EXHIBIT 10
NIAGARA MOHAWK POWER CORPORATION
OUTSIDE DIRECTOR DEFERRED STOCK UNIT PLAN
JANUARY 1, 1996
AS AMENDED:
MAY 14, 1998
AUGUST 25, 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 was originally effective as of January 1, 1996 (hereinafter
referred to as the Effective Date ). The Plan as amended and
restated herein is effective as of August 25, 1998 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 non-employee 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 non-employee
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 except
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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 employees of the
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Company shall be eligible to participate in the Plan.
3.2 Participation. Eligible directors who are credited with deferred stock
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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 eligible 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 annual grants of DSUs to an eligible director who has
received, is receiving, or is entitled to receive benefits under the
Company s Pension Plan or Supplemental Executive Retirement Plan
(hereinafter referred to as a Former Employee Director ) shall be
determined by substituting $5,000 for the dollar amounts in clause
(i) of the preceding sentence.
(b) Each eligible director as of the Effective Date, other than a Former
Employee Director, received 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
director who had attained age 60 as of the Effective Date was permitted
to 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) Eligible 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 is
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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.