Exhibit 10-11
NIAGARA MOHAWK POWER CORPORATION
OFFICER LONG TERM INCENTIVE PLAN
Article 1. Establishment, Purpose and Duration
1.1 Establishment of the Plan. Niagara Mohawk Power
Corporation, a New York corporation (hereinafter referred to as
the " Company " ), hereby establishes an incentive compensation
plan to be known as the "Niagara Mohawk Power Corporation Officer
Long Term Incentive Plan" (hereinafter referred to as the
"Plan"), as set
forth in this document. The Plan permits the grant of SAR's,
Stock Units and
Dividend Equivalents, as defined herein.
The Plan shall become effective as of September 25,
1996 (the "Effective Date") and shall remain in effect as
provided in Section 1.3 herein.
1.2 Purpose of the Plan. The purpose of the Plan is to
promote the success and enhance the value of the Company through
the retention and continued motivation of Participants, focusing
their efforts toward the execution of business strategies
directed toward improving financial returns to shareholders.
1.3 Duration of the Plan. The Plan shall commence on the
Effective Date, as described in Section 1.1 herein, and shall
remain in effect, subject to the right of the Board of Directors
to terminate the Plan at any time pursuant to Article 14 herein,
until September 24, 2006. The applicable terms of the Plan and
any terms and conditions applicable to SARs or Stock Units,
including any deferral elections, granted prior to such date
shall survive the termination of the Plan .
Article 2. Definitions
Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when such meaning is intended,
the initial letter of the word is capitalized:
2.1 "Award" means, individually or collectively, a grant
under the Plan of SARs or Stock Units.
2.2 "Award Agreement" means an agreement entered into by
each Participant and the Company, setting forth the terms and
provisions applicable to an Award granted to a Participant under
the Plan.
2.3 "Base Value" of an SAR shall have the meaning set forth
in Section 6.2 herein.
2.4 "Board" or "Board of Directors" means the Board of
Directors of the Company .
2.5 "Cause" means: (i) a material default or other material
breach by a Participant of his obligations under any Employment
Agreement he may have with the Company, (ii) failure by a
Participant diligently and competently to perform his duties
under any Employment Agreement he may have with the Company, or
otherwise, or (iii) misconduct, dishonesty, insubordination or
other act by a Participant detrimental to the good will of the
Company or damaging the Company's relationships with its
customers, suppliers or employees. "Cause" shall be determined
in good faith by the Committee.
2.6 "Change in Control" of the Company shall be deemed to
have occurred as of the first day that any one or more of the
following conditions shall have been satisfied:
(1) The acquisition by any Person of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding Shares of
the Company or (ii) 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 the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company (excluding an acquisition
by virtue of the exercise of a conversion privilege), (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
acquisition by any corporation pursuant to a reorganization,
merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses
(i), (ii) and (iii) of subparagraph (3) below are satisfied; or
(2) Individuals who, as of the date hereof, constitute the
Board of Directors (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 comprising 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 either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(3) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i)
more than 75 % of, respectively, the then outstanding shares of
common stock of the corporation resulting from such organization,
merger or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors are then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Shares and Outstanding Company
Voting Securities immediately prior to such reorganization,
merger or consolidation, in substantially the same proportions as
their ownership immediately prior to such reorganization, merger
or consolidation, of the Outstanding Shares and Outstanding
Company Voting Securities, as the case may be, (ii) no Person
(excluding the Company, any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 20% or more of
the Outstanding Shares or Outstanding Voting Securities, as the
case may be) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (iii) at least
a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of
the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(4) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with
respect to which following such sale or other disposition, (A)
more than 75% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Shares and
Outstanding Company Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as
their ownership immediately prior to such sale or other
disposition of the Outstanding Shares and Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding
the Company and any employee benefit plan (or related trust) of
the Company or such corporation and any Person beneficially
owning, immediately prior to such sale or other disposition,
directly or indirectly, 20% or more of the Outstanding Shares or
Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (C) at least
a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of
the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Company; provided, however, that the implementation of the
corporate restructuring contemplated by the Company's PowerChoice
proposal filed with the New York Public Service Commission on
October 6, 1995, or any substantially similar corporate
restructuring (as determined by the Committee) shall not be
deemed to be a "Change in Control".
2.7 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
2.8 "Committee" means the committee, as specified in
Article 3, appointed by the Board to administer the Plan with
respect to grants of Awards.
2.9 "Company" means Niagara Mohawk Power Corporation, a
New York corporation, or any successor thereto as provided in
Article 16 herein.
2.10 "Director" means any individual who is a member of the
Board of Directors of the Company.
2.11 "Disability" shall have the meaning ascribed to such
term under Section 22(e)(3) of the Code.
2.12 "Dividend Equivalent" means, with respect to Shares
underlying a Stock Unit, an amount equal to all cash and stock
dividends declared on an equal number of outstanding Shares on
all common stock dividend payment dates occurring during the
Vesting Period.
2.13 "Eligible Employee" means an Employee who is eligible
to participate in the Plan, as set forth in Section 5.1 herein.
2.14 "Employee" means any full-time employee of the Company,
who is not covered by any collective bargaining agreement to
which the Company is a party. Directors who are not otherwise
employed by the Company shall not be considered Employees under
the Plan. For purposes of the Plan, transfer of employment of a
Participant from the Company to any one of its Subsidiaries shall
not be deemed a termination of employment.
2.15 "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor act thereto.
2.16 "Exercise Period" means the period during which an SAR
is exercisable, as set forth in the related Award Agreement.
2.17 "Fair Market Value" means the average of the daily
opening and closing sale prices as reported in the consolidated
transaction reporting system.
2.18 "Participant" means an Employee of the Company who has
outstanding an Award granted under the Plan.
2.19 "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act, as used in Sections 13(d)
and 14(d) thereof, including usage in the definition of a "group"
in Section 13(d) thereof.
2.20 "Retirement" shall have the meaning ascribed to such
term in the tax-qualified defined benefit pension plan maintained
by the Company for the benefit of some or all of its
non-represented employees.
2.21 "Shares" means the shares of common stock of the
Company, par value $1.
2.22 "Stock Appreciation Right" or "SAR" means a right,
designated as an SAR, to receive a payment on the day the right
is exercised, pursuant to the terms of Article 6 herein. Each SAR
shall be denominated in terms of one Share.
2.23 "Stock Unit" means a right, designated as a Stock Unit,
to receive a payment as soon as practicable following the last
day of a Vesting Period, pursuant to the terms of Article 7
herein. Each Stock Unit shall be denominated in terms of one
Share.
2.24 "Subsidiary" means any corporation that is a
"subsidiary corporation" of the Company as that term is defined
in Section 424(f) of the Code.
2.25 "Valuation Period" means the 12 trading day period
ending on and including the relevant date.
2.26 "Vesting Period" means the period during which Stock
Units are not yet payable, as set forth in the related Award
Agreement.
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the
Compensation and Succession Committee of the Board, or by any
other Committee appointed by the Board consisting of not less
than two (2) non-employee Directors. The members of the
Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board of Directors.
3.2 Authority of the Committee. The Committee shall have
full power except as limited by law, the Articles of
Incorporation and the Bylaws of the Company, subject to such
other restricting limitations or directions as may be imposed by
the Board and subject to the provisions herein, to determine the
size and types of Awards; to determine the terms and conditions
of such Awards in a manner consistent with the Plan; to construe
and interpret the Plan and any agreement or instrument entered
into under the Plan; to establish, amend or waive rules and
regulations for the Plan's administration; and (subject to the
provisions of Article 14 herein) to amend the terms and
conditions of any outstanding Award. Further, the Committee
shall make all other determinations that may be necessary or
advisable for the administration of the Plan. As permitted by
law, the Committee may delegate its authorities as identified
hereunder.
3.3 Decisions Binding. All determinations and decisions
made by the Committee pursuant to the provisions of the Plan and
all related orders or resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, its
shareholders, Employees, Participants and their estates and
beneficiaries.
3.4 Costs. The Company shall pay all costs of
administration of the Plan.
Article 4. Adjustments in Authorized Shares
In the event of any merger, reorganization consolidation,
recapitalization, separation, liquidation, stock dividend,
split-up, share combination or other change in the corporate
structure of the Company affecting the Shares, such adjustment
shall be made in the number of SARs and Stock Units that may be
granted under the Plan, and in the number and/or price of
outstanding Awards granted under the Plan, as may be determined
to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights;
provided, however, that the number of SARs and Stock Units
subject to an Award shall always be a whole number.
Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in the
Plan include all Employees who are officers of the Company, as
determined by the Committee, including Employees who are members
of the Board, but excluding Directors who are not Employees.
5.2 Actual Participation. Subject to the provisions of the
Plan, the Committee may, from time to time, select from all
eligible Employees those to whom Awards shall be granted and
shall determine the nature and amount of each Award.
Article 6. Stock Appreciation Rights
6.1 Grant of SARs. Subject to the terms and conditions of
the Plan, SARs may be granted to Eligible Employees at any time
and from time to time, as shall be determined by the Committee.
The Committee shall have complete discretion in determining
the number of SARs granted to each Participant (subject to
Article 4 herein) and, consistent with the provisions of the
Plan, in determining the terms and conditions pertaining to such
SARs.
6.2 Base Value. The Base Value of an SAR shall equal the
Fair Market Value of a Share determined for the 12 trading day
period immediately preceding the date of the grant, or for such
other period as the Compensation Committee, in its sole
discretion, shall determine at the time of grant.
6.3 Exercise and Payment of SARs. A Participant may
exercise an SAR at any time during the Exercise Period. SARs
shall be exercised by the delivery of a written notice of
exercise to the Company, setting forth the number of SARs being
exercised. Upon exercise of an SAR, a Participant shall be
entitled to receive payment in cash from the Company in an amount
equal to the product of:
(a) the excess of (i) the Fair Market Value of a Share on
the date of exercise over (ii) the Base Value of the SAR,
multiplied by (b) the number of Shares with respect to which the
SAR is exercised.
6.4 SAR Award Agreement. Each SAR grant shall be evidenced
by an Award Agreement that shall specify the number of SARs
granted, the Base Value, the Exercise Period, the expiration date
and such other provisions as the Committee shall determine.
6.5 Lapse of SARs. Subject to the provisions of Article 9,
an SAR will lapse upon the earlier of (i) ten (l0) years from the
date of grant and (ii) the expiration of the Exercise Period as
set forth in the grant.
Article 7. Stock Units
7. 1 Grant of Stock Units. Subject to the terms and
conditions of the Plan, Stock Units may be granted to Eligible
Employees at any time and from time to time, as shall be
determined by the Committee.
The Committee shall have complete discretion in determining
the number of Stock Units granted to each Participant (subject to
Article 4 herein) and, consistent with the provisions of the
Plan, in determining the terms and conditions pertaining to such
Stock Units.
7.2 Vesting of Stock Units. The Vesting Period of Stock
Units granted under the Plan shall be determined by the
Committee, in its sole discretion, as set forth in the related
Award Agreement.
7.3 Payment of Stock Units. After the applicable Vesting
Period has ended, the holder of Stock Units shall be entitled to
receive, for each Stock Unit held, payment in cash from the
Company in an amount equal to the Fair Market Value of one Share
determined as of the Valuation Period ending on the last day of
the Vesting Period. Payment shall be made as soon as practicable
following the last day of the Vesting Period.
7.4 Stock Unit Award Agreement. Each Stock Unit grant
shall be evidenced by an Award Agreement that shall specify the
number of Stock Units granted, the Vesting Period and such other
provisions as the Committee shall determine.
Article 8. Dividend Equivalents
Simultaneously with the grant of Stock Units, the
Participant shall be granted Dividend Equivalents, to be credited
to a bookkeeping entry account, on each common stock dividend
payment date with respect to the Shares subject to such Award.
In the case of cash dividends, the number of Dividend Equivalents
credited on each common stock dividend payment date shall equal
the number of Shares (including fractional Shares) that could be
purchased on the dividend payment date, based on the average of
the opening and closing sale price, as reported in the
consolidated transaction reporting system on that date, with cash
dividends that would have been paid on Awards of Stock Units and
on Dividend Equivalents previously credited to such bookkeeping
entry account, if such Stock Units or Dividend Equivalents were
Shares. In the case of stock dividends, the number of Dividend
Equivalents credited on each stock dividend payment date shall be
equal to the number of Shares (including fractional Shares) that
would have been issued as a stock dividend in respect of the
Participant's Stock Units and on Dividend Equivalents previously
credited to such bookkeeping entry account, if such Stock Units
or Dividend Equivalents were Shares.
Participants shall receive cash payment from the Company of
the Fair Market Value of the Dividend Equivalents, if and when
they receive payment of the related Stock Units, the Fair Market
Value of such Dividend Equivalents to be determined in the same
manner as for the related Stock Units.
The Committee may, in its discretion, establish such rules
and procedures governing the crediting of Dividend Equivalents,
including timing and payment contingencies that apply to the
Dividend Equivalents, as the Committee deems necessary or
appropriate in order to comply with applicable law.
Article 9. Termination of Employment; Transferability
9.1 Disability; Involuntary Termination. In the event the
employment of a Participant is terminated by reason of Disability
or involuntarily by the Company (other than for Cause):
(i) during a Vesting Period for Stock Units, the
Participant shall receive a full payout of the Stock Units and
related Dividend Equivalents, as and when provided in Section 7.3
herein;
(ii) before the Exercise Period commences for SARs subject
to an Award, such SARs may be exercised in full at any time
during the one year period commencing on the day the Exercise
Period begins; and
(iii) during the Exercise Period for SARs, but before
exercise, such SARs may be exercised in full at any time during
the one year period after such termination, but in no event after
the Exercise Period for such SARs has expired.
9.2 Death. In the event the employment of a Participant is
terminated by reason of death:
(i) during the Vesting Period for Stock Units, the
Participant's beneficiary or estate shall receive a full payout
of the Stock Units and related Dividend Equivalents. The payout
shall be made promptly based on the Fair Market Value of a Share
on the date of death; and
(ii) before the Exercise Period commences for SARs subject
to an Award or during the Exercise Period, but before exercise,
the Participant's beneficiary or estate shall receive a full
payout of all SARs subject to an Award, to the extent the Fair
Market Value of a Share exceeds the Base Value of the SAR on the
date of death.
9.3 Corporate Restructuring. In the event (i) the
corporate restructuring as contemplated by the Company's
PowerChoice proposal filed with the New York Public Service
Commission on October 6, 1995, or any substantially similar
corporate restructuring (determined by the Committee), is
implemented and (ii) the employment of a Participant with the
Company is terminated (other than for Cause), then with respect
to Awards granted prior to implementation of the restructuring,
(i) during a Vesting Period for Stock Units, the
Participant shall receive a full payout of Stock Units and
related Dividend Equivalents, as and when provided in Section 7.3
herein;
(ii) before the Exercise Period commences for SARs subject
to an Award, such SARs may be exercised in full at any time
during the one year period commencing on the day the Exercise
Period begins; and
(iii) during the Exercise Period for SARs, but before
exercise, such SARs may be exercised in full at any time during
the one year period after such termination, but in no event after
the Exercise Period for such SARs has expired.
9.4 Retirement. In the event the employment of a
Participant is terminated by reason of Retirement:
(i) during a Vesting Period for Stock Units, the
Participant shall receive a prorated payout of the Stock Units
and related Dividend Equivalents. The prorated payout shall be
determined by the Committee, shall be based upon the length of
time that the Participant held the Stock Units during the Vesting
Period and shall be made as and when provided in Section 7.3
herein;
(ii) before the Exercise Period commences for SARs subject
to an Award, the number of SARs subject to an Award shall be
prorated by the Committee, based upon the length of time that the
Participant held the SARs before Retirement; after the Exercise
Period commences, the prorated SARs may be exercised at any time
in full or in part from time to time during the Exercise Period,
and
(iii) during the Exercise Period for SARs, but before
exercise, such SARs may be exercised at any time in full or in
part from time to time during the Exercise Period.
Other than as set forth in Article 13, in the event that a
Participant's employment terminates for any reason other than as
set forth in Sections 9.l, 9.2, 9.3 and 9.4, above, all Stock
Units, SARs and Dividend Equivalents shall be forfeited by the
Participant to the Company.
9.5 Nontransferability of Awards. Notwithstanding the
foregoing, the Committee may in its discretion authorize a
participant to transfer all or a portion of any award to the
participant's family members on such terms prescribed by the
Committee. No Award granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all Awards granted to a Participant under
the Plan shall be exercisable/payable during his or her lifetime
only by or to such Participant or his or her legal
representative.
9.6 Right of Committee. Subject to the provisions of
Section 14.2 herein, all provisions in this Article 9 are subject
to the Committee's right, at any time, to make such other
determinations as it may choose, in its sole discretion.
Furthermore, should more than one section of Article 9 and/or
Article 13 apply to a situation, the Committee shall have the
right, in its sole discretion, to determine which section and/or
article to apply.
Article 10. Beneficiary Designation
Each Participant under the Plan may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently
or successively) to whom any benefit under the Plan is to be paid
in case of his death before he receives any or all of such
benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when
filed by the Participant in writing with the Committee during the
Participant's lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be
paid to the Participant's estate.
The spouse of a married Participant domiciled in a community
property jurisdiction shall join in any designation of
beneficiary or beneficiaries other than the spouse.
Article 11. Deferrals
The Committee may permit a Participant to defer such
Participant's receipt of the payment of cash that would otherwise
be due to such Participant. If any such deferral election is
permitted, the Committee shall, in its sole discretion, establish
such rules and procedures as it deems necessary or desirable for
such payment deferrals.
Article 12. Rights of Employees
12.1 Employment. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any
Participant's employment at any time, for any reason or no
reason, in the Company's sole discretion, nor confer upon any
Participant any right to continue in the employ of the Company.
12.2 Participation. No Employee shall have the right to be
selected to receive an Award under the Plan, or, having been so
selected, to be selected to receive a future Award.
Article 13. Change in Control
Upon the occurrence of a Change in Control, as defined
herein, unless otherwise specifically prohibited by the terms of
Article 17 herein:
(a) Any and all SARs granted hereunder shall be deemed to
have been exercised on the date such Change in Control occurs;
(b) Any Vesting Period with respect to Stock Units shall be
deemed to have expired, and there shall be paid out in cash to
Participants within thirty (30) days following the effective date
of the Change in Control the cash payment due with respect to
such Stock Units and related Dividend Equivalents, with a
Valuation Period ending on the effective date of the Change in
Control.
Article 14. Amendment, Modification and Termination
14.1 Amendment. Modification and Termination. The Board may,
at any time and from time to time, alter, amend, suspend or
terminate the Plan in whole or in part.
14.2 Awards Previously Granted. No termination, amendment
or modification of the Plan shall adversely affect in any
material way any Award previously granted under the Plan, without
the written consent of the Participant holding such Award, unless
such termination, modification or amendment is required by
applicable law.
Article 15. Tax Withholding
The Company shall have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy Federal, state and local taxes
(including the Participant's FICA obligation) required by law to
be withheld with respect to any taxable event arising out of or
as a result of an Award made under the Plan.
Article 16. Successors
All obligations of the Company under the Plan, with respect
to Awards granted hereunder shall be binding on any successor to
the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation or
otherwise, of all or substantially all of the business and/or
assets of the Company.
Article 17. Legal Construction
17.1 Gender and Number. Except where otherwise indicated by
the context, any masculine term used herein also shall include
the feminine, the plural shall include the singular and the
singular shall include the plural.
17.2 Severability. In the event any provision of the Plan
shall be held illegal or invalid for any reason, the illegality
or invalidity shall not affect the remaining parts of the Plan,
and the Plan shall be construed and enforced as if the illegal
or invalid provision had not been included.
17.3 Requirements of Law. The granting of Awards under the
Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies
or national securities exchanges as may be required.
17.4 Governing Law. To the extent not preempted by Federal
law, the Plan, and all agreements hereunder, shall be construed
in accordance with, and governed by, the laws of the State of New
York, without regard to conflicts of law provisions.