitled to notice under this
Section 1.6.
SECTION 1.7 NOTICE OF MEETINGS
Written notice of the date, time and place of every shareholders' meeting
shall be given personally, or by first class mail (not less than ten (10) nor
more than sixty (60) days before the date of the meeting) or by third class mail
(not less than twenty-four (24) nor more than sixty (60) days before the date of
the meeting) or as otherwise may be permitted by law, to each shareholder of
record as of the date fixed by the Board of Directors, pursuant to Section 1.9
hereof, and such other notice shall be given as may be required by law.
Notice of a special shareholders' meeting shall indicate that it is being
issued by or at the direction of the person or persons calling the meeting and
shall state the purpose(s) for which the meeting is called.
If mailed, such notice shall be deemed given when deposited in the United
States mail, with postage thereon prepaid, directed to the shareholder at his or
her address as it appears on the shareholders' list or record, or, if he or she
shall have filed with the Secretary of the Company a written request that
notices to him or her be mailed to some other address, then directed to him or
her at such other address.
An affidavit of the Secretary of the Corporation or other person giving
the notice or of a transfer agent of the Corporation that the notice required by
this Section 1.7 has been given shall be supplied at the meeting to which it
relates.
2
<PAGE>
SECTION 1.8 WAIVER AND CONSENT
Notice of meeting need not be given to any shareholder who submits a
signed waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of any shareholder at a meeting, in person or by proxy,
without objecting to the lack of notice of such meeting prior to the conclusion
of the meeting, shall constitute a waiver of notice by such shareholder.
The transactions of any shareholders' meeting, however called and noticed,
are as valid as though had at a meeting duly held after regular call and notice,
if a quorum is present either in person or by proxy, and if, either before or
after the meeting, each of the persons entitled to vote, not present in person
or by proxy, signs a written waiver of notice, or a consent to the holding of
the meeting, or an approval of the minutes thereof.
All such waivers, consents or approvals shall be filed with the corporate
records or made a part of the minutes of the meeting. Executors, administrators,
guardians, trustees, and other fiduciaries entitled to vote shares may sign such
waivers, consents and approvals.
SECTION 1.9 FIXING RECORD DATE
For the purpose of determining the shareholders entitled to notice of or
to vote at any shareholders' meeting or any adjournment thereof, or for the
purpose of determining shareholders entitled to receive payment of any dividend
or the allotment of any rights, or for the purpose of any other action, the
Board of Directors may fix, in advance, a date as the record date for any such
determination. Such date shall not be more than sixty (60) nor less than ten
(10) days before the date of such meeting, nor more than sixty (60) days before
the date of such action.
SECTION 1.10 LIST OF SHAREHOLDERS AT MEETINGS
A list of shareholders as of the record date, certified by the Secretary
or any Assistant Secretary or by a transfer agent, shall be produced at any
shareholders' meeting upon the request thereat or prior thereto of any
shareholder. If the right to vote at any meeting is challenged, the inspectors,
or the person presiding thereat, shall require such list of shareholders to be
produced as evidence of the right of the persons challenged to vote at such
meeting, and all persons who appear from such list to be shareholders entitled
to vote thereat may vote at such meeting.
SECTION 1.11 PROXIES
(a) Generally. Every person entitled to vote or execute consents shall
have the right to do so either in person or by one or more agents authorized by
a written proxy executed by such person or his duly authorized agent and filed
with the Secretary of the Company or by telephone or electronic transmission as
permitted by law. Any executor, administrator, guardian, trustee or other
fiduciary, may give proxies.
3
<PAGE>
(b) Term of Proxies. A proxy is not valid after the expiration of eleven
(11) months from the date of its execution, unless the length of time for which
such proxy is to continue in force is otherwise specified therein, which in no
case shall exceed seven (7) years from the date of its execution.
(c) Revocation and Suspension of Proxies. Any proxy duly executed
continues in full force and effect and is not revoked until an instrument
revoking it, or until a duly executed proxy bearing a later date, is filed with
the Secretary of the Company. A proxy is not revoked by the death or incapacity
of the maker unless, before the vote is counted or the authority is exercised,
written notice of the death or incapacity is given to the Company.
Notwithstanding that a valid proxy is outstanding, if the person executing the
proxy is present at the meeting and elects to vote in person, then the powers of
the proxy holder are suspended, except in the case of a proxy coupled with an
interest (which states that fact on its face).
(d) Voting by Two or More Proxies. If any instrument of proxy designates
two or more persons to act as proxy, in the absence of any provision in the
proxy to the contrary, the persons designated may represent and vote the shares
in accordance with the vote or consent of the majority of the persons named as
such proxies. If only one such proxy is present, such proxy may vote all the
shares, and all the shares standing in the name of the principal(s) for whom
such proxy acts shall be deemed represented for the purpose of obtaining a
quorum. The foregoing provisions shall apply to the voting of shares by proxies
for any two or more administrators, executors, trustees, or other fiduciaries,
unless an instrument or order of court appointing them otherwise directs.
(e) Directors' Determination of Execution and Use of Proxies. The Board of
Directors may, in advance of any annual or special meeting of the shareholders,
prescribe additional regulations concerning the manner of execution and filing
of proxies and the validation of the same, which are intended to be voted at any
such meeting.
SECTION 1.12 NOTICE OF SHAREHOLDER BUSINESS AND
NOMINATIONS
A. Annual Shareholders' Meetings
(1) Nominations of persons for election to the Board of Directors of the
Company and the proposal of business to be considered by the shareholders may be
made at an annual shareholders' meeting (a) pursuant to the Company's notice of
meeting, (b) by or at the direction of the Board of Directors or (c) by any
shareholder of the Company who was a shareholder of record at the time of giving
of notice provided for in this Section 1.12 who is entitled to vote at the
meeting and who complies with the notice of procedures set forth in this Section
1.12.
4
<PAGE>
(2) For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (c) of paragraph A.(1) of
this Section 1.12, the shareholder must have given timely notice thereof in
writing to the Secretary of the Company and such other business must otherwise
be a proper matter for shareholder action. To be timely, a shareholder's notice
shall be delivered to the Secretary at the principal executive offices of the
Company not later than the close of business on the 60th day nor earlier than
the close of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the shareholder to be timely must be so
delivered not earlier than the close of business on the 90th day prior to such
annual meeting and no later than the close of business on the later of the 60th
day prior to such annual meeting or the 10th day following the day on which the
date of such meeting is first publicly announced or disclosed (in a public
filing or otherwise) by the Company. In no event shall the public announcement
of an adjournment of an annual meeting commence a new time period for the giving
of a shareholder's notice as described above. Such shareholder's notice shall
set forth (a) as to each person whom the shareholder proposes to nominate for
election or reelection as a Director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
Directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
Director if elected); (b) as to any other business that the shareholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such shareholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c) as to
the shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
shareholder, as they appear on the Company's books, and of such beneficial owner
and (ii) the class and number of shares of the Company which are owned
beneficially and of record by such shareholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph A.(2) of
this Section 1.12 to the contrary, in the event that the number of Directors to
be elected to the Board of Directors of the Company is increased and there is no
public announcement by the Company naming all of the nominees for Director or
specifying the size of the increased Board of Directors at least 70 days prior
to the first anniversary of the preceding year's annual meeting, a shareholder's
notice required by paragraph A. of Section 1.12 shall also be considered timely,
but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive
offices of the Company not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
Company.
5
<PAGE>
B. Special Shareholders' Meetings
Only such business shall be conducted at a special shareholders' meeting
as shall have been brought before the meeting pursuant to the Company's notice
of meeting. Nominations of persons for election to the Board of Directors may be
made at a special shareholders' meeting at which Directors are to be elected
pursuant to the Company's notice of meeting (a) by or at the direction of the
Board of Directors or (b) provided that the Board of Directors has determined
that Directors shall be elected at such meeting, by any shareholder of the
Company who is a shareholder of record at the time of giving of notice provided
for in this Section 1.12 who is entitled to vote at the meeting and who complies
with the notice procedures set forth in this Section 1.12. In the event the
Company calls a special shareholders' meeting for the purpose of electing one or
more Directors to the Board of Directors, any such shareholder may nominate a
person or persons (as the case may be), for election to such position(s) as
specified in the Company's notice of meeting, if the shareholder's notice
required by paragraph A.(2) of this Section 1.12 shall be delivered to the
Secretary at the principal executive offices of the Company not earlier than the
close of business on the 90th day prior to such special meeting and not later
than the close of business on the later of the 60th day prior to such special
meeting or the 10th day following the day on which public announcement or other
disclosure (in a public filing or otherwise) is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
shareholder's notice as described above.
C. General
(1) Only such persons who are nominated in accordance with the procedures
set forth in this Section 1.12 shall be eligible to serve as Directors and only
such business shall be conducted at a shareholders' meeting as shall have been
brought before the meeting in accordance with the procedures set forth in this
Section 1.12. Except as otherwise provided by law, the Chairman of the meeting
shall have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made or proposed, as the case may
be, in accordance with the procedures set forth in this Section 1.12 and, if any
proposed nomination or business is not in compliance with this Section 1.12, to
declare that such defective proposal or nomination shall be disregarded.
(2) For purposes of this Section 1.12, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Company with the Securities and Exchange Commission pursuant to Section 13, 14,
or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 1.12, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 1.12. Nothing in this Section 1.12
6
<PAGE>
of Article I shall be deemed to affect any rights (i) of shareholders to request
inclusion of proposals in the Company's proxy statement pursuant to Rule 14a-8
under the Exchange Act or (ii) of the holders of any series of Preferred Stock
to elect Directors under specified circumstances.
SECTION 1.13 INSPECTORS OF ELECTIONS
The Board of Directors by resolution shall appoint, or shall authorize an
officer of the Company to appoint, one or more inspectors, which inspector or
inspectors may include individuals who serve the Company in other capacities,
including, without limitation, as officers, employees, agents or
representatives, to act at the meetings of shareholders and make a written
report thereof. One or more persons may be designated as alternate inspector(s)
to replace any inspector who fails to act. If no inspector or alternate has been
appointed to act or is able to act at a meeting of shareholders, the Chairman of
the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging such person's duties, shall take and sign an oath
to execute faithfully the duties of inspector with strict impartiality and
according to the best of such person's ability. The inspector(s) shall have the
duties prescribed by law. The Chairman of the meeting shall fix and announce at
the meeting the date and time of the opening and the closing of the polls for
each matter upon which the shareholders will vote at a meeting.
SECTION 1.14 VOTE OF SHAREHOLDERS
Subject to the rights of holders of any series of Preferred Stock,
Directors shall, except as otherwise required by law or by the Certificate of
Incorporation or by a specific provision of these By-Laws adopted by the
shareholders, be elected by a plurality of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote in the election. Subject
to the rights of holders of any series of Preferred Stock, whenever any
corporate action, other than the election of Directors, is to be taken by vote
of the shareholders, it shall, except as otherwise required by law or by the
Certificate of Incorporation, be authorized by a majority of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote thereon.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 NUMBER OF DIRECTORS
The affairs of this Company shall be managed by no less than one (1) nor
more than twenty-five (25) Directors as fixed by resolution adopted by a
majority of the entire Board. Each director shall be at least 18 years of age.
No person who will reach age 71 during his or her prospective term shall stand
for election as a Director.
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SECTION 2.2 ELECTIONS, TERMS AND VACANCIES
At the first annual meeting of shareholders following the adoption of the
Restated Certificate of Incorporation of the Company, or any special meeting in
lieu thereof, the Board of Directors shall be divided into three classes
designated Class I, Class II and Class III. Such classes shall be as nearly
equal in number as the then total number of Directors constituting the entire
Board permits. Class I, Class II and Class III Directors shall be elected for
terms expiring at the next succeeding annual meeting, the second succeeding
annual meeting and the third succeeding annual meeting, respectively, and until
their respective successors are elected and qualified. At each annual
shareholders' meeting after such first annual (or special) meeting of
shareholders following the adoption of the Restated Certificate of Incorporation
of the Company, the Directors chosen to succeed those in the class whose terms
then expire shall be elected by shareholders for terms expiring at the third
succeeding annual meeting after election, or for such lesser term for which one
or more may be nominated in a particular case in order to assure that the number
of Directors in each class shall be appropriately constituted and until their
respective successors are elected and qualified. Newly created Directorships or
any decrease in Directorships resulting from increases or decreases in the
number of Directors shall be so apportioned among the classes of Directors as to
make all the classes as nearly equal in number as possible. Vacancies on the
Board at any time may be filled by a majority of the Directors then in office,
although less than a quorum. A Director elected to fill a vacancy, unless
elected by the shareholders, shall hold office until the next meeting of
shareholders at which the election of Directors is in the regular order of
business, and until his or her successor has been elected and qualified.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Stock (other than the Common Stock) shall have the right,
voting separately by class or series, to elect Directors at an annual or special
shareholders' meeting, the election, term of office, filling of vacancies and
other features of such Directorships shall be governed by any terms of the
Certificate of Incorporation of the Company applicable thereto, and such
Directors so elected shall not be divided into classes pursuant to this Section
2.2 unless expressly provided by such terms.
SECTION 2.3 MEETINGS OF THE BOARD
An annual meeting of the Board of Directors shall be held in each year as
soon as practicable after the annual meeting of shareholders. Regular meetings
of the Board shall be held at such times as may be fixed by the Board. No notice
need be given of annual or regular meetings of the Board of Directors.
SECTION 2.4 NOTICE AND ADJOURNMENT
Notice of each special meeting of the Board shall be given to each
director either by mail not later than noon, New York time, on the fifth
business day prior to the meeting or by telegram,
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by facsimile transmission, by written message or orally to the Directors not
later than noon, New York time, on the day prior to the meeting. Notices shall
be deemed to have been given by mail when deposited in the United States mail,
by telegram at the time of filing, by facsimile transmission upon confirmation
of receipt, and by messenger at the time of delivery by the messenger. Notices
by mail, telegram, facsimile transmission or messenger shall be sent to each
Director at the address or facsimile number designated by him or her for that
purpose, or, if none has been so designated, at his or her last known residence
or business address. Notice of a meeting of the Board of Directors need not be
given to any Director who submits a signed waiver of notice whether before or
after the meeting, or who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to him or her. A notice or waiver of
notice need not specify the purpose of any meeting of the Board of Directors. A
majority of the Directors present, whether or not a quorum is present, may
adjourn any meeting to another time and place. Notice of any adjournment of a
meeting to another time or place shall be given in the manner described above to
the Directors who were not present at the time of the adjournment and, unless
such time and place are announced at the meeting, to the other Directors.
SECTION 2.5 QUORUM
Unless a greater quorum is required by law, a majority of the number of
directors at the time serving on the Board of Directors shall constitute a
quorum for the transaction of business, or of any specified item of business,
provided, however, that a quorum shall not consist of less than one-third of the
entire Board of Directors. Except where otherwise provided by law or in the
Certificate of Incorporation or these By-Laws, the vote of a majority of the
Directors present at a meeting at the time of such vote, if a quorum is then
present, shall be the act of the Board.
SECTION 2.6 UNANIMOUS WRITTEN CONSENT
Any action authorized, in writing, by all of the Directors entitled to
vote thereon and filed with the minutes of the Company shall be the act of the
Board with the same force and effect as if the same had been passed by unanimous
vote at a duly called meeting of the Board.
SECTION 2.7 RESIGNATION OF DIRECTORS
Any Director of the Company may resign at any time. Such resignation shall
be made in writing and shall take effect at the time specified therein, or, if
no time be specified, at the time of its receipt by the Chairman of the Board or
Secretary. The acceptance of a resignation shall not be necessary to make it
effective unless so specified therein.
SECTION 2.8 REMOVAL OF DIRECTORS
Subject to the rights of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation to elect Directors
under specified circumstances, any
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Director may be removed from office only for cause by a vote of the shareholders
entitled to vote thereon.
SECTION 2.9 COMPENSATION OF DIRECTORS
Members of the Board shall receive such fees and compensation as fixed
from time to time by the Board and shall be reimbursed for reasonable expenses
for attending Board meetings. In the event of brief unscheduled Board meetings
or Board meetings called on short notice, the Chairman of the Board, President
and Chief Executive Officer may decide to hold the meeting by conference
telephone or similar communications equipment or permit a member of the Board to
attend the meeting by such means, in which case each director participating in
the meeting by such teleconference shall be compensated at 75% of the then
normal fee applicable to such meeting.
SECTION 2.10 TIME AND PLACE OF MEETINGS
Meetings of the Board of Directors shall be held in such month on such day
at such hour and at such place as the Board may from time to time direct.
SECTION 2.11 SPECIAL MEETINGS
Special meetings of the Board may be held on the call of the Chairman of
the Board of Directors, President and Chief Executive Officer or the Secretary
or upon written request of a majority of the Directors at the time serving on
the Board addressed to the Secretary.
SECTION 2.12 TELEPHONIC MEETINGS
In the event it is necessary to obtain a quorum, at the discretion of the
Chairman of the Board, President and Chief Executive Officer and the presiding
committee Chairman, any one or more members of the Board or any committee of the
Board may participate in a meeting of the Board or committee by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at such meeting.
ARTICLE III
COMMITTEES
SECTION 3.1 ORGANIZATION AND AUTHORITY
The Board of Directors, by resolution adopted by a majority of the entire
Board, may designate from among its members, such committees as the Board of
Directors may from time to time determine, including the committee created by
Section 3.2 of this Article III, each consisting of three or more Directors, and
each of which, to the extent provided in the resolution, shall have
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all the authority of the Board, except that no such committee shall have
authority as to (1) the submission to shareholders of any action that needs
shareholders' approval; (2) the filling of vacancies in the Board or in any
committee thereof; (3) the fixing of compensation of the Directors for serving
on the Board or on any committee thereof; (4) the amendment or repeal of the
By-Laws, or the adoption of new By-Laws; (5) the amendment or repeal of any
resolution of the Board which, by its terms, shall not be so amendable or
repealable; (6) the fixing or changing of the size of the Board; or (7) the
removal or indemnification of Directors. In the event of the absence of any
member(s) from a meeting of a committee, replacements may be made from Directors
designated as alternate members of such committee by the Board. The Chairman of
the Board of Directors, President and Chief Executive Officer, or in his absence
or should he so direct, a Vice President, if such officers are members of the
committee, shall preside at meetings of the committee, otherwise the presiding
officer shall be designated by majority vote of the committee. Vacancies in the
membership of the committee shall be filled by the Board of Directors at a
regular or special meeting of the Board of Directors. Unless the Board of
Directors otherwise provides, each committee designated by the Board may adopt,
amend and repeal rules for the conduct of its business.
SECTION 3.2 EXECUTIVE COMMITTEE
The Board of Directors, by resolution adopted by a majority of the entire
Board, may designate three or more of the directors, together with the Chairman
of the Board of Directors, President and Chief Executive Officer, to constitute
an Executive Committee, to serve at the pleasure of the Board, which Committee
shall during the intervals between meetings of the Board of Directors, unless
limited by the resolution appointing such Committee, have authority to exercise
all or any of the powers of the Board of Directors in the management of the
affairs of the Corporation, insofar as such powers may lawfully be delegated or
as set forth in these By-Laws. The Board may designate one or more directors as
alternate members of such Committee, who may replace any absent member or
members at any meeting of such Committee.
SECTION 3.3 ACTION BY A COMMITTEE
The act of a majority of the members of a committee present at any meeting
at which a quorum is present shall be the act of such committee. The members of
a committee shall act only as a committee, and the individual members thereof
shall have no individual powers as such. Each committee may make such rules as
it may deem expedient for the regulation and carrying on of its meetings and
proceedings.
SECTION 3.4 QUORUM
A majority of the members of a committee shall constitute a quorum.
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SECTION 3.5 REPORTS TO BOARD OF DIRECTORS
Each such committee shall keep a record of its proceedings and make
reports to the Board at its next regular meeting.
SECTION 3.6 COMPENSATION OF COMMITTEE MEMBERS
Members of committees of the Board shall receive such fees and
compensation as fixed from time to time by the Board and shall be reimbursed for
reasonable expenses for attending committee meetings. In the event of brief
unscheduled committee meetings or committee meetings called on short notice, the
Chairman of the Board, President and Chief Executive Officer and the presiding
committee Chairman may decide to hold the meeting by conference telephone or
similar communications equipment or permit a member of the committee to attend
the meeting by such means, in which case each director participating in the
meeting by such teleconference shall be compensated at 75% of the then normal
fee applicable to such meeting.
SECTION 3.7 RESIGNATION AND REMOVAL OF COMMITTEE MEMBERS
Any member of any committee may resign at any time. Such resignation shall
be made in writing and shall take effect at the time specified therein, or, if
no time be specified, at the time of its receipt by the Chairman of the Board of
Directors, President and Chief Executive Officer or Secretary. The acceptance of
a resignation shall not be necessary to make it effective unless so specified
therein. Committee members may be removed by action of the Board of Directors,
with or without cause.
SECTION 3.8 UNANIMOUS WRITTEN CONSENT
Any action authorized in writing, by all of the members of a committee and
filed with the minutes of the Company shall be the act of that committee with
the same force and effect as if the same had been passed by unanimous vote at a
duly called meeting of such committee.
SECTION 3.9 PLACE OF COMMITTEE MEETINGS
Meetings of each committee shall be held in such month on such day at such
hour and at such place as such committee may from time to time direct.
SECTION 3.10 NOTICE
Unless otherwise provided by resolution of the Board or by vote of a
majority of the members of the relevant committee, notice of committee meetings
shall be given in the same manner as notice of special meetings of the Board is
to be given under Section 2.4 of these By-Laws.
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ARTICLE IV
OFFICERS AND THEIR DUTIES
SECTION 4.1 OFFICERS
The Board of Directors, at its regular annual meeting, shall elect or
appoint from their number a Chairman of the Board of Directors, President and
Chief Executive Officer, the Chairmen of Committees of the Board and may elect
or appoint a Vice Chairman of the Board of Directors and Vice Chairmen of
Committees of the Board, which officers shall be officers of the Board; and it
shall elect or appoint one or more Vice Presidents, a Secretary, a Treasurer,
and a Controller which officers shall be officers of the Company. Each of said
officers, subject to the provisions of Sections 4.2 and 4.3 hereof, shall hold
officer, if elected, until the meeting of the board following the next Annual
Meeting of shareholders and until his or her successor has been elected and
qualified, or, if appointed, for the term specified in the resolution appointing
him or her and until his or her successor has been elected or appointed. Any two
or more offices may be held by the same person. Should any of the officers of
the Board cease to be a director, he shall ipso facto cease to be such officer.
SECTION 4.2 TERM OF OFFICE; RESIGNATION; REMOVAL;
VACANCIES
Except as otherwise provided in the resolution of the Board of Directors
electing or appointing any officer, all officers shall be elected or appointed
to hold office until the meeting of the Board of Directors following the next
succeeding annual meeting of shareholders. Each officer shall hold office for
the term for which he or she is elected or appointed, and until his or her
successor has been elected or appointed and qualified. Any officer may resign at
any time by giving written notice to the Board or to the Chairman of the Board
of Directors, President and Chief Executive Officer, if any, or the Secretary of
the Company. Such resignation shall take effect at the time specified therein,
and unless otherwise specified therein no acceptance of such resignation shall
be necessary to make it effective. Any officer may be removed by the Board, with
or without cause, at any time. Removal of an officer without cause shall be
without prejudice to his or her contract rights, if any, with the Company, but
the election or appointment of an officer shall not of itself create contract
rights. Any vacancy occurring in any office of the Company by death,
resignation, removal or otherwise may be filled for the unexpired portion of the
term by the Board.
SECTION 4.3 POWERS AND DUTIES
The officers of the Company shall have such authority and perform such
duties in the management of the Company as may be prescribed by the Board of
Directors and, to the extent not so prescribed, as generally pertain to their
respective offices, subject to the control of the Board. Securities of other
companies held by the Company may be voted by any officer designated by the
Board and, in the absence of any such designation, by the Chairman of the
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Board of Directors, President and Chief Executive Officer, any Vice President,
the Secretary or the Treasurer. The Board may require any officer, agent or
employee to give security for the faithful performance of his duties.
SECTION 4.4 SALARIES
Salaries of all officers of the Company shall be fixed by the Board from
time to time; and salaries of all other employees of the Company shall be
regulated by the Chief Executive Officer.
SECTION 4.5 CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT &
CHIEF EXECUTIVE OFFICER
The Chairman of the Board of Directors, President and Chief Executive
Officer shall, when present, preside at all meetings of the shareholders and the
Board of Directors. He shall be Chairman of the Executive Committee. He shall be
responsible for direction of the policy of the Board of Directors and shall have
the power and perform the duties necessary to implement such responsibility. If
the office of the Chairman of the Board, President and Chief Executive Officer
is vacated due to the incumbent's death, retirement, or inability to act, or
should the Board of Directors elect to leave such office vacant, the Board of
Directors shall fill such vacancy as defined in Section 2.2 of these By-Laws. If
the Chairman of the Board, President and Chief Executive Officer is unable to
perform the duties as identified herein for reason of reasons other than those
defined herein on a short-term basis, he may delegate the powers contained
herein to an existing member of the Board of Directors and designate such
individual to serve in the capacity of Chairman of the Board, President and
Chief Executive Officer until his return.
SECTION 4.6 VICE CHAIRMAN
The Vice Chairman shall do and perform all such duties as shall be
assigned to him or her by the Chairman of the Board of Directors, President and
Chief Executive Officer or required by the Board of Directors.
SECTION 4.7 VICE PRESIDENT
The Vice Presidents, respectively, shall do and perform all such duties as
shall be assigned to them by the Chairman of the Board of Directors, President
and Chief Executive Officer or required of them by the Board of Directors. If
designated by the Board of Directors as a member of the Executive Committee, a
Vice President shall perform the duties of Chairman of the Board of Directors,
President and Chief Executive Officer in case of the Chairman of the Board of
Directors, President and Chief Executive Officer's absence or inability to act
or in case of a vacancy in that office. An Assistant Vice President in the
absence or disability of a Vice President may at the discretion of the Chairman
of the Board of Directors, President and Chief Executive Officer perform the
duties of a Vice President and shall perform such other duties as may be
assigned to him or her.
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SECTION 4.8 SECRETARY
It shall be the duty of the Secretary to keep and attest true records of
the proceedings of all meetings of the Board and Executive Committee, to see
that all notices are duly given in accordance with the provisions of these
By-Laws or as required by law and safely keep and account for all documents,
papers and property of the Company which may come into his or her possession. He
or she shall be the custodian of the Corporate Seal of the Company and shall
affix and attest the same whenever it is necessary and proper so to do, and
shall perform such other duties as may be assigned to him or her by the Board.
In the absence or disability of the Secretary, an Assistant Secretary or any
Vice President shall perform his or her duties and such other duties as may be
assigned to him or her.
SECTION 4.9 TREASURER
The Treasurer shall have the custody of all money, funds and securities of
the Company. He or she shall furnish such security for the faithful performance
of his or her duties as may be required by the Board of Directors. He or she
shall receive all money due to the Company and deposit the same in its corporate
name in such banks or trust companies as the Board of Directors shall determine.
He or she shall sign all checks, drafts or orders for the payment of money; and
perform such other duties as may be required of him or her by the Board of
Directors. An Assistant Treasurer shall, in the absence or disability of the
Treasurer, perform his or her duties and such other duties as may be assigned to
him or her. In the absence or disability of the Treasurer and Assistant
Treasurers, any Vice President shall perform his or her duties and such other
duties as may be assigned to him or her. The Treasurer shall, when directed by
the Board of Directors, open special accounts in the Company's depositories; all
checks, drafts or orders for the payment of money out of such special accounts
shall be signed in such manner and by such officers or employees of the Company
as the Board of Directors shall designate; such checks, drafts or orders for the
payment of money shall also be signed, if, as and when so directed by resolution
of the Board of Directors, by such persons and in such manner as the Board of
Directors shall determine.
SECTION 4.10 CONTROLLER
The Controller shall:
(a) Keep at the office of the Company correct books of account of all its
business and transactions;
(b) Exhibit at all reasonable times his or her books of accounts and
records to any of the directors upon application during business hours at the
office of the Company where such books and records are kept;
(c) Render a full statement of the financial condition of the Company
whenever requested
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so to do by the Board of Directors, the Chairman of the Board, President and
Chief Executive Officer; and
(d) In general, perform such duties as may be from time to time assigned
to him or her by the Board of Directors, the Chairman of the Board, President
and Chief Executive Officer.
SECTION 4.11 OTHER OFFICERS
Other officers, including one or more additional Vice Presidents, may from
time to time be appointed by the Board of Directors or by any officer or
committee upon whom a power of appointment may be conferred by the Board of
Directors, which other officers shall have such powers and perform such duties
as may be assigned to them by the Board of Directors, the Chairman of the Board
of Directors, President and Chief Executive Officer and shall hold office for
such terms as may be designated by the Board of Directors or the officer or
committee appointing them.
ARTICLE V
SHARES
CERTIFICATED SHARES
SECTION 5.1 CERTIFICATES, REGISTRAR AND TRANSFER AGENT
Certificates for shares of the capital stock of the Company shall be in
such form as shall be approved by the Board of Directors. The certificates shall
be numbered, as nearly as may be, in the order of their issue and shall be
signed by the Chairman of the Board of Directors, President and Chief Executive
Officer or a Vice President, and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer, and sealed with the seal of the
Company.
SECTION 5.2 AUTHORIZATION OF FACSIMILE SIGNATURES AND SEAL
The signatures of the officers upon a certificate, and the seal of the
Company, may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than Company itself or its employee.
SECTION 5.3 TRANSFER OF CERTIFICATED SHARES
Shares of the capital stock of the Company shall be transferable by the
holder thereof in person or by duly authorized attorney upon surrender of the
certificate or certificates for such shares properly endorsed. Every certificate
of stock exchanged or returned to the Company shall be appropriately canceled. A
person in whose name shares of stock stand on the books of the Company shall be
deemed the owner thereof as regards the Company. The Board of Directors may make
such other and further rules and regulations as they may deem necessary or
proper concerning the issue, transfer and registration of stock certificates.
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SECTION 5.4 LOST, STOLEN OR DESTROYED SHARE CERTIFICATES
The Company may issue a new certificate for shares in place of any
certificate theretofore issued by it, alleged to have been lost or destroyed,
and the Company may require the owner of the lost or destroyed certificate, or
such owner's legal representative, to give the Company a bond sufficient to
indemnify it against any claim that may be made against it on account of the
alleged loss or destruction of any such certificate or the issuance of any such
new certificate.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 GENERAL APPLICABILITY
Except to the extent expressly prohibited by the New York Business
Corporation Law, the Company shall indemnify each person made, or threatened to
be made, a party to or involved in any action, suit or proceeding, whether
criminal or civil, administrative or investigative by reason of the fact that
such person or such person's testator or intestate is or was a Director or
Officer of the Company, against judgments, fines, penalties, amounts paid in
settlement and reasonable expenses, including attorney's fees and expenses,
reasonably incurred in enforcing such person's right to indemnification,
incurred in connection with such action or proceeding, or any appeal therein,
provided that no such indemnification shall be made if a judgment or other final
adjudication adverse to such person establishes that such person's acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that such person
personally gained in fact a financial profit or other advantage to which such
person was not legally entitled, and provided further that no such
indemnification shall be required with respect to any settlement or other
nonadjudicated disposition of any threatened or pending action or proceeding
unless the Company has given its prior consent to such settlement or other
disposition.
SECTION 6.2 SCOPE OF INDEMNIFICATION
The Company promptly shall advance or reimburse upon request, after
receipt by the Company of a statement or statements from the claimant requesting
such advance or advances of reimbursements, to any person entitled to
indemnification hereunder all reasonable expenses, including attorney's fees and
expenses, reasonably incurred in defending any action or proceeding in advance
of the final disposition thereof upon receipt of an undertaking by or on behalf
of such person to repay such amount if such person is ultimately found not to be
entitled to indemnification or, where indemnification is granted, to the extent
the expenses so advanced or reimbursed exceed the amount to which such person is
entitled; provided, however, that such person shall cooperate in good faith with
any request by the Company that common counsel be used by the parties to an
action or proceeding who are similarly situated unless to do so would be
inappropriate due to actual or potential differing interests between or among
such parties.
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SECTION 6.3 OTHER INDEMNIFICATION PROVISIONS
Nothing herein shall limit or affect any right of any Director, Officer or
other corporate personnel otherwise than hereunder to indemnification or
expenses, including attorney's fees, under any statute, rule, regulation,
certificate of incorporation, by-law, insurance policy, contract or otherwise;
without affecting or limiting the rights of any Director, Officer or other
corporate personnel pursuant to this Article VI, the Company is authorized to
enter into agreements with any of its Directors, Officers or other corporate
personnel extending rights to indemnification and advancement of expenses to the
fullest extent permitted by applicable law.
Unless limited by resolution of the Board of Directors or otherwise, the
Company shall advance the payment of expenses to the fullest extent permitted by
applicable law to, and shall indemnify, any Director, Officer or other corporate
person who is or was serving at the request of the Company, as a director,
officer, partner, trustee, employee or agent of another corporation, whether for
profit or not-for-profit, or a partnership, joint venture, trust or other
enterprise, whether or not such other enterprise shall be obligated to indemnify
such person.
SECTION 6.4 SURVIVAL OF INDEMNIFICATION
Anything in these By-Laws to the contrary notwithstanding, no elimination
or amendment of this Article VI adversely affecting the right of any person to
indemnification or advancement of expenses hereunder shall be effective until
the 60th day following notice to such person of such action, and no elimination
of or amendment to this Article VI shall deprive any such person's rights
hereunder arising out of alleged or actual occurrences, acts or failures to act
prior to such 60th day.
SECTION 6.5 INABILITY TO LIMIT INDEMNIFICATION
The Company shall not, except by elimination or amendment of this Article
VI in a manner consistent with the preceding Section 6.4 and with the provisions
of Article VIII ("Amendments to By-Laws"), take any corporate action or enter
into any agreement which prohibits, or otherwise limits the rights of any person
to, indemnification in accordance with the provisions of this Article VI. The
indemnification of any person provided by this Article VI shall continue after
such person has ceased to be a Director or Officer of the Company and shall
inure to the benefit of such person's heirs, executors, administrators and legal
representatives.
SECTION 6.6 SEVERABILITY
In case any provision in this Article VI shall be determined at any time
to be unenforceable in any respect, the other provisions of this Article VI
shall not in any way be affected or impaired thereby, and the affected provision
shall be given the fullest possible
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enforcement in the circumstances, it being the intention of the Company to
afford indemnification and advancement of expenses to its Directors or Officers,
acting in such capacities or in the other capacities mentioned herein, to the
fullest extent permitted by law.
ARTICLE VII
OTHER MATTERS
SECTION 7.1 BOOKS TO BE KEPT
The Company shall keep (a) correct and complete books and records of
account, (b) minutes of the proceedings of the shareholders, Board of Directors
and Executive Committee, if any, and (c) a current list of the Directors and
Officers and their residence addresses. The Company shall also keep, at its
office located in the County of Dutchess in the State of New York or at the
office of its transfer agent or registrar, if any, a record containing the names
and addresses of all shareholders, the number and class of shares held by each
and the dates when they respectively became the owners of record thereof. Any of
the foregoing books, minutes or records may be in written form or in any other
form capable of being converted into written form within a reasonable time. The
Board of Directors shall, subject to the laws of the State of New York, have
power to determine from time to time, whether, to what extent, and under what
conditions and regulations the accounts and books of the Corporation or any of
them shall be open to the inspection of the shareholders, and no shareholder
shall have any right to inspect any account book or document of the Corporation
except as conferred by the laws of the State of New York unless and until
authorized so to do by resolution of the Board of Directors or shareholders of
the Corporation.
SECTION 7.2 CORPORATE SEAL
The Board of Directors may adopt a corporate seal, alter such seal at
pleasure, and authorize it to be used by causing it or a facsimile to be affixed
or impressed or reproduced in any other manner.
SECTION 7.3 WHEN NOTICE OR LAPSE OF TIME UNNECESSARY
Whenever for any reason the Company or the Board of Directors or any
committee thereof is authorized to take any action after notice to any person or
persons or after the lapse of a prescribed period of time, such action may be
taken without notice and without the lapse of such period of time if at any time
before or after such action is completed the person or persons entitled to such
notice or entitled to participate in the action to be taken or, in the case of a
shareholder, his or her attorney-in-fact, submit a signed waiver of notice of
such requirements.
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SECTION 7.4 CONTRACTS, ETC., HOW EXECUTED.
The Board of Directors, except as in these By-Laws otherwise provide, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute and deliver any instrument in the name of and on behalf of the
Company, and such authority may be general or confined to specific instances,
and, unless so authorized by the Board of Directors, no officer or agent or
employee shall have any power or authority to bind the Company by any contract
or engagement or to pledge its credits or to render it liable pecuniarily for
any purpose or to any amount.
SECTION 7.5 LOANS.
No loans shall be contracted on behalf of the Company and no negotiable
paper shall be issued in its name, unless authorized by the vote of the Board of
Directors. When so authorized, any officer or agent of the Company may effect
loans and advances for the Company from any bank, trust company or other
institution, or from any firm, Company or individual and for such loans and
advances may make, execute and deliver promissory notes, bonds or other
evidences of indebtedness of the Company. When so authorized any officer or
agent of the Company, as security for the payment of any and all loans,
advances, indebtedness and liabilities of the Company, may pledge, hypothecate
or transfer any and all stocks, securities and other personal property at any
time held by the Company, and to that end endorse, assign and deliver the same.
Such authority may be general or confined to specific instances. The Board of
Directors may authorize any mortgage or pledge of, or the creation of a security
interest in, all or any part of the corporate property, or any interest therein,
wherever situated.
SECTION 7.6. DEPOSITS.
All funds of the Company shall be deposited from time to time to its
credit in such banks, trust companies or other depositaries as the Board of
Directors may select, or as may be selected by an officer or officers, agent or
agents of the Company to whom such power, from time to time, may be delegated by
the Board of Directors and, for the purpose of such deposit, checks, drafts and
other orders for the payment of money which are payable to the order of the
Company may be endorsed, assigned and delivered by the Chairman of the Board,
President and Chief Executive Officer or a Vice President, or the Treasurer or
the Secretary, or by any officer, agent or employee of the Company to whom any
of said officers, or the Board of Directors, by resolution, shall have delegated
such power.
SECTION 7.7 GENERAL AND SPECIAL BANK ACCOUNTS.
The Board of Directors may from time to time authorize the opening and
keeping of general and special bank accounts with such banks, trust companies or
other depositaries as the Board may select and may make such special rules and
regulations with respect thereto, as it may deem expedient.
20
<PAGE>
SECTION 7.8 FISCAL YEAR.
The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
AMENDMENTS TO BY-LAWS
SECTION 8.1 BY DIRECTORS
By-Laws may be adopted, amended, or repealed or new By-Laws may be adopted
by the vote of a majority of the entire Board of Directors at any regular or
special meeting of the Board at which a quorum is present; provided, however,
that any adoption of, amendment to or repeal of any new By-Law or provision
inconsistent with Article I (Section 1.2 - "Special meetings", 1.4 - "Presiding
at Meetings" or 1.12 - "Notice of Shareholder Business and Nominations"),
Article II (Section 2.1 - "Number of Directors", 2.2 - "Elections, Terms and
Vacancies" or 2.8 - "Removal of Directors"), Article VI - "Indemnification" or
this Article VIII -"Amendments to By-Laws" hereof, if by action of the Board,
shall be only upon the approval of not less than two-thirds of the entire Board
at any such regular or special meeting of the Board of Directors.
SECTION 8.2 BY SHAREHOLDERS
By-Laws may be adopted, amended, or repealed by the vote of a majority of
the shareholders entitled to vote in the election of any Directors (as herein
provided) at any annual or special shareholders' meeting at which a quorum is
present, if notice of such proposed action shall have been given in accordance
with the notice requirements of Section 1.12 of these By-Laws; provided,
however, that any adoption of, amendment to or repeal of any new By-Laws or
provision inconsistent with Article I (Section 1.2 -"Special meetings", 1.4 -
"Presiding at Meetings" or 1.12 - "Notice of Shareholder Business and
Nominations"), Article II (Section 2.1 - "Number of Directors", 2.2 - -
"Elections, Terms and Vacancies" or 2.8 - "Removal of Directors"), Article VI -
- - "Indemnification" or this Article VIII - "Amendments to By-Laws" hereof, if by
action of shareholders, shall be only upon the affirmative vote of not less than
80% of the shares entitled to vote thereon at such annual or special
shareholders' meeting at which any such action is proposed.
11/10/98
Amended effective 11/2/99 & Adopted Retroactive to 9/23/98
Amended 11/19/99, 12/17/99, 2/04/00
21
<PAGE>
EXHIBIT 3 (ii) 2
B Y - L A W S
OF
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
<PAGE>
TABLE OF CONTENTS
BY-LAWS OF
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Page
ARTICLE I. MEETING OF SHAREHOLDERS 1
Section 1. Place of Meeting 1
Section 2. Annual Meeting 1
Section 3. Special Meeting 1
Section 4. Notice of Meetings 1
Section 5. Quorum 2
Section 6. Inspectors 2
Section 7. Adjournment of Meetings 2
Section 8. Voting 3
Section 9. Record Date 3
ARTICLE II. BOARD OF DIRECTORS 3
Section 1. Number and Qualifications 3
Section 2. Election of Directors 4
Section 3. Term of Office 4
Section 4. Resignation and Removal 4
Section 5. Newly Created Directorships and Vacancies 4
Section 6. Election of Directors by Holders of Preferred Stock 4
Section 7. Regular Meetings 6
Section 8. Special Meetings 6
Section 9. Notice and Place of Meetings 6
Section 10. Business Transacted at Meetings 6
Section 11. Quorum and Manner of Acting 6
Section 12. Compensation 7
Section 13. Indemnification of Officers and Directors 7
Section 14. Committees of the Board 9
ARTICLE III. EXECUTIVE COMMITTEE 9
Section 1. How Constituted and Powers 9
Section 2. Removal and Resignation 9
<PAGE>
- 2 -
Page
Section 3. Filling of Vacancies 10
Section 4. Quorum 10
Section 5. Record of Proceedings, etc. 10
Section 6. Organization, Meetings, etc. 10
Section 7. Compensation of Members 10
ARTICLE IV. OFFICERS 11
Section 1. Election 11
Section 2. Removal 11
Section 3. Resignation of Officers 11
Section 4. Filling of Vacancies 11
Section 5. Compensation 12
Section 6. Chairman of the Board of Directors
and Chief Executive Officer 12
Section 7. Vice Chairman of the Board of Directors 12
Section 8. President and Chief Operating Officer 12
Section 9. The Vice Presidents 12
Section 10. The Treasurer 13
Section 11. Controller 13
Section 12. The Secretary 14
Section 13. Other Officers 14
ARTICLE V. CONTRACTS, LOANS, BANK ACCOUNTS, ETC. 15
Section 1. Contracts, etc., How Executed 15
Section 2. Loans 15
Section 3. Checks, Drafts, etc. 15
Section 4. Deposits 16
Section 5. General and Special Bank Accounts 16
ARTICLE VI. CAPITAL STOCK 16
Section 1. Issue of Certificates of Stock 16
Section 2. Transfer of Stock 16
Section 3. Lost, Destroyed and Mutilated Certificates 17
<PAGE>
- 3 - Page
ARTICLE VII. DIVIDENDS, SURPLUS, ETC. 17
Section 1. General Discretion of Directors 17
ARTICLE VIII. MISCELLANEOUS PROVISIONS 18
Section 1. Fiscal Year 18
Section 2. Waiver of Notice 18
Section 3. Notices 18
Section 4. Examination of Books 18
Section 5. Gender 19
ARTICLE IX. AMENDMENTS 19
Section 1. Amendment by Directors 19
Section 2. Amendment by Shareholders 19
<PAGE>
B Y - L A W S
OF
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
-------------------
ARTICLE I.
MEETINGS OF SHAREHOLDERS
SECTION 1. Place of Meeting.
All meetings of the shareholders shall be held at the principal office of
the Corporation in the City of Poughkeepsie, County of Dutchess, State of New
York, or at such other place or places in the State of New York as may from time
to time be fixed by the Board of Directors.
SECTION 2. Annual Meeting.
The Annual Meeting of the shareholders, for the election of directors and
the transaction of such other business as may brought before the meeting, shall
be held each year on the third Tuesday in April (or if said day be a legal
holiday, then on the next succeeding business day), at such time of day as the
directors may determine.
SECTION 3. Special Meetings.
Special meetings of the shareholders may be called by (i) all of the Board
of Directors or (ii) by the Chairman of the Board and Chief Executive Officer
and one other Director of the Corporation or, (iii) in the absence,
unavailability, or inability to act of the Chairman of the Board and Chief
Executive Officer, by the President and Chief Operating Officer and one other
Director of the Corporation, or (iv) by shareholders together holding at least
one third of the capital stock of the Corporation entitled to vote or act with
respect thereto upon the business to be brought before such meeting.
SECTION 4. Notice of Meetings.
Notice of any annual or special meeting of the shareholders shall be in
writing and shall be signed by the Chairman of the Board of Directors and Chief
Executive Officer or the President and Chief Operating Officer or the Secretary
or an Assistant Secretary. Such notice shall state the purpose or purposes for
which the meeting is called and shall state the place, date and hour of the
meeting and, unless it is the annual meeting, indicate that it is being issued
by or at the direction of the person or persons calling the meeting. A copy of
the notice of any meeting shall be given, personally or by first-class mail, not
fewer than
<PAGE>
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sixty days before the date of the meeting, to each shareholder entitled to vote
at such meeting. If mailed, such notice is given when deposited in the United
States mail, with postage thereon prepaid, directed to the shareholder at his
address as it appears on the record of shareholders, or, if he shall have filed
with the Secretary of the Corporation a written request that notices to him be
mailed to some other address, then directed to him at such other address. An
affidavit of the Secretary of the Corporation or other person giving the notice
or of a transfer agent of the Corporation that the notice required by this
section has been given shall be supplied at the meeting to which it relates.
SECTION 5. Quorum.
Except as otherwise provided by statute, the holders of a majority of the
shares entitled to vote thereat shall constitute a quorum at a meeting of
shareholders for the transaction of any business, provided that when a specified
item of business is required to be voted on by a class or series, voting as a
class, the holders of a majority of the shares of such class or series shall
constitute a quorum for the transaction of such specified item of business.
SECTION 6. Inspectors.
The person presiding at a shareholders' meeting may, and on the request of
any shareholder entitled to vote thereat shall, appoint one or more inspectors.
Each inspector, before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum, the validity
and effect of proxies, and shall receive votes, ballots or consents, hear and
determine questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all shareholders.
The inspectors shall make a report in writing of any matter determined by them
and execute a certificate of any fact found by them.
SECTION 7. Adjournment of Meetings.
Any meeting of shareholders may be adjourned by a majority vote of the
shareholders present or represented by proxy despite the absence of a quorum.
When a meeting of shareholders is adjourned to another time or place, it shall
not be necessary to give any notice of the adjourned meeting if the time and
place to which the meeting is adjourned are announced at the meeting at which
the adjournment is taken, and at the
<PAGE>
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adjourned meeting at which a quorum shall be present, any business may be
transacted, and any corporate action may be taken, which might have been
transacted or taken if the meeting had been held as originally called.
SECTION 8. Voting.
Every shareholder of record shall be entitled at every meeting of the
shareholders to one vote for every share of stock standing in his name on the
record of shareholders of the Corporation unless otherwise provided in the
Certificate of Incorporation and amend ments thereto and except as provided in
Section 9 of this Article I. Every shareholder entitled to vote at a meeting of
shareholders may authorize another person or persons to act for him by proxy. No
proxy shall be valid after the expiration of eleven months from the date thereof
unless otherwise provided in the proxy. A list of shareholders as of the record
date certified by the officer responsible for its preparation or by a transfer
agent shall be available at every meeting of shareholders and shall be produced
upon the request of any shareholder, and all persons who appear from such list
to be shareholders entitled to vote thereat may vote at such meeting.
SECTION 9. Record Date.
For the purpose of determining the shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action, the Board of
Directors may fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall not be more than sixty nor less
than ten days before the day of such meeting, nor more than sixty days prior to
any other action.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 1. Number and Qualifications.
The number of directors constituting the entire Board shall be not less
than three nor more than ten. The number of directors may be increased, or
decreased, by amendment of the by-laws adopted by vote of a majority of the
entire Board of Directors.
Each director shall be at least 18 years of age. No person who has reached
age 70 shall stand for election as a director.
<PAGE>
- 4 -
SECTION 2. Election of Directors.
Except as otherwise required by law or by the Certificate of Incorporation
as amended, and except as hereinafter otherwise provided by Sections 5 and 6 of
this Article II, directors shall be elected by a plurality of the votes cast at
the annual meeting of shareholders by the holders of shares entitled to vote at
the election and shall hold office until the next annual meeting of
shareholders.
SECTION 3. Term of Office.
Each director shall, except as hereinafter provided in Section 4 and in
Section 6 of this Article II, hold office until the expiration of the term for
which he is elected and until his successor has been elected and qualified.
SECTION 4. Resignation and Removal.
Any director may resign at any time. Such resignation shall be made in
writing and shall take effect at the time specified therein, or if no time be
specified, at the time of its receipt by the Chairman of the Board of Directors
and Chief Executive Officer or the Secretary. The acceptance of a resignation
shall not be necessary to make it effective unless so specified therein. Any
director may at any time, with or without cause, be removed by vote of the
shareholders at a special meeting called for that purpose. When, however,
pursuant to the provisions of the Certificate of Incorporation as amended, the
holders of the shares of any class or series, voting as a class, have the right
to elect one or more directors, such director or directors so elected may be
removed only by the applicable vote of the holders of the shares of that class
or series, voting as a class.
SECTION 5. Newly Created Directorships and Vacancies.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the Board for any reason, except the
removal of directors without cause, and except as provided for in Section 6 of
this Article II, may be filled by vote of a majority of the directors then in
office, although less than a quorum exists. A vacancy occurring in the Board by
reason of the removal of a director without cause, may be filled only by vote of
the shareholders, subject to the provisions of said Section 6. A director
elected to fill a vacancy shall be elected to hold office for the unexpired term
of his predecessor, and until his successor is elected and qualified.
SECTION 6. Election of Directors by Holders of Preferred Stock.
Anything in the by-laws to the contrary notwithstanding: In case dividends
on any series of the serial preferred stock of the Corporation at the rate or
rates prescribed for such series shall not have been paid in full for periods
aggregating one year or more, than, and until full cumulative dividends thereon
shall have been paid, the holders of each such series shall have the right,
together with holders of all other serial preferred stock in respect
<PAGE>
- 5 -
to which the same right shall be conferred, to elect a majority of the members
of the Board of Directors of the corporation. Whenever the holders of any series
of serial preferred stock shall become so entitled, either separately or
together with the holders of other serial preferred stock as aforesaid, to elect
a majority of the members of the Board of Directors, and upon the written
request of the holders of record of at least five percent of the total number of
shares of serial preferred stock then outstanding and entitled to such right of
election, addressed to the Secretary of the Corporation, a special meeting of
the holders of serial preferred stock entitled to such right of election and the
holders of Common Stock shall be called for the purpose of electing directors.
At such meeting the holders of serial preferred stock and the holders of Common
Stock shall vote separately, and the holders of serial preferred stock present
in person or by proxy at such meeting shall be entitled to elect, by a plurality
of votes cast by them, a majority of the members of a new Board of Directors of
the corporation, and the holders of Common Stock present in person or by proxy
shall be entitled to elect, by a plurality of votes cast by them, the remainder
of the new Board of Directors. The persons so elected as directors shall
thereupon constitute the Board of Directors of the Corporation, and the terms of
office of the previous directors of the Corporation shall thereupon terminate.
The term "a majority of the members of Board of Directors" as herein used shall
mean one more than one half of the total number of directors provided for by the
by-laws, regardless of the number then in office, and in case one half of such
number shall not be a whole number, such one half shall be the next smaller
whole number. In the event of any vacancy in the Board of Directors among the
directors elected by the holders of serial preferred stock, such vacancy may be
filled by the other directors elected by them, and if not so filled may be
filled by the holders of serial preferred stock entitled to the right of
election as aforesaid at a special meeting of the holders of said stock called
for that purpose, and such a meeting shall be called upon the written request of
at least five percent of the total number of shares of serial preferred stock
then outstanding and entitled to such right of election. If and when, however,
full cumulative dividends upon any series of the serial preferred stock shall at
any subsequent time be paid, then and thereupon such power of the holders of
such series of serial preferred stock to vote in the election of a majority of
the members of the Board of Directors shall cease; subject, however, to being
again revived at any subsequent time if there shall again be default in payment
of dividends upon such series of serial preferred stock for periods aggregating
one year or more as aforesaid. Whenever such power of the holders of all series
of serial preferred stock to vote shall cease, the proper officer of the
Corporation may and upon the written request of the holders of record of five
percent of the total number of shares of Common Stock then outstanding shall
call a special meeting of the holders of Common Stock for the purpose of
electing directors. At any meeting so called, the holders of a majority of the
Common Stock then outstanding, present in person or by proxy, shall be entitled
to elect, by a plurality of votes, a new Board of Directors of the Corporation.
The persons so elected as directors shall thereupon constitute the Board of
Directors of the Corporation, and the terms of office of the previous directors
of the Corporation shall thereupon terminate.
<PAGE>
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SECTION 7. Regular Meetings.
The directors shall hold a regular annual meeting for the election of
officers as soon as practicable after the adjournment of the Annual Meeting of
the shareholders, and, in addition, regular meetings of the directors shall be
held at such times as the Board of Directors may by resolution determine. No
notice of the Annual Meeting shall be required if held immediately after the
Annual Meeting of the shareholders and if a quorum is present.
SECTION 8. Special Meetings.
Special meetings of the directors may be called by (i) the Chairman of the
Board of Directors and Chief Executive Officer or, (ii) in the absence,
unavailability, or inability to act of the Chairman of the Board and Chief
Executive Officer, by the President and Chief Operating Officer and one director
of the Corporation, or (iii) by any two directors at any time upon the written
request of the Secretary on behalf of the two directors.
SECTION 9. Notice and Place of Meetings.
Regular meetings shall be held at such place or places either within or
without the State of New York as the Board of Directors may from time to time
determine. Special meetings shall be held at such place or places either within
or without the State of New York as may be specified in the respective notices
of the meetings. Except as provided in Section 7 of this Article II, notice of
any regular or special meeting of the directors shall be mailed to each director
addressed to him at his residence or usual place of business at least two days
before the day on which the meeting is to be held, or shall be sent to him at
such place by telegraph, or be delivered personally or by telephone, not later
than the day before the day on which the meeting is to be held.
SECTION 10. Business Transacted at Meetings.
Any business may be transacted and any corporate action taken at any
regular or special meeting of the directors whether stated in the notice of the
meeting or not.
SECTION 11. Quorum and Manner of Acting.
A majority of the directors in office at the time of any meeting of the
Board shall constitute a quorum and, except as by law otherwise provided, the
act of a majority of the directors present at any such meeting, at which a
quorum is present, shall be the act of the Board of Directors. In the event it
is necessary to obtain a quorum, and only in such event, at the discretion of
the presiding Board member, any one or more members of the Board may be present
and participate in a meeting of the Board by means of a conference telephone or
similar communications equipment allowing all persons participating in the
meeting to hear each other at the same time. Participation by such means shall
constitute presence in person at such meeting. In the absence of a quorum, the
directors present
<PAGE>
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may adjourn the meeting from time to time until a quorum be had. Notice of any
adjourned meeting need not be given other than by announcement at the meeting.
The directors shall act only as a Board and the individual directors shall have
no power as such.
SECTION 12. Compensation.
The compensation of the directors, other than employees of the
Corporation, for services as directors and as members of committees of the Board
shall be as fixed by the Board from time to time. Such directors shall also be
reimbursed for expenses incurred in attending meetings of the Board and/or
committees thereof.
SECTION 13. Indemnification of Officers and Directors.
A. General Applicability
Except to the extent expressly prohibited by the New York Business
Corporation Law, the Corporation shall indemnify each person made, or threatened
to be made, a party to or involved in any action, suit or proceeding, whether
criminal or civil, administrative or investigative by reason of the fact that
such person or such person's testator or intestate is or was a Director or
Officer of the Corporation, against judgments, fines, penalties, amounts paid in
settlement and reasonable expenses, including attorney's fees and expenses,
reasonably incurred in enforcing such person's right to indemnification,
incurred in connection with such action or proceeding, or any appeal therein,
provided that no such indemnification shall be made if a judgment or other final
adjudication adverse to such person establishes that such person's acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that such person
personally gained in fact a financial profit or other advantage to which such
person was not legally entitled, and provided further that no such
indemnification shall be required with respect to any settlement or other
nonadjudicated disposition of any threatened or pending action or proceeding
unless the Corporation has given its prior consent to such settlement or other
disposition.
b. Scope of Indemnification
The Corporation promptly shall advance or reimburse upon request, after
receipt by the Corporation of a statement or statements from the claimant
requesting such advance or advances of reimbursements, to any person entitled to
indemnification hereunder all reasonable expenses, including attorney's fees and
expenses, reasonably incurred in defending any action or proceeding in advance
of the final disposition thereof upon receipt of an undertaking by or on behalf
of such person to repay such amount if such person is ultimately found not to be
entitled to indemnification or, where indemnification is granted, to the extent
the expenses so advanced or reimbursed exceed the amount to which such person is
entitled; provided, however, that such person shall cooperate in good faith with
any request by the Corporation that common counsel be used by the parties to an
action or proceeding who are similarly situated unless to do so would be
inappropriate due to actual or potential differing interests between or among
such parties.
<PAGE>
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c. Other Indemnification Provisions
Nothing herein shall limit or affect any right of any Director, Officer or
other corporate personnel otherwise than hereunder to indemnification or
expenses, including attorney's fees, under any statute, rule, regulation,
certificate of incorporation, by-law, insurance policy, contract or otherwise;
without affecting or limiting the rights of any Director, Officer or other
corporate personnel pursuant to this Article II, the Corporation is authorized
to enter into agreements with any of its Directors, Officers or other corporate
personnel extending rights to indemnification and advancement of expenses to the
fullest extent permitted by applicable law.
Unless limited by resolution of the Board of Directors or otherwise, the
Corporation shall advance the payment of expenses to the fullest extent
permitted by applicable law to, and shall indemnify, any Director, Officer or
other corporate person who is or was serving at the request of the Corporation,
as a director, officer, partner, trustee, employee or agent of another
corporation, whether for profit or not-for-profit, or a partnership, joint
venture, trust or other enterprise, whether or not such other enterprise shall
be obligated to indemnify such person.
d. Survival of Indemnification
Anything in these By-Laws to the contrary notwithstanding, no elimination
or amendment of this Article II adversely affecting the right of any person to
indemnification or advancement of expenses hereunder shall be effective until
the 60th day following notice to such person of such action, and no elimination
of or amendment to this Article II shall deprive any such person's rights
hereunder arising out of alleged or actual occurrences, acts or failures to act
prior to such 60th day.
e. Inability to Limit Indemnification
The Corporation shall not, except by elimination or amendment of this
Article II in a manner consistent with the preceding Section 13D and with the
provisions of Article IX ("Amendments"), take any corporate action or enter into
any agreement which prohibits, or otherwise limits the rights of any person to,
indemnification in accordance with the provisions of this Article II. The
indemnification of any person provided by this Article II shall continue after
such person has ceased to be a Director or Officer of the Corporation and shall
inure to the benefit of such person's heirs, executors, administrators and legal
representatives.
f. Severability
In case any provision in this Article II shall be determined at any time
to be unenforceable in any respect, the other provisions of this Article II
shall not in any way be affected or impaired thereby, and the affected provision
shall be given the fullest possible enforcement in the circumstances, it being
the intention of the Corporation to afford indemnification and advancement of
expenses to its Directors or Officers, acting in such capacities or in the other
capacities mentioned herein, to the fullest extent permitted by law.
<PAGE>
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SECTION 14. Committees of the Board.
The Board, by resolution adopted by a majority of the entire Board, may
designate from among its members, in addition to the Executive Committee
provided for in Article III of these By-Laws, committees of the Board, each
consisting of three or more directors, and each of which shall have the powers
and duties prescribed in the resolution designating such committees. Anything in
these By-Laws or in the resolution designating such committees to the contrary
notwithstanding, in the event it is necessary to obtain a quorum, and only in
such event, at the discretion of the presiding committee member, any one or more
members of any committee of the Board of Directors may participate in any
meeting of such committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at such meeting.
ARTICLE III.
EXECUTIVE COMMITTEE
SECTION 1. How Constituted and Powers.
The Board of Directors, by resolution adopted by a majority of the entire
Board, may designate three or more of the directors, together with the Chairman
of the Board of Directors and Chief Executive Officer, to constitute an
Executive Committee, to serve at the pleasure of the Board, which Committee
shall during the intervals between meetings of the Board of Directors, unless
limited by the resolution appointing such Committee, have authority to exercise
all or any of the powers of the Board of Directors in the management of the
affairs of the Corporation, insofar as such powers may lawfully be delegated.
The Board may designate one or more directors as alternate members of such
Committee, who may replace any absent member or members at any meeting of such
Committee.
SECTION 2. Removal and Resignation.
Any member of the Executive Committee, except a member ex officio, may be
removed at any time with or without cause, by resolution adopted by a majority
of the entire Board. Any member of the Executive Committee may resign at any
time. Such resignation shall be in writing and shall take effect at the time
specified therein, or, if no time be specified, at the time of its receipt by
the Chairman of the Board of Directors and Chief Executive Officer or the
President and Chief Operating Officer or Secretary. The acceptance of a
resignation shall not be necessary to make it effective unless so specified
therein. Any person ceasing to be a director shall ipso facto cease to be a
member of the Executive Committee.
<PAGE>
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SECTION 3. Filling of Vacancies.
Any vacancy among the members of the Executive Committee occurring from
any cause whatsoever may be filled from among the directors by a majority of the
entire Board of Directors.
SECTION 4. Quorum.
A majority of the members of the Executive Committee shall constitute a
quorum. The act of a majority of the members of the Executive Committee present
at any meeting at which a quorum is present shall be the act of the Executive
Committee. The members of the Executive Committee shall act only as a committee
and the individual members thereof shall have no powers as such.
SECTION 5. Record of Proceedings, etc.
The Executive Committee shall keep a record of its acts and proceedings
and shall report the same to the Board of Directors when and as required.
SECTION 6. Organization, Meetings, etc.
The Executive Committee shall make such rules as it may deem expedient for
the regulation and carrying on of its meetings and proceedings.
SECTION 7. Compensation of Members.
The members of the Executive Committee shall be entitled to such
compensation as may be allowed them by resolution of the Board of Directors.
<PAGE>
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ARTICLE IV.
OFFICERS
SECTION 1. Election.
The Board of Directors, at its regular annual meeting, shall elect or
appoint from their number a Chairman of the Board of Directors and Chief
Executive Officer and the Chairmen of Committees of the Board and may elect or
appoint a vice chairman of the Board of Directors and vice chairmen of
Committees of the Board, which officers shall be officers of the Board; and it
shall elect or appoint a President and Chief Operating Officer, one or more Vice
Presidents, a Secretary, a Treasurer, and a Controller which officers shall be
officers of the Corporation. Each of said officers, subject to the provisions of
Sections 2 and 3 of this Article, shall hold office, if elected, until the
meeting of the Board following the next Annual Meeting of shareholders and until
his successor has been elected and qualified, or, if appointed, for the term
specified in the resolution appointing him and until his successor has been
elected or appointed. Any two or more offices may be held by the same person,
except the offices of President and Secretary. Should any of the officers of the
Board or the President cease to be a director, he shall ipso facto cease to be
such officer.
SECTION 2. Removal.
Any officer may be removed summarily with or without cause at any time by
resolution of the Board of Directors, or, except in the case of any officer
elected by the Board of Directors, by any committee or officer upon whom such
power of removal may be conferred by the Board of Directors, without prejudice,
however, to any rights which any such person may have by contract.
SECTION 3. Resignation of Officers.
Any officer may resign at any time by giving written notice of such
resignation to the Board of Directors, its Chairman and Chief Executive Officer,
the President and Chief Operating Officer or Secretary of the Corporation. Such
resignation shall take effect at the time specified therein, or, if no time be
specified, at the time of its receipt by the Board of Directors or one of the
above-named officers of the Corporation. The acceptance of a resignation shall
not be necessary to make it effective unless so specified therein.
SECTION 4. Filling of Vacancies.
A vacancy in any office, from whatever cause arising, shall be filled for
the unexpired portion of the term in the manner provided in these by-laws for
the regular election or appointment of such officer.
<PAGE>
- 12 -
SECTION 5. Compensation.
The compensation of the officers shall be fixed by the Board of Directors
or by any committee or superior officer upon whom power in that regard may be
conferred by the Board of Directors.
SECTION 6. Chairman of the Board of Directors and Chief Executive Officer.
The Chairman of the Board of Directors and Chief Executive Officer shall,
when present, preside at all meetings of the shareholders and the Board of
Directors. He shall be Chairman of the Executive Committee. He shall be
responsible for direction of the policy of the Board of Directors and shall have
the power and perform the duties necessary to implement such responsibility.
SECTION 7. Vice Chairman of the Board of Directors.
In the absence of the Chairman of the Board of Directors, the Vice
Chairman shall, when present, preside at all meetings of the shareholders and
the Board of Directors. He shall have such powers and perform such duties as the
Chairman of the Board of Directors and Chief Executive Officer shall delegate to
him.
SECTION 8. President and Chief Operating Officer.
The President and Chief Operating Officer shall, subject to the authority
of the Chairman of the Board of Directors and Chief Executive Officer, have the
power and perform the duties usually appertaining to the President and Chief
Operating Officer of a corporation, and such power and duties as the Chairman of
the Board of Directors and Chief Executive Officer shall assign to him.
SECTION 9. The Vice Presidents.
The Vice Presidents shall have such duties as may from time to time be
assigned to them by the Board of Directors or the President and Chief Operating
Officer, or by the Chairman of the Board and Chief Executive Officer in the
President and Chief Operating Officer's absence. When performing the duties of
the President and Chief Operating Officer, they shall have all the powers of,
and be subject to all the restrictions upon, the President.
<PAGE>
- 13 -
SECTION 10. The Treasurer.
The Treasurer shall:
(a) Except as otherwise ordered by the Board, have charge and custody
of, and be responsible for all funds, securities, receipts and
disbursements of the Corporation and shall deposit, or cause to be
deposited, all money and other valuable effects in its name in such
banks, trust companies or other depositaries as shall be selected in
accordance with these by-laws;
(b) Receive and give receipts for payments made to the Corporation and
take and preserve proper receipts for all monies disbursed by it;
(c) In general, perform such duties as are incident to the office of
Treasurer, or as may be from time to time assigned to him by the
Board of Directors, the Chairman of the Board and Chief Executive
Officer or the President and Chief Operating Officer, or as may be
prescribed by law or by these by-laws.
The Treasurer shall give to the Corporation a bond if, and in such sum as,
required by the Board of Directors, conditioned for the faithful performance of
the duties of his office and the restoration to the Corporation at the
expiration of his term of office, or in case of his death, resignation or
removal from office, of all books, papers, vouchers, money or other property of
whatever kind, in his possession belonging to the Corporation.
SECTION 11. Controller.
The Controller shall:
(a) Keep at the office of the Corporation correct books of account of
all its business and transactions, subject to the supervision and
control of the President and Chief Operating Officer and Treasurer;
(b) Exhibit at all reasonable times his books of accounts and records to
any of the directors upon application during business hours at the
office of the Corporation where such books and records are kept;
(c) Render a full statement of the financial condition of the
Corporation whenever requested so to do by the Board of Directors,
the Chairman of the Board and Chief Executive Officer or the
President and Chief Operating Officer; and
(d) In general, perform such duties as may be from time to time assigned
to him by the Board of Directors, the Chairman of the Board and
Chief Executive Officer or the President and Chief Operating
Officer.
<PAGE>
- 14 -
SECTION 12. The Secretary.
The Secretary shall:
(a) Keep the minutes of the meetings of the shareholders, Board of
Directors and Executive Committee in books provided for the purpose;
(b) See that all notices are duly given in accordance with the
provisions of these by-laws or as required by law;
(c) Be custodian of the seal of the Corporation and see that it or a
facsimile thereof is affixed to all stock certificates prior to
their issue, and that it is affixed to all documents the execution
of which under the seal of the Corporation is duly authorized or
which require that the seal be affixed thereto;
(d) Have charge of the stock certificate books of the Corporation and
keep, or cause to be kept, at the office of the Corporation or at
the office of its transfer agent or registrar, a record of
shareholders of the Corporation, containing the names and addresses
of all shareholders, the number and class of shares held by each and
the dates when they respectively became the owners of record
thereof; and
(e) In general, perform such duties as are incident to the office of
Secretary, or as may be from time to time assigned to him by the
Board of Directors, the Chairman of the Board and Chief Executive
Officer or the President and Chief Operating Officer, or as are
prescribed by law or by these by-laws.
SECTION 13. Other Officers.
Other officers, including one or more additional Vice Presidents, may from
time to time be appointed by the Board of Directors or by any officer or
committee upon whom a power of appointment may be conferred by the Board of
Directors, which other officers shall have such powers and perform such duties
as may be assigned to them by the Board of Directors, the Chairman of the Board
and Chief Executive Officer or the President and Chief Operating Officer and
shall hold office for such terms as may be designated by the Board of Directors
or the officer or committee appointing them.
<PAGE>
- 15 -
ARTICLE V.
CONTRACTS, LOANS, BANK ACCOUNTS, ETC.
SECTION 1. Contracts, etc., How Executed.
The Board of Directors, except as in these by-laws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute and deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances, and, unless so authorized by the Board of Directors, no officer or
agent or employee shall have any power or authority to bind the Corporation by
any contract or engagement or to pledge its credits or to render it liable
pecuniarily for any purpose or to any amount.
SECTION 2. Loans.
No loans shall be contracted on behalf of the Corporation and no
negotiable paper shall be issued in its name, unless authorized by the vote of
the Board of Directors. When so authorized, any officer or agent of the
Corporation may effect loans and advances for the Corporation from any bank,
trust company or other institution, or from any firm, corporation or individual
and for such loans and advances may make, execute and deliver promissory notes,
bonds or other evidences of indebtedness of the corporation. When so authorized
any officer or agent of the Corporation, as security for the payment of any and
all loans, advances, indebtedness and liabilities of the Corporation, may
pledge, hypothecate or transfer any and all stocks, securities and other
personal property at any time held by the Corporation, and to that end endorse,
assign and deliver the same. Such authority may be general or confined to
specific instances. The Board of Directors may authorize any mortgage or pledge
of, or the creation of a security interest in, all or any part of the corporate
property, or any interest therein, wherever situated.
SECTION 3. Checks, Drafts, etc.
All checks, drafts or other orders for the payment of money, notes or
other evidence of indebtedness issued in the name of the Corporation shall be
signed by the Treasurer or such other officer or officers, agent or agents of
the Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
<PAGE>
- 16 -
SECTION 4. Deposits.
All funds of the Corporation shall be deposited from time to time to its
credit in such banks, trust companies or other depositaries as the Board of
Directors may select, or as may be selected by an officer or officers, agent or
agents of the Corporation to whom such power, from time to time, may be
delegated by the Board of Directors and, for the purpose of such deposit,
checks, drafts and other orders for the payment of money which are payable to
the order of the Corporation may be endorsed, assigned and delivered by the
President and Chief Operating Officer or a Vice President, or the Treasurer or
the Secretary, or by any officer, agent or employee of the Corporation to whom
any of said officers, or the Board of Directors, by resolution, shall have
delegated such power.
SECTION 5. General and Special Bank Accounts.
The Board of Directors may from time to time authorize the opening and
keeping of general and special bank accounts with such banks, trust companies or
other depositaries as the Board may select and may make such special rules and
regulations with respect thereto, as it may deem expedient.
ARTICLE VI.
CAPITAL STOCK
SECTION 1. Issue of Certificates of Stock.
Certificates for shares of the capital stock of the Corporation shall be
in such form as shall be approved by the Board of Directors. They shall be
numbered, as nearly as may be, in the order of their issue and shall be signed
by the Chairman of the Board of Directors and Chief Executive Officer or by the
President and Chief Operating Officer or a Vice President, and by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed
with the seal of the Corporation or a facsimile thereof. The signatures of the
officers upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than the
Corporation itself or its employee.
SECTION 2. Transfer of Stock.
Shares of the capital stock of the Corporation shall be transferable by
the holder thereof in person or by duly authorized attorney upon surrender of
the certificate or certificates for such shares properly endorsed. Every
certificate of stock exchanged or returned to the Corporation shall be
appropriately cancelled. A person in whose name shares of stock stand on the
books of the Corporation shall be deemed the owner thereof as regards the
Corporation. The Board of Directors may make such other and further rules and
regulations as they may deem necessary or proper concerning the issue, transfer
and registration of stock certificates.
<PAGE>
- 17 -
SECTION 3. Lost, Destroyed and Mutilated Certificates.
The holder of any stock of the Corporation shall immediately notify the
corporation of any loss, destruction or mutilation of the certificates therefor.
The Corporation may issue a new certificate of stock in the place of any
certificate theretofore issued by it alleged to have been lost or destroyed, and
the Board of Directors may, in its discretion, require the owner of the lost or
destroyed certificate or his legal representatives to give the Corporation a
bond in such sum and with such surety or sureties, as they may require to
indemnify the Corporation, and any registrar or transfer agent of its stock,
against any claim that may be made against it by reason of the issue of such new
certificate and against all other liability in the premises.
ARTICLE VII.
DIVIDENDS, SURPLUS, ETC.
SECTION 1. General Discretion of Directors.
The Board of Directors shall have the power from time to time to fix and
determine and to vary the amount of working capital of the Corporation, to
determine whether any and, if any, what dividends shall be declared and paid to
the shareholders, to fix the date or dates for the payment of dividends, and to
fix a time, not exceeding 50 days preceding the date fixed for the payment of
any dividend, as a date for the determination of shareholders entitled to
receive payment of such dividend. When any dividend is paid or any other
distribution is made, in whole or in part, from sources other than earned
surplus, it shall be accompanied by a written notice (1) disclosing the amounts
by which such dividend or distribution affects stated capital, surplus and
earned surplus, or (2) if such amounts are not determinable at the time of such
notice, disclosing the approximate effect of such dividend or distribution as
aforesaid and stating that such amounts are not yet determinable.
<PAGE>
- 18 -
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
SECTION 1. Fiscal Year.
The fiscal year of the Corporation shall be the calendar year.
SECTION 2. Waiver of Notice.
Notice of meeting need not be given to any shareholder who submits a
signed waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of any shareholder at a meeting, in person or by proxy,
without protesting prior to the conclusion of the meeting the lack of notice of
such meeting, shall constitute a waiver of notice by him. Notice of a meeting
need not be given to any director who submits a signed waiver of notice whether
before or after the meeting, or who attends the meeting without protesting,
prior thereto or at its commencement, the lack of notice to him. Whenever the
Corporation or the Board of Directors or any committee thereof is authorized to
take any action after notice to any person or persons or after the lapse of a
prescribed period of time, such action may be taken without notice and without
the lapse of such period of time, if at any time before or after such action is
completed the person or persons entitled to such notice or entitled to
participate in the action to be taken or, in the case of a shareholder, by his
attorney-in-fact, submit a signed waiver of notice of such requirements.
SECTION 3. Notices.
Whenever by the by-laws any written notice is required to be given to any
shareholder, director or officer, the same may be given, unless otherwise
required by law and except as hereinbefore otherwise expressly provided, by
delivering it personally to him or by mailing or telegraphing it to him at his
last known post office address. Where a notice is mailed or telegraphed, it
shall be deemed to have been given at the time it is mailed or telegraphed.
SECTION 4. Examination of Books.
The Board of Directors shall, subject to the laws of the State of New York
have power to determine from time to time, whether, to what extent, and under
what conditions and regulations the accounts and books of the Corporation or any
of them shall be open to the inspection of the shareholders, and no shareholder
shall have any right to inspect any account book or document of the Corporation
except as conferred by the laws of the State of New York unless and until
authorized so to do by resolution of the Board of Directors or shareholders of
the Corporation.
<PAGE>
- 19 -
SECTION 5. Gender.
Words used in these by-laws importing the male gender shall be construed
to include the female gender, wherever appropriate.
ARTICLE IX.
AMENDMENTS
SECTION 1. Amendment by Directors.
The Board of Directors shall have the power without the assent or vote of
the shareholders to adopt by-laws, and except as hereinafter provided in Section
2 of this Article, and subject to such limitations as may be imposed by law, to
rescind, alter, amend or repeal by a vote of a majority of the whole Board any
of the by-laws, whether adopted by the Board or by the shareholders.
SECTION 2. Amendment by Shareholders.
The shareholders shall have power to rescind, alter, amend or repeal any
by-laws and to adopt by-laws which, if so expressed, may not be rescinded,
altered, amended or repealed by the Board of Directors.
<PAGE>
EXHIBIT 4 (ii) 30 b (5)
Rule 424(b)(3)
File Nos. 333-65597
and 33-56349
PRICING SUPPLEMENT NO. 2, DATED JANUARY 26, 2000
(To prospectus dated January 7, 1999, as supplemented
by a prospectus supplement dated January 8, 1999)
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Medium-Term Notes, Series C, as follows:
Principal Amount: $7,500,000
Salomon Smith Barney Inc. $3,750,000
Chase Securities Inc. --
Banc One Capital Markets, Inc.* 3,750,000
----------
Total $7,500,000
Issue Price: 100%
Settlement Date (Original Issue Date): January 31, 2000
Maturity Date (Stated Maturity): June 30, 2001
Type of Note:
[X]Fixed Rate Note
[ Zero Coupon Note
Form:
[X]Book-Entry
[ Definitive Certificates
Authorized denominations: $1,000 and integral multiples thereof
CUSIP No: 15361G AE 5
Interest Rate: 7.05% per annum
Interest Payment Dates: January 1 and July 1, and at maturity
Record Dates: December 15 and June 15
- -------
* Formerly First Chicago Capital Markets, Inc.
<PAGE>
Initial Interest Payment Date: July 1, 2000
Redemption Terms (at option of the issuer):
[X]Not redeemable prior to Stated Maturity
[ ]Redeemable in accordance with the following terms:
Repayment Terms (at option of the holder):
[X]Not repayable prior to Stated Maturity
[ ]Repayable in accordance with the following terms:
Sinking Fund Provisions:
[X]None
[ ]Applicable in accordance with the following terms:
Agents: Salomon Smith Barney Inc.
Banc One Capital Markets, Inc.
Agent acting in capacity indicated below:
[X]As Agents
[ ]As Principals
The notes are being offered at the Issue Price set forth above.
Agents' Commissions (based on amounts placed) as follows:
Salomon Smith Barney $5,625 (.15%)
Banc One Capital Markets, Inc. $5,625 (.15%)
Net proceeds to issuer (before expenses): $7,488,750
Additional Terms: None
The notes have not been approved or disapproved by the Securities
and Exchange Commission or any state securities commission nor have any of these
organizations determined that this pricing supplement or the applicable
prospectus supplement or prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.
<PAGE>
Exhibit 10 (i) 88
THIS EXHIBIT CONTAINS CONFIDENTIAL INFORMATION WHICH HAS BEEN REDACTED AND FILED
SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
AMENDMENT III TO THE AGREEMENT
FOR THE SALE AND PURCHASE OF COAL
THIS AMENDMENT ("AMENDMENT"), dated as of November 1, 1999 TO THAT
AGREEMENT ("AGREEMENT") FOR THE SALE AND PURCHASE OF COAL made and entered into
as of the 1st day of December 1996 and as AMENDED ("AMENDMENT I") ON November 1,
1997 and ("AMENDMENT II") ON November 1, 1998 and between CENTRAL HUDSON GAS &
ELECTRIC CORPORATION, (herein-after referred to as "BUYER") and INTER-AMERICAN
COAL N.V., (hereinafter referred to as "PRODUCER") and INTER-AMERICAN COAL,
INC., (hereinafter referred to as "SALES AGENT"). PRODUCER and SALES AGENT are
hereinafter collectively referred to as "SELLER".
WITNESSETH:
WHEREAS, Article VI of Amendment II of the AGREEMENT provides that
beginning July 1, 1999, BUYER and SELLER shall commence good faith negotiations
with respect to the price of coal for the next Contract Year; and
WHEREAS, notice was duly given and BUYER and SELLER
entered into good faith negotiations; and
WHEREAS, after completion of good faith negotiations,
<PAGE>
BUYER and SELLER desire to amend the AGREEMENT to provide for the pricing of
coal and certain other AGREEMENT provisions;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties hereto agree as follows:
ARTICLE II (TERM OF AGREEMENT), ARTICLE IV (SPECIFICATION & QUALITY
& WEIGHT), ARTICLE VI (BASE PRICE) and ARTICLE VII (ADJUSTMENT IN PRICE FOR
QUALITY) of AMENDMENT II of the AGREEMENT shall be respectively amended in their
entirety and ARTICLE III (DELIVERIES) of the AGREEMENT shall be amended as
indicated, all to read as follows:
ARTICLE II
TERM OF AGREEMENT
-----------------
The Term of this AGREEMENT shall be for the period commencing
January 1, 1997 and continuing until midnight, December 31, 2001, unless sooner
terminated as provided for herein. This AGREEMENT shall terminate automatically,
without further obligation or liability to either party, except for payments for
coal delivered, at the end of the Term.
2
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
In recognition of the pending Auction of the Danskammer Generating
Station, and to provide the new ownership with maximum flexibility, Seller
agrees to forgo deliveries under this AGREEMENT in Contract Year 2001 upon six
months advance notice from the New Owners.
ARTICLE III
DELIVERIES
-----------
Section 1. Quantities/Delivery Schedule: Except for as provided for
below, the quantity of coal sold and purchased hereunder shall be a Firm tonnage
of XXX,XXX Metric Tons (+ or - 10%) per year. In addition, there will be up to
XX,XXX Metric Tons (+ or - 10%) per year called Incremental Tonnage which will
be sold and purchased hereunder provided that the delivered cost per million
Btu's of oil, natural gas or spot coal usable at Buyer's Danskammer Plant or the
equivalent price of replacement electric energy exceeds the applicable Base
Price of coal in delivered cost per million Btu's at appropriately applied heat
rates.
The Sales Agent/Seller will assume that one Vessel per month of a nominal
XX,XXX Metric Tons (+ or - 10%) will be shipped under this Agreement. The third
Vessel in the first and
3
<PAGE>
fourth quarter will deliver Incremental Tonnage provided (1) Buyer requires the
tonnage and (2) Buyer and Seller have agreed on the price for said tonnage as
per the notification procedure described herein.
On or before the the first day of the Notice Month, Buyer will
provide to Seller the fifteen (15) day delivery window for each Vessel for the
following quarter as well as a notice of the Incremental Price for the third
Vessel to be shipped if the schedule is for the first or the fourth quarter. The
Seller is obligated to deliver Incremental Tonnage quoted at the Base Price . On
the first working day of each month of the quarter or fifteen (15) days prior to
each Vessel's ETA, whichever is sooner, the lay days will be reduced to a ten
(10) day window and fifteen (15) days prior to ETA the lay days will be reduced
to a seven (7) day window. Vessel's ETA will be narrowed by the Vessel owner.
Seller will provide notice to the Buyer on or before the fifteenth
day of the Notice Month as to whether Incremental Tonnage will be shipped at the
quoted price. If the Seller accepts the quoted price, the coal will be shipped
as scheduled, with the Incremental tonnage at the quoted price and the Firm
tonnage at the Base Price. The Seller reserves the right to re- offer any
unshipped Incremental Tonnage to the Buyer at another
4
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
time in the ensuing twelve (12) months (commencing with the quarter during which
the unshipped Incremental Tonnage would otherwise have been shipped) at the Base
Price. In each such instance, Buyer will then have the option to accept that
Incremental Tonnage or permanently cancel that Incremental Tonnage.
Section 3. Delivery Schedule Limitations: All Firm Tonnage in a
quarter will be delivered before any Incremental Tonnage is delivered. Both Firm
and Incremental Tonnage can be delivered during the same quarter, but Seller
will not be obligated to deliver more than three (3) XX,XXX Metric Ton shipments
of coal during any one quarter, unless otherwise mutually agreed. There will be
a minimum of fifteen (15) calendar days between shipment releases from the Load
Port unless otherwise mutually agreed.
Section 9.1 Vessel Failure to Discharge at Minimum Rate: Should
Seller's Vessel fail to offload cargo at a minimum rate of X,XXX Metric Tons per
hour, Buyer shall receive a reduction of U.S. $ .XX per NT for each NT so
delivered by said Vessel. This reduction is over and above any allowances
previously provided herein.
5
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
ARTICLE IV
----------
SPECIFICATION & QUALITY & WEIGHT
--------------------------------
Section 1. Origin: The coal shall be from the
------
Producer's operations as per the component blends indicated and
meet the specifications as per Attachment I:
Blend A Blend B
Santander XX% XXX%
Tachira XX% X%
Mina Norte X% X%
BUYER and SELLER agree that SELLER's Norte de Santander (Santander)
coal shall be the primary component (XX % minimum) for each shipment under this
agreement. Tachira coal shall be the secondary component (XX% maximum). Blend A
above will be shipped unless another blend (B or other) is mutually agreed. The
prices for coal shipped as provided in Article VI will prevail provided the
secondary coal is limited to a maximum of 30% of the two coal blend. Higher
percentages of Santander in blend A will command the same price per short ton.
Coal loadings with greater than XX% of the secondary coal or those using a three
coal blend that results in a lower price per net ton will be priced at the
weighted component price per MMBtu (See Attachment III) provided the cargo is
accepted by Central Hudson.
6
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
The two incremental cargoes will be priced in accordance with the contract
provisions for incremental tonnage which will be subject to adjustment as
provided above if the secondary coal is greater than XX%. The difference between
the Base Price of coal and the weighted component price shall be deducted from
the agreed incremental price. Mutually agreed shipments of coal blends not
provided herein shall be priced at the weighted component price per MMBtu or as
mutually agreed between Buyer and Seller.
ARTICLE VI
BASE PRICE
----------
Section 1. The Base Price for coal shipped under the terms of this
Agreement will be $XX.XX DES per NT for Blend A and $XX.XX per NT for Blend B
for the Contract Year 2000. Buyer has requested and Seller has agreed to ship
Blend A in contract year 2000 however Seller reserves the option to ship Blend B
in the event that coal stocks or vessel availability make Blend A untenable.
7
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
Section 2. On or before July 1, 2000, Buyer and Seller will enter
into negotiations to fix the Base Price for coal delivered hereunder for the
ensuing year. This Agreement will terminate on December 31, 2000, if
negotiations for the following year have not been completed by October 1.
ARTICLE VII
-----------
ADJUSTMENT IN PRICE FOR QUALITY
-------------------------------
Section 3. Adjustment for Ash Value: The Price to be paid to Seller
by Buyer is based upon coal with an ash content (Ash Value) of XXXXX percent
(X%) by weight of the "as received" analysis of the coal. If the Ash Value is
between X.X% and X.X%, there will be no adjustment for Ash Value. If the Ash
Value is less than X.X%, then a premium of $.XXX per net ton shall be paid to
Seller for each .X% Ash Value variation below X.X%. If the Ash Value is greater
than X.X%, then a penalty of $X.XXX per net ton shall be deducted from the Price
for each .X% Ash Value variation in excess of X.X%.
8
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this AGREEMENT to
be executed in its behalf by its proper officer thereunder duly authorized, all
as of the day and year first above written.
BUYER: CENTRAL HUDSON GAS & ELECTRIC CORPORATION
BY: /s/ Arthur R. Upright
------------------------------------------------
Arthur R. Upright
Senior Vice President
Regulatory Affairs, Financial Planning And Accounting
PRODUCER: INTER-AMERICAN COAL N.V.
BY:
/s/ Marcel L. J. van den Berg
------------------------------------------------
Marcel L. J. van den Berg
ITS: President and Chief Executive Officer
SALES AGENT: INTER-AMERICAN COAL, INC.
BY: /s/ Marcel L. J. van den Berg
------------------------------------------------
Marcel L. J. van den Berg
ITS: President
9
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
Attachment III
Base Price/Blend:
Component $/MMBtu Min % Max %
Mina Norte $X.XXX X XX
Norte de Santander $X.XXX XX XXX
Tachira $X.XXX X XX
Weighted Prices per short ton determined using the above $/MMBtu
and the guaranteed contract Btu/Lb .
Exhibit 10 (i) 89
THIS EXHIBIT CONTAINS CONFIDENTIAL INFORMATION WHICH HAS BEEN REDACTED AND FILED
SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
AMENDMENT I TO THE AGREEMENT
FOR THE SALE AND PURCHASE OF COAL
THIS AMENDMENT ("AMENDMENT"), dated as of November 1, 1999 TO THAT
AGREEMENT ("AGREEMENT") FOR THE SALE AND PURCHASE OF COAL made and entered into
as of the 1st day of November 1998 between CENTRAL HUDSON GAS & ELECTRIC
CORPORATION, (herein-after referred to as "BUYER") and GLENCORE Ltd.,
(hereinafter referred to as "SELLER").
WITNESSETH:
WHEREAS, Article IV of the AGREEMENT provides that beginning July 1,
1999, BUYER and SELLER shall commence good faith negotiations with respect to
the price of coal for the next Contract Year; and
WHEREAS, notice was duly given and BUYER and SELLER entered into
good faith negotiations; and
WHEREAS, after completion of good faith negotiations, BUYER and
SELLER desire to amend the AGREEMENT to provide for the pricing of coal and
certain other AGREEMENT provisions;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties hereto agree as follows:
SECTION 8, ARTICLE II, (DELIVERIES) ,SECTIONS 1 & 2, ARTICLE IV
(PAYMENT) AND SECTION 4, ARTICLE V (ADJUSTMENT IN PRICE FOR QUALITY) of the
AGREEMENT shall be respectively amended in their entirety for contract year
2000. The remaining ARTICLES AND SECTIONS of the AGREEMENT shall remain in full
force and affect. The amended ARTICLE AND SECTIONS shall read as follows:
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
ARTICLE II
DELIVERIES
Section 8. If Buyer's coal unloading system or equipment is damaged
or forced to shut down as the result of receiving foreign or oversized material
from the vessel, then the Seller shall be liable for any damage and/or delays
associated with the unauthorized delivery of this extraneous material.
Demurrage at Discharge Berth
If after completion of discharge Buyer has used more time to receive
the entire cargo than allowed, Buyer will reimburse Seller for excess laytime
used at the rate of USD $XX,XXX for each 24 hours, fractions pro rata.
If after completion of discharge Seller's vessel has failed to
offload the entire cargo at a minimum rate of XXXX short tons per hour, Seller
will reduce the price as determined by Article IV, Section 1 by USD $ .XX per
short ton for each ton of coal delivered.
ARTICLE IV
PAYMENT
Section 1. Price: The Base Price of the Firm cargoes of coal sold
hereunder in contract year 2000 is fixed at $XX.XX per short ton CIFFO Roseton
Dock. Option Cargoes will be priced in accordance with ARTICLE II, Section 1.
Section 2. On or before July 1st 2000, Buyer and Seller will enter
into negotiations to fix the Base Price for coal delivered hereunder for the
ensuing year. Unless otherwise agreed, this Agreement will terminate on December
31st of that contract year if negotiations for the following year have not been
completed by November 1st.
2
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
ARTICLE V
ADJUSTMENT IN PRICE FOR QUALITY
Section 4. Adjustment for Sulfur Value: If the Sulfur Value of the
coal shipment is less than or equal to X.XX% there will be no adjustment for
Sulfur Value variation. If the Sulfur Value is greater than X.XX% but less than
or equal to X.XX% then a penalty of $X.XX per ton shall be deducted from the
Price for each X.XX% Sulfur Value variation in excess of X.XX%.
IN WITNESS WHEREOF, each Party hereto has caused this Agreement to
be executed in its behalf by its proper officer thereunder duly authorized, all
as of the day and year first above written.
BUYER: CENTRAL HUDSON GAS & ELECTRIC CORPORATION
BY /s/ Arthur R. Upright
-------------------------------------------------
Arthur R. Upright
ITS Senior Vice President-Regulatory Affairs, Financial Planning And Accounting
SELLER: GLENCORE LTD.
BY /s/ Gregory L. Marcum
------------------------------------------------
ITS Trader
-------------------------------------------------
3
Exhibit 10 (i) 90
THIS EXHIBIT CONTAINS CONFIDENTIAL INFORMATION WHICH HAS BEEN REDACTED AND FILED
SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
AMENDMENT I TO THE AGREEMENT
FOR THE SALE AND PURCHASE OF COAL
This Amendment ("Amendment"), dated as of November 1, 1999 to that
Agreement ("Agreement") for the sale and purchase of coal made and entered into
as of the 1st day of April 1999 between Central Hudson Gas & Electric
Corporation, (hereinafter referred to as "Buyer") and Arch Coal Sales Company,
Inc., Agent for the Independent Operating Subsidiaries of Arch Coal, Inc.,
(hereinafter referred to as "Seller").
WITNESSETH:
WHEREAS, Article IV of the Agreement provides that beginning July 1,
1999, Buyer and Seller shall commence good faith negotiations with respect to
the price of coal for the next Contract Year; and
WHEREAS, notice was duly given and Buyer and Seller entered into good
faith negotiations; and
WHEREAS, after completion of good faith negotiations, Buyer and
Seller desire to amend the Agreement to provide for the pricing of coal and
certain other Agreement provisions;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties hereto agree as follows:
ARTICLE III, (SPECIFICATIONS & QUALITY & WEIGHTS), ARTICLE IV (PRICE
& PAYMENT) AND ARTICLE V (ADJUSTMENT IN PRICE FOR QUALITY) of the Agreement
shall be respectively amended in their entirety for contract year 2000. The
remaining ARTICLES of the Agreement shall remain in full force and affect. The
amended ARTICLES shall read as follows:
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
ARTICLE III
SPECIFICATIONS & QUALITY & WEIGHTS
----------------------------------
Section 1. Origin: The Primary Source of coal for deliveries hereunder
shall be from the Mingo Logan Operations and such coal shall meet the
specifications herein. Coals from other sources shall not be shipped without the
prior written approval of Buyer.
Section 2. As Received Quality Specifications: The coal delivered
hereunder shall conform to the following Typical Specifications on an "as
received" basis determined on a per Vessel basis. The quality of the coal
delivered by Seller shall be determined in accordance with Article VI.
Typical Minimum Maximum ASTM Method
------- ------- ------- -----------
As Received:
Moisture % X XX D 3173
Volatiles % XX XX XX D 3175
Fixed Carbon % XX XX XX D 3172
Ash % X.X -- X.X D 3174
BTU/LB XX,XXX XX,XXX -- D 3286
Sulphur % X.XX X.XX X.XX D 3177/4239
SO2 (LBS./MMBTU) X.XX -- X.X Calculated
Grind (HGI) XX XX (1) XX D 409-85
Ash Fusion (Reducing)
(I.D., Deg. F) X,XXX X,XXX -- D1587
Coal Fines:
(A) 1/4" Round Hole -- -- XX% D4749
(B) 35 Mesh U.S. Standard -- -- XX% D4749
(1) Subject to approval by Buyer.
2
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
THIS COAL SHALL BE FREE OF EXTRANEOUS MATERIAL AND SHALL HAVE A MAXIMUM TOP SIZE
OF TWO INCHES.
(A) Coal defined as zero times one quarter inch round hole.
(B) Coal fines defined as zero by 0.5 mm (35 mesh U.S. Standard sieve or 32
mesh Tyler sieve).
Section 3. Buyer's Remedies Related to Quality Specifications: In lieu of
any other remedies related to Seller's failure to meet the quality
specifications provided for in Section 2 above, except for the price adjustments
for quality provided for in Article V herein, Buyer shall have the rights and
remedies described in this Section 3 upon Seller's failure to deliver coal in
accordance with the specifications set forth in Section 2 of this Article III.
Buyer's ability to use the coal being dependent on the coal meeting the
specifications set forth above, it is agreed that Buyer shall have the right to
reject any and all shipments which fail to meet any of the individual shipment
as received rejection limits shown below:
INDIVIDUAL SHIPMENT REJECTION LIMITS (As Received)
--------------------------------------------------
Sulphur (By Weight) X.X% Maximum
Volatiles XX% Minimum
Ash % X% Maximum
Ash Fusion (I.D. - Degrees F) X,XXX Minimum(1)
Grind (HGI) XX Minimum
Gross Calorific Value (BTU/LB) XX,XXX Minimum
SO2/Million BTU X.X LBS. Maximum
(1) Lower value subject to approval by Buyer.
3
<PAGE>
Seller shall pay all freight, diversion, demurrage, testing and other
expenses in connection with any such rejected shipment, or shipments found to be
nonconforming, unless such shipment is accepted by Buyer. Furthermore, Seller
certifies that it will not make any shipment shown by sampling and analyses (as
provided in Article VI) to exceed the individual shipment rejection limits.
Section 4. Seller's Duty of Care: Seller shall, at all times exercise
reasonable care and diligence in its efforts to ship to Buyer coal which
conforms to the specifications as set forth above in Section 2. Nothing in this
Article III shall be construed to relieve Seller of its obligation to conduct
its mining and operations in a competent manner, consistent with good industry
practices, so as to produce coal which will meet the specifications as set forth
in Section 2 above.
Section 5. Weights: For rail/water deliveries, The Seller shall submit to
Buyer the certified rail weights provided by the origin carrier within five (5)
working days after the certified weights become available.
For water only deliveries, the weight of coal sold hereunder shall be
determined by an Independent Marine Survey(s) of the Vessel at the Load Port or
by Independent Marine Survey(s) at Buyer's Discharge Port if Seller's Vessel has
multiple Discharge Ports. The Buyer, Seller or their Agents reserve the right to
witness any or all Marine Surveys.
4
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
ARTICLE IV
PRICE AND PAYMENT
Section 1. Price: The Base Price of the Firm cargoes of coal sold
hereunder is fixed at $ XX.XX per short ton DES Roseton Dock. Option Cargoes
will be priced in accordance with ARTICLE II, Section 1.
Section 2. Price Reopener: On or before July 1st 2000, Buyer and Seller
will enter into negotiations to fix the Base Price for coal delivered hereunder
for the ensuing year. Unless otherwise agreed, this Agreement will terminate on
December 31, 2000 if negotiations for the following year have not been completed
by October 31st.
Submission of Analysis: In addition to Seller's notifications provided for
in Article II, Section 3, Seller shall submit to Buyer the analytical data on
said shipments from the Operations as obtained by the Independent Laboratory for
each shipment within five days after each shipment.
Section 3. Invoice: An invoice for any adjustments for quality as
hereinafter defined, and all coal shipped from the Operations based on weights
determined in accordance with Article III Section 5 will be submitted by the
Seller to the Buyer. The coal shipped will be invoiced at the Price as defined
in ARTICLE IV, Section 1.
5
<PAGE>
Section 4. Taxes: All taxes due on cargo in U.S.A. upon transfer of title per
Incoterms (1990) are for Buyer's account.
Section 5. Vessel Costs: All usual and customary Vessel costs, including but
not limited to docking, are for the account of the Seller (i.e., pilots, tugs).
Section 6. Payment: Buyer shall make payment to Seller within thirty (30)
calendar days from vessel Bill of Lading Date. There shall be no discount for
early payment. Payments due on a Saturday shall be made on the prior Friday and
those due on a Sunday shall be made on the following Monday. Payments due on a
Holiday shall be made on the following week day.
Payment shall be made by wire transfer as directed by Seller upon written
notice to Buyer.
6
<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS BEEN REDACTED
AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
ARTICLE V
ADJUSTMENT IN PRICE FOR QUALITY
Section 1. BTU Value (Gross Calorific Value As Received Basis - BTU/LB):
The Price to be paid to Seller by Buyer is based upon coal with XX,XXX BTU/LB
heat content (BTU Value) for each net ton of coal in each shipment. The BTU
Value of the coal sold hereunder may vary, and the Price for such coal shall be
adjusted to compensate for variations in BTU Value, as described below.
Section 2. Adjustment for BTU Value: If the BTU Value of the coal shipment
is between XX,XXX BTU/LB and XX,XXX BTU/LB (inclusive), there will be no
adjustment for BTU Value variation. If the BTU Value is less than XX,XXX BTU/LB
or greater than XX,XXX BTU/LB, the Price for a shipment shall be adjusted, based
upon variations from the XX,XXX BTU/LB BTU Value, as follows:
[a] For a coal shipment with a BTU Value greater than XX,XXX BTU/LB, a
premium shall be paid by Buyer to Seller at the rate of $X.XX per 100 BTU/LB,
fractions pro rata above XX,XXX BTU/LB;
[b] For a coal shipment with a BTU Value less than XX,XXX BTU/LB but
greater than XX,XXX BTU/LB, a penalty shall be deducted from the Price at the
rate of $X.XX per 100 BTU/LB, fractions pro rata below XX,XXX BTU/LB;
[c] For a coal shipment with a BTU Value less than XX,XXX BTU/LB but
greater than XX,XXX BTU/LB, a penalty shall be deducted from the Price at the
rate of $ X.XX per 100 BTU/LB, fractions pro rata below XX,XXX BTU/LB.
Section 3. Adjustments for Ash Value: The Price to be paid to Seller by
Buyer is based upon coal with an ash content (Ash Value) of XXXXX percent (X%)
by weight of the "as received" analysis of the coal. If the Ash Value is between
X.XX% and X.XX% there will be no adjustment for Ash Value. If the Ash Value is
less than X.XX% then a premium of $.XX per ton shall be paid to Seller for each
0.X% Ash Value variation below X.X%. If the Ash Value is greater than X.XX% but
equal to or less than X% then a penalty of $.XX per ton shall be deducted from
the Price for each X.X% Ash Value variation in excess of X.X%. The maximum
premium/penalty shall be $ X.XX per ton.
7
<PAGE>
IN WITNESS WHEREOF, each Party hereto has caused this Agreement to
be executed in its behalf by its proper officer thereunder duly authorized, all
as of the day and year first above written.
BUYER: CENTRAL HUDSON GAS & ELECTRIC CORPORATION
BY /s/ Arthur R. Upright
------------------------------------
Arthur R. Upright
ITS Senior Vice President-Regulatory Affairs, Financial Planning And Accounting
SELLER: ARCH COAL SALES COMPANY, INC.
BY /s/ John W. Eaves
------------------------------------
John W. Eaves
ITS President of Arch Coal Sales Company, Inc.
--------------------------------------------
8
EXHIBIT 10 (i) 91
FIRST AMENDMENT
THIS FIRST AMENDMENT dated as of June 11, 1999 (this "Amendment") amends
the Credit Agreement dated as of December 4, 1998 (the "Credit Agreement") among
CH ENERGY GROUP, INC. (the "Company"), various financial institutions (the
"Lenders") and THE FIRST NATIONAL BANK OF CHICAGO, as Administrative Agent for
the Lenders (in such capacity, the "Administrative Agent"). Terms defined in the
Credit Agreement are, unless otherwise defined herein or the context otherwise
requires, used herein as defined therein.
WHEREAS, the Company, the Lenders and the Administrative Agent have
entered into the Credit Agreement; and
WHEREAS, the parties hereto desire to amend the Credit Agreement as
hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 Amendment. Effective as set forth in Section 2, clause (iii) of
Section 5.3 of the Credit Agreement shall be amended by deleting the following
language therefrom:
"(it being understood that prior to the Funding Date, the Utility shall
obtain an amendment to or waiver of the change of control provision set
forth in Section 6.01(l) of its Credit Agreement dated as of October 23,
1996 with various financial institutions and Morgan Guaranty Trust Company
of New York, as agent, which amendment or waiver shall permit the Utility
to become a Subsidiary of the Borrower)".
SECTION 2 Effectiveness. The amendment set forth in Section 1 above shall
become effective on the date when the Administrative Agent shall have received
counterparts of this Amendment executed by the Company and each Lender (it being
understood that, in the case of any Lender, the Administrative Agent may rely
upon facsimile confirmation of the execution of a counterpart hereof by such
Lender for purposes of determining the effectiveness hereof).
SECTION 3 Miscellaneous.
3.1 Continuing Effectiveness, etc. As herein amended, the Credit Agreement
shall remain in full force and effect and is hereby ratified and confirmed in
all respects. After this Amendment become effective, all references in the
Credit Agreement and the other Loan Documents to "Credit Agreement" or similar
terms shall refer to the Credit Agreement as amended hereby.
<PAGE>
3.2 Counterparts. This Amendment may be executed in any number of
counterparts and by the parties herto on separate counterparts, and each such
counterpart shall be deemed to be an original but all such counterparts shall
together constitute one and the same Amendment.
3.3 Governing Law. This Amendment shall be governed by the laws of
the State of Illinois applicable to contracts made and to be performed
entirely within such State.
3.4 Successors and Assigns. This Amendment shall be binding upon the
Company, the Lenders and the Administrative Agent and their respective
successors and assigns, and shall inure to the benefit of the Company, the
Lenders and the Administrative Agent and the respective successors and assigns
of the Lenders and the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
CH ENERGY GROUP, INC.
By: /s/ Steven V. Lant
----------------------------
Title: Secretary and Treasurer
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Administrative Agent
By:_______________________
Title______________________
THE CHASE MANHATTAN BANK
By:_______________________
Title:______________________
MARINE MIDLAND BANK
By:________________________
Title:______________________
<PAGE>
EXHIBIT 10 (iii) 19
AMENDMENT TO THE
DIRECTORS' DEFERRED COMPENSATION PLAN
OF CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Central Hudson Gas & Electric Corporation ("Central Hudson"), established
the Directors' Deferred Compensation Plan, effective October 1, 1980, and
thereafter amended (as amended, the "Plan").
It is proposed to further amend the Plan to permit Directors who
participate in the Plan two options by which deferred Compensation can be
adjusted prior to distribution.
Accordingly, Article 3 of the Plan is hereby amended and restated (all
other terms being ratified, affirmed and approved), effective October 1, 1999,
to read as follows:
"Article 3. PAYMENT OF DEFERRED COMPENSATION
3.1 Compensation deferred by the Corporation for a Director (and
adjusted to reflect the "Interest Equivalent" and/or "Equity Factor", as
those terms are described below) in accordance with this Plan shall be
paid to such Director by the Corporation at such time that he/she ceases
being a Director of the Corporation or at such other time after ceasing to
be a Director of the Corporation as he/she may specify when he/she makes
an election pursuant to Section 2.1; provided, however, that the
commencement of such pay-out period shall be at least one year after the
effective date of such election.
3.2 At the sole option of the Director, payment by the Corporation
pursuant to Section 3.1 shall be a lump sum or in equal quarterly
installments, not to exceed 40 installments.
3.3 A.If elected, as provided below, the "Interest Equivalent" shall
result in an additional sum to be paid to the Director under the Plan. The
Interest Equivalent shall be determined by applying the "United States
Treasury Bill Rate", as that term is hereinafter defined, to that part (as
the Director shall elect) of Compensation credited by the Corporation to
that Director's compensation ledger, during such periods as the Director
shall elect, commencing on the date on which each increment of such
Compensation would have been paid to such Director by the Corporation in
the absence of this Plan, and ending on the date on which each such
increment and the applicable Interest Equivalent are fully paid by the
Corporation pursuant to this
<PAGE>
Plan. During periods of more than one month when an Interest Equivalent
election is in effect, the United States Treasury Bill Rate shall be
compounded monthly and applied to sums of Interest Equivalent remaining
unpaid under this Plan until such sums are fully paid.
If elected, as provided below, the "Equity Factor" shall
increase or decrease monthly the amount of Compensation, subject to such
election, credited by the Corporation to that Director's compensation
ledger. The Equity Factor shall be determined by applying the "Standard &
Poor's 500 Index Rate", as that term is hereinafter defined, to that part
(as the Director shall elect) of Compensation credited by the Corporation
to that Director's compensation ledger, during such periods as the
Director shall elect, commencing on the date on which each increment of
such Compensation would have been paid to such Director by the Corporation
in the absence of this Plan, and ending on the date on which each such
increment is fully paid by the Corporation pursuant to this Plan.
3.4 A.The term "United States Treasury Bill Rate", as used herein,
shall be determined for each month in which it is to be applied to that
part (as a Director shall elect) of Compensation credited to a Director's
Compensation ledger pursuant to the provisions of this Plan, by computing
the average of the discount rates in effect during the first and last
weeks of the period of three calendar months immediately preceding the
month in which the United States Treasury Bill Rate is to be so applied.
B.The "Standard & Poor's 500 Index Rate", as used herein, shall
be determined for each month in which it is to be applied to that part (as
a Director shall elect) of Compensation credit to a Director's
Compensation ledger pursuant to the provision of this Plan, by computing
the percentage change in the Standard & Poor's 500 Index from the first
day of the immediately preceding calendar month to the last day of such
month, which percentage shall increase or decrease the amount of such
Compensation subject to such election.
C.The Director shall have the right to elect and reelect monthly
either the United States Treasury Bill Rate or the Standard & Poor's 500
Index Rate, or a combination thereof, to be applied to the Compensation
credited by the Corporation to that Director's compensation ledger. The
initial election and any reelection must be received at least three (3)
business days to the beginning of a month. If no initial election is
timely made, the United States Treasury Bill Rate shall apply. If no
reelection is timely made the prior timely election shall continue in
effect.
3.5 If it is not possible to calculate either the United States
Treasury Bill Rate or the Standard & Poor's 500 Index Rate in the above
manner for any month, then such terms shall mean, for the Rate it is not
possible to calculate, the annual
2
<PAGE>
interest rate paid by the Corporation during such month on its customers'
deposits, less one percent.
3.6 If the death of a Director shall occur before he has received
full payment from the Corporation of all the Compensation, as adjusted,
payable under this Plan, the Corporation shall make all remaining payments
due or to become due hereunder in a single sum to the beneficiary or
beneficiaries designated in writing and filed with the Plan Administrator
by the Director in his lifetime, or if the Director fails to make such
designation or if the designee predeceases the Director, then to the
Director's estate in a single sum upon the appointment of the executor or
administrator of such estate."
IN WITNESS WHEREOF, the undersigned Chairman of the Board and Chief
Executive Officer of Central Hudson Gas & Electric Corporation has signed this
instrument this 24th day of September, 1999 as duly authorized by resolutions of
its Board of Directors.
/s/ Paul J. Ganci
-------------------------------------------------
Chairman of the Board and Chief Executive Officer
of Central Hudson Gas & Electric Corporation
3
<PAGE>
EXHIBIT 10 (iii) 20
ASSIGNMENT AND ASSUMPTION
EXECUTIVE DEFERRED COMPENSATION PLAN
Central Hudson Gas & Electric Corporation ("Assignor") hereby assigns the
Executive Deferred Compensation Plan ("Plan") of the Corporation, pursuant to
authorization of its Board of Directors by action taken on January 28, 2000, in
the form attached hereto, to CH Energy Group, Inc. ("Assignee").
Assignor and Assignee hereby agree as follows:
Assignor hereby assigns all of its interest and obligations under the
attached Plan to Assignee. Assignee, pursuant to authorization of its Board of
Directors by action taken on February 4, 2000, hereby assumes all of Assignor
interest in and obligations under said Plan, effective December 15, 1999.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Dated: As of December 15,1999
By: /s/ Carl E. Meyer
-----------------------------------
Name: Carl E. Meyer
Title: President and Chief Operating Officer
CH ENERGY GROUP, INC.
Dated: As of December 15,1999
By: /s/ Paul J. Ganci
----------------------------------
Name: Paul J. Ganci
Title: Chairman of the Board, President and
Chief Executive Officer
<PAGE>
EXHIBIT 10 (iii) 21
AMENDMENT, ADOPTION, ASSIGNMENT AND ASSUMPTION
STOCK PLAN FOR OUTSIDE DIRECTORS
Central Hudson Gas & Electric Corporation ("Assignor") hereby agrees to
amend and restate its Stock Plan For Outside Directors ("Plan"), and readopts
such Plan, as amended and restated, pursuant to authorization of its Board of
Directors by action taken on November 19, 1999, such Plan to be in the form
attached hereto. Assignor hereby assigns said Plan, as amended and restated, to
CH Energy Group, Inc. ("Assignee").
Assignor and Assignee hereby agree as follows:
Assignor hereby assigns all of its interest and obligations under the
attached Plan, as amended and restated, to Assignee. Assignee, pursuant to
authorization of its Board of Directors by action taken on November 19, 1999,
hereby assumes all of Assignor interest in and obligations under said Plan, as
amended and restated, effective December 15, 1999.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Dated: As of December 15, 1999
By: /s/ Carl E. Meyer
----------------------------------
Name: Carl E. Meyer
Title: President and Chief Operating Officer
CH ENERGY GROUP, INC.
Dated: As of December 15, 1999
By: /s/ Paul J. Ganci
---------------------------------
Name: Paul J. Ganci
Title: Chairman of the Board, President and
Chief Executive Officer
<PAGE>
EXHIBIT 10 (iii) 21
AMENDED AND RESTATED STOCK PLAN
FOR OUTSIDE DIRECTORS OF
CH ENERGY GROUP, INC.
Central Hudson Gas & Electric Corporation ("Central Hudson"), effective
January 1, 1996, established a stock plan for eligible members of its Board of
Directors in recognition of their past and future services. Central Hudson,
effective December 15, 1999, became a wholly- owned subsidiary of CH Energy
Group, Inc. ("Corporation"). Therefore, and, by this amendment and restatement
of such plan, the Corporation hereby becomes successor in interest to Central
Hudson under such plan, as amended, to read as follows:
The loyalty and dedicated service of "outside" directors is essential to
the growth and progress of any publicly-held company. Therefore, such plan is
intended to better enable the Corporation to attract and retain qualified
outside directors until they reach the mandatory retirement age of 70 for all
directors. The following shall constitute the terms and conditions of the
Corporation's Stock Plan for Outside Directors:
SECTION 1. DEFINITIONS
1.1 "Account" means the account referred to in Section 4.1 hereof.
1.2 "Plan" means the CH Energy Group, Inc. Stock Plan for Outside
Directors as described in this instrument, and as it from time to time may be
amended, which is intended to be unfunded for tax purposes and for purposes of
Title I of the Employee Retirement Income Security Act of 1974.
1.3 "Committee" means the Committee referred to in Section 7.1.
1.4 "Corporation" means CH Energy Group, Inc. (or any successor
corporation or, prior to December 15, 1999, Central Hudson Gas & Electric
Corporation ("Central Hudson")).
1.5 "Director" means a person duly elected and serving as a member
of the Corporation's Board of Directors who is also not an employee of the
Corporation or any of its affiliates.
1.6 "Fiscal Year" means the fiscal year of the Corporation as
established from time to time.
1.7 "Participant" means each Director who participates in the Plan
in accordance with the terms and conditions of the Plan.
<PAGE>
1.8 "Share Equivalent" means a unit of participation in the Plan,
equivalent to one share of Common Stock, credited to a Participant pursuant to
Section 3.1.
1.9 "Common Stock" shall mean the common stock of the Corporation,
$.10 par value.
SECTION 2. ELIGIBILITY AND PARTICIPATION
2.1 Each Director is a Participant.
SECTION 3. CREDITED SHARE EQUIVALENTS
3.1 (a) As additional compensation for services rendered, each
Participant shall be credited with 25 Share Equivalents for each full quarterly
period of a Fiscal Year during which such Participant served as a Director. Such
credits shall be made as of the end of each quarterly period (commencing with
the first quarterly period ending in March 1996, when the term Corporation meant
Central Hudson) during which the Participant served as a Director of the
Corporation.
(b) As additional compensation for services rendered, each
Participant upon ceasing to serve as a member of the Corporation's Board of
Directors (except for any such member whose service is terminated for cause)
shall also be entitled to receive 25 Share Equivalents for each full quarterly
period of a Fiscal Year (but not for more than 40 quarters) during which such
Participant served as an Outside Director, including periods prior to January 1,
1996. Such entitlement shall be implemented by crediting such Participant's
Account with 25 Share Equivalents as of the end of each full quarterly period of
a Fiscal Year commencing with the first such period after such Participant's
cessation. Such entitlement shall be personal to such Participant and shall not
survive such Participant's death, except for Share Equivalents credited to such
participant's Account prior to death.
(c) Such credited Share Equivalents shall be treated as
deferred compensation to be distributed as provided in Section 5.
SECTION 4. DEFERRED COMPENSATION ACCOUNT
4.1 A deferred compensation account (herein referred to as the
"Account") shall be established for each Participant, consisting of Share
Equivalents credited pursuant to Section 3.1.
4.2 Upon the occurrence of any event affecting the outstanding
Common Stock, including any stock dividend, extraordinary non-cash dividend,
forward or reverse stock split, recapitalization, reclassification of shares of
Common Stock, merger, consolidation or sale by the Corporation of all or a
substantial portion of its assets, tender offer for its securities, or
2
<PAGE>
other event which could distort the implementation of the Plan or the
realization of its objectives, the Committee shall make such appropriate
adjustments in the number and kind of securities which Share Equivalents will
represent or which may be paid out under the Plan. All such adjustments shall be
made so as to prevent dilution or enlargement of the rights of Participants.
Effective December 15, 1999 any Share Equivalent of Common Stock of Central
Hudson, par value $5.00 per share, shall automatically be converted to a Share
Equivalent of Common Stock.
SECTION 5. DISTRIBUTION
5.1 The Participant's Account shall be valued as of the end of each
such quarterly period and distributions shall be made therefrom as follows:
Distribution of an Account shall be in Common Stock, on the basis of one share
of such Stock for each Share Equivalent credited to the Account. Distribution of
Common Stock shall be made in one lump sum within 60 days following the end of
each such quarterly period subject to compliance with all applicable
administrative and legal requirements.
5.2 Any Common Stock, which becomes distributable after the death of
a Participant, shall be distributed to such person or persons or the survivors
thereof, including corporations, unincorporated associations or trusts, as shall
be provided by written agreement between the Corporation and the Participant and
in the absence of such an agreement such Common Stock shall be distributed to
the Participant's estate.
5.3 The Corporation shall deduct from the amount of all
distributions under the Plan any taxes required to be withheld by the Federal or
any state or local governments.
5.4 At the time of distribution or as soon thereafter as
practicable, the Corporation shall deliver to a Participant or to his/her
Beneficiary a certificate for the shares of Common Stock to which he or she is
entitled. Such certificates shall be registered in the name of the Participant
or his/her Beneficiary. Notwithstanding the foregoing, if the registration of
ownership of Common Stock is then being maintained by the Corporation or its
transfer agent in book-entry form, the delivery of shares of Common Stock to the
Participant or his/her Beneficiary may be evidenced by book entry, unless the
Participant or Beneficiary requests otherwise in writing.
The Corporation shall not be required to issue or deliver any
certificates for, or make a book-entry reflecting, shares of Common Stock prior
to (a) the listing of such shares on any stock exchange or quotation system on
which the Common Stock may then be listed or quoted and (b) the completion of
any registration, qualification, approval or authorization of such shares under
any federal or state law, or any ruling or regulation or approval or
authorization of any governmental body which the Corporation shall, in its sole
discretion, determine to be necessary or advisable.
3
<PAGE>
All certificates for shares of Common Stock delivered under
the Plan, and book entries reflecting such shares, shall be subject to such
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is then listed and any applicable federal
or state securities laws.
SECTION 6. RIGHTS OF PARTICIPANTS
6.1 Nothing contained in this Plan shall be construed as giving any
Participant the right to be retained as a Director of the Corporation. Nothing
contained in this Plan shall be construed as limiting, in any way, any right
that any party or parties may have to remove a Participant as a Director of the
Corporation or to appoint or to elect another individual to replace a
Participant as a Director of the Corporation. Nothing contained in this Plan
shall be construed as giving any Participant the right to receive any benefit
not specifically provided by the Plan. Any other provision of the Plan
notwithstanding, a Participant shall not have any interest in the amounts
credited to his/her Account until such Account is distributed in accordance with
the provisions of Section 5, which, among other things, means that the
Participant has no voting rights with respect to the Common Stock represented by
Share Equivalents. With respect to amounts credited to a Participant's Account,
the rights of the Participant, the Beneficiary of the Participant under this
Plan shall be solely those of unsecured general creditors of the Corporation,
and the obligations of the Corporation hereunder shall be purely contractual.
Such benefits shall be paid from the general assets of the Corporation. As
contemplated by Revenue Procedure 92-65, I.R.B. 1992-33, 16, Participants shall
have the status of general unsecured creditors of the Corporation and the Plan.
6.2 The rights of a Participant to the payment of shares of Common
Stock as provided in this Plan and with respect to Share Equivalents credited to
his or her Account are not transferable by a Participant other than by will or
the laws of descent and distribution and shall not be assigned, transferred,
pledged or encumbered or be subject in any manner to alienation or anticipation.
No Participant may borrow against his or her Account. No Account shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution or levy of any kind, whether
voluntary or involuntary, including, but not limited to, any liability which s
for alimony or other payments for the support of a spouse or former spouse, or
for any other relative of a Participant. Neither a Participant's Account nor a
Participant's rights to benefits hereunder may be assigned to any other party by
means of a judgment, decree or order (including approval of a property
settlement agreement) relating to the provision of child support, alimony
payments, or marital property rights of a spouse, former spouse, child or other
dependent of the Participant.
This Plan shall not in any manner be liable for or subject to
the debts, contracts, liabilities, engagements or torts of any person entitled
to benefits hereunder.
4
<PAGE>
In addition, a Participant or Beneficiary shall have not
rights against or security interest in the assets of the Plan, Corporation or
any trust which may be established with respect to the Plan, and shall have only
the Corporation's unsecured promise to pay benefits. All assets of the Plan, if
any, shall remain subject to the claims of the Corporation's general creditors.
SECTION 7. ADMINISTRATION OF THE PLAN
7.1 The Plan shall be administered by the Committee on Compensation
and Succession of the Corporation's Board of Directors (herein called the
"Committee").
7.2 The Committee shall from time to time establish rules for the
administration of the Plan that are not inconsistent with the provisions of the
Plan.
7.3 The determination of the Committee as to any disputed question
arising under the Plan, including questions of construction and interpretation,
shall be final, binding and conclusive upon all persons.
7.4 Neither the Committee nor a member of the Board of Directors of
the Corporation and no employee of the Corporation, shall be liable for any act
or action hereunder, whether of omission or commission, except in circumstances
involving bad faith, or for any act of any other member or employee or of any
agent to whom duties in connection with the administration of the plan have been
delegated.
SECTION 8. AMENDMENTS, ETC.
8.1 The Board of Directors of the Corporation may in its absolute
discretion, without notice, at anytime and from time to time, modify or amend,
in whole or in part, any or all of the provisions of the Plan or suspend or
terminate it entirely. Any such modification, amendment, suspension or
termination, however, may not, without the Participant's consent, apply to or
affect the payment or distribution to any Participant relating to any Share
Equivalent for any quarterly period ended prior to the effective date of such
modification, amendment, suspension or termination; provided, however, any such
action may be taken to comply with the applicable law and governmental rules and
regulations issued thereunder notwithstanding the effect thereof on a
Participant's account hereunder.
SECTION 9. EFFECTIVE DATE, CONTROLLING LAW
9.1 This Plan became effective as of January 1, 1996 and, effective
December 15, 1999, the Corporation became the Plan successor to Central Hudson.
This Plan shall be construed under the laws of the State of
New York, to the extent Federal law is inapplicable.
5
<PAGE>
IN WITNESS WHEREOF, the undersigned Chairman of the Board and Chief
Executive Officer of CH Energy Group, Inc. and the President and Chief Operating
Officer of Central Hudson Gas & Electric Corporation have each signed this
instrument this 15th day of December, 1999 as duly authorized by resolutions of
each of their respective Board of Directors.
/s/ Paul J. Ganci
-------------------------------------------
Chairman of the Board, President and
Chief Executive Officer of
CH Energy Group, Inc.
/s/ Carl E. Meyer
-------------------------------------------
President and Chief Operating
Officer of Central Hudson Gas
& Electric Corporation
6
<PAGE>
EXHIBIT 10 (iii) 22
ASSIGNMENT AND ASSUMPTION
CHANGE OF CONTROL SEVERANCE POLICY AND PLAN
Central Hudson Gas & Electric Corporation ("Assignor") hereby assigns its
Change of Control Severance Policy and Plan ("Policy and Plan"), pursuant to
authorization of its Board of Directors by action taken on January 28, 2000, in
the form attached hereto, to CH Energy Group, Inc. ("Assignee").
Assignor and Assignee hereby agree as follows:
Assignor hereby assigns all of its interest and obligations under the
attached Policy and Plan to Assignee. Assignee, pursuant to authorization of its
Board of Directors by action taken on February 4, 2000, hereby assumes all of
Assignor interest in and obligations under said Policy and Plan, effective
December 15, 1999.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Dated: As of December 15, 1999
By: /s/ Carl E. Meyer
---------------------------------------
Name: Carl E. Meyer
Title: President and Chief Operating Officer
CH ENERGY GROUP, INC.
Dated: As of December 15, 1999
By: /s/ Paul J. Ganci
-----------------------------------
Name: Paul J. Ganci
Title: Chairman of the Board, President and
Chief Executive Officer
<PAGE>
EXHIBIT 10 (iii) 23
ASSIGNMENT AND ASSUMPTION
EMPLOYMENT AGREEMENTS WITH OFFICERS
OF CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Reference is made to the employment agreements ("Agreements") between the
individuals listed on Annex A hereto and Central Hudson Gas & Electric
Corporation ("Central Hudson"). Central Hudson ("hereinafter 'Assignor') hereby
assigns such Agreements, pursuant to authorization of its Board of Directors by
action taken on January 28, 2000, in the form attached hereto, to CH Energy
Group, Inc. ("Assignee").
Assignor and Assignee hereby agree as follows:
Assignor hereby assigns all of its interest and obligations under said
Agreements to Assignee and Assignee, pursuant to authorization of its Board of
Directors by action taken on February 4, 2000, and pursuant to Section 11(c) of
said Agreements, as successor corporation to substantially all of the business
and/or assets of Assignor, hereby expressly assumes and agrees to perform,
effective December 15, 1999, the Agreements in the same manner and to the same
extent Assignor would be required to perform the Agreements if no such
succession had taken place.
Assignee also expressly and unconditionally assumes and agrees to perform,
effective December 15, 1999, Assignor's obligations under Assignor's Change of
Control Severance Policy and Plan ("Policy"), in the same manner and to the same
extent Assignor would be required to perform under the Policy as if no such
succession had taken place. References in said Agreement and the Policy to
Assignor shall hereinafter be deemed references to Assignee.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Dated:As of December 15, 1999 By: /s/ Carl E. Meyer
------------------------------------
Name: Carl E. Meyer
Title: President and Chief Operating Officer
CH ENERGY GROUP, INC.
Dated:As of December 15, 1999 By: /s/ Paul J. Ganci
----------------------------------
Name: Paul J. Ganci
Title:Chairman of the Board, President and
Chief Executive Officer
<PAGE>
ANNEX A
OFFICERS OF CENTRAL HUDSON GAS & ELECTRIC CORPORATION
COVERED UNDER EMPLOYMENT AGREEMENTS, EFFECTIVE DECEMBER 15,
1999:
RONALD P. BRAND
JOHN C. CHECKLICK
GLADYS L. COOPER
JOSEPH J. DE VIRGILIO, JR.
DONNA S. DOYLE
STEVEN V. LANT
JAMES P. LOVETTE
CARL E. MEYER
ALLAN R. PAGE
ARTHUR R. UPRIGHT
DENISE D. VAN BUREN
<PAGE>
EXHIBIT 10 (iii) 24
ASSIGNMENT AND ASSUMPTION
EMPLOYMENT AGREEMENT WITH PAUL J. GANCI
Reference is made to the employment agreement ("Agreement") between Paul
J. Ganci and Central Hudson Gas & Electric Corporation ("Central Hudson").
Central Hudson ("hereinafter 'Assignor') hereby assigns its Agreement with Paul
J. Ganci, pursuant to authorization of its Board of Directors by action taken on
January 28, 2000, in the form attached hereto, to CH Energy Group, Inc.
("Assignee").
Assignor and Assignee hereby agree as follows:
Assignor hereby assigns all of its interest and obligations under said
Agreement to Assignee and Assignee, pursuant to authorization of its Board of
Directors by action taken on February 4, 2000, and pursuant to Section 11(c) of
said Agreement, as successor corporation to substantially all of the business
and/or assets of Assignor, hereby expressly assumes and agrees to perform,
effective December 15, 1999, the Agreement in the same manner and to the same
extent Assignor would be required to perform the Agreement if no such succession
had taken place.
Assignee also expressly and unconditionally assumes and agrees to perform,
effective December 15, 1999, Assignor's obligations under Assignor's Change of
Control Severance Policy and Plan ("Policy"), in the same manner and to the same
extent Assignor would be required to perform under the Policy as if no such
succession had taken place. References in said Agreement and the Policy to
Assignor shall hereinafter be deemed references to Assignee.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Dated: As of December 15, 1999 By: /s/ Carl E. Meyer
------------------------------------
Name: Carl E. Meyer
Title: President and Chief Operating Officer
CH ENERGY GROUP, INC.
Dated: As of December 15, 1999 By: /s/ Paul J. Ganci
---------------------------------------
Name: Paul J. Ganci
Title: Chairman of the Board, President and
Chief Executive Officer
<PAGE>
EXHIBIT 10 (iii) 25
CH ENERGY GROUP, INC.
DIRECTORS AND EXECUTIVES
DEFERRED COMPENSATION PLAN
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I TITLE AND DEFINITIONS.....................................4
1.1 Title...........................................................4
1.2 Definitions.....................................................4
ARTICLE II PARTICIPATION.............................................6
ARTICLE III DEFERRAL ELECTIONS........................................6
3.1 Elections to Defer Compensation.................................6
3.2 Investment Elections............................................7
ARTICLE IV DEFERRAL ACCOUNTS AND TRUST FUNDING.......................8
4.1 Deferral Accounts...............................................8
4.2 Company Discretionary Contribution Account......................8
4.3 Trust Funding...................................................9
ARTICLE V VESTING...................................................9
ARTICLE VI DISTRIBUTIONS............................................10
6.1 Distribution of Deferred Compensation and Discretionary
Company Contributions..........................................10
6.2 Non-Scheduled In-Service Withdrawals...........................11
6.3 Hardship Distribution..........................................12
6.4 Inability to Locate Participant................................12
ARTICLE VII ADMINISTRATION...........................................12
7.1 Committee......................................................12
7.2 Committee Action...............................................12
7.3 Powers and Duties of the Committee.............................13
7.4 Construction and Interpretation................................13
7.5 Information....................................................13
(i)
<PAGE>
7.6 Compensation, Expenses and Indemnity...........................14
7.7 Monthly Statements.............................................14
7.8 Disputes.......................................................14
ARTICLE VIII MISCELLANEOUS............................................15
8.1 Unsecured General Creditor.....................................15
8.2 Restriction Against Assignment.................................15
8.3 Withholding....................................................16
8.4 Amendment, Modification, Suspension or Termination.............16
8.5 Governing Law..................................................16
8.6 Receipt or Release.............................................16
8.7 Payments on Behalf of Persons Under Incapacity.................16
8.8 Limitation of Rights and Employment Relationship...............17
8.9 Headings.......................................................17
(ii)
<PAGE>
CH ENERGY GROUP, INC.
DIRECTORS AND EXECUTIVES
DEFERRED COMPENSATION PLAN
WHEREAS, CH Energy Group, Inc. (the "Company") desires to provide a tax
deferred capital accumulation opportunity for members of the Company's Board of
Directors and for a select group of executives and key management and highly
compensated employees effective as of January 1, 2000; and
WHEREAS, Central Hudson Gas & Electric Corporation has previously adopted
the Central Hudson Gas & Electric Corporation Directors' Deferred Compensation
Plan, which Plan has been assigned to and assumed by the Company; and
WHEREAS, Company desires to merge the Central Hudson Gas & Electric
Corporation Directors' Deferred Compensation Plan into this Plan with the
adoption of this Plan,
NOW, THEREFORE, effective as of January 1, 2000, the Plan is hereby
adopted to read as follows and the Central Hudson Gas & Electric Corporation
Directors' Deferred Compensation Plan is hereby merged into this Plan as
described below:
ARTICLE I
TITLE AND DEFINITIONS
1.1 Title.
This Plan shall be known as the CH Energy Group, Inc. Directors and
Executives Deferred Compensation Plan.
1.2 Definitions.
Whenever the following words and phrases are used in this Plan, with the
first letter capitalized, they shall have the meanings specified below.
(a) "Account" or "Accounts" shall mean a Participant's Deferral Account
and/or the Company Discretionary Contribution Account.
(b) "Base Salary" shall mean a Participant's annual base salary, excluding
bonus, incentive and all other remuneration for services rendered to the Company
and prior to reduction for any salary contributions to a plan established
pursuant to Section 125 of the Code or qualified pursuant to Section 401(k) of
the Code.
(c) "Beneficiary" or "Beneficiaries" shall mean the person or persons,
including a trustee, personal representative or other fiduciary, last designated
in writing by a Participant in accordance with procedures established by the
Committee to receive the benefits specified hereunder in the event of the
Participant's death. No beneficiary designation shall become effective until it
is filed with the Committee. However, no designation of a Beneficiary
<PAGE>
other than the Participant's spouse shall be valid unless consented to in
writing by such spouse. Any designation shall be revocable at any time through a
written instrument filed by the Participant with the Committee with or without
the consent of the previous Beneficiary. If there is no Beneficiary designation
in effect, or there is no surviving designated Beneficiary, the Participant's
surviving spouse shall be the Beneficiary. If there is no surviving spouse to
receive any benefits payable in accordance with the preceding sentence, the duly
appointed and currently acting personal representative of the Participant's
estate (which shall include either the Participant's probate estate or living
trust) shall be the Beneficiary. In any case where there is no such personal
representative of the Participant's estate duly appointed and acting in that
capacity within ninety (90) days after the Participant's death (or such extended
period as the Committee determines is reasonably necessary to allow such
personal representative to be appointed, but not to exceed one hundred eighty
(180) days after the Participant's death), then Beneficiary shall mean the
person or persons who can verify by affidavit or court order to the satisfaction
of the Committee that they are legally entitled to receive the benefits
specified hereunder. In the event any amount is payable under the Plan to a
minor, payment shall not be made to the minor, but instead be paid (a) to that
person's living parent(s) to act as custodian, (b) if that person's parents are
then divorced, and one parent is the sole custodial parent, to such custodial
parent, or (c) if no parent of that person is then living, to a custodian
selected by the Committee to hold the funds for the minor under the Uniform
Transfers or Gifts to Minors Act in effect in the jurisdiction in which the
minor resides. If no parent is living and the Committee decides not to select
another custodian to hold the funds for the minor, then payment shall be made to
the duly appointed and currently acting guardian of the estate for the minor or,
if no guardian of the estate for the minor is duly appointed and currently
acting within sixty (60) days after the date the amount becomes payable, payment
shall be deposited with the court having jurisdiction over the estate of the
minor. Payment by the Company pursuant to any unrevoked Beneficiary designation,
or to the Participant's estate if no such designation exists, of all benefits
owed hereunder shall terminate any and all liability of the Company.
(d) "Board of Directors" or "Board" shall mean the Board of Directors of CH
Energy Group, Inc.
(e) "Bonuses" shall mean the incentive compensation determined under the
Company's Executive Incentive Plan earned during the Plan Year.
(f) "Change of Control" shall mean:
(1) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (x) the then outstanding shares of common stock of
the Company (the "Outstanding Company Common Stock") or (y) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however that for purposes of this
subsection (1), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any
-2-
<PAGE>
acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (3) of this Section 1.2(f);
or
(2) Individuals who, as of December 1, 1998, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
compromising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or
consummation of a reorganization, merger or consolidation or sale, or other
disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the Business Combination
and (iii) at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business Combination; or
(3) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company;
(g) "Change of Control Payments" shall mean a payment from Company as a
result of a Change of Control;
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(i) "Committee" shall mean the Committee appointed by the Chief Executive
Officer of the Company to administer the Plan in accordance with Article VII.
-3-
<PAGE>
(j) "Company" shall mean CH Energy Group, Inc. and any successor
corporations. Company shall include each corporation which is a member of a
controlled group of corporations (within the meaning of Section 414(b) of the
Code) of which CH Energy Group, Inc. is a component member, if the Board
provides that such corporation shall participate in the Plan and such
corporation's governing Board of Directors adopts this Plan.
(k) "Company Discretionary Contribution Account" shall mean the bookkeeping
account maintained by the Company for each Participant that is credited with an
amount equal to the Company Discretionary Contribution Amount, if any, and
earnings and losses pursuant to Section 4.2.
(l) "Company Discretionary Contribution Amount" shall mean, for each
Participant for a Plan Year, an additional discretionary amount allocated to a
Participant under this Plan as determined by the Company. Such amount may differ
from Participant to Participant both in amount, including no contribution, and
as a percentage of Compensation.
(m) "Compensation" shall mean Base Salary, Bonuses, Change of Control
Payments and Directors Fees that the Participant is entitled to receive for
services rendered to the Company.
(n) "Deferral Account" shall mean the bookkeeping account maintained by the
Committee for each Participant that is credited with amounts equal to (1) the
portion of the Participant's Compensation that he or she elects to defer,
including any amounts deferred under the Central Hudson Gas & Electric
Corporation Directors' Deferred Compensation Plan and income earned thereon as
of the Effective Date, and (2) interest pursuant to Section 4.1.
(o) "Directors Fees" shall mean the retainers and fees a member of the
Board is entitled to receive for services rendered in his or her capacity as a
member of the Board.
(p) "Distributable Amount" shall mean the sum of the amounts credited to a
Participant's Deferral Account and the Company Discretionary Contribution
Account.
(q) Effective Date" shall mean January 1, 2000.
(r) "Eligible Director" shall mean a member of the Board of Directors.
(s) "Eligible Employee" shall mean executive officers and other executives
and key management employees of the Company that meet criteria approved by the
Committee on Compensation and Succession/Retirement of the Board of Directors.
(t) "Eligible Individual" shall mean Eligible Directors and Eligible
Employees.
(u) "Fund" or "Funds" shall mean one or more of the investment funds or
Policies selected by the Committee pursuant to Section 3.2(b).
(v) "Hardship Distribution" shall mean a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of his
-4-
<PAGE>
or her Dependent (as defined in Section 152(a) of the Code), loss of a
Participant's property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant. The circumstances that would constitute an unforeseeable
emergency will depend upon the facts of each case, but, in any case, a Hardship
Distribution may not be made to the extent that such hardship is or may be
relieved (i) through reimbursement or compensation by insurance or otherwise,
(ii) by liquidation of the Participant's assets, to the extent the liquidation
of such assets would not itself cause severe financial hardship, or (iii) by
cessation of deferrals under this Plan.
(w) "Initial Election Period" for an Eligible Individual shall mean the
thirty (30) day period prior to December 20, 1999 or the thirty (30) day period
following the time an employee or member of the Board becomes an Eligible
Individual.
(x) "Rate of Return" shall mean for each Fund an amount equal to the net
rate of gain or loss on the assets of such Fund during the period amounts are
invested in the Fund.
(y) "Long Term Disability" shall have the same meaning as provided in the
long term disability policy maintained by the Company for its senior executive
employees.
(z) "Non-Scheduled In-Service Withdrawal" shall mean an election by a
Participant in accordance with Section 6.2 to receive a withdrawal of amounts
from his or her Deferral Account and Company Discretionary Contribution Account
prior to the time in which such Participant would otherwise be entitled to such
amounts.
(aa) "Participant" shall mean any Eligible Individual who becomes a
Participant in accordance with Article II.
(bb) "Payment Date" for payment of a Distributable Amount shall mean the
time as soon as administratively practicable after (1) the end of the calendar
quarter in which the Participant's employment terminates for any reason, or (2)
the Scheduled In-Service Withdrawal Date.
(cc) "Plan" shall mean the CH Energy Group, Inc. Directors and Executives
Deferred Compensation Plan set forth herein, now in effect, or as amended from
time to time.
(dd) "Plan Year" shall mean the initial period beginning on January 1, 2000
and ending on December 31, 2000 and thereafter the twelve (12) consecutive month
period beginning on each January 1 and ending on each December 31.
(ee) "Retirement" shall mean the Participant's termination of employment
with the Company on or after age fifty-five (55).
(ff) "Scheduled In-Service Withdrawal Date" shall be the distribution date
elected by the Participant for an in-service withdrawal of all amounts of
Compensation deferred in a given Plan Year and Company Discretionary
Contribution Amounts, and earnings and losses attributable thereto, as set forth
on the election form for such Plan Year.
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(gg) "Trust" shall mean the CH Energy Group, Inc. Directors and Executives
Deferred Compensation Plan Trust.
(hh) "Trustee" shall mean the trustee of the Trust.
ARTICLE II
PARTICIPATION
A Participant in the Central Hudson Gas & Electric Corporation Directors'
Deferred Compensation Plan in effect immediately prior to the Effective Date of
this Plan shall continue such participation as a Participant in this Plan. Any
other Eligible Individual shall become a Participant in this Plan by electing to
defer a portion of his or her Compensation in accordance with Section 3.1.
ARTICLE III
DEFERRAL ELECTIONS
3.1 Elections to Defer Compensation.
(a) Initial Election Period. Subject to the provisions of Article II, each
Eligible Employee may elect to defer Base Salary, Bonuses and Change of Control
Payments by filing with the Committee an election that conforms to the
requirements of this Section 3.1 on a form provided by the Committee, no later
than the last day of his or her Initial Election Period. An Eligible Director
may, subject to the provisions of Article II elect to defer Directors' Fees by
filing with the Committee an election that conforms with the requirements of
this Section 3.1, on a form provided by the Committee, no later than the last
day of his or her Initial Election Period.
(b) General Rule. The amount of Compensation which an Eligible Individual
may elect to defer is such Compensation earned on or after the time at which the
Eligible Individual elects to defer Compensation in accordance with Sections
1.2(w) and 3.1(a). The amount elected by an Eligible Employee shall be a flat
dollar amount or a percentage of Base Salary, Bonus and Change of Control
Payments which shall not exceed 50% of the Eligible Employee's Base Salary, and
100% of the Eligible Employee's Bonus and 100% of any Change of Control Payment,
provided that the total amount deferred by an Eligible Employee shall be limited
in any calendar year, to an annual amount that results in an Eligible Employee's
Compensation being not less than the Social Security Wage Base. In addition, the
Committee may in its sole and absolute discretion further limit deferrals for
income tax withholding and employee benefit plan withholding requirements. An
Eligible Director may defer up to 100% of his or her Director's Fees. The
minimum contribution which may be made in any Plan Year by an Eligible
Individual shall not be less than 25% of the expected target contribution which
can be satisfied from either Base Salary, targeted Bonuses, and Change of
Control Payments or Directors Fees, whether or not the targeted bonus is
actually earned.
(c) Duration of Compensation Deferral Election. An Eligible Employee's
initial election to defer Base Salary must be filed on or before December 20,
1999 and is to be effective for the first day of the next following Plan Year. A
Participant may renew, increase,
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decrease or terminate a deferral election with respect to Base Salary for any
subsequent Plan Year by filing a new election on or before December 20 which
election shall be effective on the first day of the next following Plan Year. An
Eligible Employee's Initial Election to defer Bonuses earned during the calendar
year ended December 31, 2000 must be filed prior to December 20, 1999. Any
subsequent election with respect to bonuses must be filed by December 20 of the
year prior to the year that the Bonuses are earned. An Eligible Employee's
Election with respect to a Change of Control Payment must be made on or before
December 20 and shall be effective on the first day of the next following Plan
Year. An Eligible Employee may change his or her election with respect to a
Change of Control Payment at least one year prior to any Change of Control, in
order for such election to become effective.
An Election by an Eligible Director must be made on or before December 20
of the year prior to the year in which the Director's Fees are earned.
All elections under this Section 3.1 shall be for a period of one (1) year.
In the case of an employee or director who becomes an Eligible Individual on or
after January 1, 2000, such Eligible Individual shall have thirty (30) days from
the date he or she has become an Eligible Individual to make an Initial Election
with respect to amounts capable of being deferred under the Plan. Such election
shall be for the remainder of the Plan Year.
(d) Elections other than Elections during the Initial Election Period.
Subject to the limitations of Section 3.1(b) above, any Eligible Employee or
Eligible Director who fails to elect to defer Compensation during his or her
Initial Election Period may subsequently become a Participant, and any Eligible
Employee or Eligible Director who has terminated a prior Compensation deferral
election may elect to again defer Compensation, by filing an election, on a form
provided by the Committee, to defer Compensation as described in Sections 3.1(b)
and 3.1(c) above. An election to defer Compensation must be filed on or before
December 20 and will be effective for Compensation earned in the next following
Plan Year.
3.2 Investment Elections.
(a) At the time of making the deferral elections described in Section 3.1,
the Participant shall designate, on a form provided by the Committee, the types
of investments the Participant's Account will be deemed to be invested in for
purposes of determining the amount of earnings and losses to be credited to that
Account. In making the designation pursuant to this Section 3.2, the Participant
may specify that all or any multiple of his or her Deferral Account and Company
Discretionary Contribution Account be deemed to be invested in one or more of
the types of investments provided under the Plan. A Participant may change the
designation made under this Section 3.2 each day in accordance with procedures
established by the Committee. If a Participant fails to elect a type of
investment fund under this Section 3.2, he or she shall be deemed to have
elected the Money Market type of investment fund.
(b) Although the Participant may designate the type of investment funds in
Section 3.2(a) above, the Committee shall not be bound by such designation. The
Committee shall select from time to time, in its sole discretion, a commercially
available investment fund of each of the types provided under the Plan to be the
Funds. The Rate of Return of each such
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commercially available investment fund shall be used to determine the amount of
earnings or losses to be credited to Participant's Account under Article IV.
ARTICLE IV
DEFERRAL ACCOUNTS AND TRUST FUNDING
4.1 Deferral Accounts.
The Committee shall establish and maintain a Deferral Account for each
Participant under the Plan. Each Participant's Deferral Account shall be further
divided into separate subaccounts ("investment fund subaccounts"), each of which
corresponds to an investment fund elected by the Participant pursuant to Section
3.2(a). A Participant's Deferral Account shall be credited as follows:
(a) Within five (5) days after each payroll date, the Committee shall
credit the investment fund subaccounts of the Participant's Deferral Account
with an amount equal to the Compensation deferred by the Participant during each
pay period in accordance with the Participant's election under Section 3.2(a);
that is, the portion of the Participant's deferred Compensation that the
Participant has elected to be deemed to be invested in a certain type of
investment fund shall be credited to the investment fund subaccount
corresponding to that investment fund;
(b) As of each day, each investment fund subaccount of a Participant's
Deferral Account shall be credited with earnings or losses in an amount equal to
that determined by multiplying the balance credited to such investment fund
subaccount as of the preceding day plus contributions credited to the
Participant's Deferral Account since the preceding day by the Rate of Return for
the corresponding fund selected by the Company pursuant to Section 3.2(b).
(c) In the event that a Participant elects for a given Plan Year's deferral
of Compensation to have a Scheduled In-Service Withdrawal Date, all amounts
attributed to the deferral of Compensation for such Plan Year shall be accounted
for in a manner which allows separate accounting for the deferral of
Compensation and investment gains and losses associated with such Plan Year's
deferral of Compensation.
4.2 Company Discretionary Contribution Account.
If necessary, the Committee shall establish and maintain a Company
Discretionary Contribution Account for each Participant under the Plan. Each
Participant's Company Discretionary Contribution Account shall be further
divided into separate investment fund subaccounts corresponding to the
investment fund elected by the Participant pursuant to Section 3.2(a). A
Participant's Company Discretionary Contribution Account shall be credited as
follows:
(a) Within five (5) days after each payroll date, the Committee shall
credit the investment fund subaccounts of the Participant's Company
Discretionary Contribution Account with an amount equal to the Company
Discretionary Contribution Amount, if any, applicable to that Participant, that
is, the portion of the Company Discretionary Contribution Amount, if any,
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which the Participant elected to be deemed to be invested in a certain type of
investment fund shall be credited to the corresponding investment fund
subaccount; and
(b) As of each day, each investment fund subaccount of a Participant's
Company Discretionary Contribution Account shall be credited with earnings or
losses in an amount equal to that determined by multiplying the balance credited
to such investment fund subaccount as of the prior day plus contributions
credited to the Participant's Company Discretionary Contribution Account since
the preceding day by the Rate of Return for the corresponding Fund selected by
the Company pursuant to Section 3.2(b).
(c) In the event that a Participant elects for a given Plan Year's Company
Discretionary Contribution Amount to have a Scheduled In-Service Withdrawal
Date, all amounts attributed to the Company Discretionary Contribution Amount
for such Plan Year shall be accounted for in a manner which allows separate
accounting for the Company Discretionary Contribution Amount and investment
gains and losses associated with such Plan Year's Company Discretionary
Contribution Amount.
4.3 Trust Funding.
The Company has created a Trust with First American Trust Company serving
as initial trustee. The Company shall cause the Trust to be funded each year.
The Company shall contribute to the Trust an amount equal to the Compensation
deferred by each Participant for the Plan Year. The Company shall also
contribute to the Trust an amount equal to the Company Discretionary
Contribution Amount, if any, for the Plan Year.
Although the principal of the Trust and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Plan Participants and beneficiaries as set forth
therein, neither the Participants nor their beneficiaries shall have any
preferred claim on, or any beneficial ownership in, any assets of the Trust
prior to the time such assets are paid to the Participants or beneficiaries as
benefits and all rights created under this Plan shall be unsecured contractual
rights of Plan Participants and beneficiaries against the Company. Any assets
held in the Trust will be subject to the claims of Company's general creditors
under federal and state law in the event of insolvency as defined in Section
4.2(a) of the Trust.
The assets of the Plan and Trust shall never inure to the benefit of the
Company and the same shall be held for the exclusive purpose of providing
benefits to Participants and their beneficiaries. The sole exception to the
foregoing shall be amounts that remain after payment to a Participant of the
Participant's vested Account balance, if any, shall be transferred by the
Trustee to the Company.
ARTICLE V
VESTING
A Participant's Deferral Account shall be 100% vested at all times. A
Participant's Company Discretionary Contribution Account, if any, shall be 100%
vested in the event of a Change of Control and, otherwise, shall vest in
accordance with rules established by the
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Company, in its sole and absolute discretion. Such rules are hereby
incorporated by this reference into the Plan.
ARTICLE VI
DISTRIBUTIONS
6.1 Distribution of Deferred Compensation and Discretionary Company
Contributions.
(a) Distribution Without Scheduled In-Service Withdrawal Date. In the
case of a Participant who terminates employment due to Retirement or Long
Term Disability, the Distributable Amount shall be paid to the Participant
(and after his or her death to his or her Beneficiary) in the form of
substantially equal quarterly installments over fifteen (15) years
beginning on his or her Payment Date. Notwithstanding the foregoing, a
Participant described in the preceding sentence may elect from among the
following optional forms of benefit which may be elected by the Participant
on the form provided by the Company during his or her Initial Election
Period:
(1) A lump sum payment on the Participant's Payment Date;
(2) Substantially equal quarterly installments over five (5)
years beginning on the Participant's Payment Date; and
(3) Substantially equal quarterly installments over ten (10)
years beginning on the Participant's Payment Date;
Notwithstanding, any provision to the contrary, in the event a
Participant's Distributable Amount is less than $25,000, such Distributable
Amount shall be distributed to the Participant or his Beneficiary in a lump sum.
A Participant may change his or her election with respect to the frequency of
payment, provided such change in the frequency of payment occurs at least one
year prior to the Participant's Retirement or Long Term Disability.
In the event of termination of employment for any other reason,
distribution to the Participant shall be made in a lump sum on his or her
Payment Date.
The Participant's Accounts shall continue to be credited with earnings
pursuant to Section 4.1 of the Plan until all amounts credited to his or her
Accounts under the Plan have been distributed.
(b) Distribution With Scheduled In-Service Withdrawal Date. In the case of
a Participant who has elected a Scheduled In-Service Withdrawal Date for a
distribution while still in the employ of the Company, such Participant shall
receive his or her Distributable Amount, but only with respect to those
deferrals of Compensation and vested Company Discretionary Contribution Amounts
and earnings on such deferrals of Compensation and vested Company Discretionary
Contribution Amounts as shall have been elected by the Participant to be subject
to the Scheduled In-Service Withdrawal Date in accordance with Section 1.2(ff)
of the Plan. A Participant's Scheduled In-Service Withdrawal Date with respect
to amounts of Compensation
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deferred in a given Plan Year and vested Company Discretionary Contribution
Amounts must be at least two (2) years from the last day of the Plan Year for
which the deferrals of Compensation and Company Discretionary Contribution
Amounts are made. A Participant may extend the Scheduled In-Service Withdrawal
Date for the deferral of Compensation and Company Discretionary Contribution
Amounts for any Plan Year, provided such extension occurs at least one (1) year
before the Scheduled In-Service Withdrawal Date and is for a period of not less
than two (2) years from the Scheduled In-Service Withdrawal Date. The
Participant shall have the right to twice modify any Scheduled In-Service
Withdrawal Date. In the event a Participant terminates employment with Company
prior to a Scheduled In-Service Withdrawal Date, the Participant's entire
Distributable Amount will be paid in a lump sum as soon as administratively
practicable following the end of the quarter in which the termination of
employment occurs.
(c) Death Benefit. In the event a Participant dies after he or she has
retired from the Company and still has a balance in his or her Account, the
balance shall continue to be paid in quarterly installments for the remainder of
the period as elected by the Participant. In the event a Participant dies while
in the active employment of the Company, the Participant's Account balance,
whether or not vested, will be paid in a lump sum to the Participant's
Beneficiary.
6.2 Non-Scheduled In-Service Withdrawals.
A Participant shall be permitted to elect a Non-Scheduled In-Service
Withdrawal from his or her Deferral Account and vested Company Discretionary
Contribution Account prior to the Payment Date, subject to the following
restrictions:
(a) The election to take a Non-Scheduled In-Service Withdrawal shall be
made by filing a form provided by and filed with the Committee prior to the end
of any calendar month.
(b) The amount of the Non-Scheduled In-Service withdrawal shall be paid in
a single cash lump sum as soon as practicable after the end of the calendar
month in which the Non-Scheduled In-Service Withdrawal election is made.
(c) If a Participant requests a Non-Scheduled In-Service Withdrawal of his
entire Deferral Account and vested Company Discretionary Contribution Account,
10% of the Deferral Account and vested Company Discretionary Contribution
Account shall be permanently forfeited and the Company shall have no obligation
to the Participant or his Beneficiary with respect to such forfeited amount. If
a Participant receives a Non-Scheduled In-Service Withdrawal of less than the
entire Deferral Account and vested Company Discretionary Contribution Account,
such Participant shall forfeit 10% of the gross amount to be distributed from
the Participant's Deferral Account and vested Company Discretionary Contribution
Account.
(d) If a Participant receives a Non-Scheduled In-Service Withdrawal of
either all or a part of his Deferral Account and Company Discretionary
Contribution Account, the Participant will be ineligible to participate in the
Plan for the balance of the Plan Year and for the following Plan Year.
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6.3 Hardship Distribution.
A Participant shall be permitted to elect a Hardship Distribution in
accordance with Section 1.2(v) of the Plan prior to the Payment Date, subject to
the following restrictions:
(a) The election to take a Hardship Distribution shall be made by filing a
form provided by and filed with Committee prior to the end of any calendar
month.
(b) The Committee shall have made a determination that the requested
distribution constitutes a Hardship Distribution in accordance with Section
1.2(v) of the Plan.
(c) The amount determined by the Committee as a Hardship Distribution shall
be paid in a single cash lump sum as soon as practicable after the end of the
calendar month in which the Hardship Distribution election is made and approved
by the Committee.
(d) If a Participant receives a Hardship Distribution, the Participant will
be ineligible to participate in the Plan for the balance of the Plan Year and
the following Plan Year.
6.4 Inability to Locate Participant.
In the event that the Committee is unable to locate a Participant or
Beneficiary within two (2) years following the required Payment Date, the amount
allocated to the Participant's Account shall be forfeited. If, after such
forfeiture, the Participant or Beneficiary later claims such benefit, such
benefit shall be reinstated without interest or earnings.
ARTICLE VII
ADMINISTRATION
7.1 Committee.
A Committee shall be appointed by, and serve at the pleasure of, the Board
of Directors. The number of members comprising the Committee shall be determined
by the Board which may from time to time vary the number of members. A member of
the Committee may resign by delivering a written notice of resignation to the
Chief Executive Officer. The Chief Executive Officer may remove any member by
delivering a certified copy of its resolution of removal to such member.
Vacancies in the membership of the Committee shall be filled promptly by the
Chief Executive Officer.
7.2 Committee Action.
The Committee shall act at meetings by affirmative vote of a majority of
the members of the Committee. Any action permitted to be taken at a meeting may
be taken without a meeting if, prior to such action, a written consent to the
action is signed by all members of the Committee and such written consent is
filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely to him or
herself as a Participant. The Chairman or any other member or members of the
Committee
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designated by the Chairman may execute any certificate or other written
direction on behalf of the Committee.
7.3 Powers and Duties of the Committee.
(a) The Committee, on behalf of the Participants and their Beneficiaries,
shall enforce the Plan in accordance with its terms, shall be charged with the
general administration of the Plan, and shall have all powers necessary to
accomplish its purposes, including, but not by way of limitation, the following:
(1) To select the Funds in accordance with Section 3.2(b) hereof;
(2) To construe and interpret the terms and provisions of this Plan;
(3) To compute and certify to the amount and kind of benefits payable
to Participants and their Beneficiaries;
(4) To maintain all records that may be necessary for the
administration of the Plan;
(5) To provide for the disclosure of all information and the filing or
provision of all reports and statements to Participants, Beneficiaries or
governmental agencies as shall be required by law;
(6) To make and publish such rules for the regulation of the Plan and
procedures for the administration of the Plan as are not inconsistent with
the terms hereof;
(7) To appoint a plan administrator or any other agent, and to
delegate to them such powers and duties in connection with the
administration of the Plan as the Committee may from time to time
prescribe; and
(8) To take all actions necessary for the administration of the Plan,
including determining whether to hold or discontinue the Policies.
7.4 Construction and Interpretation.
The Committee shall have full discretion to construe and interpret the
terms and provisions of this Plan, which interpretations or construction shall
be final and binding on all parties, including but not limited to the Company
and any Participant or Beneficiary. The Committee shall administer such terms
and provisions in a uniform and nondiscriminatory manner and in full accordance
with any and all laws applicable to the Plan.
7.5 Information.
To enable the Committee to perform its functions, the Company shall supply
full and timely information to the Committee on all matters relating to the
Compensation of all Participants, their death or other events which cause
termination of their participation in this Plan, and such other pertinent facts
as the Committee may require.
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7.6 Compensation, Expenses and Indemnity.
(a) The members of the Committee shall serve without compensation for their
services hereunder.
(b) The Committee is authorized at the expense of the Company to employ
such legal counsel as it may deem advisable to assist in the performance of its
duties hereunder. Expenses and fees in connection with the administration of the
Plan shall be paid by the Company.
(c) To the extent permitted by applicable state law, the Company shall
indemnify and save harmless the Committee and each member thereof, the Board of
Directors and any delegate of the Committee who is an employee of the Company
against any and all expenses, liabilities and claims, including legal fees to
defend against such liabilities and claims arising out of their discharge in
good faith of responsibilities under or incident to the Plan, other than
expenses and liabilities arising out of willful misconduct. This indemnity shall
not preclude such further indemnities as may be available under insurance
purchased by the Company or provided by the Company under any bylaw, agreement
or otherwise, as such indemnities are permitted under state law.
7.7 Quarterly Statements.
Under procedures established by the Committee, a Participant shall receive
a quarterly statement with respect to such Participant's Accounts.
7.8 Disputes.
(a) Claim.
A person who believes that he or she is being denied a benefit to which he
or she is entitled under this Agreement (hereinafter referred to as "Claimant")
may file a written request for such benefit with the Company, setting forth his
or her claim. The request must be addressed to the President of the Company at
its then principal place of business.
(b) Claim Decision.
Upon receipt of a claim, the Committee on behalf of the Company shall
advise the Claimant that a reply will be forthcoming within ninety (90) days and
shall, in fact, deliver such reply within such period. The Company may, however,
extend the reply period for an additional ninety (90) days for special
circumstances.
If the claim is denied in whole or in part, the Company shall inform the
Claimant in writing, using language calculated to be understood by the Claimant,
setting forth: (A) the specified reason or reasons for such denial; (B) the
specific reference to pertinent provisions of this Agreement on which such
denial is based; (C) a description of any additional material or information
necessary for the Claimant to perfect his or her claim and an explanation of why
such material or such information is necessary; (D) appropriate information as
to the steps to be
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taken if the Claimant wishes to submit the claim for review; and (E) the time
limits for requesting a review under subsection (c).
(c) Request For Review.
Within sixty (60) days after the receipt by the Claimant of the written
opinion described above, the Claimant may request in writing that the Committee
review the determination of the Company. Such request must be addressed to the
Secretary of the Company, at its then principal place of business. The Claimant
or his or her duly authorized representative may, but need not, review the
pertinent documents and submit issues and comments in writing for consideration
by the Committee. If the Claimant does not request a review within such sixty
(60) day period, he or she shall be barred and estopped from challenging the
Company's determination.
(d) Review of Decision.
Within sixty (60) days after the Committee's receipt of a request for
review, after considering all materials presented by the Claimant, the Committee
will inform the Participant in writing, in a manner calculated to be understood
by the Claimant, the decision setting forth the specific reasons for the
decision containing specific references to the pertinent provisions of this
Agreement on which the decision is based. If special circumstances require that
the sixty (60) day time period be extended, the Committee will so notify the
Claimant and will render the decision as soon as possible, but no later than one
hundred twenty (120) days after receipt of the request for review.
ARTICLE VIII
MISCELLANEOUS
8.1 Unsecured General Creditor.
Participants and their Beneficiaries, heirs, successors, and assigns shall
have no legal or equitable rights, claims, or interest in any specific property
or assets of the Company. No assets of the Company shall be held in any way as
collateral security for the fulfilling of the obligations of the Company under
this Plan. Any and all of the Company's assets shall be, and remain, the general
unpledged, unrestricted assets of the Company. The Company's obligation under
the Plan shall be merely that of an unfunded and unsecured promise of the
Company to pay money in the future, and the rights of the Participants and
Beneficiaries shall be no greater than those of unsecured general creditors. It
is the intention of the Company that this Plan be unfunded for purposes of the
Code and for purposes of Title I of the Employee Retirement Income Security Act
of 1974.
8.2 Restriction Against Assignment.
The Company shall pay all amounts payable hereunder only to the person or
persons designated by the Plan and not to any other person or corporation. No
part of a Participant's Accounts shall be liable for the debts, contracts, or
engagements or any Participant, his or her Beneficiary, or successors in
interest, nor shall a Participant's Accounts be subject to execution by levy,
attachment, or garnishment or by any other legal or equitable proceeding, nor
shall any
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such person have any right to alienate, anticipate, sell, transfer, commute,
pledge, encumber, or assign any benefits or payments hereunder in any manner
whatsoever. if any Participant, Beneficiary or successor in interest is
adjudicated bankrupt or purports to anticipate, alienate, sell, transfer,
commute, assign, pledge, encumber or charge any distribution or payment from the
Plan, voluntarily or involuntarily, the Committee, in its discretion, may cancel
such distribution or payment (or any part thereof) to or for the benefit of such
Participant, Beneficiary or successor in interest in such manner as the
Committee shall direct.
8.3 Withholding.
There shall be deducted from each payment made under the Plan or any other
Compensation payable to the Participant (or Beneficiary) all taxes which are
required to be withheld by the Company in respect to such payment or this Plan.
The Company shall have the right to reduce any payment (or compensation) by the
amount of cash sufficient to provide the amount of said taxes.
8.4 Amendment, Modification, Suspension or Termination.
The Chief Executive Officer of the Company may amend, modify, suspend or
terminate the Plan in whole or in part, except that no amendment, modification,
suspension or termination shall have any retroactive effect to reduce any
amounts allocated to a Participant's Accounts. In the event that this Plan is
terminated, the amounts allocated to a Participant's Accounts shall be
distributed to the Participant or, in the event of his or her death, his or her
Beneficiary in a lump sum within thirty (30) days following the date of
termination.
8.5 Governing Law.
This Plan shall be construed, governed and administered in accordance with
the laws of the State of New York.
8.6 Receipt or Release.
Any payment to a Participant or the Participant's Beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Committee and the Company. The
Committee may require such Participant or Beneficiary, as a condition precedent
to such payment, to execute a receipt and release to such effect.
8.7 Payments on Behalf of Persons Under Incapacity.
In the event that any amount becomes payable under the Plan to a person
who, in the sole judgment of the Committee, is considered by reason of physical
or mental condition to be unable to give a valid receipt therefore, the
Committee may direct that such payment be made to any person found by the
Committee, in its sole judgment, to have assumed the care of such person. Any
payment made pursuant to such determination shall constitute a full release and
discharge of the Committee and the Company.
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8.8 Limitation of Rights and Employment Relationship.
Neither the establishment of the Plan and Trust nor any modification
thereof, nor the creating of any fund or account, nor the payment of any
benefits shall be construed as giving to any Participant or other person any
legal or equitable right against the Company or the trustee of the Trust except
as provided in the Plan and Trust; and in no event shall the terms of employment
of any Employee or Participant be modified or in any way be affected by the
provisions of the Plan and Trust.
8.9 Headings.
Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the
provisions hereof.
IN WITNESS WHEREOF, the Company has caused this document to be executed by
its duly authorized officer on this 17th day of December, 1999.
CH ENERGY GROUP, INC.
By: /s/ Paul J. Ganci
---------------------
By: Paul J. Ganci
---------------------
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EXHIBIT 10 (iii) 26
CH ENERGY GROUP, INC.
DIRECTORS AND EXECUTIVES
DEFERRED COMPENSATION PLAN TRUST AGREEMENT
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. TITLE AND DEFINITIONS.....................................1
Section 1.1 Title.....................................................1
Section 1.2 Definitions...............................................2
ARTICLE II. ADMINISTRATION............................................2
Section 2.1 Trustee Responsibility....................................2
Section 2.2 Maintenance of Records....................................2
ARTICLE III. FUNDING...................................................3
Section 3.1 Contributions.............................................3
Section 3.2 Subtrusts.................................................3
ARTICLE IV. PAYMENTS FROM TRUST FUND..................................4
Section 4.1 Payments to Trust Beneficiaries...........................4
Section 4.2 Trustee Responsibility Regarding Payments to Trust
Beneficiaries When the Company is Insolvent...............5
Section 4.3 Payments to the Company...................................5
Section 4.4 Trustee Compensation and Expenses; Other Fees and
Expenses..................................................5
Section 4.5 Taxes.....................................................6
Section 4.6 Alienation................................................6
Section 4.7 Disputes..................................................6
ARTICLE V. INVESTMENT OF TRUST ASSETS................................6
Section 5.1 Investment of Subtrust Assets.............................6
Section 5.2 Disposition of Income.....................................6
ARTICLE VI. TRUSTEE...................................................7
Section 6.1 General Powers and Duties.................................7
Section 6.2 Records...................................................8
Section 6.3 Third Persons.............................................8
Section 6.4 Limitation on Obligation of Trustee.......................8
ARTICLE VII. RESIGNATION AND REMOVAL OF TRUSTEE........................8
Section 7.1 Method and Procedure......................................8
ARTICLE VIII. AMENDMENT AND TERMINATION.................................9
Section 8.1 Amendments................................................9
Section 8.2 Duration and Termination..................................9
Section 8.3 Distribution upon Termination............................10
(i)
<PAGE>
ARTICLE IX. MISCELLANEOUS............................................10
Section 9.1 Limitation on Participants' Rights.......................10
Section 9.2 Receipt or Release.......................................10
Section 9.3 Governing Law............................................10
Section 9.4 Headings, etc., No Part of Agreement.....................11
Section 9.5 Instrument in Counterparts...............................11
Section 9.6 Successors and Assigns...................................11
Section 9.7 Indemnity................................................11
(ii)
<PAGE>
CH ENERGY GROUP, INC.
DIRECTORS AND EXECUTIVES
DEFERRED COMPENSATION PLAN TRUST AGREEMENT
This Trust Agreement made and entered into as of this 1st day of January,
2000, by and between CH ENERGY GROUP, INC. (hereinafter called the "Company")
and FIRST AMERICAN TRUST COMPANY (hereinafter called "Trustee"), evidences the
terms of a trust for the benefit of members of the Board of Directors of
Company, certain employees, former employees and their designated beneficiaries
(hereinafter collectively called "Trust Beneficiaries") who will be entitled to
receive benefits under the CH Energy Group, Inc. Directors and Executives
Deferred Compensation Plan ("Plan").
This Trust is intended to be a grantor trust, of which the Company is the
grantor, within the meaning of subpart E, part I, subchapter J, Chapter l,
subtitle A of the Internal Revenue Code of 1986, as amended, (the "Code") and
shall be construed accordingly.
W I T N E S S E T H:
WHEREAS, the Company wishes to establish an irrevocable trust (hereinafter
called the "Trust") and to transfer to the Trust assets which shall be held
therein, subject to the claims of the Company's creditors in the event of the
Company's insolvency, until paid to the Trust Beneficiaries as benefits in such
manner and at such times as required hereunder; and
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA");
WHEREAS, the inclusion of members of the Board of Directors in the Plan
and as Trust Beneficiaries shall not affect the status of the Plan as an
unfunded plan maintained for the purpose of providing deferred compensation for
a select group of management or highly compensated employees for purposes of
Title I of ERISA.
NOW, THEREFORE, it is mutually understood and agreed as follows:
ARTICLE I.
TITLE AND DEFINITIONS
Section 1.1 Title.
This Trust Agreement shall be known as the CH Energy Group, Inc.
Directors and Executives Deferred Compensation Plan Trust Agreement.
<PAGE>
Section 1.2 Definitions.
The following words, when used in this Trust Agreement with initial letter
capitalized, shall have the meanings set forth below:
"Company" shall mean CH Energy Group, Inc. and any successor corporations.
Company shall include each corporation which is a member of a controlled group
of corporations (within the meaning of Section 414(b) of the Code) of which CH
Energy Group, Inc. is a component member, if the Board of Directors of CH Energy
Group, Inc. provides that such corporation shall participate in the Plan and
such corporations governing board of directors adopts this Plan.
"General Fund" shall mean that portion of the Trust fund which is not
allocated to a Subtrust.
"Plan" shall mean the CH Energy Group, Inc. Directors and Executives
Deferred Compensation Plan as amended from time to time.
"Policy" shall mean an insurance policy purchased in accordance with the
terms of the Plan.
"Subtrust" shall mean a separate subtrust established for a Participant
pursuant to Section 3.2.
Capitalized terms not defined above shall be defined in accordance with
the Plan.
ARTICLE II.
ADMINISTRATION
Section 2.1 Trustee Responsibility.
By its acceptance of this Trust, Trustee agrees to make payments under
this Trust to Trust Beneficiaries in accordance with the provisions of this
Trust Agreement.
Section 2.2 Maintenance of Records.
The Committee shall have the duty and responsibility to maintain all
individual Trust Beneficiary records and to prepare and file all reports and
other information required by any federal or state law or regulation relating to
the Trust and the Trust assets.
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<PAGE>
ARTICLE III.
FUNDING
Section 3.1 Contributions.
(a) The Company hereby deposits with the Trustee in trust the sum of
$100.00 to be held in the General Fund of the Trust.
(b) The Company shall contribute to the Trust an amount equal to the amount
deferred by each Participant for the Plan Year and Company Discretionary
Contribution Amounts for the Plan Year. In no event shall these contributions be
made after the Company's tax return due date for that Plan Year. The Company may
also contribute cash to the Trust in an amount approximately equal to the "cost
of insurance" (as defined in the Policies) needed to fund any death benefits as
may be provided in the Plan, whether the Participant is employed or otherwise.
(c) Except as provided otherwise herein, all contributions received
pursuant to (a) and (b) above, together with the income therefrom and any
increment thereon, shall be held by Trustee as a single Trust pursuant to the
terms of this Trust Agreement without distinction between principal and income.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Plan Participants and general creditors as herein set
forth. Trust Beneficiaries shall not have any preferred claim on, or any
beneficial ownership interest in, any assets of the Trust prior to the time such
assets are paid to Trust Beneficiaries as benefits as provided in Section 4.1,
and all rights created under this Trust Agreement shall be mere unsecured
contractual rights of Trust Beneficiaries against the Company or Trust. Any
assets held by the Trust will be subject to the claims of Company's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 4.2(a) herein.
Section 3.2 Subtrusts.
(a) If directed by the Committee, the Trustee shall establish a separate
Subtrust for that Participant and credit the amount of such contribution to that
Participant's Subtrust. Each Subtrust shall reflect an individual interest in
the assets of the Trust fund and shall not require any segregation of particular
assets.
(b) Following the allocation of assets to Subtrusts pursuant to Section
3.2(a), the Trustee shall allocate investment earnings and losses of the Trust
fund, only at the direction of the Committee, among the Subtrusts in accordance
with Section 5.2. Payments to general creditors pursuant to Section 4.2 hereof
shall be charged against the Subtrusts in proportion to their account balances,
except that the payment of benefits to a Trust Beneficiary shall be charged
against the Subtrust established or maintained for such Trust Beneficiary.
(c) Amounts allocated to a Participant's Subtrust may not be utilized to
pay benefits to another Participant or Beneficiary of another Participant.
Following payment of a
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<PAGE>
Participant's entire benefit under the Plan, including payment of a
Non-Scheduled In-Service Withdrawal or Hardship Distribution under Sections 6.2
and 6.3 of the Plan (whether by the Trustee pursuant to the terms of this Trust
Agreement or by the Company or by a combination thereof), any amounts remaining
allocated to that Participant's Subtrust (and any Policy held with respect to
such Participant) shall be transferred by the Trustee to the Company. In lieu of
transferring the Policy, the Committee may direct the Trustee to designate a new
beneficiary (which may be the Company) under the Policy or cash in the
applicable Policy and transfer the proceeds to the Company
ARTICLE IV.
PAYMENTS FROM TRUST FUND
Section 4.1 Payments to Trust Beneficiaries.
(a) The Committee shall direct the Trustee to pay (or to commence to pay)
to a Participant (or, in the case of the Participant's death, to the
Participant's Beneficiary) the benefit payable to such Participant under the
Plan (the "Benefit Amount") as soon as practicable following the Participant's
Payment Date (as defined in the Plan). If Subtrusts are established, the Trustee
shall make such payment only from funds allocated to the Participant's Subtrust
plus the General Fund, if any.
(b) The Committee shall have full authority and responsibility to determine
the correct time and amount of payment of the Benefit Amount. In making such
determination, the Committee shall be governed by the terms of the Plan and this
Trust Agreement.
(c) Any obligation to a Trust Beneficiary under this Trust Agreement is
also an obligation of the Company to the extent not paid from the Trust.
Accordingly, to the extent payments to a Trust Beneficiary are discontinued
pursuant to Section 4.2, the Company shall be obligated to pay the Trust
Beneficiary the same amount (plus applicable interest from its general fund). If
the amount credited to the Trust (or a Subtrust if applicable) is not sufficient
to make the payment of the Benefit Amount to a Trust Beneficiary in accordance
with the determination by the Committee, the Company agrees that it shall make
the balance of such payment.
(d) Unless a Trust Beneficiary furnishes documentation in form and
substance satisfactory to Trustee that no withholding is required with respect
to a payment of benefits from the Trust, Trustee shall deduct from any such
Benefit Payment any federal, state or local taxes required by law to be withheld
by Trustee. Any taxes that are withheld by Trustee shall be paid separately to
the Company. The Company shall be responsible for payment and reporting of such
withheld taxes to the appropriate taxing authorities.
(e) Trustee shall provide the Company and the Committee with written
confirmation of the fact and time of any payment hereunder within ten business
days after making any payment to a Trust Beneficiary.
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<PAGE>
Section 4.2 Trustee Responsibility Regarding Payments to Trust Beneficiaries
When the Company is Insolvent.
(a) The Company shall be considered "Insolvent" for purposes of this Trust
Agreement if (i) the Company is unable to pay its debts as they become due, or
(ii) is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code.
(b) At all times during the continuance of the Trust, the principal and
income of the Trust shall be subject to claims of general creditors of the
Company as hereinafter set forth, and at any time Trustee has actual knowledge,
or has determined, that the Company is Insolvent, Trustee shall deliver any
undistributed principal and income in the Trust to satisfy such claims as a
court of competent jurisdiction may direct. The Company, through its Board of
Directors or any of its executive officers, shall advise Trustee promptly in
writing of the Company's Insolvency. If Trustee receives such notice, or
otherwise receives written notice from a third party which Trustee, in its sole
discretion, deems reliable and responsible, Trustee shall discontinue payments
to Trust Beneficiaries, shall hold the Trust assets for the benefit of the
Company's general creditors, and shall resume payments to Trust Beneficiaries in
accordance with Section 4.1 of this Trust Agreement only after Trustee has
determined that the Company is not Insolvent or is no longer Insolvent. Unless
Trustee has actual knowledge of the Company's Insolvency or has received notice
from the Company or a third party alleging the Company is Insolvent, Trustee
shall have no duty to inquire whether the Company is Insolvent. Trustee may in
all events rely on such evidence concerning the solvency of the Company as may
be furnished to Trustee which will give Trustee a reasonable basis for making a
determination concerning its solvency. Nothing in this Trust Agreement shall in
any way diminish any rights of Trust Beneficiaries to pursue their rights as
general creditors of the Company with respect to benefits payable hereunder or
otherwise.
(c) If Trustee discontinues payments of benefits from the Trust pursuant to
Section 4.2(b) and subsequently resumes such payments, the first payment
following such discontinuance shall include the aggregate amount of all payments
which would have been made to Trust Beneficiaries together with interest at the
Pension Benefit Guaranty Corporation rate applicable to immediate annuities on
the amount delayed during the period of such discontinuance, less the aggregate
amount of payments made to Trust Beneficiaries by the Company in lieu of the
payments provided for hereunder during any such period of discontinuance.
Section 4.3 Payments to the Company.
Except as provided in Sections 3.2(c) or 4.2, the Company shall have no
right or power to direct Trustee to return to the Company or to divert to others
any of the Trust assets before the Trust is terminated pursuant to Section 8.2.
Section 4.4 Trustee Compensation and Expenses; Other Fees and Expenses.
The Company shall pay the Trustee such reasonable compensation for its
services as shall be agreed upon from time to time by the Company and Trustee,
and Trustee shall be reimbursed
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<PAGE>
by the Company for its expenses that are reasonably necessary and incident to
its administration of the Trust.
Following reasonable consultation with the Company such expenses shall
include fees of counsel and other advisors, if any, incurred by Trustee for the
purpose of determining its responsibilities under the Trust. Such compensation,
expenses or fees, as well as all other administrative fees and expenses, shall
be paid from Trust assets unless paid directly by the Company.
Section 4.5 Taxes.
Trustee shall not be personally liable for any real and personal property
taxes, income taxes and other taxes of any kind levied or assessed under the
existing or future laws against the Trust assets. Such taxes shall be paid
directly from the Trust assets unless paid by the Company, in the discretion of
the Company.
Section 4.6 Alienation.
The benefits, proceeds, payments or claims of Trust Beneficiaries payable
from the Trust assets shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution or levy of any kind, either voluntary or involuntary. Any
attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber,
garnish, levy or otherwise dispose of or execute upon any right or benefits
payable hereunder shall be void. The Trust assets shall not in any manner be
liable for or subject to the debts, contracts, liabilities, engagements or torts
of any Trust Beneficiary entitled to benefits hereunder and such benefits shall
not be considered an asset of Trust Beneficiary in the event of his insolvency
or bankruptcy.
Section 4.7 Disputes.
All disputes, other than disputes between the Trustee and the Committee
or Company, shall be resolved in accordance with Section 7.8 of the Plan.
ARTICLE V.
INVESTMENT OF TRUST ASSETS
Section 5.1 Investment of Subtrust Assets.
The Trustee shall invest the assets of the Trust (and each Subtrust, if
any) in accordance with written directions from the Committee.
Section 5.2 Disposition of Income.
All income received by the Trust shall be reinvested. Any income that is
attributable to the amount credited to a Subtrust in accordance with Section
3.2, and income thereon, shall be credited to such Subtrust and reinvested.
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<PAGE>
ARTICLE VI.
TRUSTEE
Section 6.1 General Powers and Duties.
Subject to written directions from the Committee regarding the investment
of Trust assets, Trustee, on behalf of Trust Beneficiaries, shall have all
powers necessary to administer the Trust, including, but not by way of
limitation, the following powers in addition to other powers as are set forth
herein or conferred by law:
(a) To hold, invest and reinvest the principal or income of the Trust in
bonds, common or preferred stock, other securities, or other personal, real or
mixed tangible or intangible property (including investment in deposits with
Trustee which bear a reasonable interest rate, including without limitation
investments in trust savings accounts, certificates of deposit, time
certificates or similar investments or deposits maintained by the Trustee);
(b) To hold, invest and reinvest the principal or income of the Trust in
the Policies, direct investments under the Policies and take any other action
regarding the Policies, as specifically directed by the Committee, including
those specified by Sections 3.1(b) or 3.2(c) and enter into split-dollar life
insurance agreements with Participants pursuant to which each Participant
designates the beneficiary to receive a portion of the death benefits.
(c) If directed by the Company or Committee to discontinue a Policy;
(d) To pay and provide for the payment of all reasonable and necessary
expenses of administering the affairs of the Trust, subject to reimbursement of
such expenses within 30 days by the Company in accordance with Section 4.4;
(e) To pay and provide for the payment of all benefits to Trust
Beneficiaries in accordance with the provisions of this Trust Agreement;
(f) To retain noninterest bearing deposits or a cash balance with Trustee
of so much of the funds as may be determined to be temporarily held awaiting
investment or payment of benefits or expenses;
(g) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust and to institute, compromise and defend actions and
proceedings;
(h) To vote any stock, bonds or other securities of any corporation or
other issuer at any time held in the Trust; to otherwise consent to or request
any action on the part of any such corporation or other issuer; to give general
or special proxies or powers of attorney, with or without power of substitution;
to participate in any reorganization, recapitalization, consolidation, merger or
similar transaction with respect to such stocks, bonds or other securities and
to deposit such stocks, bonds or other securities in any voting trust, or with
any protective or like committee, or with a trustee, or with the depositaries
designated thereby; to exercise any subscription rights and conversion
privileges; and to generally exercise any of the powers of an owner with respect
to the stocks, bonds or other securities or properties in the Trust; and
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<PAGE>
(i) Generally, to do all such acts, execute all such instruments, take all
such proceedings, and exercise all such rights and privileges with relation to
the property constituting the Trust as if Trustee were the absolute owner
thereof.
Section 6.2 Records.
Trustee shall keep a full, accurate and detailed record of all
transactions of the Trust which the Company shall have the right to examine at
any time during Trustee's regular business hours. Within ninety (90) days after
the close of each calendar year and within forty-five (45) days after the
removal or resignation of Trustee, Trustee shall furnish the Company with a
statement of account with respect to the Trust. This account shall set forth all
receipts, disbursements and other transactions (including sales and purchases)
effected by Trustee during said year (or until its removal or resignation),
shall show the investments at the end of the year (or date of removal or
resignation), including the cost and fair market value of each item, and the
amounts allocated to each Subtrust.
Section 6.3 Third Persons.
A third person dealing with Trustee shall not be required to make any
inquiry as to whether the Company or the Committee has instructed Trustee, or
Trustee is otherwise authorized, to take or omit any action, and shall not be
required to follow the application by Trustee of any money or property which may
be paid or delivered to Trustee.
Section 6.4 Limitation on Obligation of Trustee.
Trustee shall have no responsibility for the validity of the Plan or of
the Trust and does not guarantee the payment of any amount which may become
payable to any Trust Beneficiary under the terms hereof.
ARTICLE VII.
RESIGNATION AND REMOVAL OF TRUSTEE
Section 7.1 Method and Procedure.
(a) Trustee may resign at any time by delivering to the Company a written
notice of resignation, to take effect on a date specified therein, which shall
be not less than sixty (60) days after the delivery thereof, unless such notice
shall be waived.
(b) The Company may remove Trustee at any time by delivering to Trustee a
written notice of removal, to take effect on a date specified therein, which
shall be not less than thirty (30) days after the delivery thereof, unless such
notice shall be waived.
(c) In case of the resignation or removal of Trustee, Trustee shall have a
right to a settlement of its accounts, which may be made, at the option of
Trustee, either (1) by a judicial settlement in an action instituted by Trustee
in a court of competent jurisdiction, or (2) by an agreement of settlement
between Trustee and the Company.
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<PAGE>
(d) Upon such settlement, all right, title and interest of such Trustee in
the assets of the Trust, and all rights and privileges under the Trust
theretofore vested in such Trustee shall vest in the successor Trustee, and
thereupon all liabilities of such Trustee shall terminate; provided, however,
that Trustee shall execute, acknowledge and deliver all documents and written
instruments which are necessary to transfer and convey all the right, title and
interest in the assets of the Trust, and all rights and privileges in the Trust
to the successor Trustee.
(e) The Company, upon receipt of or giving notice of the resignation or
removal of Trustee, shall promptly appoint a successor Trustee. The successor
Trustee shall be a bank or trust company qualified and authorized to do trust
business in any state and having on the date of appointment total assets of at
least $10,000,000 and a credit rating from Moody's of A or better. In the event
of the failure or refusal of the Company to appoint such a successor Trustee
within thirty (30) days after the notice of resignation or removal, Trustee may
secure, at the expense of the Company, the appointment of such successor Trustee
by an appropriate action in a court of competent jurisdiction. Any successor
Trustee so appointed may qualify by executing and delivering to the Company an
instrument accepting such appointment and, upon delivery, such successor,
without further act, shall become vested with all the right, title and interest,
and all rights and privileges of the predecessor Trustee with like effect as if
originally named as Trustee herein.
ARTICLE VIII.
AMENDMENT AND TERMINATION
Section 8.1 Amendments.
The Company shall have the right to amend (but not terminate) the Trust
from time to time and to amend further or cancel any such amendment. Any
amendment shall be stated in an instrument in writing executed by the Company
and Trustee, and this Trust Agreement shall be amended in the manner and at the
time therein set forth, and the Company and Trustee shall be bound thereby;
provided, however:
(a) No amendment shall have any retroactive effect so as to deprive any
Trust Beneficiary of any benefits already vested under the Plan, or create a
reversion of Trust assets to the Company except as already provided in this
Trust Agreement, other than such changes, if any, as may be required in order
for the Trust to be considered a component of a plan described in Section 9.3;
(b) No amendment shall make the Trust revocable; and
(c) No amendment shall increase the duties or liabilities of Trustee
without its written consent.
Section 8.2 Duration and Termination.
This Trust shall not be revocable and shall continue until the earliest of
(a) the accomplishment of the purpose for which it was created, (b) the
exhaustion of all appeals of a final determination of a court of competent
jurisdiction that the interest in the Trust of Trust
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<PAGE>
Beneficiaries is includable for federal income tax purposes in the gross income
of such Trust Beneficiaries, without such determination having been reversed (or
the earlier expiration of the time to appeal), (c) if required to comply with
California rules regulating the maximum length for which trusts may be
established, the expiration of twenty (20) years and six (6) months after the
death of the last surviving Trust Beneficiary who is living and is a Trust
Beneficiary on the date this Trust is established, (d) a determination of the
Company to terminate the Trust because applicable law requires it to be amended
in a way that could make it taxable and failure to so amend the Trust would
subject the Company to material penalties, or (e) the dissolution or liquidation
of the Company.
Section 8.3 Distribution upon Termination.
Upon termination of this Trust, Trustee shall liquidate the Trust fund and
provide a final account to the Company and the Committee. To the extent Trust
assets are sufficient, the Trustee shall pay to each Participant the appropriate
Benefit Amount. After its final account has been settled as provided in Section
7.1(c), Trustee shall return to the Company any assets remaining after the
distributions described in this Section 8.3. Upon making such distributions,
Trustee shall be relieved from all further liability. The powers of Trustee
hereunder shall continue so long as any assets of the Trust fund remain in its
hands.
ARTICLE IX.
MISCELLANEOUS
Section 9.1 Limitation on Participants' Rights.
Participation in the Trust shall not give Participants the right to be
retained in the Company's employ or any right or interest in the Trust other
than as herein provided. The Company reserves the right to dismiss Participants
who are employees without any liability for any claim either against the Trust,
except to the extent provided herein, or against the Company. All benefits
payable hereunder shall be provided solely from the assets of the Trust.
Section 9.2 Receipt or Release.
Any payment to a Trust Beneficiary in accordance with the provisions of
the Trust shall, to the extent thereof, be in full satisfaction of all claims
against Trustee and the Company, and Trustee may require such Trust Beneficiary,
as a condition precedent to such payment, to execute a receipt and release to
such effect.
Section 9.3 Governing Law.
This Trust Agreement and the Trust hereby created shall be construed,
administered and governed in all respects under applicable federal law, and to
the extent that federal law is inapplicable, under the laws of the State of
California; provided, however, that if any provision is susceptible to more than
one interpretation, such interpretation shall be given thereto as is consistent
with the Trust being (a) classified as a grantor trust as defined in Sections
671 et seq. of the Code, and (b) classified as a component of an unfunded plan
maintained primarily to provide deferred compensation for a select group of
management or highly compensated
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<PAGE>
employees, as described in Section 201(2) of ERISA. If any provision of this
instrument shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to be fully
effective.
Section 9.4 Headings, etc., No Part of Agreement.
Headings and subheadings in this Trust Agreement are inserted for
convenience of reference only and are not to be considered in the construction
of the provisions hereof.
Section 9.5 Instrument in Counterparts.
This Trust Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instruments, which may be sufficiently evidenced by any one
counterpart.
Section 9.6 Successors and Assigns.
This Trust Agreement shall inure to the benefit of, and be binding upon,
the parties hereto and their successors and assigns.
Section 9.7 Indemnity.
(a) Except in the case of liabilities and claims arising out of Trustee's
willful misconduct or gross negligence, Company shall indemnify and hold Trustee
harmless from and against all liabilities and claims (including reasonable
attorney's fees and expenses in defense thereof) arising out of or in any way
connected with the Plan or the Trust fund or the management, operation,
administration or control thereof and based in whole or in part on:
(1) Any act or inaction of Company or Committee (which term includes,
in this paragraph, any actual or ostensible agent of Company) or
(2) Any act or inaction of Trustee resulting from the absence of
proper directions hereunder, or in accordance with any directions,
purported or real, from Company or Committee, whether or not proper
hereunder, if relied upon in good faith by Trustee.
(b) The Trustee does not warrant and shall not be liable for any tax
consequences associated with the Trust or the Plans.
(c) The Trustee shall not be liable for the inadequacy of the Trust to pay
all amounts due under the Plans.
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<PAGE>
IN WITNESS WHEREOF the undersigned have executed this Trust Agreement as
of the date first written above.
CH ENERGY GROUP, INC.
By
By
FIRST AMERICAN TRUST COMPANY
By
By
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EXHIBIT 10 (iii) 27
ADOPTION, ASSIGNMENT AND ASSUMPTION
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
Central Hudson Gas & Electric Corporation ("Assignor") hereby adopts the
Long-Term Performance-Based Incentive Plan of the Corporation, pursuant to
authorization of its Board of Directors by action taken on October 22, 1999, and
assigns such Plan, in the form attached hereto, to CH Energy Group, Inc.
("Assignee").
Assignor and Assignee hereby agree as follows:
Assignor hereby assigns all of its interest and obligations under the
attached Plan to Assignee. Assignee, pursuant to authorization of its Board of
Directors by action taken on November 2, 1999, hereby assumes all of Assignor
interest in and obligations under said Plan, as amended and restated, effective
December 15, 1999.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Dated: As of December 15, 1999
By: /s/ Carl E. Meyer
-----------------------------------
Name: Carl E. Meyer
Title: President and Chief Operating Officer
CH ENERGY GROUP, INC.
Dated: As of December 15, 1999
By: /s/ Paul J. Ganci
----------------------------------
Name: Paul J. Ganci
Title: Chairman of the Board, President and
Chief Executive Officer
EXHIBIT 10 (iii) 27
CH ENERGY GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
<PAGE>
CH ENERGY GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS
The Plan has been structured in accordance with the following principles for the
Corporation and its Affiliates:
(1) Establishing and maintaining salaries of key executives, including
base compensation and short and long-term incentives, at competitive
market levels,
(2) Establishing a portion of compensation that is "at risk" and tied to
performance relative to specific objectives. The portion of salary
"at risk" will be increased from the 1999 level of a maximum of 10%
of total compensation for the Chairman of the Board, President and
Chief Executive Officer, to a target range of 15% to 30% for key
executives; and
(3) The Plan establishes long-term incentives that include:
(a) Annual awards of performance based shares that are awarded on
the basis of achieving superior total shareholder return as
measured against an industry index; and
(b) Long-term incentives which are based on awarding stock
options, the value of which are directly tied to the long-term
increased market value of the Corporation's common stock.
For purposes of the Plan, the following terms are defined as set forth below:
a. "Affiliate" means a corporation or other entity controlled by the
Corporation and designated by the Committee, as defined in Section 2, from
time to time as such.
b. "Award" means a Stock Appreciation Right, Stock Option, Restricted Stock,
Performance Share or Performance Unit.
c. "Award Cycle" shall mean a period of consecutive fiscal years or portions
thereof designated by the Committee over which Awards are to be earned or
are to vest.
d. "Board" means the Board of Directors of the Corporation.
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e. "Cause" means (1) conviction of a participant for committing a felony
under federal law or the law of the state in which such action occurred,
(2) dishonesty in the course of fulfilling a participant's employment
duties or (3) willful and deliberate failure on the part of a participant
to perform employment duties in any material respect, or such other events
as shall be determined by the Committee. The Committee shall have the sole
discretion to determine whether "Cause" exists, and its determination
shall be final.
f. "Change of Control" and "Change of Control Price" have the meanings set
forth in Sections 10(b) and (c), respectively.
g. "Code" means the Internal Revenue Code of 1986, as amended from time to
time,and any successor thereto.
h. "Commission" means the Securities and Exchange Commission or any successor
agency.
i. "Committee" means the Committee, as defined in Section 2.
j. "Common Stock" means the common stock of the Corporation.
k. "Corporation" means Central Hudson Gas & Electric Corporation, a New York
corporation and upon the assignment to and assumption of the Plan by CH
Energy Group, Inc., "Corporation" shall mean CH Energy Group, Inc.
l. "Covered Employee" means a participant designated prior to the grant of an
Award or Awards by the Committee who is or may be a "covered employee"
within the meaning of Section 162(m)(3) of the Code in the year in which
an award or awards are expected to be taxable to such participant.
m. "Disability" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.
n. "Early Retirement" means retirement from active employment with the
Corporation or an Affiliate pursuant to the early retirement provisions of
the applicable pension plan of such employer.
o. "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor thereto.
p. "Fair Market Value" means, as of any given date, the mean between the
highest and lowest reported sales prices of the Corporation's Common Stock
on the New York Stock Exchange Composite Tape or, if not listed on such
exchange, on any other national securities exchange on which the Common
Stock is listed or on NASDAQ. If there is no regular public trading market
for such Common Stock, the Fair Market Value of the Common Stock shall be
determined by the Committee in good faith.
q. "Incentive Stock Option" means any Stock Option designated as, and
qualified as, an "Incentive Stock Option" within the meaning of Section
422 of the Code.
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r. "Non-qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
s. "Non-Employee Director" means a member of the Board who qualifies as a
Non- Employee Director as defined in Rule 16b-3(b)(3), as promulgated by
the Commission under the Exchange Act, or any successor definition adopted
by the Commission.
t. "Normal Retirement" means retirement from active employment with the
Corporation, or an Affiliate at or after age 65.
u. "Performance Goals" means the performance goals established by the
Committee prior to the grant of Restricted Stock, Performance Shares or
Performance Units that are based on the attainment of one or any
combination of the following: Specified levels of earnings per share from
continuing operations, operating income, revenues, return on assets, return
on equity, return on invested capital, shareholder value, economic value
added, shareholder return (measured in terms of stock price appreciation)
and/or total shareholder return (measured in terms of stock price
appreciation and/or dividend growth), achievement of cost controls,
delivery cost per Kilowatthour or delivery cost per Millions of Cubic Feet
of natural gas, customer satisfaction ratings, frequency or duration of
electric or gas service interruptions, number of or severity of gas leaks,
avoidance of environmental, public or employee safety problems, realization
of the regulated return on equity, or the price of the Common Stock, fixed
on a company-wide basis or with reference to the Affiliate, business unit,
division or department of the Corporation for or within which the
participant is primarily employed, and that are intended to qualify under
Section 162(m)(4)(C) of the Code. Such Performance Goals also may be based
upon attaining specified levels of performance under one or more of the
measures described above relative to the performance of other corporations.
Such Performance Goals shall be set by the Committee within the time period
prescribed by Section 162(m) of the Code and related regulations.
v. "Performance Units" or "Performance Shares" means awards made pursuant to
Section 8 or Section 9 respectively.
w. "Plan" means the Corporation's Long-Term Performance-Based Incentive Plan,
as set forth herein and as hereinafter amended from time to time.
x. "Restricted Stock" means an award granted under Section 7.
y. "Retirement" means Normal or Early Retirement.
z. "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.
aa. "Stock Appreciation Right" means a right granted under Section 6.
bb. "Stock Option" means an option granted under Section 5.
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cc. "Termination of Employment" means the termination of the participant's
employment with the Corporation and any Affiliate. A participant employed
by an Affiliate shall also be deemed to incur a Termination of Employment
if the Affiliate ceases to be such an Affiliate and the participant does
not immediately thereafter become an employee of the Corporation or another
Affiliate. Temporary absences from employment because of illness, vacation
or leave of absence and transfers among the Corporation and Affiliates
shall not be considered Terminations of Employment.
In addition, certain other terms used herein have definitions given to them in
the first place in which they are used.
SECTION 2. ADMINISTRATION
The Corporation, acting by and through its Board of Directors, shall have
overall responsibility for the operation of the Plan. The Plan shall be
administered by the Committee on Compensation and Succession/Retirement or such
other committee of the Board as the Board may from time to time designate (the
"Committee"), which shall be composed of not less than two Non-Employee
Directors, each of whom shall be required to be an "outside director" for
purposes of Section 162(m)(4) of the Code, and shall be appointed by and serve
at the pleasure of the Board.
The Committee shall have plenary authority to grant Awards pursuant to the terms
of the Plan to officers and employees of the Corporation and its Affiliates.
Among other things, the Committee shall have the authority, subject to the terms
of the Plan and subject to approval of the Board:
(a) To select the officers and other employees of the Corporation and its
Affiliates to whom Awards may from time to time be granted;
(b) Determine whether and to what extent an Award or any combination of Awards
are to be granted hereunder;
(c) Determine the number of shares of Common Stock to be covered by each Award
granted hereunder;
(d) Determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the option price (subject to Section
5(a)), any vesting condition, restriction or limitation (which may be
related to the performance of the participant, the Corporation or any
Affiliate) and any vesting acceleration or forfeiture waiver regarding any
Award and the shares of Common Stock relating thereto, based on such
factors as the Committee shall determine;
(e) Modify, amend or adjust the terms and conditions of any Award, at any time
or from time to time, including but not limited to Performance Goals;
provided however, that the Committee may not adjust upwards the amount
payable to a designated Covered Employee with respect to a particular
Award upon the satisfaction of applicable Performance Goals;
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(f) Determine to what extent and under what circumstances Common Stock and
other amounts payable with respect to an Award shall be deferred; and
(g) Determine under what circumstances and/or in what proportions an Award may
be settled in cash or Common Stock under Sections 5(j) and 8(b)(i).
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office, except
that the members thereof may (i) delegate to an officer of the Corporation the
authority to make decisions pursuant to paragraphs (c), (f), (g), (h) and (i) of
Section 5 (provided that no such delegation may be made that would cause any
Award or transaction under the Plan to cease to be exempt from Section 16(b) of
the Exchange Act or cause any Award or payment made in respect thereof to be
"applicable employee remuneration" under Section 162(m)(4)(A) of the Code) and
(ii) authorize any one or more of their number or any officer of the Corporation
to execute and deliver documents on behalf of the Committee.
Any determination made by the Committee or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Award shall be made
in the sole discretion of the Committee or such delegate at the time of the
grant of the Award or, unless in contravention of any express term of the Plan,
at any time thereafter. All decisions made by the Committee or any appropriately
delegated officer pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Corporation and Plan participants, subject
to the next paragraph.
The Committee annually shall report to the Corporation's Board of Directors with
respect to the operation of the Plan and at least annually shall meet with such
Board to review the Committee's acts and determinations with respect to the
Plan. The Board of Directors of the Corporation shall have the right to review
any decision, act or determination made by the Committee and shall have the
right to amend, modify, reverse or rescind any such decision, act or
determination, which Board action shall be final and binding on all persons,
including the Corporation and Plan participants.
SECTION 3. COMMON STOCK SUBJECT TO PLAN
The total number of shares of Common Stock reserved and available for grant
under the Plan shall be 500,000, no more than 50,000 of which shares shall be
granted as Awards of Restricted Stock which do not have Performance Goals as the
sole or partial conditions for vesting. No participant may be granted Awards
covering in excess of 150,000 shares of Common Stock over the life of the Plan,
including Awards that expire or terminate unexercised. Shares subject to an
Award under the Plan may be authorized and unissued shares or may be treasury
shares or may be purchased on the open market or any combination thereof.
Any shares subject to an Award under the Plan, which Award for any reason
expires or is terminated unexercised as to such shares, shall, subject to the
provisions of the previous
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paragraph that may restrict their reissuance to a particular participant, again
be available for the grant of other Awards under the Plan.
Subject to Sections 7(c)(iv) and 9(b) (iii), if any shares of Restricted Stock
or Performance Shares are forfeited or if any Stock Option (and related Stock
Appreciation Right, if any) terminates without being exercised, or if any Stock
Appreciation Right is exercised for cash, shares subject to such Awards shall,
subject to the provisions of the first paragraph of this section that may
restrict their distribution to a particular participant, again be available for
distribution in connection with Awards under the Plan.
In the event of any change in corporate capitalization, such as a stock split or
a corporate transaction, such as any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property of the
Corporation, any reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code) or any partial or
complete liquidation of the Corporation ("Corporate Transaction"), the Committee
or Board may make such substitution or adjustments in the aggregate number and
kind of shares reserved for issuance under the Plan, in the number, kind and
option price of shares subject to outstanding Stock Options and Stock
Appreciation Rights, in the number and kind of shares subject to other
outstanding Awards granted under the Plan and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion; provided however, that the number of shares subject to any Award
shall always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the Corporation upon the exercise of any Stock
Appreciation Right associated with any Stock Option.
SECTION 4. ELIGIBILITY
Officers and other employees of the Corporation and its Affiliates who are
responsible for or contribute to the management, governance, growth and
profitability of the business of the Corporation or its Affiliates are eligible
to be granted Awards under the Plan. No grant shall be made under this Plan to a
director who is not an officer or a salaried employee of the Corporation or its
Affiliates.
SECTION 5. STOCK OPTIONS
Stock Options may be granted alone or in addition to other Awards granted under
the Plan and may be of two types, Incentive Stock Options and Non-qualified
Stock Options. Any Stock Option granted under the Plan shall be in such form as
the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive Stock
Options, Non-qualified Stock Options or both types of Stock Options (in each
case with or without Stock Appreciation Rights); provided however, that grants
hereunder are subject to the aggregate limit on grants to individual
participants set forth in Section 3. Incentive Stock Options may be granted only
to employees of the Corporation and its Affiliates (within the meaning of
Section 424(f) of the Code). To the extent that any Stock Option is not
designated as an Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a Non-qualified Stock
Option.
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Stock Options shall be evidenced by option agreements, the terms and provisions
of which may differ. An option agreement shall indicate on its face whether it
is intended to be an agreement for an Incentive Stock Option or a Non-qualified
Stock Option. The grant of a Stock Option shall occur on the date on which the
Committee by resolution selects an individual to be a participant in any grant
of a Stock Option, determines the number of shares of Common Stock to be subject
to such Stock Option to be granted to such individual and specifies the terms
and provisions of the Stock Option. The Corporation shall notify a participant
of any grant of a Stock Option, and a written option agreement or agreements
shall be duly executed and delivered by the Corporation to the participant. Such
agreement or agreements shall become effective upon execution by the Corporation
and the participant.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered nor
shall any discretion or authority granted under the Plan be exercised so as to
disqualify the Plan under Section 422 of the Code or, without the consent of the
optionee affected, to disqualify any Incentive Stock Option under said Section
422.
Stock Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions as the
Committee shall deem desirable:
(a) Option Price. The option price per share of Common Stock purchasable under
a Stock Option shall be determined by the Committee and set forth in the
option agreement, but shall not be less than the Fair Market Value of the
Common Stock subject to the Stock Option on the date of grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than 10
years after the date on which the Stock Option is granted.
(c) Exercisability. Except as otherwise provided herein, Stock Options shall
be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee
provides that any Stock Option is exercisable only in installments, the
Committee may at any time waive such installment exercise provisions, in
whole or in part, based on such factors as the Committee may determine. In
addition, the Committee may at any time accelerate the exercisability of
any Stock Option.
(d) Method of Exercise. Subject to the provisions of this Section 5, Stock
Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Corporation
specifying the number of shares of Common Stock subject to the Stock
Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase price
by certified or bank check or such other instrument as the Corporation may
accept. If approved by the Committee, payment, in full or in part, may
also be made in the form of unrestricted Common Stock already owned by the
optionee (based on the Fair Market Value of the Common Stock on the date
the Stock Option is exercised) and which has been held by the optionee for
at least six (6) months; provided
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however, that, in the case of an Incentive Stock Option the right to make
a payment in the form of already owned shares of Common Stock may be
authorized only at the time the Stock Option is granted.
In the discretion of the Committee, payment for any shares subject to a
Stock Option may also be made by delivering a properly executed exercise
notice to the Corporation, together with a copy of irrevocable
instructions to a broker to deliver promptly to the Corporation the amount
of sale or loan proceeds to pay the purchase price, and, if requested, by
the amount of any federal, state, local or foreign withholding taxes. To
facilitate the foregoing, the Corporation may enter into agreements for
coordinated procedures with one or more brokerage firms.
In addition, in the discretion of the Committee, payment for any shares
subject to a Stock Option may also be made by instructing the Committee to
withhold a number of such shares having a Fair Market Value on the date of
exercise equal to the aggregate exercise price of such Stock Option.
No shares of Common Stock shall be issued until full payment therefor has
been made. An optionee shall have all of the rights of a shareholder of
the Corporation holding the class or series of Common Stock that is
subject to such Stock Option (including, if applicable, the right to vote
the shares and the right to receive dividends), when the optionee has
given written notice of exercise, has paid in full for such shares and, if
requested, has given the representation described in Section 13 (a).
(e) Nontransferability of Stock Options. No Stock Option shall be
transferable by the optionee other than (i) by will or by the laws of
descent and distribution; or (ii) in the case of a Non-qualified Stock
Option, pursuant to (a) a qualified domestic relations order (as defined in
the Code or Title I of the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder) or (b) a gift to such optionee's
children, whether directly or indirectly or by means of a trust or
partnership or otherwise, if expressly permitted under the applicable
option agreement. All Stock Options shall be exercisable, subject to the
terms of this Plan, during the optionee's lifetime, only by the optionee or
by the guardian or legal representative of the optionee or, in the case of
a Non-qualified Stock Option, its alternative payee pursuant to such
qualified domestic relations order or the recipient of a gift permitted
under the applicable option agreement, it being understood that the terms
"holder" and "optionee" include the guardian and legal representative of
the optionee named in the option agreement and any person to whom an option
is transferred by will or the laws of descent and distribution or, in the
case of a Non- qualified Stock Option, pursuant to a qualified domestic
relations order or a gift permitted under the applicable option agreement.
(f) Termination by Death. Unless otherwise determined by the Committee, if an
optionee's employment terminates by reason of death, any Stock Option held
by such optionee may thereafter be exercised in full, whether or not then
exercisable, or on such accelerated basis as the Committee may determine,
for a period of three (3) years (or such other period as the Committee may
specify in the option agreement) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is
the shorter.
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(g) Termination by Reason of Disability. Unless otherwise determined by the
Committee, if an optionee's employment terminates by reason of Disability,
any Stock Option held by such optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at the time of termination, or
on such accelerated basis as the Committee may determine, for a period of
three (3) years (or such shorter period as the Committee may specify in the
option agreement) from the date of such termination of employment or until
the expiration of the stated term of such Stock Option, whichever period is
the shorter; provided however, that if the optionee dies within such
period, any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such period, continue to be exercisable
to the extent to which it was exercisable at the time of death for a period
of one (1) year from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter. In the
event of termination of employment by reason of Disability, if an Incentive
Stock Option is exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Non-qualified Stock Option.
(h) Termination by Reason of Retirement. Unless otherwise determined by the
Committee, if an optionee's employment terminates by reason of Retirement,
any Stock Option held by such optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at the time of such Retirement,
or on such accelerated basis as the Committee may determine, for a period
of five (5) years (or such shorter period as the Committee may specify in
the option agreement) from the date of such termination of employment or
until the expiration of the stated term of such Stock Option, whichever
period is the shorter; provided however, that if the optionee dies within
such period, any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such period, continue to be exercisable
to the extent to which it was exercisable at the time of death for a period
of twelve (12) months from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is the shorter.
In the event of termination of employment by reason of Retirement, if an
Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a Non- qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee: (A) If
an optionee incurs a Termination of Employment for Cause, all Stock Options
held by such optionee shall thereupon terminate; and (B) If an optionee
incurs a Termination of Employment for any reason other than death,
Disability or Retirement or for Cause, any Stock Option held by such
optionee, to the extent then exercisable, or on such accelerated basis as
the Committee may determine, may be exercised for the lesser of three (3)
months from the date of such Termination of Employment or the balance of
such Stock Option's term; provided however, that if the optionee dies
within such three (3)-month period, any unexercised Stock Option held by
such optionee shall, notwithstanding the expiration of such three (3)-
month period, continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter. Notwithstanding the foregoing, if an
optionee incurs a Termination of Employment at or after a Change of Control
(as defined Section 10(b)), other than
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by reason of death, Disability or Retirement, any Stock Option held by
such optionee shall be exercisable for the lesser of (1) six (6) months
and one (1) day from the date of such Termination of Employment, and (2)
the balance of such Stock Option's term. In the event of Termination of
Employment, if an Incentive Stock Option is exercised after the expiration
of the exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a Non-qualified
Stock Option.
(j) Cashing Out of Stock Option. Upon receipt of written notice of exercise,
the Committee may elect to cash out all or part of the portion of the
shares of Common Stock for which a Stock Option is being exercised by
paying the optionee an amount, in cash or Common Stock, equal to the
excess of the Fair Market Value of the Common Stock over the option price
times the number of shares of Common Stock for which the Option is being
exercised on the effective date of such cash-out.
(k) Change of Control Cash-Out. Notwithstanding any other provision of the
Plan, during the 60-day period from and after a Change of Control (the
"Exercise Period"), unless the Committee shall determine otherwise at the
time of grant, an optionee shall have the right, whether or not the Stock
Option is fully exercisable and in lieu of the payment of the exercise
price for the shares of Common Stock being purchased under the Stock Option
and by giving notice to the Corporation, to elect (within the Exercise
Period) to surrender all or part of the Stock Option to the Corporation and
to receive cash, within 30 days of such notice, in an amount equal to the
amount by which the Change of Control Price per share of Common Stock on
the date of such election shall exceed the exercise price per share of
Common Stock under the Stock Option (the "Spread") multiplied by the number
of shares of Common Stock granted under the Stock Option as to which the
right granted under this Section 5(k) shall have been exercised.
(l) Notwithstanding anything in the Plan to the contrary, no Stock Option shall
be reissued or repriced.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan.
In the case of a Non-qualified Stock Option, such rights may be granted
either at or after the time of grant of such Stock Option. In the case of
an Incentive Stock Option, such rights may be granted only at the time of
grant of such Stock Option. A Stock Appreciation Right shall terminate and
no longer be exercisable upon the termination or exercise of the related
Stock Option.
A Stock Appreciation Right may be exercised by an optionee in accordance
with Section 6(b) by surrendering the applicable portion of the related
Stock Option in accordance with procedures established by the Committee.
Upon such exercise and surrender, the optionee shall be entitled to
receive an amount determined in the manner prescribed in Section 6(b).
Stock Options which have been so surrendered shall no longer be
exercisable to the extent the related Stock Appreciation Rights have been
exercised.
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(b) Terms and Conditions. Stock Appreciation Rights shall be subject to such
terms and conditions as shall be determined by the Committee, including
the following:
(i) Stock Appreciation Rights shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate
are exercisable in accordance with the provisions Section 5 and this
Section 6.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall
be entitled to receive an amount in cash, shares of Common Stock or
both, equal in value to the excess of the Fair Market Value of one
share of Common Stock over the option price per share specified in
the related Stock Option multiplied by the number of shares in
respect of which the Stock Appreciation Right shall have been
exercised, with the Committee having the right to determine the form
of payment.
(iii) Stock Appreciation Rights shall be transferable only to permitted
transferees of the underlying Stock Option in accordance with
Section 5(e).
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or
part thereof to which such Stock Appreciation Right is related shall
be deemed to have been exercised for the purpose of the limitation
set forth in Section 3 on the number of shares of Common Stock to be
issued under the Plan, but only to the extent of the number of
shares covered by the Stock Appreciation Right at the time of
exercise based on the value of the Stock Appreciation Right at such
time.
SECTION 7. RESTRICTED STOCK
(a) Administration. Shares of Restricted Stock may be awarded either alone
or in addition to other Awards granted under the Plan. The Committee shall
determine the officers and other employees of the Corporation and its
Affiliates to whom and the time or times at which grants of Restricted
Stock will be awarded, the number of shares to be awarded to any
participant (subject to the aggregate limit on grants to individual
participants set forth in Section 3), the conditions for vesting, the time
or times within which such Awards may be subject to forfeiture and any
other terms and conditions of the Awards, in addition to those contained in
Section 7(c).
The Committee may, prior to grant, condition vesting of Restricted Stock
upon the attainment of Performance Goals. The Committee may, in addition
to requiring satisfaction of Performance Goals, condition vesting upon the
continued service of the participant. The provisions of Restricted Stock
Awards (including the applicable Performance Goals) need not be the same
with respect to each recipient. All Performance Goals applicable to Awards
of Restricted Stock shall be approved by the Committee in writing as
required by Section 162(m) of the Code and the rules and regulations
thereunder in order for the value of the Restricted Stock delivered
pursuant to such Award to be deductible.
(b) Awards and Certificates. Shares of Restricted Stock shall be evidenced in
such manner as the Committee may deem appropriate, including book- entry
registration
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or issuance of one or more stock certificates. Any certificate issued in
respect of shares of Restricted Stock shall be registered in the name of
such participant and shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to such Award, substantially
in the following form:
"THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING
FORFEITURE) OF CH ENERGY GROUP, INC. LONG- TERM PERFORMANCE-BASED
INCENTIVE PLAN AND A RESTRICTED STOCK AGREEMENT. COPIES OF SUCH PLAN AND
AGREEMENT ARE ON FILE AT THE OFFICES OF THE SECRETARY OF CH ENERGY GROUP,
INC., 284 SOUTH AVENUE, POUGHKEEPSIE, NEW YORK."
The Committee may require that the certificates evidencing such shares be
held in custody by the Corporation until the restrictions thereon shall
have lapsed and that, as a condition of any Award of Restricted Stock, the
participant shall have delivered a stock power, endorsed in blank,
relating to the Common Stock covered by such Award.
(c) Terms and Conditions. Shares of Restricted Stock shall be subject to the
following terms and conditions:
(i) Subject to the provisions of the Plan and the Restricted Stock
Agreement referred to in Section 7(c)(vi), during the period, if any,
set by the Committee, commencing with the date of such Award for which
such participant's continued service is required (the "Restriction
Period"), and until the later of (i) the expiration of the Restriction
Period and (ii) the date the applicable Performance Goals (if any) are
satisfied, the participant shall not be permitted to sell, assign,
transfer, pledge or otherwise encumber shares of Restricted Stock;
provided, that the foregoing shall not prevent a participant from
pledging Restricted Stock as security for a loan, the sole purpose of
which is to provide funds to pay the option price for Stock Options.
Within these limits, the Committee may provide for the lapse of
restrictions based upon period of service in installments or otherwise
and may accelerate or waive, in whole or in part, restrictions based
upon period of service or upon performance; provided however, that in
the case of Restricted Stock subject to Performance Goals granted to a
participant who is a Covered Employee, the applicable Performance
Goals have been satisfied.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i) and
the Restricted Stock Agreement, the participant shall have, with
respect to the shares of Restricted Stock, all of the rights of a
shareholder of the Corporation holding the class or series of Common
Stock that is the subject of the Restricted Stock, including, if
applicable, the right to vote the shares and the right to receive
any cash dividends. If so determined by the Committee in the
applicable Restricted Stock Agreement and subject to Section 13(e)
of the Plan, (1) cash dividends on the class or series of Common
Stock that is the subject of the Restricted Stock Award shall be
automatically deferred and reinvested in additional Restricted
Stock, held subject to vesting of the underlying Restricted Stock,
or held subject to
12
<PAGE>
meeting Performance Goals applicable only to dividends, and (2)
dividends payable in Common Stock shall be paid in the form of
Restricted Stock of the same class as the Common Stock with which
such dividend was paid, held subject to vesting of the underlying
Restricted Stock, and/or held subject to meeting Performance Goals
applicable only to dividends.
(iii) Except to the extent otherwise provided in the applicable Restricted
Stock Agreement and Sections 7(c)(i), 7(c)(iv) and 10(a)(ii), upon a
participant's Termination of Employment for any reason during the
Restriction Period or before the applicable Performance Goals are
satisfied, all shares still subject to restriction shall be
forfeited by the participant.
(iv) Except to the extent otherwise provided in Section 10(a)(ii), in the
event that a participant retires or such participant's employment is
involuntarily terminated (other than for Cause), the Committee shall
have the discretion to waive, in whole or in part, any or all
remaining restrictions (other than, in the case of Restricted Stock
with respect to which a participant is a Covered Employee,
satisfaction of any applicable Performance Goals unless the
participant's employment is terminated by reason of death or
Disability) with respect to any or all of such participant's shares
of Restricted Stock.
(v) If and when any applicable Performance Goals are satisfied and the
Restriction Period expires without a prior forfeiture of the
Restricted Stock, unlegended certificates for such shares shall be
delivered to the participant upon surrender of the legended
certificates.
(vi) Each Award shall be confirmed by, and be subject to, the terms of a
Restricted Stock Agreement.
SECTION 8. PERFORMANCE UNITS
(a) Administration. Performance Units may be awarded either alone or in
addition to other Awards granted under the Plan. The Committee shall
determine the officers and other employees of the Corporation and its
Affiliates to whom and the time or times at which Performance Units shall
be awarded, the number of Performance Units to be awarded to any
participant (subject to the aggregate limit on grants to individual
participants set forth in Section 3), the duration of the Award Cycle and
any other terms and conditions of the Award, in addition to those contained
in Section 8(b).
The Committee may, prior to grant, condition the settlement of Performance
Units upon continued employment and/or the attainment of Performance
Goals. The provisions of such Awards (including the applicable Performance
Goals) need not be the same with respect to each recipient. All
Performance Goals applicable to Awards of Performance Units awarded during
an Award Cycle shall be approved by the Committee in writing as required
by Section 162(m) of the Code and the rules and regulations thereunder in
order for the cash and/or property delivered pursuant to such Award to be
deductible.
13
<PAGE>
(b) Terms and Conditions. Performance Units Awards shall be subject to the
following terms and conditions:
(i) Subject to the provisions of the Plan and the Performance Units
Agreement referred to in Section 8(b)(vi), Performance Units may not
be sold, assigned, transferred, pledged or otherwise encumbered during
the Award Cycle. At the expiration of the Award Cycle, the Committee
shall evaluate the Corporation's performance in light of the
Performance Goals for such Award to the extent applicable, and shall
determine the value of Performance Units granted to the participant
which have been earned, and the Committee may then elect to deliver
(1) the cash amount equal to the value and number of the Performance
Units determined by the Committee to have been earned, or (2) the
number of shares of Common Stock whose Fair Market Value is equal to
cash value and number of the Performance Units determined by the
Committee to have been earned the participant. The maximum value of
cash and/or property that any participant may receive with respect to
Performance Units in any year is $600,000.
(ii) Except to the extent otherwise provided in the applicable
Performance Unit Agreement and Sections 8(b)(iii) and 10(a)(iii),
upon a participant's Termination of Employment for any reason during
the Award Cycle or before any applicable Performance Goals are
satisfied, the rights to the shares still covered by the Performance
Units Award shall be forfeited by the participant.
(iii) Except to the extent otherwise provided in Section 10(a)(iii), in
the event that a participant's employment is terminated (other than
for Cause) or in the event a participant retires, the Committee
shall have the discretion to waive, in whole or in part, any or all
remaining payment limitations (other than, in the case of
Performance Units with respect to which a participant is a Covered
Employee, satisfaction of any applicable Performance Goals unless
the participant's employment is terminated by reason of death or
Disability) with respect to any or all of such participant's
Performance Units.
(iv) A participant may elect to further defer receipt of the Performance
Units payable under an Award (or an installment of an Award) for a
specified period or until a specified event, subject in each case to
the Committee's approval and to such terms as are determined by the
Committee (the "Elective Deferral Period"). Such election must
generally be made prior to commencement of the Award Cycle for the
Award (or for such installment of an Award).
(v) If and when any applicable Performance Goals are satisfied and the
Elective Deferral Period expires without a prior forfeiture of the
Performance Units, payment in accordance with Section 8(b)(i) hereof
shall be made to the participant.
(vi) Each Award shall be confirmed by, and be subject to, the terms of a
Performance Unit Agreement.
14
<PAGE>
SECTION 9. PERFORMANCE SHARES
(a) Administration. Performance Shares may be awarded either alone or in
addition to other Awards granted under the Plan. The Committee shall
determine the officers and other employees of the Corporation and its
Affiliates to whom and the time or times at which Performance Shares shall
be awarded, the number of Performance Shares to be awarded to any
participant (subject to the aggregate limit on grants to individual
participants set forth in Section 3), the duration of the Award Cycle and
any other terms and conditions of the Award, in addition to those contained
in Section 9(b).
The Committee may, prior to grant, condition the settlement of Performance
Shares upon continued employment and/or the attainment of Performance
Goals. The provisions of such Awards (including the applicable Performance
Goals) need not be the same with respect to each recipient. All
Performance Goals applicable to Awards of Performance Shares awarded
during an Award Cycle shall be approved by the Committee in writing as
required by Section 162(m) of the Code and the rules and regulations
thereunder in order for the property delivered pursuant to such Award to
be deductible by the Corporation under the Code.
(b) Terms and Conditions. Performance Shares Awards shall be subject to the
following terms and conditions:
(i) Subject to the provisions of the Plan and the Performance Shares
Agreement referred to in Section 9(b)(vi), Performance Shares may not
be sold, assigned, transferred, pledged or otherwise encumbered during
the Award Cycle. At the expiration of the Award Cycle, the Committee
shall evaluate the Corporation's performance in light of the
Performance Goals for such Award to the extent applicable, and shall
determine the value and number of Performance Shares and associated
reinvested dividends earned by the participant. If so determined by
the Committee in the applicable Performance Shares Agreement and
subject to Section 13(e) of the Plan, (1) cash dividends on the class
or series of Common Stock that is the subject of the Performance Share
Award shall be automatically deferred and reinvested in additional
shares of Common Stock, held subject to vesting of the underlying
Performance Shares, or held subject to meeting Performance Goals , and
(2) dividends payable in Common Stock shall be paid in the form of
shares of Common Stock of the same class as the Common Stock with
which such dividend was paid, held subject to vesting of the
underlying Performance Shares, or held subject to meeting the
Performance Goals. The maximum value of property that any participant
may receive with respect to Performance Shares in any year is
$600,000. Delivery to the participant will be in shares of Common
Stock only.
(ii)Except to the extent otherwise provided in the applicable
Performance Unit Agreement and Sections 9(b)(iii) and 10(a)(iii),
upon a participant's Termination of Employment for any reason during
the Award Cycle or before any applicable Performance Goals are
satisfied, the rights to the shares still covered by the Performance
Shares Award shall be forfeited by the participant.
15
<PAGE>
(iii) Except to the extent otherwise provided in Section 10(a)(iii), in
the event that a participant's employment is terminated (other than
for Cause) or in the event a participant retires, the Committee
shall have the discretion to waive, in whole or in part, any or all
remaining payment limitations (other than, in the case of
Performance Shares with respect to which a participant is a Covered
Employee, satisfaction of any applicable Performance Goals unless
the participant's employment is terminated by reason of death or
Disability) with respect to any or all of such participant's
Performance Shares.
(iv) A participant may elect to further defer receipt of the Performance
Shares payable under an Award (or an installment of an Award) for a
specified period or until a specified event, subject in each case to
the Committee's approval and to such terms as are determined by the
Committee (the "Elective Deferral Period"). Such election must be
made prior to commencement of the Award Cycle for the Award (or for
such installment of an Award).
(v) If and when any applicable Performance Goals are satisfied and the
Elective Deferral Period expires without a prior forfeiture of the
Performance Shares, payment in accordance with Section 9(b)(i)
hereof shall be made to the participant.
(vi) Each Award shall be confirmed by, and be subject to, the terms of a
Performance Unit Agreement.
SECTION 10. CHANGE OF CONTROL PROVISIONS
(a) Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change of Control:
(i) Any Stock Options and Stock Appreciation Rights outstanding as of
the date such Change of Control is determined to have occurred, and
which are not then exercisable and vested, shall become fully
exercisable and vested to the full extent of the original grant.
(ii) The restrictions and deferral limitations applicable to any
Restricted Stock shall lapse, and such Restricted Stock shall become
free of all restrictions and become fully vested and transferable to
the full extent of the original grant.
(iii) All Performance Shares shall be considered to be earned and payable
to the extent that any Performance Goals which the Committee shall
establish have been met or exceeded, and any deferral or other
restriction shall lapse and such Performance Shares shall be settled
in cash as promptly as is practicable.
(b) Definition of Change of Control. For purposes of the Plan, a "Change of
Control" shall mean the happening of any of the following events:
16
<PAGE>
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of either (1) the then outstanding shares
of Common Stock of the Corporation (the "Outstanding Corporation
Common Stock") or (2) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote
generally in the election of directors (the "Outstanding Corporation
Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a
Change of Control; (1) any acquisition directly from the Corporation,
(2) any acquisition by the Corporation, or (3) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained by
the Corporation or any corporation controlled by the Corporation.
(ii) Approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation or the sale of all or
substantially all of the assets of the Company or the merger or
consolidation of the Corporation with or into another corporation.
(c) Change of Control Price. For purposes of the Plan, "Change of Control
Price" means the higher of (i) the highest reported sales price, regular
way, of a share of Common Stock in any transaction reported on the New York
Stock Exchange Composite Tape or other national exchange on which such
shares are listed or on NASDAQ during the 60-day period prior to and
including the date of a Change of Control or (ii) if the Change of Control
is the result of a tender or exchange offer or a Corporate Transaction, the
highest price per share of Common Stock paid in such tender or exchange
offer or Corporate Transaction; provided however, that in the case of
Incentive Stock Options and Stock Appreciation Rights relating to Incentive
Stock Options, the Change of Control Price shall be in all cases the Fair
Market Value of the Common Stock on the date such Incentive Stock Option or
Stock Appreciation Right is exercised. To the extent that the consideration
paid in any such transaction described above consists all or in part of
securities or other non- cash consideration, the value of such securities
or other noncash consideration shall be determined in the sole discretion
of the Board.
SECTION 11. TERM, AMENDMENT AND TERMINATION
The Plan will terminate 10 years after the effective date of the Plan. Awards
outstanding as of such date shall not be affected or impaired by the termination
of the Plan.
The Board may amend, alter or discontinue the Plan, but no amendment, alteration
or discontinuation shall be made which would (i) impair the rights of an
optionee under a Stock Option or a recipient of a Stock Appreciation Right,
Restricted Stock Award, Performance Share Award or Performance Unit Award
therefore granted without the optionee's or recipient's consent, except such an
amendment made to cause the Plan to qualify for the exemption provided by Rule
16b-3, or (ii) disqualify the Plan or any Award or transaction thereunder from
the exemption provided by Rule 16b-3. In addition, no such amendment shall be
made without the approval of the Corporation's shareholders to the
17
<PAGE>
extent such approval is required by law, regulation or agreement.
The Committee may amend the terms of any Stock Option or other Award theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any holder without the holder's consent except such an amendment made
to cause the Plan, or Award, transaction or payment made under the Plan, to
qualify for the exemption provided by Rule 16b-3 and any such amendment shall be
subject to Section 2(e) hereof.
Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in law and tax and accounting rules as will as
other developments, and to grant Awards which qualify for beneficial treatment
under such rules with shareholder approval.
SECTION 12. UNFUNDED STATUS OF PLAN
It is presently intended that the Plan shall constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 13. GENERAL PROVISIONS
(a) The Committee may require each person purchasing or receiving shares
pursuant to an Award to represent to and agree with the Corporation in
writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any
legend which the Committee deems appropriate to reflect any restrictions
on transfer.
Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Corporation shall not be required to issue or
deliver any certificate or certificates for shares of Common Stock under
the Plan prior to fulfillment of all of the following conditions:
(1) Listing or approval for listing upon notice of issuance of such
shares on the New York Stock Exchange,Inc., or such other securities
exchange as may at the time be the principal market for the Common
Stock;
(2) Any registration or other qualification of such shares of the
Corporation under any state or federal law or regulation, or
maintaining in effect any such registration or other qualification
which the Committee shall, in its absolute discretion upon the
advice of counsel, deem necessary or advisable; and
(3) Obtaining any other consent, approval or permit from any state or
federal governmental agency which the Committee shall, in its
absolute discretion after receiving the advice of counsel, determine
to be necessary or advisable.
18
<PAGE>
(b) Nothing contained in the Plan shall prevent the Corporation or any
Affiliate from adopting other or additional compensation arrangements for
its employees.
(c) Neither adoption of the Plan nor the grant or any Award thereunder shall
confer upon any employee any right to continued employment, nor shall it
interfere in any way with the right of the Corporation or any Affiliate to
terminate the employment of any employee at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the participant for federal income tax purposes with
respect to any Award under the Plan, the participant shall pay to the
Corporation, or make arrangements satisfactory to the Corporation regarding
the payment of, any federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. Unless
otherwise determined by the Corporation, withholding obligations may be
settled with Common Stock, including Common Stock that is part of the Award
that gives rise to the withholding requirement. The obligations of the
Corporation under the Plan shall be conditioned upon such payment or
arrangements, and the Corporation and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the participant. The Committee may establish such
procedures as it deems appropriate, including making irrevocable elections,
for settlement of withholding obligations with Common Stock.
(e) Reinvestment of dividends in additional Restricted Stock or Performance
Shares at the time of any dividend payment shall only be permissible if
sufficient shares of Common Stock are available under Section 3 for such
reinvestment (taking into account then outstanding Stock Options and other
Awards).
(f) The Committee shall establish such procedures as it deems appropriate for
a participant to designate a beneficiary to whom any amounts payable in
the event of the participant's death are to paid or by whom any rights of
the participant, after the participant's death, may be exercised.
(g) In the case of a grant of an Award to any employee of an Affiliate of the
Corporation, the Corporation may, if the Committee so directs, issue or
transfer the shares of Common Stock, if any, covered by the Award to the
Affiliate, for such lawful consideration as the Committee may specify,
upon the condition or understanding that the Affiliate will transfer the
shares of Common Stock to the employee in accordance with the terms of the
Award specified by the Committee pursuant to the provisions of the Plan.
(h) Notwithstanding the foregoing, if any right granted pursuant to this Plan
would make a Change of Control transaction ineligible for
pooling-of-interests accounting under APB No.16 that but for the nature of
such grant would otherwise be eligible for such accounting treatment, the
Committee shall have the ability to substitute for any cash payable
pursuant to such right Common Stock with a Fair Market Value equal to the
cash that would otherwise be payable hereunder.
(i) Notwithstanding anything in this Plan to the contrary, no transaction
between a participant and the Corporation that requires as a condition of
its exemption from
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<PAGE>
Section 16 of the Exchange Act approval in the manner set forth in
paragraph (d)(1) or (d)(2) of Rule 16b-3 shall be consummated until such
approval is obtained; but failure to obtain such approval shall not cause
a transaction consummated to be void or voidable without the consent of
such participant nor shall it disqualify the transaction from the benefit
of any of available exemption from said Section 16.
(j) Unless the Committee shall otherwise determine or any provision of the
Plan shall otherwise specifically require, no delivery of cash and/or
property shall be made to any "covered employee", as that term is defined
in Section 162(m)(3) of the Code, or any transferee to whom the right of
such covered employee to receive such cash and/or property has been
transferred as the result of a transfer permitted by the Plan, in any year
to the extent that the value such cash and/or property, together with the
value of all other cash and/or property delivered to such covered employee
or transferee in such year, shall not be deductible by the Corporation as a
result of the operation of Section 162(m) of the Code. Any cash and/or
property not deliverable because of the application of the previous
sentence shall be delivered together with the value of all other cash
and/or property delivered to such covered employee or transferee in such
year, is so deductible, until such cash and/or property shall have been
delivered in full. Such undelivered cash and/or property shall bear
interest from the date on which it was first payable, but for the
application of this Section (j), until paid in full, at a rate of interest
per annum to be determined by the Committee in accordance with any rules
adopted under said Section 162. For purposes of computing such interest,
the Committee shall determine the value of such property, based upon (i)
its Fair Market Value (adjusted as the Committee shall see fit, but at
least quarterly) if it is Common Stock or if its value is determinable with
reference to the price of Common Stock or (ii) as the Committee shall
determine in all other cases. This Section (j) shall cease to have effect
upon the occurrence of a Change of Control and the Plan shall thereafter be
construed as if this Section (j) had never been part thereof, except in
respect of the obligation of the Corporation to pay interest pursuant to
the provisions of this Section (j); without limiting the generality of this
sentence, (i) all property deliverable as a result of such occurrence shall
be delivered when due as if this Section (j) were not part of the Plan and
(ii) all property deliverable, but for the provisions of this Section (j),
shall become deliverable upon such Change of Control, together with
interest accrued thereon.
(k) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of New
York, without reference to principles of conflict of laws.
SECTION 14. EFFECTIVE DATE - SHAREHOLDER APPROVAL
The Plan shall become effective on January 1, 2000, subject to obtaining the
approval of the shareholders of the Corporation as required by Code Section
422(b) and Rule 16 b- 3(d)(2) of the Exchange Act.
20
<PAGE>
<TABLE>
EXHIBIT 12
<CAPTION>
CH ENERGY GROUP, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED DIVIDENDS
Year Ended December 31,
1999 1998 (1) 1997 (1) 1996 (1) 1995 (1)
---- ---- ---- ---- ----
Earnings:
<S> <C> <C> <C> <C> <C>
A. Net Income $ 48,573 $ 49,314 $ 51,856 $ 52,852 $ 47,819
B. Federal Income Tax 28,925 28,627 26,237 31,068 28,687
-------- -------- -------- -------- --------
C. Earnings before Income Taxes $ 77,498 $ 77,941 $ 78,093 $ 83,920 $ 76,506
======== ======== ======== ======== ========
D. Total Fixed Charges
Interest on Mortgage Bonds 13,057 14,225 14,237 15,112 16,862
Interest on Other Long-Term Debt 11,094 8,890 8,860 8,505 9,063
Other Interest 4,860 3,639 2,647 2,626 1,917
Interest Portion of Rents 993 1,004 1,020 1,094 1,522
Amortization of Premium & Expense
on Debt 993 924 906 940 1,069
Preferred Stock Dividends of
Central Hudson 5,078 5,031 4,800 5,054 7,528
-------- -------- -------- -------- --------
36,075 33,713 32,470 33,331 37,961
-------- -------- -------- -------- --------
E. Total Earnings $113,573 $111,654 $110,563 $117,251 $114,467
======== ======== ======== ======== ========
Preferred Dividend Requirements:
F. Allowance for Preferred Stock
Dividends Under IRC Sec 247 $ 3,230 $ 3,230 $ 3,230 $ 3,230 $ 4,903
G. Less Allowable Dividend Deduction (127) (127) (127) (127) (528)
-------- -------- -------- -------- --------
H. Net Subject to Gross-up 3,103 3,103 3,103 3,103 4,375
I. Ratio of Earnings before Income
Taxes to Net Income (C/A) 1.595 1.581 1.506 1.588 1.600
-------- -------- -------- -------- --------
J. Pref. Dividend (Pre-tax) (HxI) 4,951 4,904 4,673 4,927 7,000
K. Plus Allowable Dividend Deduction 127 127 127 127 528
-------- -------- -------- -------- --------
L. Preferred Dividend Factor 5,078 5,031 4,800 5,054 7,528
======== ======== ======== ======== ========
M. Ratio of Earnings to Fixed Charges
and Preferred Dividends (E/D) 3.15 3.31 3.41 3.52 3.02
======== ======== ======== ======== ========
(1) CH Energy Group, Inc. was formed on December 15, 1999. Prior Periods have been restated to
reflect preferred stock dividends as a component of fixed charges.
</TABLE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement, on Form S-3 (Registration No.
333-11521-99), relating to CH Energy Group, Inc.'s Stock Purchase Plan, of our
report dated January 28, 2000 appearing in this Annual Report on Form 10-K for
the year ended December 31, 1999.
New York, New York
March 1, 2000
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, PAUL J. GANCI, Chairman of the
Board, President and Chief Executive Officer, a Principal Executive Officer and
a Director of CH Energy Group, Inc. ("Corporation"), have made, constituted and
appointed, and by these presents do make, constitute and appoint, DONNA S. DOYLE
and STEVEN V. LANT, WILLIAM P. REILLY, and each of them, my true and lawful
attorneys, for me and in my name, place and stead, and in my office and capacity
as aforesaid, to sign and file the Corporation's Annual Report, on Form 10-K,
for the year ended December 31, 1999, with the Securities and Exchange
Commission, pursuant to the applicable provisions of the Securities Exchange Act
of 1934, together with any and all amendments and supplements to said Annual
Report and any and all other documents to be signed and filed with the
Securities and Exchange Commission in connection therewith, hereby granting to
said attorneys, and each of them, full power and authority to do and perform
each and every act and thing whatsoever requisite and necessary to be done in
the premises as fully, to all intents and purposes, as I might or could do if
personally present, hereby ratifying and confirming in all respects all that
said attorneys or any of them may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ PAUL J. GANCI L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came PAUL J. GANCI
to me known and known to me to be the individual described in and who executed
the foregoing instrument, and duly acknowledged to me that he executed the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, JOHN E. MACK III, a Director of CH
Energy Group, Inc. ("Corporation"), have made, constituted and appointed, and by
these presents do make, constitute and appoint, PAUL J. GANCI, DONNA S. DOYLE,
STEVEN V. LANT, WILLIAM P. REILLY, and each of them, my true and lawful
attorneys, for me and in my name, place and stead, and in my office and capacity
as aforesaid, to sign and file the Corporation's Annual Report, on Form 10-K,
for the year ended December 31, 1999, with the Securities and Exchange
Commission, pursuant to the applicable provisions of the Securities Exchange Act
of 1934, together with any and all amendments and supplements to said Annual
Report and any and all other documents to be signed and filed with the
Securities and Exchange Commission in connection therewith, hereby granting to
said attorneys, and each of them, full power and authority to do and perform
each and every act and thing whatsoever requisite and necessary to be done in
the premises as fully, to all intents and purposes, as I might or could do if
personally present, hereby ratifying and confirming in all respects all that
said attorneys or any of them may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ JOHN E. MACK III L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came JOHN E. MACK
III to me known and known to me to be the individual described in and who
executed the foregoing instrument, and duly acknowledged to me that he executed
the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, EDWARD P.
SWYER, a Director of CH Energy Group, Inc. ("Corporation"), have made,
constituted and appointed, and by these presents do make, constitute and
appoint, PAUL J. GANCI, DONNA S. DOYLE, STEVEN V. LANT, WILLIAM
P. REILLY, and each of them, my true and lawful attorneys, for me and in
my name, place and stead, and in my office and capacity as aforesaid, to
sign and file the Corporation's Annual Report, on Form 10-K, for the year
ended December 31, 1999, with the Securities and Exchange Commission,
pursuant to the applicable provisions of the Securities Exchange Act of
1934, together with any and all amendments and supplements to said
Annual Report and any and all other documents to be signed and filed with
the Securities and Exchange Commission in connection therewith, hereby
granting to said attorneys, and each of them, full power and authority to do
and perform each and every act and thing whatsoever requisite and
necessary to be done in the premises as fully, to all intents and purposes,
as I might or could do if personally present, hereby ratifying and confirming
in all respects all that said attorneys or any of them may or shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ EDWARD P. SWYER L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came EDWARD P.
SWYER to me known and known to me to be the individual described in and who
executed the foregoing instrument, and duly acknowledged to me that he executed
the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, JACK EFFRON, a Director of CH
Energy Group, Inc. ("Corporation"), have made, constituted and appointed, and by
these presents do make, constitute and appoint, PAUL J. GANCI, DONNA S. DOYLE,
STEVEN V. LANT, WILLIAM P. REILLY, and each of them, my true and lawful
attorneys, for me and in my name, place and stead, and in my office and capacity
as aforesaid, to sign and file the Corporation's Annual Report, on Form 10-K,
for the year ended December 31, 1999, with the Securities and Exchange
Commission, pursuant to the applicable provisions of the Securities Exchange Act
of 1934, together with any and all amendments and supplements to said Annual
Report and any and all other documents to be signed and filed with the
Securities and Exchange Commission in connection therewith, hereby granting to
said attorneys, and each of them, full power and authority to do and perform
each and every act and thing whatsoever requisite and necessary to be done in
the premises as fully, to all intents and purposes, as I might or could do if
personally present, hereby ratifying and confirming in all respects all that
said attorneys or any of them may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ JACK EFFRON L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came JACK EFFRON
to me known and known to me to be the individual described in and who executed
the foregoing instrument, and duly acknowledged to me that he executed the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, HEINZ K.
FRIDRICH, a Director of CH Energy Group, Inc. ("Corporation"), have
made, constituted and appointed, and by these presents do make,
constitute and appoint, PAUL J. GANCI, DONNA S. DOYLE, STEVEN V.
LANT, WILLIAM P. REILLY, and each of them, my true and lawful
attorneys, for me and in my name, place and stead, and in my office and
capacity as aforesaid, to sign and file the Corporation's Annual Report, on
Form 10-K, for the year ended December 31, 1999, with the Securities and
Exchange Commission, pursuant to the applicable provisions of the
Securities Exchange Act of 1934, together with any and all amendments
and supplements to said Annual Report and any and all other documents to
be signed and filed with the Securities and Exchange Commission in
connection therewith, hereby granting to said attorneys, and each of them,
full power and authority to do and perform each and every act and thing
whatsoever requisite and necessary to be done in the premises as fully, to
all intents and purposes, as I might or could do if personally present, hereby
ratifying and confirming in all respects all that said attorneys or any of them
may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ HEINZ K. FRIDRICH L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came HEINZ K.
FRIDRICH to me known and known to me to be the individual described in and who
executed the foregoing instrument, and duly acknowledged to me that he executed
the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, EDWARD F. X.
GALLAGHER, a Director of CH Energy Group, Inc. ("Corporation"), have
made, constituted and appointed, and by these presents do make,
constitute and appoint, PAUL J. GANCI, DONNA S. DOYLE, STEVEN V.
LANT, WILLIAM P. REILLY, and each of them, my true and lawful
attorneys, for me and in my name, place and stead, and in my office and
capacity as aforesaid, to sign and file the Corporation's Annual Report, on
Form 10-K, for the year ended December 31, 1999, with the Securities and
Exchange Commission, pursuant to the applicable provisions of the
Securities Exchange Act of 1934, together with any and all amendments
and supplements to said Annual Report and any and all other documents to
be signed and filed with the Securities and Exchange Commission in
connection therewith, hereby granting to said attorneys, and each of them,
full power and authority to do and perform each and every act and thing
whatsoever requisite and necessary to be done in the premises as fully, to
all intents and purposes, as I might or could do if personally present, hereby
ratifying and confirming in all respects all that said attorneys or any of them
may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ EDWARD F. X. GALLAGHER L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came EDWARD F. X.
GALLAGHER to me known and known to me to be the individual described in and who
executed the foregoing instrument, and duly acknowledged to me that he executed
the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, CHARLES LAFORGE, a Director of CH
Energy Group, Inc. ("Corporation"), have made, constituted and appointed, and by
these presents do make, constitute and appoint, PAUL J. GANCI, DONNA S. DOYLE,
STEVEN V. LANT, WILLIAM P. REILLY, and each of them, my true and lawful
attorneys, for me and in my name, place and stead, and in my office and capacity
as aforesaid, to sign and file the Corporation's Annual Report, on Form 10-K,
for the year ended December 31, 1999, with the Securities and Exchange
Commission, pursuant to the applicable provisions of the Securities Exchange Act
of 1934, together with any and all amendments and supplements to said Annual
Report and any and all other documents to be signed and filed with the
Securities and Exchange Commission in connection therewith, hereby granting to
said attorneys, and each of them, full power and authority to do and perform
each and every act and thing whatsoever requisite and necessary to be done in
the premises as fully, to all intents and purposes, as I might or could do if
personally present, hereby ratifying and confirming in all respects all that
said attorneys or any of them may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ CHARLES LAFORGE L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came CHARLES
LAFORGE to me known and known to me to be the individual described in and who
executed the foregoing instrument, and duly acknowledged to me that he executed
the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, FRANCES D.
FERGUSSON, a Director of CH Energy Group, Inc. ("Corporation"), have
made, constituted and appointed, and by these presents do make,
constitute and appoint, PAUL J. GANCI, DONNA S. DOYLE, STEVEN V.
LANT, WILLIAM P. REILLY, and each of them, my true and lawful
attorneys, for me and in my name, place and stead, and in my office and
capacity as aforesaid, to sign and file the Corporation's Annual Report, on
Form 10-K, for the year ended December 31, 1999, with the Securities and
Exchange Commission, pursuant to the applicable provisions of the
Securities Exchange Act of 1934, together with any and all amendments
and supplements to said Annual Report and any and all other documents to
be signed and filed with the Securities and Exchange Commission in
connection therewith, hereby granting to said attorneys, and each of them,
full power and authority to do and perform each and every act and thing
whatsoever requisite and necessary to be done in the premises as fully, to
all intents and purposes, as I might or could do if personally present, hereby
ratifying and confirming in all respects all that said attorneys or any of them
may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ FRANCIS D. FERGUSSON L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came FRANCES D.
FERGUSSON to me known and known to me to be the individual described in and who
executed the foregoing instrument, and duly acknowledged to me that she executed
the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, STANLEY J.
GRUBEL, a Director of CH Energy Group, Inc. ("Corporation"), have made,
constituted and appointed, and by these presents do make, constitute and
appoint, PAUL J. GANCI, DONNA S. DOYLE, STEVEN V. LANT, WILLIAM
P. REILLY, and each of them, my true and lawful attorneys, for me and in
my name, place and stead, and in my office and capacity as aforesaid, to
sign and file the Corporation's Annual Report, on Form 10-K, for the year
ended December 31, 1999, with the Securities and Exchange Commission,
pursuant to the applicable provisions of the Securities Exchange Act of
1934, together with any and all amendments and supplements to said
Annual Report and any and all other documents to be signed and filed with
the Securities and Exchange Commission in connection therewith, hereby
granting to said attorneys, and each of them, full power and authority to do
and perform each and every act and thing whatsoever requisite and
necessary to be done in the premises as fully, to all intents and purposes,
as I might or could do if personally present, hereby ratifying and confirming
in all respects all that said attorneys or any of them may or shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ STANLEY J. GRUBEL L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came STANLEY J.
GRUBEL to me known and known to me to be the individual described in and who
executed the foregoing instrument, and duly acknowledged to me that she executed
the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, DONNA S. DOYLE, Vice President -
Accounting and Controller, Officer of CH Energy Group, Inc. ("Corporation"),
have made, constituted and appointed, and by these presents do make, constitute
and appoint, PAUL J. GANCI and STEVEN V. LANT, WILLIAM P. REILLY, and each of
them, my true and lawful attorneys, for me and in my name, place and stead, and
in my office and capacity as aforesaid, to sign and file the Corporation's
Annual Report, on Form 10-K, for the year ended December 31, 1999, with the
Securities and Exchange Commission, pursuant to the applicable provisions of the
Securities Exchange Act of 1934, together with any and all amendments and
supplements to said Annual Report and any and all other documents to be signed
and filed with the Securities and Exchange Commission in connection therewith,
hereby granting to said attorneys, and each of them, full power and authority to
do and perform each and every act and thing whatsoever requisite and necessary
to be done in the premises as fully, to all intents and purposes, as I might or
could do if personally present, hereby ratifying and confirming in all respects
all that said attorneys or any of them may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ DONNA S. DOYLE L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came DONNA S.
DOYLE to me known and known to me to be the individual described in and who
executed the foregoing instrument, and duly acknowledged to me that he executed
the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, STEVEN V. LANT, Chief Financial
Officer and Treasurer, of CH Energy Group, Inc. ("Corporation"), have made,
constituted and appointed, and by these presents do make, constitute and
appoint, PAUL J. GANCI, DONNA S. DOYLE, WILLIAM P. REILLY, and each of them, my
true and lawful attorneys, for me and in my name, place and stead, and in my
office and capacity as aforesaid, to sign and file the Corporation's Annual
Report, on Form 10-K, for the year ended December 31, 1999, with the Securities
and Exchange Commission, pursuant to the applicable provisions of the Securities
Exchange Act of 1934, together with any and all amendments and supplements to
said Annual Report and any and all other documents to be signed and filed with
the Securities and Exchange Commission in connection therewith, hereby granting
to said attorneys, and each of them, full power and authority to do and perform
each and every act and thing whatsoever requisite and necessary to be done in
the premises as fully, to all intents and purposes, as I might or could do if
personally present, hereby ratifying and confirming in all respects all that
said attorneys or any of them may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have set my hand and seal this 4th day of February,
2000.
/s/ STEVEN V. LANT L.S.
STATE OF NEW YORK )
: ss.:
COUNTY OF DUTCHESS )
On this 4th day of February, 2000, before me personally came STEVEN V.
LANT to me known and known to me to be the individual described in and who
executed the foregoing instrument, and duly acknowledged to me that he executed
the same.
/s/ DONNA M. GIAMETTA
Notary Public
<PAGE>
EXHIBIT 24
I, Gladys L. Cooper, Corporate Secretary of CH Energy Group, Inc., hereby
certify that at the meeting of the Board of Directors of CH Energy Group, Inc.,
a corporation organized under the laws of the State of New York, duly called and
held at the office of said Corporation, 284 South Avenue, in the City of
Poughkeepsie, State of New York, on February 4, 2000, at which a quorum was
present and voting throughout, the following resolution was unanimously and duly
adopted and is now in full force and effect:
RESOLVED, that the Annual Report to the Securities and
Exchange Commission, on Form 10-K, for the year ended December 31,
1999, in the form presented to this meeting, be and the same hereby
is in all respects approved; and that the Chairman of the Board,
President and Chief Executive Officer and the officers of this
Corporation be and they hereby are authorized in the name and on
behalf of this Board of Directors and this Corporation to execute
said Form 10-K Report, in the form presented to this meeting, and
that the officers and Directors of this Corporation be and they
hereby are requested and authorized to join in the execution of said
Form 10-K Report, and that the Chairman of the Board, President and
Chief Financial Officer and the officers of this Corporation be and
they hereby are authorized and directed to file or cause to be filed
as required or permitted by law said Form 10-K, together with
appropriate Exhibits, as required in connection therewith, subject
to such changes therein as the Chairman of the Board, President and
Chief Executive Officer and the officers of this Corporation,
advised by counsel, may deem necessary or appropriate to comply with
the requirements of the Securities and Exchange Commission; and to
do and cause to be done any and all things necessary or appropriate
to effect the filing of said Form 10-K and any amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand as Corporate Secretary of
Central Hudson Gas & Electric Corporation and affixed it corporate seal this 4th
day of February, 2000.
/s/ Gladys L. Cooper
----------------------------
Gladys L. Cooper
Corporate Secretary
<PAGE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED
STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $921,416
<OTHER-PROPERTY-AND-INVEST> $98,808
<TOTAL-CURRENT-ASSETS> $147,422
<TOTAL-DEFERRED-CHARGES> $168,253
<OTHER-ASSETS> $0
<TOTAL-ASSETS> $1,335,899
<COMMON> $1,686
<CAPITAL-SURPLUS-PAID-IN> $349,924
<RETAINED-EARNINGS> $132,796
<TOTAL-COMMON-STOCKHOLDERS-EQ> $484,406
$35,000
$21,030
<LONG-TERM-DEBT-NET> $335,451
<SHORT-TERM-NOTES> $50,000
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $35,100
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $374,912
<TOT-CAPITALIZATION-AND-LIAB> $1,335,899
<GROSS-OPERATING-REVENUE> $521,940
<INCOME-TAX-EXPENSE> $27,758
<OTHER-OPERATING-EXPENSES> $423,544
<TOTAL-OPERATING-EXPENSES> $451,302
<OPERATING-INCOME-LOSS> $70,638
<OTHER-INCOME-NET> $10,779
<INCOME-BEFORE-INTEREST-EXPEN> $81,417
<TOTAL-INTEREST-EXPENSE> $29,614
<NET-INCOME> $48,573
$3,230
<EARNINGS-AVAILABLE-FOR-COMM> $0
<COMMON-STOCK-DIVIDENDS> $36,422
<TOTAL-INTEREST-ON-BONDS> $13,057
<CASH-FLOW-OPERATIONS> $103,803
<EPS-BASIC> 2.88
<EPS-DILUTED> 0
</TABLE>
