NIAGARA MOHAWK POWER CORP /NY/
CEO SPECIAL AWARD PLAN
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>exh10-4ceospecawardplan.htm
<DESCRIPTION>CEO SPECIAL AWARD PLAN
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<TITLE>  CEO Special Award Plan
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<P ALIGN=RIGHT><FONT FACE=TIMES SIZE=3><B>
EXHIBIT NO. 10-4</B>
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<H1 ALIGN=CENTER><FONT FACE=TIMES SIZE=3>
NIAGARA MOHAWK CEO SPECIAL AWARD PLAN
</FONT></H1>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 1.&nbsp;&nbsp;&nbsp;&nbsp;
Establishment, Purpose and Duration
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
1.1&nbsp;&nbsp;&nbsp;
<U>Establishment of the Plan</U>.&nbsp;&nbsp; Niagara Mohawk Power Corporation, a New York corporation, established
a special award plan, known as the &#147;Niagara Mohawk Power Corporation CEO
Special Award Plan.&#148; The plan was amended and restated effective as of June
10, 1997 (&#147;Effective Date&#148;). Effective as of January 1, 1999, the name
of the plan was changed to the &#147;Niagara Mohawk CEO Special Award Plan&#148;
(&#147;Plan&#148;).
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
1.2&nbsp;&nbsp;&nbsp;
<U>Purpose of the Plan</U>.&nbsp;&nbsp;The purpose of the Plan is to promote the success and enhance the
value of the Company through awards to Participants which recognize
contributions to a successful initiative which results in a major positive
impact on the Company.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
1.3&nbsp;&nbsp;&nbsp;
<U>Duration of the Plan</U>.&nbsp;&nbsp;The amendment and restatement of the Plan shall commence on the
Effective Date and shall remain in effect, subject to the right of the Board of
Directors to terminate the Plan at any time pursuant to Article&#160;14 herein,
until June&#160;9, 2007. The applicable terms of the Plan and any terms and
conditions applicable to any Awards, including any deferral elections, granted
prior to such date shall survive the termination of the Plan.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 2.&nbsp;&nbsp;&nbsp;&nbsp;Definitions
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
Whenever used in the Plan, the following terms shall have the meanings set forth below and, when such
meaning is intended, the initial letter of the word is capitalized:
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.1&nbsp;&nbsp;&nbsp;
&#147;<U>Award</U>&#148; means, individually or collectively, a grant under the Plan of SARs, Stock Units or
cash.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>2.2&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Award Agreement</U>&#148; means an agreement entered into by each Participant and the
Company setting forth the terms and provisions applicable to an Award granted
under the Plan.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>2.3&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Base Value</U>.&#148;&nbsp;&nbsp;The Base Value of an SAR shall equal the Fair Market Value of a
Share determined for the 12 trading day period immediately preceding the date of
the grant, or for such other period as the Compensation Committee, in its sole
discretion, shall determine at the time of grant.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>2.4&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Board</U>&#148; or &#147;<U>Board of Directors</U>&#148; means,
effective March 17, 1999, the Board of Directors of Niagara Mohawk Holdings,
Inc. Prior to March 17, 1999, references to &#147;Board&#148; mean the Board of
Directors of Niagara Mohawk Power Corporation.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>2.5&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Cause</U>&#148; means: (i)&#160;a material default or other material
breach by a Participant of his obligations under any Employment Agreement he may
have with the Company, (ii)&#160;failure by a Participant diligently and
competently to perform his duties with the Company, (iii)&#160;misconduct,
dishonesty, insubordination or other act by a Participant detrimental to the
good will of the Company or damaging the Company&#146;s relationships with its
customers, suppliers or employees. &#147;Cause&#148; shall be determined in good
faith by the Committee.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>2.6&nbsp;&nbsp;&nbsp;&nbsp;
 &#147;<U>Change in Control</U>&#148; of the Company shall be deemed to have occurred as of the
first day that any one or more of the following conditions shall have been
satisfied:
</FONT></P>

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<TD WIDTH=7%><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(1)</FONT></TD>
<TD WIDTH=83%><FONT SIZE=2>
The acquisition by any Person of beneficial ownership (within the meaning of
Rule&#160;13d-3 promulgated under the Exchange Act) of 20% or more of either
(i)&#160;the then outstanding Shares of the Company or (ii)&#160;the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the &#147;Outstanding Company
Voting Securities&#148;); provided, however, that the following acquisitions
shall not constitute a Change of Control: (i)&#160;any acquisition directly from
the Company (excluding an acquisition by virtue of the exercise of a conversion
privilege), (ii)&#160;any acquisition by the Company, (iii)&#160;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)&#160;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&#160;(3)
below are satisfied; or
</FONT></TD>
</TR>
</TABLE>
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<TABLE WIDTH=90% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=7%><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2)</FONT></TD>
<TD WIDTH=83%><FONT SIZE=2>
Individuals who, as of April 1, 1999, constitute the Board of Directors (the
&#147;Incumbent Board&#148;) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election by the Company&#146;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&#160;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
</FONT></TD>
</TR>
</TABLE>
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<TABLE WIDTH=90% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=7%><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(3)</FONT></TD>
<TD WIDTH=83%><FONT SIZE=2>
Approval by the shareholders of the Company of a reorganization, merger or
consolidation, in each case, unless, following such reorganization, merger or
consolidation, (i)&#160;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)&#160;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 Pension 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 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)&#160;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
</FONT></TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=90% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=7%><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(4)</FONT></TD>
<TD WIDTH=83%><FONT SIZE=2>
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 or, on or after April 1, 1999, of
Niagara Mohawk Power Corporation, (A)&#160;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 the 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)&#160;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)&#160;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;
</FONT></TD>
</TR>
</TABLE>

<P><FONT FACE=TIMES SIZE=2>
provided, however, that the implementation of the corporate restructuring contemplated by the Company&#146;s
Power Choice proposal filed with the New York Public Service Commission on
October&#160;6, 1995, or any substantially similar corporate restructuring (as
determined by the Committee) shall not be deemed to be a &#147;Change in
Control.&#148;
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.7&nbsp;&nbsp;&nbsp;
&#147;<U>Committee</U>&#148; means the committee, as specified in Article 3, appointed by the Board to
administer the Plan.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.8&nbsp;&nbsp;&nbsp;
&#147;<U>Company</U>&#148; means Niagara Mohawk Holdings, Inc. (effective as of
March 17, 1999), Niagara Mohawk Power Corporation, and any other separate
employer that participates in this Plan with the consent of the Board (each of
these separate employers, as well as any other separate employer that
participates in this Plan with the consent of the Board, shall hereinafter be
referred to as a &#147;Participating Employer&#148;). Notwithstanding the
foregoing, the term &#147;Company&#148; means Niagara Mohawk Holdings, Inc. for
purposes of the administration of the Plan and for purposes of Section 2.6. The
term &#147;Company&#148; is being used solely for convenience to make the Plan
easier to read, and does not alter the fact that an Employee is employed by the
separate Participating Employer from which the Employee regularly receives his
paycheck. With respect to any Employee, the term &#147;Company&#148; means such
separate Participating Employer.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.9&nbsp;&nbsp;&nbsp;
 &#147;<U>Dividend Equivalent</U>&#148; means, with respect to Shares underlying a Stock Unit, an
amount equal to all cash and stock dividends declared on an equal number of
outstanding Shares on all common stock dividend payment dates occurring during
the Vesting Period.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.10&nbsp;&nbsp;&nbsp;
&#147;<U>Eligible Employee</U>&#148; means an Employee who is eligible to participate in the Plan, as set forth
in Section 4.1 herein.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.11&nbsp;&nbsp;&nbsp;
&#147;<U>Employee</U>&#148; means any full-time employee of the Company or one
of its subsidiaries who is not covered by any collective bargaining agreement to
which the Company or such subsidiary is a party.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.12&nbsp;&nbsp;&nbsp;
&#147;<U>Exchange Act</U>&#148; means the Securities Exchange Act of 1934, as amended from time to time, or any
successor act thereto.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.13&nbsp;&nbsp;&nbsp;
&#147;<U>Exercise Period</U>&#148; means the period during which an SAR is exercisable, as set forth in the
related Award Agreement.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.14&nbsp;&nbsp;&nbsp;
&#147;<U>Fair Market Value</U>&#148; means the average of the daily opening and closing sale prices
as reported in the consolidated transaction reporting system.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.15&nbsp;&nbsp;&nbsp;
&#147;<U>Participant</U>&#148; means an Employee who has an outstanding Award granted under the Plan.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.16&nbsp;&nbsp;&nbsp;
&#147;<U>Person</U>&#148; shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act,
as used in Sections 13(d) and 14(d) thereof, including usage in the definition of a "group" in Section 13(d)
thereof.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.17&nbsp;&nbsp;&nbsp;
&#147;<U>Shares</U>&#148; means, through March 17, 1999, the shares of common
stock of Niagara Mohawk Power Corporation, par value $1.00. After March 17,
1999, all references to &#147;Shares&#148; mean the shares of common stock of
Niagara Mohawk Holdings, Inc., par value $1.00.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.18&nbsp;&nbsp;&nbsp;
&#147;<U>Stock Appreciation Right</U>&#148; or &#147;<U>SAR</U>&#148; means a right, designated
as an SAR, to receive a payment on the day the right is exercised, pursuant to
the terms of Article&#160;5 herein. Each SAR shall be denominated in terms of
one Share.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.19&nbsp;&nbsp;&nbsp;
&#147;<U>Stock Unit</U>&#148; means a right, designated as a Stock Unit, to receive a payment
as soon as practicable following the last day of a Vesting Period, pursuant to
the terms of Article&#160;6 herein. Each Stock Unit shall be denominated in
terms of one Share.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.20&nbsp;&nbsp;&nbsp;
&#147;<U>Valuation Period</U>&#148; means the 12 trading day period ending on and including the relevant date.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
2.21&nbsp;&nbsp;&nbsp;
&#147;<U>Vesting Period</U>&#148; means the period during which Stock Units are not yet payable,
as set forth in the related Award Agreement.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 3.&nbsp;&nbsp;&nbsp;&nbsp;Administration
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
3.1&nbsp;&nbsp;&nbsp;
<U>The Committee</U>.&nbsp;&nbsp;The Plan shall be administered by the Compensation and Succession Committee of
the Board, or by any other Committee appointed by the Board consisting of not
less than two (2) members of the Board who are &#147;non-employee
directors&#148; within the meaning of Rule 16b-3 under the Exchange Act. The
members of the Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
3.2&nbsp;&nbsp;&nbsp;
<U>Authority of the Committee</U>.&nbsp;&nbsp;The Committee shall have full power except as limited by law, the
Articles of Incorporation and the Bylaws of the Company, subject to such other
restricting limitations or directions as may be imposed by the Board and the
provisions of the Plan, to determine the amounts and types of Awards; to
determine the terms and conditions of such Awards; to construe and interpret the
Plan and any agreement or instrument entered into under the Plan; to establish,
amend or waive rules and regulations for the Plan&#146;s administration; and to
amend the terms and conditions of any outstanding Award. Further, the Committee
shall make all other determinations that may be necessary or advisable for the
administration of the Plan. As permitted by law, the Committee may delegate its
authorities as identified hereunder.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
3.3&nbsp;&nbsp;&nbsp;
<U>Decisions Binding</U>.&nbsp;&nbsp;All determinations and decisions made by the Committee pursuant to
the provisions of the Plan and all related orders or resolutions of the Board
shall be final, conclusive and binding on all persons, including the Company,
its shareholders, Employees, Participants and their estates and beneficiaries.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
3.4&nbsp;&nbsp;&nbsp;
<U>Costs</U>.&nbsp;&nbsp;The Company shall pay all costs of administration of the Plan.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 4.&nbsp;&nbsp;&nbsp;&nbsp;Eligibility and Participation
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
4.1&nbsp;&nbsp;&nbsp;&nbsp;<U>Eligibility</U>.&nbsp;&nbsp;
All officers of the Company and other key Employees, as determined by the
Committee, are eligible to participate in the Plan.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
4.2&nbsp;&nbsp;&nbsp;<U>Actual Participation</U>.&nbsp;&nbsp;
The Committee may, from time to time, select which Eligible Employees
shall be granted Awards and shall determine the type and amount of each Award.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 5.&nbsp;&nbsp;&nbsp;&nbsp;Stock Appreciation Rights
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
5.1&nbsp;&nbsp;&nbsp;&nbsp;<U>Grants</U>.&nbsp;&nbsp;
SARs may be granted to Eligible Employees at any time and from time to time by the
Committee, which shall have complete discretion in determining the number of
SARs granted, the Exercise Period of such SARs and the other terms and
conditions pertaining to such SARs.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
5.2&nbsp;&nbsp;&nbsp;
<U>Exercise and Payment</U>.&nbsp;&nbsp;
A Participant may exercise an SAR at any time during the Exercise
Period by the delivery of a written notice of exercise to the Company, setting
forth the number of SARs being exercised. Upon exercise of an SAR, a Participant
shall be entitled to receive payment in cash from the Company in an amount equal
to the excess of (i)&#160;the Fair Market Value of one Share on the date of
exercise over (ii)&#160;the Base Value of the SAR.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
5.3&nbsp;&nbsp;&nbsp;<U>Award Agreement</U>.&nbsp;&nbsp;
Each SAR grant shall be evidenced by an Award Agreement that shall specify the
number of SARs granted, the Base Value, the Exercise Period, the expiration date
and such other provisions as the Committee shall determine.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 6.&nbsp;&nbsp;&nbsp;&nbsp;Stock Units
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
6.1&nbsp;&nbsp;&nbsp;<U>Grant</U>.&nbsp;&nbsp;
Stock Units may be granted to Eligible Employees at any time and from time to time by
the Committee, which shall have complete discretion in determining the number of
Stock Units granted, the Vesting Period of such Stock Units and the other terms
and conditions pertaining to such Stock Units.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
6.2&nbsp;&nbsp;&nbsp;<U>Payment</U>.&nbsp;&nbsp;
After the applicable Vesting Period has ended, the holder of Stock Units shall be
entitled to receive, for each Stock Unit held, payment in cash from the Company
in an amount equal to the Fair Market Value of one Share as determined as of the
Valuation Period ending on the last day of the Vesting Period. Payment
shall be made as soon as practicable following the last business day of the
Vesting Period.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
6.3&nbsp;&nbsp;&nbsp;<U>Award Agreement</U>.&nbsp;&nbsp;
Each Stock Unit grant shall be evidenced by an Award Agreement that shall
specify the number of Stock Units granted, the Vesting Period and such other provisions as the Committee shall
determine.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 7.&nbsp;&nbsp;&nbsp;&nbsp;Dividend Equivalents
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
Simultaneously with the grant of Stock Units, the Committee may grant the Participant Dividend
Equivalents, to be credited to a bookkeeping entry account, on each common stock
dividend payment date with respect to the Shares subject to such Award. In the
case of cash dividends, the number of Dividend Equivalents credited on each
common stock dividend payment date shall equal the number of Shares (including
fractional Shares) that could be purchased on the dividend payment date, based
on the average of the opening and closing sale price, as reported in the
consolidated transaction reporting system on that date, with cash dividends that
would have been paid on Awards of Stock Units and on Dividend Equivalents
previously credited to such bookkeeping entry account, if such Stock Units or
Dividend Equivalents were Shares. In the case of stock dividends, the number of
Dividend Equivalents credited on each stock dividend payment date shall be equal
to the number of Shares (including fractional Shares) that would have been
issued as a stock dividend in respect of the Participant&#146;s Stock Units and
on Dividend Equivalents previously credited to such bookkeeping entry account,
if such Stock Units or Dividend Equivalents were Shares.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
Participants shall receive cash payment from the Company of the Fair Market Value of the Dividend
Equivalents, if and when they receive payment of the related Stock Units, the
Fair Market Value of such Dividend Equivalents to be determined in the same
manner as for the related Stock Units.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
The Committee may, in its discretion, establish such rules and procedures governing the crediting of
Dividend Equivalents, including timing and payment contingencies that apply to
the Dividend Equivalents, as the Committee deems necessary or appropriate in
order to comply with applicable law.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 8.&nbsp;&nbsp;&nbsp;&nbsp;Cash Awards
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
The Committee may, at any time and from time to time, make an Award to an Eligible Employee payable in the
form of a lump sum in cash in such amount as determined by the Committee. Each
such Award shall be payable at such time as the Committee shall determine and,
if applicable, as evidenced by an Award Agreement that shall specify such
provisions as the Committee shall determine.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 9.&nbsp;&nbsp;&nbsp;&nbsp;Beneficiary Designation; Nontransferability of Awards
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
9.1&nbsp;&nbsp;&nbsp;<U>Designation of Beneficiary</U>.&nbsp;&nbsp;
Each Participant under the Plan may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently or successively)
to whom any benefit under the Plan is to be paid in case of his death before he
receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during the Participant&#146;s lifetime. In the absence of any
such designation, benefits remaining unpaid at the Participant&#146;s death
shall be paid to the Participant&#146;s estate.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
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.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
9.2&nbsp;&nbsp;&nbsp;<U>Nontransferability of Awards</U>.&nbsp;&nbsp;
No Award granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further, all Awards granted to a
Participant under the Plan shall be exercisable/payable during his or her
lifetime only by or to such Participant or his or her legal representative.
Notwithstanding the foregoing, the Committee may in its discretion authorize a
participant to transfer all or a portion of any award to the participant&#146;s
family members on such terms prescribed by the Committee.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 10.&nbsp;&nbsp;&nbsp;&nbsp;Deferrals
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
The Committee may permit a Participant to defer such Participant&#146;s receipt of the payment of cash that
would otherwise be due to such Participant. If any such deferral election is
permitted, the Committee shall, in its sole discretion, establish such rules and
procedures as it deems necessary or desirable for such payment deferrals.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 11.&nbsp;&nbsp;&nbsp;&nbsp;Adjustments in Awards
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, share combination or other change in the corporate structure
of the Company affecting the Shares, such adjustment shall be made to the number
of SARs and Stock Units under outstanding Awards granted under the Plan and the
Base Value of SARs, as may be determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or enlargement of rights;
provided, however, that the number of SARs and Stock Units subject to an Award
shall always be a whole number.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 12.&nbsp;&nbsp;&nbsp;&nbsp;No Rights of Employees
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
12.1&nbsp;&nbsp;&nbsp;<U>Employment</U>.&nbsp;&nbsp;
Nothing in the Plan shall interfere with or limit in any way the right of the
Company to terminate any Participant&#146;s employment at any time, for any
reason or no reason, in the Company&#146;s sole discretion, nor confer upon any
Participant any right to continue in the employ of the Company.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
12.2&nbsp;&nbsp;&nbsp;<U>Awards</U>.&nbsp;&nbsp;
No Employee shall have the right to be selected to receive an Award under the Plan,
or, having been so selected, to be selected to receive a future Award.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 13.&nbsp;&nbsp;&nbsp;&nbsp;Termination of Employment
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
13.1 &nbsp;&nbsp;&nbsp;In the event the employment of a participant is terminated for any reason other than for Cause, or as
set forth in Article 14,
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
during a Vesting Period for Stock Units, the Participant shall receive a full
payout of the Stock Units and related Dividend Equivalents, as and when provided
in<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Article 6.2 herein;
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
before the Exercise Period commences for SARs subject to an Award, such SARs may be exercised in full at any time
during the one year period commencing on <BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the day the Exercise Period begins; and
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;
during the Exercise Period for SARs, but before exercise, such SARs may be exercised in full at any time during the one
year period after such termination, but<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
in no event after the Exercise Period for such SARs has expired.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;
all outstanding cash Awards shall be paid in full as and when provided in Article 8.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 14.&nbsp;&nbsp;&nbsp;&nbsp;Corporate Restructuring; Change in Control
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
14.1 &nbsp;&nbsp;&nbsp;<U>Corporate Restructuring</U>.&nbsp;&nbsp;
In the event (i)&#160;the corporate restructuring as
contemplated by the Company&#146;s Power Choice proposal filed with the New York
Public Service Commission on October 6, 1995, or any substantially similar
corporate restructuring (determined by the Committee), is implemented and
(ii)&#160;the employment of a Participant with the Company is terminated (other
than for Cause), then with respect to Awards granted prior to implementation of
the restructuring,
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
during a Vesting Period for Stock Units, the Participant shall receive a full
payout of Stock Units and related Dividend Equivalents, as and when provided in
Article&#160;7;
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
before the Exercise Period commences for SARs subject to an Award, such SARs may
be exercised in full at any time during the one year period commencing on<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the day the Exercise Period begins;
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;
during the Exercise Period for SARs, but before exercise, such SARs may be
exercised in full at any time during the one year period after such termination,
but in<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
no event after the Exercise Period for such SARs has expired; and
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;
all outstanding cash Awards shall be paid in full within 30 days following termination.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
14.2&nbsp;&nbsp;&nbsp;<U>Change In Control</U>.&nbsp;&nbsp;
Upon the occurrence of a Change in Control, as defined herein, unless
otherwise specifically prohibited by the terms of Article 18 herein:
</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT></TD>
<TD WIDTH=95%><FONT SIZE=2>
If the Change in Control results in cash payment for the outstanding Shares and
such Shares cease to be readily tradeable on a national securities exchange
which is registered under Section 6 of the Exchange Act or on NASDAQ, then any
and all SARs granted hereunder shall be deemed to have been exercised on the
date such Change in Control occurs;
</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
</FONT></TD>
<TD WIDTH=95%><FONT SIZE=2>
If the Change in Control does not result in a cash payment for the outstanding
Shares or such Shares continue to be readily tradeable on a national securities
exchange which is registered under Section 6 of the Exchange Act or on NASDAQ,
then any and all SARs granted hereunder shall be fully and immediately
exercisable and may be exercised at any time in full or in part from time to
time until the end of the Exercise period. In such event, if the Shares are
converted into the common stock of the Person referred to in subsection (1) of
Section 2.6, the corporation resulting from the reorganization, merger or
consolidation referred to in subsection (3) of Section 2.6 (the &#147;Resulting
Corporation&#148;) or the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities of such
Person or the Resulting Corporation (the &#147;Ultimate Parent&#148;), then (i)
payments for SARS shall be based on the value of the common stock of such
Person, Resulting Corporation or Ultimate Parent and (ii) the Base Value and
number of SARs shall be appropriately adjusted to reflect the per Share
consideration received by the holders of the Shares.
</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
</FONT></TD>
<TD WIDTH=90%><FONT SIZE=2>
Any Vesting Period with respect to Stock Units shall be deemed to have expired,
and there shall be paid out in cash to Participants within thirty (30) days
following the effective date of the Change in Control the cash payment due with
respect to such Stock Units and related Dividend Equivalents based on the Fair
Market Value of one Share on the effective date of the Change in Control; and
</FONT></TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE=TIMES SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;
All outstanding cash Awards shall be paid in full within 30&#160;days following
the effective date of the Change in Control.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 15.&nbsp;&nbsp;&nbsp;&nbsp;Amendment, Modification and Termination
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
15.1&nbsp;&nbsp;&nbsp;<U>Amendment, Modification and Termination</U>.&nbsp;&nbsp;
The Board may, at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>15.2&nbsp;&nbsp;&nbsp; <U>Awards Previously Granted</U>.&nbsp;&nbsp;
No termination, amendment or modification of the Plan shall
adversely affect in any material way any Award previously granted under the
Plan, without the written consent of the Participant holding such Award, unless
such termination, modification or amendment is required by applicable law.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 16.&nbsp;&nbsp;&nbsp;Tax Withholding</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to
the Company, an amount sufficient to satisfy Federal, state and local income and
employment taxes required by law to be withheld with respect to any taxable
event arising out of or as a result of an Award made under the Plan.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 17.&nbsp;&nbsp;Successors
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
All obligations of the Company under the Plan, with respect to Awards granted hereunder shall be
binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation or
otherwise, of all or substantially all of the business and/or assets of the
Company.
</FONT></P>

<H2 ALIGN=LEFT><FONT FACE=TIMES SIZE=2>
Article 18.&nbsp;&nbsp;&nbsp;Legal Construction
</FONT></H2>

<P><FONT FACE=TIMES SIZE=2>
18.1&nbsp;&nbsp;&nbsp;<U>Gender and Number</U>.&nbsp;&nbsp;
Except where otherwise indicated by the context, any masculine term used herein also shall include
the feminine, the plural shall include the singular and the singular shall include the plural.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
18.2&nbsp;&nbsp;&nbsp;<U>Severability</U>.&nbsp;&nbsp;
In the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
18.3&nbsp;&nbsp;&nbsp;<U>Requirements of Law</U>.&nbsp;&nbsp;
The granting of Awards under the Plan shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
</FONT></P>

<P><FONT FACE=TIMES SIZE=2>
18.4&nbsp;&nbsp;&nbsp;<U>Governing Law</U>.&nbsp;&nbsp;
To the extent not preempted by Federal law, the Plan, and all agreements
hereunder, shall be construed in accordance with, and governed by, the laws of
the state of New York, without regard to conflicts of law provisions.
</FONT></P>

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