EXHIBIT 99(a)
NIAGARA MOHAWK POWER CORPORATION
REPRESENTED EMPLOYEES'
SAVINGS FUND PLAN
As Amended and Restated Effective as of July 1, 1992
(Including Amendments Through May 1, 1996)
TABLE OF CONTENTS
Page
Preamble ................................................ 1
ARTICLE
I DEFINITIONS..................................... 2
II PARTICIPATION................................... 7
III PARTICIPANT CONTRIBUTIONS....................... 8
IV ACTUAL DEFERRAL PERCENTAGE...................... 9
V MATCHING CONTRIBUTIONS.......................... 13
VI AVERAGE CONTRIBUTION PERCENTAGE................. 13
VII ROLLOVER CONTRIBUTIONS; DIRECT TRANSFERS........ 17
VIII CONTRIBUTION LIMITATIONS........................ 20
IX ACCOUNTS; VESTING............................... 22
X WITHDRAWALS..................................... 23
XI DISTRIBUTIONS................................... 26
XII INVESTMENT OF FUNDS............................. 29
XIII LOANS........................................... 31
XIV ADMINISTRATION.................................. 33
XV TRUSTEE......................................... 35
XVI TERMINATION AND AMENDMENT....................... 37
XVII MISCELLANEOUS................................... 38
XVIII TOP HEAVY PROVISIONS............................ 40
APPENDIX A
APPENDIX B
NIAGARA MOHAWK POWER CORPORATION
REPRESENTED EMPLOYEES'
SAVINGS FUND PLAN
As Amended and Restated Effective July 1, 1992
Preamble
This Plan was originally established effective January 1, 1966 by the
Board of Directors of Niagara Mohawk Power Corporation and originally
implemented effective January 1, 1966 for the exclusive benefit of Eligible
Employees and their Beneficiaries in order to provide additional retirement
security through a deferred savings and investment program. The Plan, as amended
and restated effective July 1, 1992, is designed as a profit sharing plan which
incorporates a cash or deferred arrangement under section 401(k) of the Internal
Revenue Code of 1986, as amended, and Plan provisions are to be interpreted
accordingly. Except as otherwise expressly provided, the provisions of the Plan,
as set forth in this document and as may be amended from time to time, establish
the rights and obligations with respect to Participants on and after July 1,
1992 and transactions under the Plan on and after that date. Rights and
obligations under the Plan with respect to any Employee who terminated
employment with the Employer for any reason prior to July 1, 1992 shall be
determined in accordance with the provisions of the Plan as in effect on the
date of termination.
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ARTICLE I
DEFINITIONS:
The following words and phrases shall have the meanings provided below,
except as otherwise required by the context. As used in the Plan, the masculine
pronoun shall be deemed to include the feminine, and the singular, the plural,
unless a different meaning is clearly indicated by the context.
"Accounts" means the Participant's accounts maintained for
recordkeeping purposes under the Plan, including a Company Account,
Participant Account, Rollover Account, Transfer Account and Loan Account,
as applicable.
"Affiliate" means the Company and any corporation which is a member of
a controlled group of corporations (as defined in Code section 414(b))
which includes the Company, any trade or business (whether or not
incorporated) which is under common control (within the meaning of Code
section 414(c)) with the Company, any organization which is part of an
affiliated service group as defined in Code section 414(m), or any entity
required to be aggregated with the Company in accordance with Code section
414(o) and the regulations thereunder. For purposes under the Plan of
determining whether or not a person is an Employee and the period of
employment of such person, each such other company shall be included as an
Affiliate only for such period or periods during which such other company
is a member of the controlled group, under common control, an affiliated
service group or otherwise required to be so aggregated.
"After-tax Contributions" means a Participant's after-tax
contributions to the Plan pursuant to Section 3.1. After-tax contributions
shall be made by payroll deduction.
"Before-tax Contributions" means a Participant's before-tax
contributions to the Plan pursuant to Section 3.1. Before-tax contributions
shall be made by payroll reduction.
"Beneficiary" means the person designated by the Participant in
accordance with the provisions of Section 11.6 to receive any benefits
payable under the Plan after the death of the Participant.
"Board of Directors" means the Board of Directors of the Company.
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"Break in Service" means a 12-consecutive-month period during which a
Participant has not completed more than 500 Hours of Service.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the committee for the Plan appointed by the Board of
Directors pursuant to Section 14.3 and shall include agents and delegates
of the committee whenever applicable.
"Company" means Niagara Mohawk Power Corporation, or any successor
corporation.
"Company Account" means the separate account maintained for each
Participant to which Matching Contributions and related earnings are
credited under Section 9.1.
"Compensation" means the basic annual wages and salary (not in excess
of the statutory dollar limitation under Code section 401(a)(17), as may be
adjusted by the Secretary of the Treasury) of an Employee from the Employer
(other than overtime, commissions, bonuses, disability retirement income,
pension retirement income, premiums or other extra or additional
compensation from the Employer), unreduced by the Employee's Before-tax
Contributions or contributions to a plan of the Employer qualifying under
Code section 125, but excluding other contributions to this Plan or
contributions to other employee benefit plans of the Employer. For purposes
of applying the dollar limitation on Compensation, the rules of Code
section 414(q)(6) shall apply, except that in applying such rules, the term
"family" shall include only the spouse of the Employee and lineal
descendants of the Employee who have not attained age 19 before the close
of the year. The dollar limitation will be allocated among the members of
the family unit in proportion to each member's Compensation.
"Effective Date" means July 1, 1992, the date of the amendment and
restatement of the Plan.
"Eligible Employee" means each Employee eligible to participate in the
Plan in accordance with Section 2.1.
"Employee" means any employee of the Employer covered by a collective
bargaining agreement with the Employer, unless such collective bargaining
agreement expressly precludes coverage under the Plan.
"Employer" means the Company and any Affiliate which participates in
the Plan with the approval of the Board of Directors.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Highly Compensated Employee" means an Employee within the meaning of
Code section 414(q).
"Hour of Service" means (1) each hour for which an Employee is directly
or indirectly compensated or entitled to compensation by the Employer for
the performance of duties during the applicable computation period; (2)
each hour for which an Employee is directly or indirectly compensated or
entitled to compensation by the Employer on account of a period of time
during which no duties are performed (such as vacation, holidays, sickness,
disability, layoff, jury duty, military duty or leave of absence) during
the applicable computation period; (3) each hour for which back pay is
awarded or agreed to by the Employer without regard to mitigation. The same
Hours of Service shall not be credited both under (1) or (2), as the case
may be, and (3).
Notwithstanding (2) above, (i) no more than 501 Hours of Service will
be credited to an Employee on account of any single continuous period
during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee
is directly or indirectly paid, or entitled to payment, on account of a
period during which no duties are performed is not required to be credited
to the Employee if such payment is made or due under a plan maintained
solely for the purpose of complying with applicable worker's compensation,
or unemployment compensation or disability insurance laws; and (iii) Hours
of Service are not required to be credited for a payment which solely
reimburses an Employee for medical or medically related expenses incurred
by the Employee.
Solely for purposes of determining whether a Year of Service for
purposes of Section 5.1 has been completed in a computation period, an
Employee who is absent from work for maternity or paternity reasons shall
receive credit for the Hours of Service which would otherwise have been
credited to such individual but for such absence, or in any case in which
such hours cannot be determined, 8 Hours of Service per day of such
absence; in no case shall more than 501 Hours of Service be credited for
any one such absence. For purposes of this subsection, an absence from work
for maternity or paternity reasons means an absence (1) by reason of the
pregnancy of the Employee, (2) by reason of the birth of a child of the
Employee, (3) by reason of the placement of a child with the Employee in
connection with the adoption of such child by such Employee, or (4) for
purposes of caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service credited under this
subsection shall be credited (1) in the computation period in which the
absence begins if the crediting is necessary to prevent a Break in Service
in that period, or (2) in all other cases, in the following computation
period.
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An Employee with respect to whom the Company or an Affiliate does not
maintain records reflecting the number of hours for which he is paid shall
be credited with 45 Hours of Service for each week or part thereof he is
paid or entitled to be paid by the Company or an Affiliate. The provisions
of Department of Labor regulations section 2530.200b-2(b) and (c) are
incorporated herein by reference.
"Investment Funds" means each of the Investment Funds provided for in
Section 12.2 and set forth in Appendix A.
"Investment Manager" means the individual(s) or other entity appointed
in accordance with Section 15.5 who has acknowledged in writing that he is
a fiduciary with respect to the Plan and who is:
(a) registered as an investment advisor under the Investment Advisers
Act of 1940;
(b) a bank, as defined in such Act; or
(c) an insurance company qualified to manage, acquire or dispose of
assets of pension plans.
"Loan Account" means a separate account established for a Participant
for the purpose of administering the Participant's loan.
"Matching Contributions" means the contributions made to the Plan by
the Employer under Section 5.1.
"Non-Represented Plan" means the Niagara Mohawk Power Corporation Non-
Represented Employees' Savings Fund Plan (including any Appendix) as may be
amended from time to time.
"Participant" means an Employee participating in the Plan in accordance
with Article II.
"Participant Account" means the separate account maintained for each
Participant to which a Participant's Before-tax Contributions and After-tax
Contributions and related earnings are credited under Section 9.1.
"Plan" means the Niagara Mohawk Power Corporation Represented
Employees' Savings Fund Plan, as amended and restated in this document
(including any Appendix) and as may be amended from time to time.
"Plan Year" means the calendar year.
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"Rollover Account" means the separate account maintained for a
Participant to which the Participant's rollover contributions and related
earnings are credited under Section 9.1.
"Service" means a Participant's period of employment with the Company
or any Affiliate.
"Total Disability" means (i) for a Participant who is covered under the
Company's Disability Retirement and Separation Allowance Plan, the
Participant's total disability entitling him to a disability retirement
benefit under such plan; and (ii) for any other Participant, the total and
permanent inability, by reason of physical or mental infirmity, or both, of
a Participant to perform, without endangering his health, the tasks,
functions or duties assigned to him by the Employer for not less than six
consecutive months; provided that the determination of the existence or
nonexistence of such Participant's Total Disability shall be made by the
Committee pursuant to an examination by a physician selected or approved by
the Committee.
"Transfer Account" means the separate account maintained for a
Participant to which amounts transferred on behalf of a Participant, and
related earnings, are credited under Section 9.1.
"Trust Agreement" means the agreement between the Trustee and the
Company pursuant to which the Trust Fund is established and maintained, as
provided in Article XV.
"Trust Fund" means the trust under the Plan established pursuant to the
Trust Agreement, as provided for in Article XV.
"Trustee" means the trustee under the Trust Agreement.
"Valuation Date" means any applicable business day.
"Year of Service" means a 12 consecutive-month period (commencing on
the date as of which an individual first becomes an Employee) during which
the Employee has completed at least 1,000 Hours of Service; provided that,
if a Participant does not complete 1,000 Hours of Service during such
12-month period, a Year of Service means the first Plan Year, beginning
with the Plan Year immediately following the date he first becomes an
Employee, during which he completes at least 1,000 Hours of Service.
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ARTICLE II
PARTICIPATION
2.1 Each Employee on the Effective Date who was a Participant in the
Plan immediately prior to the Effective Date shall continue as a Participant as
of the Effective Date. Subject to Section 2.4, each other Employee shall become
an Eligible Employee as of date of hire; provided, however, that an Employee
shall become eligible to receive Matching Contributions under the Plan only as
of the first day of the month following the first full calendar month after he
has attained age 21 and completed one Year of Service.
2.2 Participation in the Plan is purely voluntary. When an Employee
first becomes an Eligible Employee he will be provided with an explanation of
the Plan and the procedure for Plan enrollment. Each Eligible Employee on or
after the Effective Date shall become a Participant as soon as administratively
feasible after his enrollment request is completed in such form and manner as
prescribed by the Committee. Once an Employee becomes an Eligible Employee, he
will continue to be an Eligible Employee until he ceases to be an Employee.
Notwithstanding the foregoing, an Employee shall become a Participant if he
makes a rollover contribution to the Plan in accordance with Section 7.1 or
effects a direct plan-to-plan transfer in accordance with Section 7.2 before
becoming an Eligible Employee in accordance with Section 2.1.
2.3 A Participant shall continue as such until his Accounts are
completely distributed under the Plan or transferred to the Non-Represented Plan
pursuant to Section 2.4. Any interest in the Investment Funds of a Participant
who retires or otherwise terminates
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employment with the Employer shall be allowed to remain in the Trust Fund,
subject to Article XI.
2.4 The Accounts of a Participant who ceases to be represented by a
collective bargaining agreement with the Employer shall be transferred to the
Non-Represented Plan as soon as administratively feasible. If a participant in
the Non-Represented Plan becomes an Eligible Employee, his accounts under the
Non-Represented Plan shall be transferred to corresponding Accounts under this
Plan, and he shall become a Participant in the Plan as of the date of such
transfer and shall be eligible to make contributions to the Plan in accordance
with Article III as soon as administratively feasible following receipt by the
Committee of his application for membership in accordance with Section 2.2.
2.5 If an Eligible Employee terminates employment with the Employer and
is reemployed by the Employer, he shall be an Eligible Employee as of his date
of reemployment, and shall participate in the Plan as soon as administratively
feasible after applying for membership in accordance with Section 2.2.
ARTICLE III
PARTICIPANT CONTRIBUTIONS
3.1 Subject to Section 3.4 and Articles IV, VI, and VIII, a Participant
may elect to make (i) Before-tax Contributions in an amount ranging from 2% to
15% (in whole percentages) of his Compensation for the Plan Year; (ii) After-tax
Contributions in an amount ranging from 2% to 10% (in whole percentages) of his
Compensation for the Plan Year; or (iii) a combination of Before-tax
Contributions and After-tax Contributions (in whole percentages), not to exceed
in the aggregate 15% of his Compensation for the Plan Year
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(provided that After-tax Contributions in the aggregate shall not exceed 10% of
his Compensation for the Plan Year).
3.2 The Employer shall contribute, or have contributed, to the Plan the
amount of a Participant's Before-tax Contributions and After-tax Contributions
elected pursuant to Section 3.1. All such contributions, together with any
related earnings, shall be credited to the Participant's Participant Account.
3.3 A Participant may discontinue or change the rate of his Before-tax
Contributions or After-tax Contributions, or both, as of any payroll period by
providing at least 30 days' advance written notice to the Committee, in such
form and manner as the Committee may prescribe.
3.4 Notwithstanding the provisions of Article IV, the maximum amount of
Before-tax Contributions credited to the Participant Account on behalf of a
Participant in any calendar year may not exceed $9,500 (as may be adjusted by
the Secretary of the Treasury) and any Before-tax Contributions made to the
Participant Account in excess of such amount, plus any related earnings on such
excess amount, shall be distributed to the Participant no later than April 15
following the close of the calendar year in which such excess Before-tax
Contributions are made.
ARTICLE IV
ACTUAL DEFERRAL PERCENTAGE
4.1 (a) If the actual deferral percentage (as defined in paragraph (c)
below) of Compensation for Participants who are Highly Compensated Employees is
more than the amount permitted under the deferral limitations set forth in
paragraph (b) below, there shall be
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a reduction in the portion of the Before-tax Contributions credited to the
Participant Accounts of those Participants who are Highly Compensated Employees
and who elected to contribute at the highest Before-tax Contribution percentage
rate, such that the deferral limitations are satisfied. The Employer shall
distribute to such Participants any excess Before-tax Contributions, and any
related earnings, no later than 2 1/2 months following the Plan Year in which
such excess Before-tax Contributions are made. Excess Before-tax Contributions
shall be treated as annual additions for purposes of Section 8.1. In addition,
if the Employer determines that Before-tax Contributions would be in excess of
the deferral limitations set forth in paragraph (b) below, the Employer may in
its sole discretion suspend, in whole or in part, Before-tax Contributions to
the Plan made on behalf of Participants who are Highly Compensated Employees (in
which case the amounts which would ordinarily be deferred in a payroll period
shall be paid directly to such Participants).
(b) The actual deferral percentage for any Plan Year beginning on or
after the Effective Date of all Eligible Employees who are Highly Compensated
Employees shall not exceed, alternatively: (A) 125% of the actual deferral
percentage for all Eligible Employees who are not Highly Compensated Employees;
or (B) 200% of the actual deferral percentage for Eligible Employees who are not
Highly Compensated Employees, provided that the actual deferral percentage for
all Eligible Employees who are Highly Compensated Employees does not exceed the
actual deferral percentage for all other Eligible Employees by more than 2%, or
such other amount that the Secretary of the Treasury shall prescribe.
(c) For purposes of this Section 4.1, the actual deferral percentage
for a specified group of Participants for a Plan Year shall be the average of
the ratios, calculated
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separately for each Eligible Employee in such group, of (i) the amount of
Before-tax Contributions to the Participant Account and Matching Contributions
to the Company Account (to the extent taken into account for purposes of the
actual deferral percentage test) made on behalf of each Eligible Employee for
such Plan Year to (ii) the Eligible Employee's Compensation for such Plan Year.
However, for purposes of determining the actual deferral percentage for a Plan
Year of one of the ten most highly-paid Highly Compensated Employees, the
Before-tax Contributions (and Matching Contributions, if treated as Before-tax
Contributions for purposes of the actual deferral percentage test) and
Compensation of such Highly Compensated Employee shall include the Before-tax
Contributions (and Matching Contributions, if treated as Before-tax
Contributions for purposes of the actual deferral percentage test) and
Compensation for the Plan Year of "family members" (as defined in Code section
414(q)(6)). "Family members," with respect to such Highly Compensated Employees,
shall be disregarded as separate employees in determining the actual deferral
percentage both for Eligible Employees who are not Highly Compensated Employees
and for Eligible Employees who are Highly Compensated Employees. In addition,
for purposes of determining the actual deferral percentage test, Before-tax
Contributions and Matching Contributions must be made before the last day of the
12-month period immediately following the Plan Year to which contributions
relate.
(d) The Employer may, to the extent permitted under Treasury
Regulations section 1.401(k)-1(f)(3), recharacterize as After-tax Contributions
for such Plan Year all or a portion of the Before-tax Contributions for
Participants who are Highly Compensated Employees to the extent necessary to
comply with the limitations set forth in paragraph (b)
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above. The amount of excess Before-tax Contributions to be recharacterized or
distributed with respect to a Participant for the Plan Year shall be reduced by
any excess deferrals previously distributed to such Participant under Section
3.4 for the Participant's taxable year ending with or within such Plan Year.
(e) The actual deferral percentage for any Participant who is a Highly
Compensated Employee in the Plan Year who is eligible to have Before-tax
Contributions made on his behalf under two or more arrangements described in
Code section 401(k) that are maintained by the Employer shall be determined as
if such Before-tax Contributions were made under a single arrangement.
(f) If a reduction in the amount of Before-tax Contributions on behalf
of a Participant is required because of the application of paragraph (a) above,
the reduction shall be treated as taxable earnings to the Participant for the
pay period in which the reduction occurs, and the Employer shall withhold any
taxes required by law on such taxable earnings.
(g) If a distribution of excess Before-tax Contributions (and related
earnings) is required because of the application of paragraph (a) above, the
Employer shall withhold any taxes required by law on such distribution.
(h) In the event the Employer is required to reduce the Before-tax
Contributions made on behalf of a Participant as a result of the application of
the provisions of paragraph (a) above, the Matching Contributions under Section
5.1 made on behalf of the Participant for the remainder of the Plan Year shall
be applied to the reduced amount of Before-tax Contributions.
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ARTICLE V
MATCHING CONTRIBUTIONS
5.1 Subject to the provisions of Articles VI and VII, the Employer
shall contribute to the Plan on behalf of each Participant an amount equal to
50% of such Participant's Before-tax Contributions, After-tax Contributions, or
both, made pursuant to Section 3.1; provided that the amount of Matching
Contributions made on behalf of a Participant for any Plan Year shall not
exceed, in the aggregate, 2% of his Compensation for the Plan Year (2.5% of such
Compensation if he has completed 10 Years of Service or has attained age 40 with
at least 6 Years of Service; 3% of such Compensation if he has completed 15
Years of Service or has attained age 45 with at least 11 Years of Service). Such
Matching Contributions and related earnings shall be credited to the
Participant's Company Account.
ARTICLE VI
AVERAGE CONTRIBUTION PERCENTAGE
6.1 (a) If the contribution percentage (as defined in paragraph (c)
below) of Compensation for Participants who are Highly Compensated Employees is
more than the amount permitted under the special limitations set forth in
paragraph (b) below, there shall be a reduction in the After-tax Contributions
credited to the Participant Accounts and the Matching Contributions credited to
the Company Accounts of those Participants who are Highly Compensated Employees
on the basis of the respective portions of such amounts attributable to each
such Participant so that such special limitations are satisfied. Any excess
After-tax Contributions or Matching Contributions made to the Plan, plus any
related earnings, shall be distributed to such Participants no later than 2 1/2
months following the Plan Year in
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which such excess After-tax Contributions or Matching Contributions are made.
Excess After-tax Contributions shall be treated as annual additions for purposes
of Section 8.1. In addition, if the Employer determines that After-tax
Contributions or Matching Contributions would be in excess of the special
limitations set forth in paragraph (b) below, the Employer may, in its sole
discretion, suspend, in whole or in part, After-tax Contributions or Before-tax
Contributions to the Plan made on behalf of Participants who are Highly
Compensated Employees and, therefore, related Matching Contributions with
respect to such Participants (in which case the Before-tax Contributions that
would ordinarily be contributed to the Plan on such Participants' behalf in a
payroll period shall be paid directly to such Participants).
(b) The contribution percentage for any Plan Year of all Eligible
Employees who are Highly Compensated Employees shall not exceed, alternatively:
(A) 125% of the contribution percentage for all Eligible Employees who are not
Highly Compensated Employees, or (B) 200% of the contribution percentage for
Eligible Employees who are not Highly Compensated Employees, provided that the
contribution percentage for Eligible Employees who are Highly Compensated
Employees does not exceed the contribution percentage for all other Eligible
Employees by more than 2%, or such other amount that the Secretary of the
Treasury shall prescribe.
(c) For purposes of this Section 6.1, the average contribution
percentage for a specified group of Participants for a Plan Year shall be the
average of the ratios, calculated separately for each Eligible Employee in such
group of (i) the amount of After-tax Contributions to the Participant Account
and the amount of Matching Contributions to the Company Account (to the extent
not taken into account for purposes of the actual deferral
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percentage test) made on behalf of each Eligible Employee for such Plan Year to
(ii) the Eligible Employee's Compensation for such Plan Year. However, for
purposes of determining the average contribution percentage for a Plan Year of
one of the ten most highly-paid Highly Compensated Employees, the Matching
Contributions (to the extent not taken into account for purposes of the actual
deferral percentage test) and Compensation of such Highly Compensated Employee
shall include the Matching Contributions (to the extent not taken into account
for purposes of the actual deferral percentage test) and Compensation for the
Plan Year of "family members" (as defined in Code section 414(q)(6)). "Family
members," with respect to such Highly Compensated Employees, shall be
disregarded as separate employees in determining the average contribution
percentage both for Eligible Employees who are not Highly Compensated Employees
and for Eligible Employees who are Highly Compensated Employees. In addition,
for purposes of determining the contribution percentage test, Matching
Contributions will be considered made for a Plan Year if made before the last
day of the 12-month period immediately following the Plan Year to which
contributions relate.
(d) The average contribution percentage for any Participant who is a
Highly Compensated Employee in the Plan Year who is eligible to make After-tax
Contributions under two or more arrangements described in Code section 401(m)
that are maintained by the Employer shall be determined as if such After-tax
Contributions were made under a single arrangement.
(e) If a reduction in the amount of After-tax Contributions or
Before-tax Contributions on behalf of a Participant is required because of the
application of paragraph (a) above, the reduction shall be treated as taxable
earnings to the Participant for the pay period in
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which the reduction occurs, and the Employer shall withhold any taxes required
by law on such taxable earnings.
(f) If a distribution of excess Matching Contributions (and related
earnings) is required because of the application of (a) above, the Employer
shall withhold any taxes required by law on such distribution.
(g) In the event the Employer is required to reduce the Before-tax
Contributions made on behalf of a Participant as a result of the application of
the provisions of paragraph (a) above, the Matching Contributions under Section
5.1 made on behalf of the Participant for the remainder of the Plan Year shall
be applied to the reduced amount of Before-tax Contributions.
6.2 If both the actual deferral percentage and the average contribution
percentage of the Highly Compensated Employees exceeds 1.25 multiplied by the
actual deferral percentage and average contribution percentage of the non-Highly
Compensated Employees, multiple use will occur. In the event of multiple use, if
one or more Highly Compensated Employees participate in a plan(s) subject to
both the actual deferral percentage and average contribution percentage tests
and the sum of the two percentages of those Highly Compensated Employees subject
to either or both tests exceeds the "aggregate limit," then the average
contribution percentage of those Highly Compensated Employees who also
participate in a salary deferral arrangement will be reduced (beginning with the
Highly Compensated Employee whose average contribution percentage is the
highest) so that the limit is not exceeded. For the purposes of this Section,
"aggregate limit" shall mean the sum of (i) 125% of the greater of the actual
deferral percentage or the average contribution percentage for non-Highly
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Compensated Employees for the Plan Year and (ii) the lesser of 200% of, or two
plus, the smaller of such actual deferral percentage or average contribution
percentage.
ARTICLE VII
ROLLOVER CONTRIBUTIONS; DIRECT TRANSFERS
7.1 Subject to the provisions of the Plan and to rules of uniform
application to be promulgated by the Committee, and in addition to any
contributions to the Plan made in accordance with Article III, a Participant may
make a contribution to the Plan, in cash, which qualifies as a "rollover
amount", "rollover contribution" or "eligible rollover distribution" under Code
section 401(a)(31), 402(c), 403(a)(4) or 408(d)(3). A Participant who wishes to
make such a contribution shall timely file with the Committee, in such form and
manner as the Committee may prescribe, a written notice requesting approval for
such contribution, affirming that his contribution qualifies as a rollover
amount, rollover contribution or eligible rollover distribution. Investment of
such contribution, as between or among the Investment Funds, as applicable,
shall be as directed by the Participant in accordance with the provisions of
Sections 12.3 and 12.4. The Committee shall direct the Trustee as to the manner
in which the contribution is to be invested. In addition to the written notice
required under this Section 7.1, the Committee may require such further
documentation from the Participant, or the applicable trustee, plan sponsor,
custodian or other appropriate person, as evidence of the contribution
constituting a rollover amount, rollover contribution or eligible rollover
distribution, and until such written notice and documentary evidence
satisfactory to the Committee have been so provided, the Committee shall not
approve such contribution to the Plan. The Committee shall be fully protected in
relying on such written and documentary
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evidence presented by or on behalf of the Participant. Contributions made by the
Participant pursuant to this Section 7.1 shall be credited to the Participant's
Rollover Account. An Employee shall be permitted to make a rollover contribution
to the Plan in accordance with this Section 7.1 before becoming an Eligible
Employee in accordance with Section 2.1 and, upon effecting such rollover
contribution, shall be considered a Participant with respect to his Rollover
Account.
7.2 Subject to Section 2.4, other applicable provisions of the Plan and
to rules of uniform application to be promulgated by the Committee, and in
addition to contributions to the Plan in accordance with Article III and Section
7.1, a Participant may have transferred directly to the Plan on his behalf his
accrued benefit in another employee benefit plan qualified under Code section
401(a), provided such plan is not required to provide automatic survivor
benefits (such as a defined benefit plan or money purchase pension plan or the
transferee plan of any such plan). A Participant who wishes to have such amount
transferred shall timely file with the Committee a written notice, in such form
and manner as the Committee may prescribe, requesting approval for such
transfer, affirming that the transfer is from a tax-qualified plan. Such
transfer shall be effected directly from the transferor plan without
distribution to the Participant, as soon as practicable after receipt of such
notice by the Committee. Investment of such transferred amount, as between or
among the Investment Funds, as applicable, shall be as directed by the
Participant in accordance with the provisions of Sections 12.3 and 12.4. In
addition to the written notice required under this Section 7.2, the Committee
may require such further documentation from the Participant, or the applicable
trustee, plan sponsor, custodian or other appropriate person, as evidence of the
transfer being
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from a plan qualified under Code section 401(a), and until such written notice
and documentary evidence satisfactory to the Committee have been so provided,
the Committee shall not approve such transfer to the Plan. The Committee shall
be fully protected in relying on such written and documentary evidence presented
by or on behalf of the Participant. Transfers made by the Participant pursuant
to this Section 7.2 shall be credited to the Participant's Transfer Account. An
Employee shall be permitted to effect a transfer to the Plan in accordance with
this Section 7.2 before becoming an Eligible Employee in accordance with Section
2.1 and, upon effecting such transfer, shall be considered a Participant with
respect to his Transfer Account.
7.3 Upon the occurrence of an event of withdrawal as described in
Article X or distribution as described in Article XI, and notwithstanding any
other provisions of the Plan to the contrary that would otherwise limit a
distributee's election under this Section, effective January 1, 1993, a
distributee may elect, at the time and in the manner prescribed by the Company,
to have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover. For
purposes of this Section 7.3, the following definitions apply:
"Eligible rollover distribution" is any distribution of
all or any portion of the balance to the credit of the
distributee, except that an eligible rollover
distribution does not include: any distribution that is
one of a series of substantially equal periodic
payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the
distributee and the distributee's designated
beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution
is required under Code section 401(a)(9); and the
portion of any distribution that is not includible in
gross income (determined without regard to the
exclusion for net unrealized appreciation with respect
to employer securities).
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"Eligible retirement plan" is an individual retirement
account described in Code section 408(a), an individual
retirement annuity described in Code section 408(b), an
annuity plan described in Code section 403(a), or a
qualified trust described in Code section 401(a), that
accepts the distributee's eligible rollover
distribution. However, in the case of an eligible
rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement
account or individual retirement annuity.
"Distributee" includes an Employee or former Employee.
In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as
defined in Code section 414(p), are distributees with
regard to the interest of the spouse or former spouse.
"Direct rollover" is a payment by the Plan to the
eligible retirement plan specified by the distributee.
ARTICLE VIII
CONTRIBUTION LIMITATIONS
8.1 (a) Any provision of the Plan to the contrary notwithstanding, no
contributions or other annual additions to a Participant's interest in the Trust
Fund will be made in any Plan Year in excess of the lesser of $30,000 or 25% of
the Participant's compensation (within the meaning of Code section 415(c)(3)).
The $30,000 amount may be adjusted by the Secretary of the Treasury.
(b) Any provision of the Plan to the contrary notwithstanding, in the
case of a Participant who is a participant in a defined benefit plan of the
Employer, his maximum annual additions shall not exceed the amount which will
result in a defined contribution plan fraction which when added to the defined
benefit plan fraction of such Participant will exceed 1.0 for any Plan Year.
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(c) For purposes of applying this Section 8.1, all defined benefit
plans of the Company and its Affiliates, and all defined contribution plans of
the Company and its Affiliates, including the Plan, shall be combined or
aggregated and the maximum benefit or annual additions limitation shall be
determined on the basis of a Participant's annual additions and benefits under
all such plans.
(d) For purposes of this Section 8.1, (i) a defined contribution plan
means a plan described in Code section 414(i); (ii) a defined benefit plan means
a plan described in Code section 414(j); however, in the case of a defined
benefit plan which provides a benefit derived from employer contributions which
is based partly on the balance of the separate account of a participant, such
plan shall be treated as a defined contribution plan to the extent benefits are
based on the separate account of a participant and as a defined benefit plan
with respect to the remaining portion of the benefits under the plan; (iii) the
defined benefit plan fraction for a Participant shall be a fraction the
numerator of which is the lesser of (a) the product of 1.25 multiplied by the
dollar limitation in effect for the plan, or (b) the product of 1.4 multiplied
by the amount equal to 100% of the Participant's average compensation for his
high three years projected annual benefit under the plan, if such plan provided
the maximum benefit allowed by law; (iv) the defined contribution plan fraction
for a Participant shall be a fraction the numerator of which is the sum of the
annual additions to the Participant's accounts under all defined contribution
plans of the Company and its Affiliates (as determined in accordance with Code
section 415(h)) and the denominator of which is the sum of the lesser of the
following amounts for such Plan Year and for each prior Plan Year: (a) the
product of 1.25 multiplied by the dollar limitation in effect for such Plan
Year, or (b) the product of 1.4
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multiplied by the 25% of Participant's compensation (within the meaning of Code
section 415(c)(3)); and (v) annual addition means for any Plan Year (A) Employer
contributions, (B) Employee contributions, (C) forfeitures, if any, (D) amounts
allocated to an individual medical account, as defined in Code section
415(l)(1), which is part of a pension or annuity plan maintained by the
Employer, and (E) amounts derived from contributions which are attributable to
post-retirement medical benefits allocated to the separate account of a key
employee, as defined in Code section 419A(d)(3), under a welfare benefit fund,
as defined in Code section 419(e), maintained by the Employer.
ARTICLE IX
ACCOUNTS; VESTING
9.1 As appropriate, the Committee shall maintain the following
individual Plan Accounts on behalf of each Participant:
(i) Participant Account, credited separately with Before-tax
Contributions and After-tax Contributions made pursuant to Section 3.1,
and related earnings;
(ii) Company Account, credited with Matching Contributions made
pursuant to Section 5.1, and related earnings;
(iii) Rollover Account, credited with the Participant's rollover
contributions, if any, made pursuant to Section 7.1, and related
earnings;
(iv) Transfer Account, credited with amounts, if any, transferred
directly to the Plan on behalf of the Participant, pursuant to Section
7.2, and related earnings; and
(v) Loan Account, reflecting any loans and loan repayments made
pursuant to Article XIII.
9.2 A Participant's interest in each of his Accounts shall be fully
vested at all times.
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9.3 A Participant who forfeited all or a portion of his Company Account
under the prior vesting provisions of the Plan as in effect as of his date of
termination prior to January 1, 1989, and who is reemployed by the Employer
after January 1, 1989, may elect, within the earlier of (i) the date on which
occurs the fifth consecutive one-year Break in Service from the date he received
his Plan distribution, or (ii) 5 years from the date of such reemployment to
repay to the Plan an amount equal to the distribution he received upon his prior
termination. Upon such repayment, the amount of such Participant's Company
Account so forfeited shall be restored to his credit by an additional Employer
contribution.
ARTICLE X
WITHDRAWALS
10.1 A Participant may elect to withdraw all or any portion of his
After-tax Contributions and related earnings credited to his Participant Account
by providing an advance written application to the Committee, in such form and
manner as the Committee may prescribe.
10.2 A Participant may elect to withdraw that portion of the Matching
Contributions and related earnings credited to his Company Account for at least
24 months by providing an application to the Committee, in such form and manner
as the Committee may prescribe; except that a Participant who has completed at
least 5 years of active Plan participation may elect to withdraw all or any
portion of the Matching Contributions and related earnings credited to his
Company Account by providing such application to the Committee.
10.3 Upon application to the Committee, in such form and manner as the
Committee may prescribe, a Participant who is an Employee and has attained age
59 1/2 may make a
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withdrawal in cash from any or all of his Accounts; provided that such
Participant may elect to receive in stock all of his Accounts invested in the
Stock Fund (as described in Appendix A).
10.4 (a) Upon application by a Participant to the Committee, in such
form and manner as the Committee shall prescribe, the Committee shall determine
whether the Participant is entitled to make a hardship withdrawal of Before-tax
Contributions credited to his Participant Account, or of amounts credited to his
Rollover Account or Transfer Account, as applicable, subject to the provisions
of this Section 10.4. A hardship entitling a Participant to make a withdrawal
will exist if the Committee determines that the Participant has an immediate and
heavy financial need. A distribution based upon financial hardship cannot exceed
the amount required to meet the immediate financial need created by the hardship
and not reasonably available from reserves or other resources of the
Participant. The determination of the existence of financial hardship and the
amount required to be distributed to meet the need created by the hardship shall
be made by the Committee in accordance with uniform and nondiscriminatory
standards established by the Committee. In no event may the amount of such
hardship withdrawal exceed the amount necessary to constitute security for
repayment of any outstanding loan made pursuant to Article XIII.
(b) For purposes of this Section 10.4:
(i) A distribution will be deemed to be made on account of an
immediate and heavy financial need of the Participant if the
distribution is on account of (1) medical expenses described in Code
section 213(d) incurred by the Participant, his spouse, or any
dependents (as defined in Code section 152(a)) or necessary for these
persons to obtain medical care described in Code section 213(d); (2)
the purchase (excluding mortgage payments) of a principal residence for
the Participant; (3) the payment of tuition and related educational
fees for the next 12 months of post-secondary education for the
Participant, his spouse, or any dependents; (4) the need to prevent the
eviction of the Participant from,
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or the foreclosure on the mortgage of, the Participant's principal
residence; or (5) other events or conditions as prescribed or permitted
by the Internal Revenue Service through publication of documents of
general applicability;
(ii) In addition to the events described in (b)(i) above, the
Company may determine on a nondiscriminatory basis other events or
conditions which establish a Participant's immediate and heavy
financial need;
(iii) A distribution will be deemed necessary to satisfy an
immediate and heavy financial need of a Participant if (1) the
distribution is not in excess of the amount of the immediate and heavy
financial need of the Participant (such amount may include any amount
necessary to pay any Federal, state or local taxes or penalties
reasonably anticipated to result from the distribution) and (2) the
Participant has obtained all distributions, other than hardship
withdrawals, and all nontaxable loans available under the Plan and any
other plan maintained by the Employer in which the Participant
participates; and
(iv) A Participant who receives a hardship withdrawal in accordance
with this Section shall have contributions to his Participant Account
suspended for 12 months after receipt of the hardship withdrawal; the
maximum amount of Before-tax Contributions which a Participant may have
credited to his Participant Account in the tax year following the tax
year in which he receives a hardship withdrawal shall be the applicable
amount described in Section 3.4 for such tax year reduced by the amount
of Before-tax Contributions credited to his Participant Account in the
tax year in which he receives the hardship withdrawal.
10.5 As soon as administratively feasible after the date as of which a
Participant has elected to make a withdrawal in accordance with this Article X,
the Committee shall direct the Trustee to effect such withdrawal. The withdrawal
shall be made from the Investment Funds in which the Participant's Accounts are
invested in accordance with the provisions of Appendix A.
10.6 If, because of a withdrawal prior to January 1, 1989, all or a
portion of a Participant's Company Account has been forfeited under the vesting
provisions of the Plan as in effect prior to January 1, 1989, such Participant
may elect, within 5 years from that date,
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and prior to a one-year Break in Service after the withdrawal, to repay
to the Plan the amount so withdrawn. Upon such repayment the amount of
such Participant's Company Account so forfeited shall be restored to
his credit by an additional Employer contribution.
10.7 Withdrawals under this Article X shall be made in the following
order:
(i) After-tax Contributions made prior to January 1, 1987;
(ii) After-tax Contributions made on or after January 1, 1987 and
related earnings;
(iii) Rollover contributions to the Plan from the Niagara Mohawk
Power Corporation Employee Stock Ownership Plan as in effect
prior to May 1, 1989 or from other plans;
(iv) Matching Contributions and related earnings;
(v) Before-tax Contributions and related earnings after the
attainment of age 59 1/2.
ARTICLE XI
DISTRIBUTIONS
11.1 The entire vested interest of a Participant in his Participant
Account, Company Account, Rollover Account and Transfer Account, as applicable,
shall become payable upon any of the following events:
(i) retirement under the Niagara Mohawk Pension Plan;
(ii) Total Disability;
(iii) death;
(iv) other termination of employment with the Employer;
(v) the Participant's attainment of age 59 1/2; or
(vi) financial hardship, but only to the extent provided under
Section 10.4.
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11.2 Upon Total Disability, attainment of age 59 1/2 or termination of
employment with the Employer for any reason, a Participant (or his Beneficiary
in the event of death) may elect distribution of his Accounts by providing an
application to the Committee in such form and manner as the Committee may
prescribe.
11.3 If at termination of employment for any reason the value of a
Participant's Accounts does not exceed $3,500, his Accounts shall be distributed
in a single sum in cash, except that the Participant may elect to receive in
stock all of his Accounts invested in the Stock Fund (as described in Appendix
A). If at termination of employment for any reason the value of a Participant's
Accounts exceeds $3,500 he may elect (i) to receive a single sum distribution of
his Accounts in cash (except that he may also elect to receive in stock all of
his Accounts invested in the Stock Fund); or (ii) to have his Accounts retained
in the Plan, in which case (1) all amounts credited to his Accounts shall, to
the fullest extent practicable, be transferred to and invested in the Fidelity
Retirement Government Money Market Portfolio (as described in Appendix A) until
withdrawal or distribution, and (2) the Participant may not make a partial
withdrawal of his Accounts. Notwithstanding the foregoing provisions of Section
11.2 or this Section 11.3, if the value of a Participant's Accounts exceeds
$3,500, (i) distribution shall not be made prior to the Participant's attainment
of age 65 without the written consent of the Participant (or his surviving
spouse); and (ii) in the case of a Participant who retires under the Niagara
Mohawk Pension Plan, and with respect to his benefits accrued as of June 30,
1992 only, the Participant may elect to receive distribution of his Accounts in
quarterly installments over a period not to exceed 10 years.
-28-
If a distribution is one to which Code sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the notice
required under Treasury Regulations section 1.411(a)-11(c) is given, provided
that: (1) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and (2) the Participant, after
receiving the notice, affirmatively elects a distribution.
11.4 Except as otherwise required under Sections 11.2 and 11.3, all
payments due under this Article XI shall commence no later than 60 days
following the close of the Plan Year in which the latest of the following
occurs:
(a) the attainment by the Participant of age 65;
(b) the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or
(c) the termination of the Participant's employment with the
Employer.
11.5 Any other provision of the Plan to the contrary notwithstanding,
payment of a benefit under the Plan to a Participant shall commence no later
than the April 1st next following the Plan Year in which the Participant attains
age 70 1/2.
11.6 A Participant may, prior to termination of his employment with the
Employer, designate a Beneficiary to whom distribution of his interest in the
Trust Fund shall be paid in the event of his death prior to the full receipt of
such interest; provided, however, that in the event the Participant is married
on the date of his death, such Beneficiary shall be deemed to be the
Participant's surviving spouse. The Participant may elect to change or revoke
his
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designated Beneficiary at any time; provided, however, that in the event prior
to such change or revocation such Beneficiary is the Participant's surviving
spouse, such election shall not be effective unless such surviving spouse
provides written consent which acknowledges the effect of such election and is
witnessed by a notary public. The affirmative designation of any Beneficiary and
any elected change or revocation thereof by a Participant shall be made on forms
provided by the Committee and shall not in any event be effective unless and
until filed with the Committee. If no designated or deemed Beneficiary survives
the Participant or former Participant, or if an unmarried Participant or former
Participant fails to designate a Beneficiary under the Plan, the amount payable
upon the death of the Participant or former Participant shall be paid to his
estate.
11.7 Notwithstanding the foregoing provisions of this Article XI, a
Participant entitled to a distribution under the Plan may instruct the
Committee, in such form and manner as the Committee may prescribe, to have all
or a portion of the amount of such distribution transferred directly from the
Trust Fund to a tax-qualified plan of another employer, an individual retirement
account or an individual retirement annuity.
ARTICLE XII
INVESTMENT OF FUNDS
12.1 The Company each pay period will transfer over to the Trustee
contributions made to the Plan to be held in trust and invested as provided
herein and in the Trust Agreement.
12.2 The Trust Fund will be invested in the Investment Funds set forth
in Appendix A.
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12.3 Matching Contributions will be invested in the Stock Fund, as
described in Appendix A. Each Participant will designate the proportion of his
Before-tax Contributions and After-tax Contributions (expressed as a percentage
in multiples of 1%), his rollover contributions under Section 7.1, and amounts
transferred to the Plan pursuant to Sections 2.4 or 7.2, as applicable, to be
invested in each Investment Fund. Such designation may be changed at any time by
giving notice to the Committee, in such form and manner as the Committee may
prescribe, except that the change shall apply only to the Participant's future
contributions. If no designation is made, the Participant's Accounts shall be
invested in accordance with the provisions in Appendix A. By giving notice to
the Committee, in such form and manner as the Committee may prescribe, a
Participant may also transfer the amount equivalent to his interest or any
partial interest from one Investment Fund to the other, as limited by the terms
and conditions of the various Investment Funds. The rights of a Participant to
transfer among Investment Funds are subject to the restrictions set forth in
Appendix A.
12.4 Each Participant shall have an interest in each Investment Fund in
which he has elected to have invested all or any part of his Before-tax and
After-tax Contributions under Section 3.1, his Matching Contributions under
Section 5.1, his rollover contributions under Section 7.1 and transferred
amounts under Section 7.2. His interest at any time in the Investment Funds
shall be equal to the sum of such contributions and transferred amounts,
adjusted from time to time to reflect his proportionate share of the income and
losses realized by such Investment Funds and of the net appreciation or
depreciation in the value of such Investment Funds.
-31-
12.5 As of each Valuation Date, the Committee shall ascertain from the
Trustee the value of each Investment Fund and shall on such basis determine the
value of the interests of Participants. Each Participant will be furnished a
statement of his Accounts at least annually.
ARTICLE XIII
LOANS
13.1 Upon application to the Committee, in such form and manner as the
Committee may prescribe, a Participant shall be permitted to borrow from his
Accounts in accordance with criteria established by the Committee on a uniform
and nondiscriminatory basis. A Participant shall be permitted to have no more
than one loan outstanding at one time; provided, that effective February 1,
1994, a Participant shall be permitted to have no more than two loans
outstanding at one time; and provided further that the Committee in its
discretion may charge the Participant, on a uniform and nondiscriminatory basis,
reasonable administrative fees for a loan. Any such loan(s) shall be evidenced
by a promissory note. A Participant may obtain a first loan for any reason.
Until November 1, 1995, the Participant may obtain a second loan, if needed,
only for one or more of the following reasons: purchase of a principal
residence, post-secondary education for the Participant or his dependents,
unreimbursed medical expenses, or to avoid foreclosure or eviction from the
Participant's principal residence; on and after November 1, 1995, these
restrictions on the use of a second loan are eliminated.
13.2 The minimum amount that a Participant shall be permitted to borrow
is $1,000. The maximum amount that a Participant shall be permitted to borrow
under this Plan is the lesser of (i) 50% of the aggregate of such Participant's
Before-tax Contributions and related
-32-
earnings and the amount credited to his Rollover Account and Transfer Account
(reduced by the balance of any amounts which remain outstanding under a Plan
loan); or (ii) $50,000, reduced by the excess, if any, of the highest
outstanding balance of any prior Plan loan(s) during the twelve-month period
ending on the day before the date the Plan loan is made over the outstanding
balance of the Plan loan on the date the loan is made.
13.3 Each loan shall be repaid by the Participant through equal payroll
deductions, on a level amortization basis, commencing with the date of the loan,
over a period of at least 12 and not more than 60 months. Interest on loans
shall be charged at a reasonable rate, as determined by the Company, and shall
be commensurate with the prevailing interest rate being charged for similarly
secured loans by entities in the business of lending money. Such rate will
remain fixed for the term of the loan. A Participant may prepay the entire
balance of his loan at any time without penalty.
13.4 The amount of the loan shall be drawn from the Investment Funds in
which the Participant's Participant Account, Rollover Account or Transfer
Account are invested, in the same manner as withdrawals (as described in Section
A.5 of Appendix A). The Participant's Accounts shall be reduced by the amount of
the loan and a Loan Account shall be established in the Participant's name and
in such amount at the time the loan is granted. The Loan Account shall represent
the Participant's outstanding loan balance. As the loan is repaid, the
Participant's Loan Account shall be reduced by the principal repaid, the
principal and interest shall be restored on a pro rata basis to the
Participant's Accounts from which the loan was made and the payment will be
allocated to the Investment Funds currently being used by the Participant.
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13.5 If a loan is in default, the Company shall liquidate all or any
portion of the Participant's Loan Account balance as necessary to discharge the
Participant's obligation under the loan agreement before any amounts are paid to
or on behalf of such Participant. In no event shall such liquidation occur prior
to the time the Participant is entitled to a distribution under Article XI. The
following events will be considered a default:
(1) death or Total Disability of the Participant;
(2) termination of the Plan;
(3) retirement or other termination of employment by the Participant;
or
(4) failure to make any required payment of loan principal and
interest for 60 days.
13.6 All loans granted under this Article XIII shall be granted in a
uniform and nondiscriminatory manner.
13.7 The Company may amend the terms of, or discontinue, the loan
program as it deems appropriate. The Company may also restrict or suspend the
making of loans if it determines that the program is having adverse effects on
Plan investment earnings or on Participants in general.
ARTICLE XIV
ADMINISTRATION
14.1 The Company shall be the Plan Administrator and "named fiduciary,"
within the meaning of ERISA section 402(a), responsible for the administration
and day-to-day operation of the Plan.
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14.2 The Committee shall establish uniform rules and procedures for the
proper administration of the Plan. It shall interpret the Plan in a uniform and
non-discriminatory manner, and its determinations shall be conclusive and
binding upon the Participants.
14.3 The Board of Directors shall appoint no less than three members of
the Committee who are officers of the Company. The Committee shall elect a
chairman from among its members and a secretary who may, but need not, be a
member of the Committee. Members of the Committee shall serve as such without
compensation but the proper expenses of the Committee, including the
compensation of its duly appointed agents, shall be paid by the Company. All
expenses attributable to the administration of the Plan and the expenses of the
Trustee shall be paid out of the Trust Fund except to the extent paid by the
Employer.
14.4 The Company, the Board of Directors and the Committee shall have
the power to assign or delegate any of its respective responsibilities to
subcommittees, members of the Committee or other agents and may designate one or
more subcommittees or other persons to carry out any of its responsibilities.
14.5 The Company and the Committee may employ such agents and such
clerical and other services as it may deem advisable in carrying out the
provisions of the Plan, and may consult with counsel, who may be counsel for the
Company.
14.6 Any person who believes that he is entitled to benefits under the
Plan may file a claim for such benefits. The Committee may require claims for
benefits to be filed in writing, on such forms and containing such information
as it may deem necessary. Adequate notice shall be provided in writing to any
person whose claim for benefits under the Plan has been wholly or partially
denied. Such notice shall set forth the specific reason for such denial and
-35-
specific reference to the pertinent Plan provisions on which the denial is
based. Such notice shall be written in a manner calculated to be understood by
the claimant and shall afford reasonable opportunity to the claimant whose claim
for benefits has been denied for a full and fair review by the Committee of the
decision denying the claim.
ARTICLE XV
TRUSTEE
15.1 All assets of the Plan shall be held pursuant to a Trust Agreement
between a Trustee, designated by the Board of Directors, and the Company. The
Trust Agreement shall provide, among other things, for a Trust Fund, to be
administered by the Trustee, to which all contributions shall be paid, and the
Trustee shall have such rights, powers and duties as shall be set forth therein.
All assets of the Trust Fund shall be held, invested and reinvested in
accordance with the provisions of the Trust Agreement.
15.2 At no time prior to the satisfaction of all liabilities with
respect to Participants and their Beneficiaries shall any part of the assets of
the Plan be used for or diverted to purposes other than for the exclusive
benefit of such persons; provided, however, Employer contributions (net of any
interest or other earnings and net of any Plan losses attributable to such
contributions) may be returned to the Employer (a) within one year after the
payment of a contribution, if made by the Employer by reason of a mistake of
fact, or (b) within one year of the disallowance of a deduction, to the extent a
deduction is disallowed, if a contribution is conditioned upon its deductibility
under Code section 404(a).
15.3 Pursuant to the terms of the Trust Agreement, the Board of
Directors may appoint one or more Investment Managers (individuals and/or other
entities), who may include
-36-
the Trustee, to direct the investment and reinvestment of part or all of the
Trust Fund, and the Board of Directors may change the appointment of the
Investment Manager from time to time.
15.4 All disbursements by the Trustee, except for the ordinary expenses
of the administration of the Trust Fund, and settlement of duly authorized
investment transactions for the account of the Trust Fund, shall be made upon
the written instructions of the Company.
15.5 The Company shall furnish the Trustee and the Participants (or
Beneficiaries) with notices and information statements when voting rights with
respect to Company stock are to be exercised, in such time and manner as may be
required by applicable law and the certificate of incorporation and by-laws of
the Company. Such statement shall be substantially the same for Participants as
for holders of such stock in general. The Trustee shall vote Company stock
credited to a Participant's Account under the Stock Fund (as described in
Appendix A) in accordance with the instructions of the Participant. If the
Trustee shall not receive instructions from a Participant (or Beneficiary), the
Trustee shall vote such Company stock proportionately in the same manner as it
votes Company stock with respect to which it has received voting instructions.
15.6 The Trustee shall respond to a tender or exchange offer with
respect to Company stock credited to a Participant's Accounts under the Stock
Fund (as described in Appendix A) as instructed by the Participant. The Company
shall notify each Participant (or Beneficiary) and utilize its best efforts to
distribute or cause to be distributed to him in a timely fashion such
information as will be distributed to shareholders of such Company stock in
connection with any such tender or exchange offer, together with a form
requesting confidential instruction to the Trustee as to the manner in which to
respond to the tender or exchange offer.
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If the Trustee shall not receive instructions from a Participant (or
Beneficiary) regarding any such tender or exchange offer, the Trustee shall not
tender or exchange such Company stock.
ARTICLE XVI
TERMINATION AND AMENDMENT
16.1 The Company expects to continue the Plan indefinitely, but the
continuance of the Plan and the payment of contributions are not assumed as
contractual obligations.
16.2 The Plan may be terminated at any time by the Board of Directors.
If the Plan shall be terminated, the Trustee shall continue to hold, invest and
administer the Trust Fund in accordance with the provisions of the Trust
Agreement and shall make distributions therefrom in accordance with the
provisions of the Plan, as then in effect, pursuant to instructions filed with
the Trustee by the Company upon such termination or from time to time
thereafter. Upon a complete discontinuance of contributions, or upon termination
or partial termination of the Plan, each affected Participant or Beneficiary
shall continue to have a nonforfeitable interest in his Accounts in the Plan.
16.3 The Plan may be amended at any time and from time to time,
including retroactively, by action of the Board of Directors; provided, however,
that no amendment shall reduce the vested percentage of a Participant's accrued
benefit derived from Employer contributions below the vested percentage thereof
on the date such amendment is adopted or becomes effective, whichever is later;
and provided further, that no amendment shall decrease the accrued benefit of a
Participant. In the event that the vesting provisions are amended, a Participant
with at least 3 Years of Service shall have the right to elect, within a
specified
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period, to have his nonforfeitable percentage computed under this Plan without
regard to such amendment.
ARTICLE XVII
MISCELLANEOUS
17.1 Participation in the Plan shall have no effect upon the employment
status of any Employee.
17.2 All benefits payable under the Plan shall be paid solely from the
Trust Fund, and the Company assumes no liability or responsibility with respect
to such payments.
17.3 In the event of any merger or consolidation of the Plan with, or
transfer of any assets or liabilities of the Plan to, any other plan, each
Participant shall be entitled to receive a benefit immediately after such
merger, consolidation, or transfer (computed as if such other plan had then
terminated) which is equal to or greater than the benefit he would have been
entitled to receive immediately before such merger, consolidation, or transfer
(computed as if the Plan had then terminated).
17.4 Except as otherwise provided by law or the issuance of a
"qualified domestic relations order" (within the meaning of Code section
414(p)), no person shall have the right to assign, alienate, transfer,
hypothecate or otherwise subject to lien his interest in or his benefit under
the Plan, nor shall benefits under the Plan be subject to the claims of any
creditor. Any other provision of the Plan to the contrary notwithstanding, if a
qualified domestic relations order requires the distribution of all or part of
an Employee's benefits under the Plan, the establishment or acknowledgment of
the alternate payee's right to benefits under the Plan in
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accordance with the terms of such qualified domestic relations order shall in
all events be deemed to be consistent with the terms of the Plan.
17.5 The Company, the Board of Directors, the Committee (including any
subcommittees, individual members and the secretary thereof), the Trustee, and
any person who is deemed to be a fiduciary under the Plan, shall not be liable
for a breach of fiduciary responsibility of another fiduciary under the Plan
except to the extent (a) it shall have participated knowingly in, or knowingly
undertaken to conceal, an act or omission of such fiduciary, knowing such act or
omission was a breach of such fiduciary's responsibilities, (b) it shall have,
through a breach of its fiduciary responsibilities, enabled such fiduciary to
commit a breach of its fiduciary responsibilities, or (c) it shall have
knowledge of a breach of fiduciary responsibilities by such fiduciary, unless it
has made reasonable efforts to remedy the breach.
17.6 The Company, the Board of Directors, and the Committee (including
any subcommittees, individual members and the secretary thereof) shall not be
liable for the acts or omissions of (a) any person or persons to whom any
authority, power or responsibility has been allocated pursuant to Section 14.4
or (b) any person or persons who have been designated to carry out any such
authority, power or responsibility pursuant to Section 14.4 except to the extent
(i) it shall have violated its fiduciary responsibilities with respect to (A)
such allocation or designation, (B) the establishment or implementation of the
allocation or designation procedures of Section 14.4 or (C) the continuation of
any such allocation or designation, or (ii) it would otherwise be liable under
Section 17.5.
17.7 If the Committee determines that any person to whom a payment is
due hereunder is incompetent by reason of physical or mental disability, the
Committee shall have
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the power to cause the payments becoming due to such person to be made to
another for the benefit of the incompetent, without responsibility of the
Committee or the Trustee to see to the application of such payment. Payments
made pursuant to such power shall operate as a complete discharge of the
Committee, the Trustee and the Trust Fund.
17.8 The Plan shall be construed and enforced in accordance with the
laws of the State of New York, except to the extent preempted by the laws of the
United States.
ARTICLE XVIII
TOP HEAVY PROVISIONS
The provisions of this Article XVIII shall become applicable only under
the circumstances described thereunder.
18.1 For purposes of this Article XVIII, the Plan shall be "top heavy"
if, as of the determination date (the last day of the preceding Plan Year or, in
the case of the first Plan Year, the last day of such year), the present value
of the cumulative account balances for "key employees," as defined in Code
section 416(i)(1), under the Plan and all other plans in the "aggregation
group," as defined in Code section 416(g)(2)(A), exceeds 60% of the present
value of the cumulative account balances under all such plans for all Employees
determined as of the applicable "valuation date." For purposes of this Article
XVIII, "valuation date" shall mean the most recent Valuation Date within a
12-month period ending on the determination date. The present value of such
account balances shall be computed in accordance with Code section 416(g), and
the above percentage ratio shall be determined by a fraction, the numerator of
which is the sum of the present value of the account balances of key employees
under the Plan and all other plans in the aggregation group, and the denominator
of which is the sum of
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the present value of the account balances under all such plans, including the
Plan, for all Employees. If an individual has not performed any service for the
Employer at any time during the five-year period ending on a determination date,
any accrued benefit of such individual shall not be taken into account.
18.2 The following provisions shall be applicable to members only for
any Plan Year with respect to which the Plan is top heavy:
(a) Notwithstanding Article V, the Employer shall make a special
contribution on behalf of each non-key employee who has satisfied the
eligibility requirements of the Plan, whether or not a Participant in the Plan
and who is in service at the end of the Plan Year, with respect to such Plan
Year in an amount which equals the lesser of (i) 3% of his compensation (as
defined in Code section 414(s), or, to the extent required by the Code and
Treasury Regulations section 1.415-2(d)) or (ii) the highest percentage of
compensation provided under the Plan for any key employee for such Plan Year. A
non-key employee is an employee who is not a key employee, including employees
who are former key employees. Any such special Employer contribution shall be
credited to such Participant's Company Account. Notwith standing the foregoing
provisions of this Section 18.2(a), if a Participant in the Plan is also a
participant in any defined benefit plan of the Employer, then for each Plan Year
with respect to which the Plan is top heavy, such Participant's accrual of a
minimum benefit under such defined benefit plan in accordance with Code section
416(c)(1) shall be deemed to satisfy the special Employer contribution
requirement of this Section 18.2(a). Employer contributions resulting from
Before-tax Contributions or Matching Contributions shall not be counted towards
meeting the minimum required allocations under this Section.
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(b) Notwithstanding the provisions of Section 8.1, if during any Plan
Year an Employee participates in both a defined contribution plan and a defined
benefit plan maintained by the Company which comprise a "top heavy group," as
defined in Code section 416(g)(2)(B), the denominators of the defined benefit
plan fraction and the defined contribution plan fraction, as described in
Section 8.1(d), shall be calculated by substituting "1.0" for "1.25" each place
it appears in such Section; provided, however, that this Section 18.2(b) shall
not apply with respect to a plan in the top heavy group if (i) such plan would
satisfy the requirements of Code section 416(h)(2)(A) and (ii) the aggregate
accrued benefits and cumulative account balances of key employees under all
plans in the top heavy group do not exceed 90% of the aggregate accrued benefits
and cumulative account balances under all such plans for all Employees.
APPENDIX A
INVESTMENT FUNDS
This Appendix A shall be incorporated in, and be deemed an integral
part of, the Plan. Terms used in this Appendix A shall have the same meanings as
ascribed in the Plan document, unless the context otherwise clearly requires.
A.1 The Accounts of a Participant shall be invested in one or more of
the following Investment Funds, in accordance with the election of the
Participant pursuant to Section 12.3 of the Plan:
Niagara Mohawk Power Corporation Stock Fund ("Stock Fund") - invested
primarily in common stock of Niagara Mohawk Power Corporation. The
Fund's investment income, net of investment expense, shall
automatically be reinvested in the Fund.
Fidelity Retirement Government Money Market Portfolio - The Fidelity
Retirement Government Money Market Portfolio, a mutual fund, seeks to
obtain as high a level of current income as is consistent with the
preservation of capital and liquidity by investing in obligations
issued or guaranteed as to principal and interest by the United States
Government, its agencies or instrumentalities and in repurchase
agreements secured by these obligations. An investment in this
portfolio is not guaranteed or insured by the U.S. government or any
governmental agency. The portfolio tries to maintain a $1 share price.
Fixed Income Fund - The Fixed Income Fund is not a mutual fund and is
not available to the general public. It is a separate fund managed by
Fidelity Management Trust Company consisting of individual investment
contracts and investments in Managed Income Portfolio II. The Managed
Income Portfolio II is managed by Fidelity Management Trust Company and
invests in individual investment contracts on behalf of the Plans and
other plans. Overall, the Fixed Income Fund strives to preserve capital
while producing income by generally purchasing investment contracts
from various financial institutions that provide a fixed interest rate
for a specified time period. By investing in these contracts, the
participants of this investment fund are essentially lending money to
the financial institution. The financial institution (usually an
insurance company or a bank) agrees to pay a specified rate of interest
on that contract and to repay the principal (contract amount) when the
investment contract matures, regardless of current market conditions or
the prime rate.
At any point in time, the Fixed Income Fund's interest rate will be a
blended rate based upon the balances and interest rates of sums held in
the various investment contracts held in the fund. The actual interest
rate depends upon the amount of contributions invested in
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the Fixed Income Fund, the amounts withdrawn, and the transfers to and
from the Fixed Income Fund.
Fidelity U.S. Equity Index Commingled Pool - This investment fund is
not a mutual fund, and it is not available to the general public. It is
managed by Fidelity Management Trust Company. This pool seeks to
provide investment results that correspond to the total return (i.e.,
the combination of capital changes and income) of the Standard & Poor's
500 Index ("S&P Index"). In seeking this objective, the investment
manager invests primarily in the common stocks of the 500 companies
that make up the S&P Index. Although the stocks are selected to create
a portfolio having the overall risk characteristics and industry
diversification of the S&P Index, exactly equal performance is not
possible because of the inclusion of associated transaction costs and
the fact that any technique used in portfolio selection cannot be
perfectly accurate in matching the performance of the S&P Index.
Fidelity U.S. Bond Index Portfolio - This mutual fund seeks to provide
investment results that correspond to the aggregate price and
investment performance of debt securities in the Lehman Brothers
Aggregate Bond Index ("Aggregate Bond Index"). Under normal conditions,
approximately 80% of the investment fund will be invested in securities
included in the Aggregate Bond Index, which is comprised of U.S.
Treasury obligations, including bonds and notes; U.S. agency
obligations, including those of the Federal Farm Credit Bank, Federal
Land Bank and the Bank for Co-Operatives; foreign obligations,
including U.S. dollar-denominated World Bank issues and non-convertible
debt issued by foreign sovereign governments, foreign municipalities,
foreign governmental agencies or international agencies; U.S.
investment-grade corporate debt, including industrial, finance and
utility issues, and mortgage-backed obligations, including Government
National Mortgage Association, Federal National Mortgage Association
and Federal Home Loan Mortgage Corporation obligations.
Fidelity Growth and Income Portfolio - This mutual fund is invested
mainly in securities of U.S. and foreign companies that pay current
dividends and show potential earnings growth, with the objective of
providing long-term capital appreciation with reasonable current
income, and growth. The Fidelity Growth and Income Portfolio may invest
in large or small capitalization stock, domestic or foreign issues and
may use convertible securities, straight bonds, and preferred stock.
Fidelity Growth Company Fund - The Fidelity Growth Company Fund is a
mutual fund invested primarily in common stock and securities
convertible into common stock of smaller, less well-known companies in
new and emerging areas of the economy and larger companies in mature or
declining industries which have been revitalized and which the
investment manager believes have above-average growth characteristics.
The objective of this investment fund is to achieve capital
appreciation. The Fidelity Growth Company Fund will purchase both
listed stock and stocks traded over-the-counter, domestic or foreign
issue.
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Fidelity Overseas Fund - The Fidelity Overseas Fund is invested
primarily in companies whose principal business activities are outside
the United States. This mutual fund's objective of capital growth is
attempted through investments in securities of issuers from at least
three countries outside of North America. The fund invests a majority
of its assets in stocks, but may invest in debt securities of any kind.
Fidelity Asset Manager: Income - The Fidelity Asset Manager: Income
investment option is a diversified, asset allocation mutual fund
invested in stocks, bonds and short-term instruments, both U.S. and
foreign, with the objective of high current income and capital
appreciation. The fund can have anywhere from 0% to 35% in stocks, from
20% to 45% in bonds, and from 20% to 80% in short-term investments.
Over the long term, the fund will generally have approximately 20%
stocks, 30% bonds and 50% short-term instruments. Stocks include equity
securities of all types. Bonds include all varieties of fixed-income
instruments with maturities of more than three years. Short-term
instruments include all types of short-term instruments with remaining
maturities of three years or less.
Fidelity Asset Manager - The Fidelity Asset Manager investment option
is a diversified, asset allocation mutual fund invested in stocks,
bonds and short-term instruments, both U.S. and foreign, with the
objective of high total return with reduced risk over the long term.
The fund's investments can range from 10% to 60% in stocks, 20% to 60%
in bonds, and 0% to 70% in short term instruments, but over time, this
investment fund is generally invested in a mixture of approximately 40%
stocks, 40% bonds and 20% short-term instruments. Stocks include equity
securities of all types. Bonds include all varieties of fixed-income
instruments with maturities of more than three years. Short-term
instruments include all types of short-term instruments with remaining
maturities of three years or less.
Fidelity Asset Manager: Growth - The Fidelity Asset Manager: Growth
investment option is a diversified asset allocation mutual fund
invested in stocks, bonds and short-term instruments, both U.S. and
foreign, with the objective of maximum total return over the long-term.
The fund can have anywhere from 0% to 100% in any of the three types of
asset classes (stocks, bonds and short-term investments). Over the long
term, the fund will generally aim for the following combination: 65%
stocks, 30% bonds and 5% short-term instruments. Stocks include equity
securities of all types. Bonds include all varieties of fixed-income
instruments with maturities of more than three years. Short-term
instruments include all types of short-term instruments with remaining
maturities of three years or less.
A.2 Amounts invested in the Fixed Income Fund may not be transferred
into the Fidelity Retirement Government Money Market Portfolio ("Government
Money Market
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Portfolio") or the Fidelity U.S. Bond Index Portfolio ("U.S. Bond Index
Portfolio") (collectively, "money-market funds"). However, a Participant may
transfer amounts from the Fixed Income Fund into one of the non-money-market
funds described in Section A.1 for a period of 180 days, after which such
amounts may be transferred into the Government Money Market Portfolio or the
U.S. Bond Index Portfolio, or both. Transfers out of the Fixed Income Fund may
be made at any time with a maximum of six transfers per year.
A.3 Prior to November 1, 1995, Matching Contributions, and related
earnings, invested in the Stock Fund cannot be transferred out of such Fund
until the Participant attains age 53. On and after November 1, 1995, this
restriction no longer applies.
A.4 In the event a Participant does not designate specific Investment
Funds, his Accounts will be invested in the Fidelity Retirement Government Money
Market Portfolio.
A.5 In the event a Participant elects to make an in-service withdrawal
in accordance with Article X, the withdrawal shall be made from the Investment
Funds of the Participant's Accounts in the following order: Fidelity Overseas
Fund, Fidelity Growth Company Fund, Fidelity Asset Manager: Growth, Fidelity
Growth and Income Portfolio, Stock Fund, Fidelity U.S. Equity Index Commingled
Pool, Fidelity Asset Manager, Fidelity U.S. Bond Index Portfolio, Fidelity
Asset Manager:Income, Fidelity Retirement Government Money Market Portfolio and,
lastly, the Fixed Income Fund. Amounts paid from Investment Funds will be paid
in cash; provided that the Participant may elect to receive in stock all of his
Accounts invested in the Stock Fund by giving notice to the Committee in such
form and manner as the Committee may prescribe.
APPENDIX B
EFFECTIVE DATES OF PLAN PROVISIONS
The Plan as set forth herein, constitutes a restatement of the Plan
effective as of July 1, 1992. Although this restatement is effective July 1,
1992, the provisions of the Plan relating to compliance with the Tax Reform Act
of 1986, as amended, are effective January 1, 1989. Amendments effective on or
after July 1, 1992 through February 1, 1994 are effective as stated in the Plan
document.