EXHIBIT 10
NIAGARA MOHAWK POWER CORPORATION
OUTSIDE DIRECTOR DEFERRED STOCK UNIT PLAN
JANUARY 1, 1996
As Amended:
May 14, 1998
NIAGARA MOHAWK POWER CORPORATION
OUTSIDE DIRECTOR DEFERRED STOCK UNIT PLAN
Article 1. Establishment, Purpose and Duration
1.1 Establishment of the Plan. Niagara Mohawk Power Corporation
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(hereinafter referred to as the "Company"), hereby establishes a plan to be
known as the "Niagara Mohawk Power Corporation Outside Director Deferred Stock
Unit Plan" (hereinafter referred to as the "Plan"), as set forth in this
document. The Plan provides for the granting of deferred stock units and
dividend equivalent deferred stock units, as described in Article 3.
The Plan is effective as of January 1, 1996 (hereinafter referred to as
the "Effective Date") and shall remain in effect until terminated as set forth
hereunder.
1.2 Plan Purpose. The Plan is intended to link the long-term compensation
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of outside directors of the Company to the longer-term performance of the
Company's stock through the payment of a portion of their compensation in
deferred stock units, and permitting outside directors to elect to defer
payment of additional compensation in deferred stock units, which become
payable following the termination of the director's service on the Board of
Directors of the Company (hereinafter referred to as the "Board").
Article 2. Administration
2.1 The Committee. The Plan shall be administered by the Compensation and
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Succession Committee of the Board. The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion of, the
Board.
2.2 Authority of the Committee. The Committee shall have full power
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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
terms of deferred stock unit grants in a manner consistent with the Plan; to
construe and interpret the Plan, or 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 10 herein) to
amend the terms and conditions of any outstanding grant. 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.
2.3 Decision Binding. All determinations and decisions made by the
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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 in
the Plan (hereinafter referred to as "participants") and their estates and
beneficiaries.
2.4 Costs. The Company shall pay all costs of administration of the Plan.
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Article 3. Eligibility and Participation
3.1 Eligibility. All directors of the Company who are not (i) employees
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of the Company or (ii) former employees of the Company receiving benefits
under the Company's Pension Plan or Supplemental Executive Retirement Plan
(hereinafter referred to as "Outside Directors"), shall be eligible to
participate in the Plan.
3.2 Participation. Eligible Outside Directors who are credited with
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deferred stock units (hereinafter referred to as "DSUs"), as hereinafter
provided in Article 4, will be regarded as Participants.
Article 4. Deferred Stock Units
4.1 Definition. A DSU is equal in value to one share of the Company's
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common stock and entitles the Participant to cash payments, following the
termination of the Participant's Board service, in the manner elected by the
Participant.
4.2 DSU Grants.
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(a) Each Outside Director, as of the business day immediately following
the Annual Meeting of the Company's shareholders, shall receive an annual
grant of DSUs on such business day equal to the result of dividing (i) $15,000
($17,000 if the Participant is a Committee Chairperson) by (ii) the average of
the daily opening and closing stock prices of one share of the Company's
common stock as reported in the consolidated transaction reporting system
(hereinafter referred to as "Fair Market Value") on the date of grant.
Notwithstanding the foregoing, the grant for calendar year 1996 shall be made
on December 2, 1996.
(b) Each Outside Director as of the Effective Date shall receive a grant
of DSUs on December 2, 1996 equal to the result of dividing (i) the present
value of the Participant's retirement benefit as of the Effective Date under
the Company's Outside Director Retirement Plan by (ii) the Fair Market Value
on December 2, 1996. Notwithstanding the foregoing sentence, each such
Outside Director who had attained age 60 as of the Effective Date may elect
within 45 days after the date the Plan was adopted by the Board to have none
or one-half of the present value of the Participant's retirement benefit
converted to DSUs.
(c) Outside Directors may elect to defer payment of some portion of their
annual retainer into DSUs of equivalent value at the time such election is
approved by the Committee.
4.3 Dividend Equivalent Deferred Stock Units. Each time a cash dividend
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is declared on the Company's common stock, Participants will be credited with
dividend equivalent deferred stock units on each DSU they have in their DSU
accounts. These cash dividend credits will be converted into dividend
equivalent DSUs by dividing the total of such cash dividend credits by the
Fair Market Value of one share of the Company's common stock on the date the
dividend was paid. Dividend equivalent DSUs will also entitle the Participant
to future dividend credits. In the case of stock dividends, the number of
dividend equivalent DSUs 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 DSUs and
dividend equivalent DSUs previously credited to the Participant, as if such
DSUs were actual shares.
4.4 DSU Accounts. A bookkeeping account will be established for each
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Participant which shall be credited with all DSUs and dividend equivalent DSUs
that have been granted or credited to the Participant in accordance with the
terms of this Plan.
Article 5. DSU Payments
The value of all DSU's credited to Participants' accounts will be paid in cash
upon their termination of service from the Board in the manner which they have
elected, as provided below. Notwithstanding the foregoing, all DSUs will
become payable in a lump sum in cash immediately upon a Change in Control as
defined in Article 6, based on the Fair Market Value of one share of the
Company's common stock on the date of the Change in Control.
In the event the Company enters bankruptcy before all DSUs have been paid to
Participants, any outstanding DSUs credited to their accounts will not be paid
until a period of six months following the date the Company, or any
successor(s), emerges from bankruptcy. At that time, payment of unpaid DSUs
will be made in accordance with the payment elections previously made by
Participants.
All Participants will receive payment following their termination of Board
service as elected by the Participant, in a lump sum amount based on Fair
Market Value of one share of the Company's common stock at the date of their
termination, or in five annual installments. The first installment will be
paid within 90 days following termination based on the stock price at time of
termination, with the other installments paid on the first through fourth
anniversaries of the Participant's date of termination from the Board. A
Participant can change a payment election, provided it is made prior to the
beginning of the year before the year of the Participant's termination of
Board service. The Committee, may, however, accelerate the payment of any
unpaid DSU installments if it deems this to be appropriate.
If a Participant dies prior to receiving payment of all DSUs credited to the
Participant's account, all unpaid DSUs will be paid in cash to the
Participant's designated beneficiary, or the Participant's estate if no
beneficiary is designated or survives the Participant. Such payments will be
based on the Fair Market Value of one share of the Company's common stock at
the time of the Participant's death.
Article 6. Change in Control
"Change in Control" of the Company shall be deemed to have occurred as of the
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first day that any one or more of the following conditions shall have been
satisfied:
(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") (hereinafter referred to as a "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
common stock of the Company (hereinafter referred to as the "Outstanding
Shares") 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 Effective Date, constitute the Board (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
reorganization, 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".
Article 7. 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
DSUs credited to the Participant's account under the Plan is to be paid in
case of his death before he receives payment in full of such DSUs. 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 or if no
beneficiary survives the Participant, DSUs credited to the Participant's
account 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 8. Transferability of DSUs
Notwithstanding the foregoing, the Committee may in its discretion authorize a
Participant to transfer all or a portion of any DSUs credited to the
Participant's account to the Participant's family members on such terms
prescribed by the Committee. No DSUs 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 DSUs
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, except as provided in this Article.
Article 9. Adjustments in DSU Credits
In the event of any merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, split-up, share combination or other
change in the corporate structure affecting the Company's shares, adjustments
shall be made in the number of DSUs credited to Participants' accounts, as may
be determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights.
Article 10. Plan 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. No such amendment, modification or
termination shall adversely affect any DSUs previously credited to
Participants' accounts under the Plan, without the written consent of
Participants, unless such Plan amendment, modification, or termination is
required by applicable law.
Article 11. Successors
All obligations of the Company under the Plan, with respect to DSUs 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 12. Legal Construction
12.1 Gender and Number. Except where otherwise indicated by the context,
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any masculine term used herein also shall include the feminine, the plural
shall include the singular and the singular shall include the plural.
12.2 Severability. In the event any provision of the Plan shall be held
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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.
12.3 Requirements of Law. The granting of DSUs under the Plan shall be
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subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
12.4 Governing Law. To the extent not preempted by Federal law, the Plan,
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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.