EXHIBIT 10.1
NEW JERSEY RESOURCES CORPORATION
2007 STOCK AWARD AND INCENTIVE PLAN
As amended,
January 12, 2007

 

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NEW JERSEY RESOURCES CORPORATION
2007 STOCK AWARD AND INCENTIVE PLAN

              Page
1. Purpose
    1  
 
       
2. Definitions
    1  
 
       
3. Administration
    3  
 
       
4. Stock Subject to Plan
    4  
 
       
5. Eligibility; Per-Person Award Limitations
    4  
 
       
6. Specific Terms of Awards
    5  
 
       
7. Performance Awards
    9  
 
       
8. Certain Provisions Applicable to Awards
    11  
 
       
9. Change in Control
    12  
 
       
10. Additional Award Forfeiture Provisions
    14  
 
       
11. General Provisions
    14  

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NEW JERSEY RESOURCES CORPORATION
2007 STOCK AWARD AND INCENTIVE PLAN
     1. Purpose. The purpose of this 2007 Stock Award and Incentive Plan (the
“Plan”) is to aid New Jersey Resources Corporation, a New Jersey corporation
(together with its successors and assigns, the “Company”), in attracting,
retaining, motivating and rewarding employees, non-employee directors, and other
service providers of the Company or its subsidiaries or affiliates,
strengthening the Company’s capability to develop, maintain and direct a
competent management team, to provide for equitable and competitive compensation
opportunities, to recognize individual contributions and reward achievement of
Company goals, and promote the creation of long-term value for shareholders by
closely aligning the interests of Participants with those of shareholders. The
Plan authorizes stock-based and cash-based incentives for Participants.
     2. Definitions. In addition to the terms defined in Section 1 above and
elsewhere in the Plan, the following capitalized terms used in the Plan have the
respective meanings set forth in this Section:
     (a) “Annual Limit” shall have the meaning specified in Section 5(b).
     (b) “Award” means any Option, SAR, Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of another award, Dividend Equivalent, Other
Stock-Based Award, or Performance Award, together with any related right or
interest, granted to a Participant under the Plan.
     (c) “Beneficiary” means the legal representatives of the Participant’s
estate entitled by will or the laws of descent and distribution to receive the
benefits under a Participant’s Award upon a Participant’s death, provided that,
if and to the extent authorized by the Committee, a Participant may be permitted
to designate a Beneficiary, in which case the “Beneficiary” instead will be the
person, persons, trust or trusts (if any are then surviving) which have been
designated by the Participant in his or her most recent written and duly filed
beneficiary designation to receive the benefits specified under the
Participant’s Award upon such Participant’s death.
     (d) “Board” means the Company’s Board of Directors.
     (e) “Change in Control” and related terms have the meanings as defined in
Section 9.
     (f) “Code” means the Internal Revenue Code of 1986, as amended. References
to any provision of the Code or regulation thereunder shall include any
successor provisions and regulations, and reference to regulations includes any
applicable guidance or pronouncement of the Department of the Treasury and
Internal Revenue Service.
     (g) “Committee” means the Leadership Development and Compensation Committee
of the Board (or a designated successor to such committee), the composition and
governance of which is established in the Committee’s Charter as approved from
time to time by the Board and subject to other corporate governance documents of
the Company. No action of the Committee shall be void or deemed to be without
authority due to the failure of any member, at the time the action was taken, to
meet any qualification standard set forth in the Committee Charter or this Plan.
The full Board may perform any function of the Committee hereunder (except to
the extent limited under applicable New York Stock Exchange rules), in which
case the term “Committee” shall refer to the Board.

 

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     (h) “Covered Employee” means an Eligible Person who is a Covered Employee
as specified in Section 11(j).
     (i) “Deferred Stock” means a right, granted under this Plan, to receive
Stock or other Awards or a combination thereof at the end of a specified
deferral period.
     (j) “Dividend Equivalent” means a right, granted under this Plan, to
receive cash, Stock, other Awards or other property equal in value to all or a
specified portion of the dividends paid with respect to a specified number of
shares of Stock.
     (k) “Effective Date” means the effective date specified in Section 11(p).
     (l) “Eligible Person” has the meaning specified in Section 5.
     (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act or rule (including a proposed
rule) thereunder shall include any successor provisions and rules.
     (n) “Fair Market Value” means the fair market value of Stock, Awards or
other property as determined in good faith by the Committee or under procedures
established by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of Stock on a given day shall be, as specified by the
Committee, either (1) the average of the high and low sales prices of the Stock,
or (2) the closing price of the Stock, on the date on which it is to be valued
hereunder as reported for New York Stock Exchange — Composite Transactions. Fair
Market Value relating to the exercise price or base price of any Non-409A Option
or SAR and relating to the market value of Stock measured at the time of
exercise shall conform to requirements under Code Section 409A.
     (o) “409A Awards” means Awards that constitute a deferral of compensation
under Code Section 409A and regulations thereunder. “Non-409A Awards” means
Awards other than 409A Awards. Although the Committee retains authority under
the Plan to grant Options, SARs and Restricted Stock on terms that will qualify
those Awards as 409A Awards, Options, SARs, and Restricted Stock are intended to
be Non-409A Awards unless otherwise expressly specified by the Committee.
     (p) “Incentive Stock Option” or “ISO” means any Option designated as an
incentive stock option within the meaning of Code Section 422 and qualifying
thereunder.
     (q) “Option” means a right to purchase Stock granted under Section 6(b).
     (r) “Other Stock-Based Awards” means Awards granted to a Participant under
Section 6(h).
     (s) “Participant” means a person who has been granted an Award under the
Plan which remains outstanding, including a person who is no longer an Eligible
Person.
     (t) “Performance Award” means a conditional right, granted to a Participant
under Sections 6(i) or 7, to receive cash, Stock or other Awards or payments.
     (u) “Preeexisting Plan” means the Employee and Outside Director Long-Term
Incentive Compensation Plan (effective January 23, 2002).

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     (v) “Restricted Stock” means Stock granted under this Plan which is subject
to certain restrictions and to a risk of forfeiture.
     (w) “Stock” means the Company’s Common Stock, par value $2.50 per share,
and any other equity securities of the Company that may be substituted or
resubstituted for Stock pursuant to Section 11(c).
     (x) “Stock Appreciation Rights” or “SAR” means a right granted to a
Participant under Section 6(c).
     3. Administration.
     (a) Authority of the Committee. The Plan shall be administered by the
Committee, which shall have full and final authority, in each case subject to
and consistent with the provisions of the Plan, to select Eligible Persons to
become Participants; to grant Awards; to determine the type and number of
Awards, the dates on which Awards may be exercised and on which the risk of
forfeiture or deferral period relating to Awards shall lapse or terminate, the
acceleration of any such dates, the expiration date of any Award, whether, to
what extent, and under what circumstances an Award may be settled, or the
exercise price of an Award may be paid, in cash, Stock, other Awards, or other
property, and other terms and conditions of, and all other matters relating to,
Awards; to prescribe documents evidencing or setting terms of Awards (such Award
documents need not be identical for each Participant or each Award), amendments
thereto, and rules and regulations for the administration of the Plan and
amendments thereto; to construe and interpret the Plan and Award documents and
correct defects, supply omissions or reconcile inconsistencies therein; and to
make all other decisions and determinations as the Committee may deem necessary
or advisable for the administration of the Plan. Decisions of the Committee with
respect to the administration and interpretation of the Plan shall be final,
conclusive, and binding upon all persons interested in the Plan, including
Participants, Beneficiaries, transferees under Section 11(b) and other persons
claiming rights from or through a Participant, and shareholders. The foregoing
notwithstanding, (i) the Board shall perform the functions of the Committee for
purposes of granting Awards under the Plan to non-employee directors (the
functions of the Committee with respect to other aspects of non-employee
director awards is not exclusive to the Board, however); and (ii) Committee
decisions with regard to the grant of awards [to executive officers] will be
subject to the ratification of the Board of Directors, unless otherwise
determined by the Board.
     (b) Manner of Exercise of Committee Authority. The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee. The
Committee may act through subcommittees, including for purposes of perfecting
exemptions under Rule 16b-3 or qualifying Awards under Code Section 162(m) as
performance-based compensation, in which case the subcommittee shall be subject
to and have authority under the charter applicable to the Committee, and the
acts of the subcommittee shall be deemed to be acts of the Committee hereunder.
The Committee may delegate to officers or managers of the Company or any
subsidiary or affiliate, or committees thereof, the authority, subject to such
terms as the Committee shall determine, to perform such functions, including
administrative functions, as the Committee may determine, to the extent (i) that
such delegation will not result in the loss of an exemption under Rule 16b-3(d)
for Awards granted to Participants subject to Section 16 of the Exchange Act in
respect of the Company and will not cause Awards intended to qualify as
“performance-based compensation” under Code Section 162(m) to fail to so
qualify, and (ii) permitted under applicable provisions of the New Jersey
Business Corporation Act.

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     (c) Limitation of Liability. The Committee and each member thereof, and any
person acting pursuant to authority delegated by the Committee, shall be
entitled, in good faith, to rely or act upon any report or other information
furnished by any executive officer, other officer or employee of the Company or
a subsidiary or affiliate, the Company’s independent auditors, consultants or
any other agents assisting in the administration of the Plan. Members of the
Committee, any person acting pursuant to authority delegated by the Committee,
and any officer or employee of the Company or a subsidiary or affiliate acting
at the direction or on behalf of the Committee or a delegee shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action or
determination.
     4. Stock Subject To Plan.
     (a) Overall Number of Shares Available for Delivery. The total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be (i) 750,000 shares, plus (ii) the number of shares that,
immediately prior to the Effective Date, remain available for new awards under
the Preexisting Plan plus (iii) the number of shares subject to awards under the
Preexisting Plan which become available in accordance with Section 4(b) after
the Effective Date; provided, however, that the total number of shares with
respect to which ISOs may be granted shall not exceed the number specified under
clause (i) above. Any shares of Stock delivered under the Plan shall consist of
authorized and unissued shares or treasury shares.
     (b) Share Counting Rules. The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for
example, in the case of tandem or substitute awards) and make adjustments in
accordance with this Section 4(b). Shares shall be counted against those
reserved to the extent such shares have been delivered and are no longer subject
to a risk of forfeiture. Accordingly, (i) to the extent that an Award under the
Plan or an award under the Pre-existing Plan is canceled, expired, forfeited,
settled in cash, settled by delivery of fewer shares than the number underlying
the Award or award, or otherwise terminated without delivery of shares to the
participant, the shares retained by or returned to the Company will not be
deemed to have been delivered under the Plan; and (ii) shares that are withheld
from such an Award or award or separately surrendered by the participant in
payment of the exercise price or taxes relating to such an Award or award shall
be deemed to constitute shares not delivered and will be available under the
Plan. The Committee may determine that Awards may be outstanding that relate to
more shares than the aggregate remaining available under the Plan so long as
Awards will not in fact result in delivery and vesting of shares in excess of
the number then available under the Plan. In addition, in the case of any Award
granted in assumption of or in substitution for an award of a company or
business acquired by the Company or a subsidiary or affiliate or with which the
Company or a subsidiary or affiliate combines, shares delivered or deliverable
in connection with such assumed or substitute Award shall not be counted against
the number of shares reserved under the Plan.
     5. Eligibility; Per-Person Award Limitations.
     (a) Eligibility. Awards may be granted under the Plan only to Eligible
Persons. For purposes of the Plan, an “Eligible Person” means (i) an employee of
the Company or any subsidiary or affiliate, including any executive officer or
employee director of the Company or a subsidiary or affiliate, (ii) any person
who has been offered employment by the Company or a subsidiary or affiliate,
provided that such prospective employee may not receive any payment or exercise
any right relating to an Award until such person has commenced employment with
the Company or a subsidiary or affiliate, (iii) any non-employee director of the
Company, and (iv) any person who provides substantial services to the Company or
a subsidiary or affiliate. An employee on leave of absence may be considered as
still in the employ of the Company or a

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subsidiary or affiliate for purposes of eligibility for participation in the
Plan. For purposes of the Plan, a joint venture in which the Company or a
subsidiary has a substantial direct or indirect equity investment shall be
deemed an affiliate, if so determined by the Committee. Holders of awards
granted by a company or business acquired by the Company or a subsidiary or
affiliate, or with which the Company or a subsidiary or affiliate combines, are
eligible for grants of substitute awards granted in assumption of or in
substitution for such outstanding awards previously granted under the Plan in
connection with such acquisition or combination transaction.
     (b) Per-Person Award Limitations. In each calendar year during any part of
which the Plan is in effect, an Eligible Person may be granted Awards intended
to qualify as “performance-based compensation” under Code Section 162(m) under
the Plan relating to up to his or her Annual Limit. A Participant’s Annual
Limit, in any year during any part of which the Participant is then eligible
under the Plan, shall equal 300,000 shares plus the amount of the Participant’s
unused Annual Limit relating to the same type of Award as of the close of the
previous year, subject to adjustment as provided in Section 11(c). In the case
of an Award which is not valued in a way in which the limitation set forth in
the preceding sentence would operate as an effective limitation satisfying
applicable law (including Treasury Regulation 1.162-27(e)(4)), an Eligible
Person may not be granted Awards authorizing the earning during any calendar
year of an amount that exceeds the Eligible Person’s Annual Limit, which for
this purpose shall equal $2.5 million plus the amount of the Eligible Person’s
unused cash Annual Limit as of the close of the previous year (this limitation
is separate and not affected by the number of Awards granted during such
calendar year subject to the limitation in the preceding sentence). For this
purpose, (i) “earning” means satisfying performance conditions so that an amount
becomes payable, without regard to whether it is to be paid currently or on a
deferred basis or continues to be subject to any service requirement or other
non-performance condition, (ii) a Participant’s Annual Limit is used to the
extent an amount or number of shares may be potentially earned or paid under an
Award, regardless of whether such amount or shares are in fact earned or paid,
and (iii) the Annual Limit applies to Dividend Equivalents under Section 6(g)
only if such Dividend Equivalents are granted separately from and not as a
feature of another Award.
6. Specific Terms Of Awards.
     (a) General. Awards may be granted on the terms and conditions set forth in
this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Sections 11(e)
and 11(k)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or
service by the Participant and terms permitting a Participant to make elections
relating to his or her Award. The Committee shall retain full power and
discretion with respect to any term or condition of an Award that is not
mandatory under the Plan, subject to Section 11(k) and the terms of the Award
agreement. The Committee may require payment of consideration for an Award
except as limited by the Plan.
     (b) Options. The Committee is authorized to grant Options to Participants
on the following terms and conditions:

  (i)   Exercise Price. The exercise price per share of Stock purchasable under
an Option (including both ISOs and non-qualified Options) shall be determined by
the Committee, provided that such exercise price shall be not less than the Fair
Market Value of a share of Stock on the date of grant of such Option, subject to
Section 8(a). Notwithstanding the foregoing, any substitute award granted in
assumption of or in substitution for an outstanding award granted by a company
or business acquired by the Company or a subsidiary or affiliate, or with which
the Company or a subsidiary or affiliate combines may be granted with an

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      exercise price per share of Stock other than as required above. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date on which the stock is issued, except as provided in Section
11(c) of the Plan.

  (ii)   Option Term; Time and Method of Exercise. The Committee shall determine
the term of each Option, provided that in no event shall the term of any Option
exceed a period of ten years from the date of grant. The Committee shall
determine the time or times at which or the circumstances under which an Option
may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the methods by which such
exercise price may be paid or deemed to be paid and the form of such payment
(subject to Sections 11(k) and 11(l)), including, without limitation, cash,
Stock (including by withholding Stock deliverable upon exercise), other Awards
or awards granted under other plans of the Company or any subsidiary or
affiliate, or other property (including through broker-assisted “cashless
exercise” arrangements, to the extent permitted by applicable law), and the
methods by or forms in which Stock will be delivered or deemed to be delivered
in satisfaction of Options to Participants (including, in the case of 409A
Awards, deferred delivery of shares subject to the Option, as mandated by the
Committee, with such deferred shares subject to any vesting, forfeiture or other
terms as the Committee may specify).     (iii)   ISOs. The terms of any ISO
granted under the Plan shall comply in all respects with the provisions of Code
Section 422.

     (c) Stock Appreciation Rights. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:

  (i)   Right to Payment. An SAR shall confer on the Participant to whom it is
granted a right to receive, upon exercise thereof, the excess of (A) the Fair
Market Value of one share of Stock on the date of exercise over (B) the grant
price of the SAR as determined by the Committee.     (ii)   Other Terms. The
Committee shall determine the term of each SAR, provided that in no event shall
the term of an SAR exceed a period of ten years from the date of grant. The
Committee shall determine at the date of grant or thereafter, the time or times
at which and the circumstances under which a SAR may be exercised in whole or in
part (including based on achievement of performance goals and/or future service
requirements), the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which Stock will be
delivered or deemed to be delivered to Participants, whether or not a SAR shall
be free-standing or in tandem or combination with any other Award, and whether
or not the SAR will be a 409A Award or Non-409A Award. Limited SARs that may
only be exercised in connection with a Change in Control or termination of
service following a Change in Control as specified by the Committee may be
granted on such terms, not inconsistent with this Section 6(c), as the Committee
may determine. The Committee may require that an outstanding Option be exchanged
for an SAR exercisable for Stock having vesting, expiration, and other terms
substantially the same as the Option, so long as such exchange will not result
in additional accounting expense to the Company.

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     (d) Restricted Stock. The Committee is authorized to grant Restricted Stock
to Participants on the following terms and conditions:

  (i)   Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such
installments or otherwise and under such other circumstances as the Committee
may determine at the date of grant or thereafter. Except to the extent
restricted under the terms of the Plan and any Award document relating to the
Restricted Stock, a Participant granted Restricted Stock shall have all of the
rights of a shareholder, including the right to vote the Restricted Stock and
the right to receive dividends thereon (subject to any mandatory reinvestment or
other requirement imposed by the Committee).     (ii)   Forfeiture. Except as
otherwise determined by the Committee, upon termination of employment or service
during the applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited and reacquired by the Company;
provided that the Committee may provide, by rule or regulation or in any Award
document, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock will lapse in whole or in
part, including in the event of terminations resulting from specified causes.  
  (iii)   Certificates for Stock. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Participant, the
Committee may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the
certificates, and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.     (iv)   Dividends and
Splits. As a condition to the grant of an Award of Restricted Stock, the
Committee may require that any dividends paid on a share of Restricted Stock
shall be either (A) paid with respect to such Restricted Stock at the dividend
payment date in cash, in kind, or in a number of shares of unrestricted Stock
having a Fair Market Value equal to the amount of such dividends, or
(B) automatically reinvested in additional Restricted Stock or held in kind,
which shall be subject to the same terms as applied to the original Restricted
Stock to which it relates, or (C) deferred as to payment, either as a cash
deferral or with the amount or value thereof automatically deemed reinvested in
shares of Deferred Stock, other Awards or other investment vehicles, subject to
such terms as the Committee shall determine or permit a Participant to elect.
Unless otherwise determined by the Committee, Stock distributed in connection
with a Stock split or Stock dividend, and other property distributed as a
dividend, shall be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which such Stock or other
property has been distributed.

     (e) Deferred Stock. The Committee is authorized to grant Deferred Stock to
Participants, subject to the following terms and conditions:

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  (i)   Award and Restrictions. Issuance of Stock will occur upon expiration of
the deferral period specified for an Award of Deferred Stock by the Committee
(or, if permitted by the Committee, as elected by the Participant). In addition,
Deferred Stock shall be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may impose, which
restrictions may lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals and/or
future service requirements), separately or in combination, in installments or
otherwise, and under such other circumstances as the Committee may determine at
the date of grant or thereafter. Deferred Stock may be satisfied by delivery of
Stock, other Awards, or a combination thereof (subject to Section 11(l)), as
determined by the Committee at the date of grant or thereafter.     (ii)  
Forfeiture. Except as otherwise determined by the Committee, upon termination of
employment or service during the applicable deferral period or portion thereof
to which forfeiture conditions apply (as provided in the Award document
evidencing the Deferred Stock), all Deferred Stock that is at that time subject
to such forfeiture conditions shall be forfeited; provided that the Committee
may provide, by rule or regulation or in any Award document, or may determine in
any individual case, that restrictions or forfeiture conditions relating to
Deferred Stock will lapse in whole or in part, including in the event of
terminations resulting from specified causes. Deferred Stock subject to a risk
of forfeiture may be called “restricted stock units” or otherwise designated by
the Committee.     (iii)   Dividend Equivalents. Unless otherwise determined by
the Committee, Dividend Equivalents on the specified number of shares of Stock
covered by an Award of Deferred Stock shall be either (A) paid with respect to
such Deferred Stock at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to such Deferred Stock, either as a cash
deferral or with the amount or value thereof automatically deemed reinvested in
additional Deferred Stock, other Awards or other investment vehicles having a
Fair Market Value equal to the amount of such dividends, as the Committee shall
determine or permit a Participant to elect.

     (f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant to Participants Stock as a bonus, or to grant Stock or other
Awards in lieu of obligations of the Company or a subsidiary or affiliate to pay
cash or deliver other property under the Plan or under other plans or
compensatory arrangements, subject to such terms as shall be determined by the
Committee.
     (g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, which may be awarded on a free-standing basis or
in connection with another Award. The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Stock, Awards, or other investment vehicles, and
subject to restrictions on transferability, risks of forfeiture and such other
terms as the Committee may specify.
     (h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock or factors that may influence
the value of Stock, including, without limitation, convertible or exchangeable
debt securities, other rights convertible or exchangeable into Stock, purchase
rights for Stock, Awards with value and payment contingent upon performance of
the

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Company or business units thereof or any other factors designated by the
Committee, and Awards valued by reference to the book value of Stock or the
value of securities of or the performance of specified subsidiaries or
affiliates or other business units. The Committee shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award in the nature of
a purchase right granted under this Section 6(h) shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Stock, other Awards, notes, or other
property, as the Committee shall determine. Cash awards, as an element of or
supplement to any other Award under the Plan, may also be granted pursuant to
this Section 6(h).
     (i) Performance Awards. Performance Awards, denominated in cash or in Stock
or other Awards, may be granted by the Committee in accordance with Section 7.
     7. Performance Awards.
     (a) Performance Awards Generally. Performance Awards may be denominated as
a cash amount, number of shares of Stock, or specified number of other Awards
(or a combination) which may be earned upon achievement or satisfaction of
performance conditions specified by the Committee. In addition, the Committee
may specify that any other Award shall constitute a Performance Award by
conditioning the right of a Participant to exercise the Award or have it
settled, and the timing thereof, upon achievement or satisfaction of such
performance conditions as may be specified by the Committee. The Committee may
use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its
discretion to reduce or increase the amounts payable under any Award subject to
performance conditions, except as limited under Sections 7(b) in the case of a
Performance Award intended to qualify as “performance-based compensation” under
Code Section 162(m).
     (b) Performance Awards Granted to Covered Employees. If the Committee
determines that a Performance Award to be granted to an Eligible Person who is
designated by the Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Performance Award shall be contingent upon
achievement of a preestablished performance goal and other terms set forth in
this Section 7(b).

  (i)   Performance Goal Generally. The performance goal for such Performance
Awards shall consist of one or more business criteria and a targeted level or
levels of performance with respect to each of such criteria, as specified by the
Committee consistent with this Section 7(b). The performance goal shall be
objective and shall otherwise meet the requirements of Code Section 162(m) and
regulations thereunder, including the requirement that the level or levels of
performance targeted by the Committee result in the achievement of performance
goals being “substantially uncertain.” The Committee may determine that such
Performance Awards shall be granted, exercised and/or settled upon achievement
of any one performance goal or that two or more of the performance goals must be
achieved as a condition to grant, exercise and/or settlement of such Performance
Awards. Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.     (ii)   Business Criteria. One or
more of the following business criteria for the Company, on a consolidated
basis, and/or for specified subsidiaries or affiliates or other business units
of the Company shall be used by the Committee in establishing performance goals
for such Performance Awards:

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(1) Revenues;
(2) Expenses;
(3) Gross margin or gross profit;
(4) Any earnings or net income measure, including earnings from operations,
earnings before taxes, earnings before interest and/or taxes and/or
depreciation, statutory earnings before realized gains (losses), or net income
available to common shareholders;
(5) Operating margin or operating profit;
(6) Earnings or earnings per share (EPS), including or excluding extraordinary
items;
(7) Operating cash flow, free cash flow, cash flow return on investment, or net
cash provided by operations;
(8) Return on equity, assets, capital employed or investment;
(9) Economic profit or value created;
(10) Stock price or total shareholder return; and
(11) Strategic business criteria, consisting of one or more objectives based on
meeting specified market penetration, total market capitalization, business
retention, new product generation, rate increase actions, geographic business
expansion goals, cost targets (including cost of capital), investment portfolio
yield, customer satisfaction, employee satisfaction, agency ratings, management
of employment practices and employee benefits, supervision of litigation and
information technology, and goals relating to acquisitions or divestitures of
subsidiaries, affiliates, joint ventures or lines of business.

      The targeted level or levels of performance with respect to such business
criteria may be established at such levels and in such terms as the Committee
may determine, in its discretion, including in absolute terms, as a goal
relative to performance in prior periods, or as a goal compared to the
performance of one or more comparable companies or an index covering multiple
companies. Performance Goals may be particular to a Participant, the Company or
a division, subsidiary or other business segment of the Company, or may be based
on the performance of the Company as a whole.     (iii)   Performance Period;
Timing for Establishing Performance Goals. Achievement of performance goals in
respect of such Performance Awards shall be measured over a performance period
of up to one year or more than one year, as specified by the Committee. A
performance goal shall be established not later than the earlier of (A) 90 days
after the beginning of any performance period applicable to such Performance
Award or (B) the time 25% of such performance period has elapsed.     (iv)  
Performance Award Pool. The Committee may establish a Performance Award pool,
which shall be an unfunded pool, for purposes of measuring performance of

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      the Company in connection with Performance Awards. The amount of such
Performance Award pool shall be based upon the achievement of a performance goal
or goals based on one or more of the business criteria set forth in
Section 7(b)(ii) during the given performance period, as specified by the
Committee in accordance with Section 7(b)(iv). The Committee may specify the
amount of the Performance Award pool as a percentage of any of such business
criteria, a percentage thereof in excess of a threshold amount, or as another
amount which need not bear a strictly mathematical relationship to such business
criteria.

  (v)   Settlement of Performance Awards; Other Terms. Settlement of Performance
Awards shall be in cash, Stock, other Awards or other property, in the
discretion of the Committee. The Committee may, in its discretion, increase or
reduce the amount of a settlement otherwise to be made in connection with such
Performance Awards, but may not exercise discretion to increase any such amount
payable to a Covered Employee in respect of a Performance Award subject to this
Section 7(b) beyond the level of payment authorized for achievement of the
performance goal specified under this Section 7(b) based on the actual level of
achievement of such goal. Any settlement which changes the form of payment from
that originally specified shall be implemented in a manner such that the
Performance Award and other related Awards do not, solely for that reason, fail
to qualify as “performance-based compensation” for purposes of Code
Section 162(m). The Committee shall specify the circumstances in which such
Performance Awards shall be paid or forfeited in the event of termination of
employment by the Participant or other event (including a Change in Control)
prior to the end of a performance period or settlement of such Performance
Awards.

     (c) Written Determinations. Determinations by the Committee as to the
establishment of performance goals, the amount potentially payable in respect of
Performance Awards, the level of actual achievement of the specified performance
goals relating to Performance Awards, and the amount of any final Performance
Award shall be recorded in writing in the case of Performance Awards intended to
qualify under Section 162(m). Specifically, the Committee shall certify in
writing, in a manner conforming to applicable regulations under Section 162(m),
prior to settlement of each such Award granted to a Covered Employee, that the
performance objective relating to the Performance Award and other material terms
of the Award upon which settlement of the Award was conditioned have been
satisfied.
     8. Certain Provisions Applicable To Awards.
     (a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any subsidiary or
affiliate, or any business entity to be acquired by the Company or a subsidiary
or affiliate, or any other right of a Participant to receive payment from the
Company or any subsidiary or affiliate; provided, however, that a 409A Award may
not be granted in tandem with a Non-409A Award. Awards granted in addition to or
in tandem with other Awards or awards may be granted either as of the same time
as or a different time from the grant of such other Awards or awards. Subject to
Sections 11(k) and (l) and subject to the restriction on repricing under
Section 11(e), the Committee may determine that, in granting a new Award, the
in-the-money value or fair value of any surrendered Award or award or the value
of any other right to payment surrendered by the Participant may be applied to
the purchase of any other Award.

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     (b) Term of Awards. The term of each Award shall be for such period as may
be determined by the Committee, subject to the express limitations set forth in
Sections 6(b)(ii), 6(c)(ii) and 8 or elsewhere in the Plan.
     (c) Form and Timing of Payment under Awards; Deferrals. Subject to the
terms of the Plan (including Sections 11(k) and (l)) and any applicable Award
document, payments to be made by the Company or a subsidiary or affiliate upon
the exercise of an Option or other Award or settlement of an Award may be made
in such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a single payment
or transfer, in installments, or on a deferred basis. The settlement of any
Award may be accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one or more
specified events, subject to Sections 11(k) and (l). Subject to Section 11(k),
installment or deferred payments may be required by the Committee (subject to
Section 11(e)) or permitted at the election of the Participant on terms and
conditions established by the Committee. Payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock. In the case of any 409A Award that is vested and no longer
subject to a risk of forfeiture (within the meaning of Code Section 83), such
Award will be distributed to the Participant, upon application of the
Participant, if the Participant has had an unforeseeable emergency within the
meaning of Code Sections 409A(a)(2)(A)(vi) and 409A(a)(2)(B)(ii), in accordance
with Section 409A(a)(2)(B)(ii).
9. Change in Control.
     (a) Effect of “Change in Control.” In the event of a “Change in Control,”
the Committee may provide that any of the following provisions shall apply in
the Award document or otherwise:

  (i)   The lapse of forfeiture conditions and other restrictions applicable to
Awards granted under the Plan , and/or the payment of such Awards as of the time
of the Change in Control or other specified time without regard to vesting or
other conditions, except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in Section 11(a); and     (ii)  
The vesting and exercisability of any Award carrying a right to exercise that
was not previously exercisable and vested as of the time of the Change in
Control and, upon any termination of employment or service by the Participant
other than a termination for cause within two years after the Change in Control,
provision for such Awards to remain outstanding and exercisable until the
earlier of three years after such termination or the stated expiration date of
such Award, subject only to applicable restrictions set forth in Section 11(a);
    (iii)   The lapse of any deferral of settlement terms, forfeiture conditions
and other restrictions applicable to an unvested Award granted under the Plan
and provision for such Awards to be fully payable as of the time of the Change
in Control or other specified time without regard to deferral and vesting
conditions, except to the extent of any waiver by the Participant (if permitted
under Section 409A) and subject to applicable restrictions set forth in
Section 11(a); and     (iv)   With respect to an outstanding Award subject to
achievement of performance goals and conditions, such performance goals and
conditions may be deemed to be met or exceeded.

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provided, however, that no distribution shall occur with respect to a 409A Award
unless the Change in Control also constitutes a 409A Ownership/Control Change.
     (b) Definition of “Change in Control.” “Change in Control” means the
occurrence of any one of the following events after the date of grant of any
affected Award:

  (i)   Any Person (as defined below) has acquired Voting Securities (as defined
below) of the Company and, immediately thereafter, is the “beneficial owner”
(within the meaning of Rule 13d-3, as promulgated under Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Voting
Securities of the Company representing thirty-five (35%) percent or more of the
combined Voting Power (as defined below) of the Company’s securities;     (ii)  
Within any 24-month period, the persons who were directors of the Company
immediately before the beginning of such period (the “Incumbent Directors”)
shall cease (for any reason other than death) to constitute at least a majority
of the Board or the board of directors of any successor to the Company, provided
that any director who was not a director at the beginning of such period shall
be deemed to be an Incumbent Director if such director (A) was elected to the
Board by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors either
actually or by prior operation of this Section 9(b)(ii) and (B) was not
designated by a person who has entered into an agreement with the Company to
effect a Corporate Event, as described in Section 9(b)(iii); or     (iii)   The
stockholders of the Company have approved a merger, consolidation, share
exchange, division, sale or other disposition of all or substantially all of the
assets of the Company, or a complete liquidation of the Company (a “Corporate
Event”), and such Corporate Event has been consummated, except that a Corporate
Event shall not trigger a Change in Control under this clause (iii) if the
shareholders of the Company immediately prior to such Corporate Event shall
hold, directly or indirectly and without substantial change in the proportionate
interest of each shareholder, immediately following such Corporate Event a
majority of the Voting Power of (x) in the case of a merger or consolidation,
the surviving or resulting corporation, (y) in the case of a share exchange, the
acquiring corporation or (z) in the case of a division or a sale or other
disposition of assets, each surviving, resulting or acquiring corporation which,
immediately following the relevant Corporate Event, holds more than 10% of the
consolidated assets of the Company immediately prior to such Event.

For purposes of this Section 9(b), “Person” shall have the meaning ascribed to
such term in Section 3(a)(9) of the Exchange Act, as supplemented by
Section 13(d)(3) of the Exchange Act; provided, however, that Person shall not
include (i) the Company or any subsidiary of the Company or (ii) any employee
benefit plan sponsored by the Company or any subsidiary of the Company. For
purposes of this Section 9(b), a specified percentage of “Voting Power” of a
company shall mean such number of the Voting Securities as shall enable the
holders thereof to cast such percentage of all the votes which could be cast in
an annual election of directors (without consideration of the rights of any
class of stock other than the common stock of the company to elect directors by
a separate class vote); and “Voting Securities” shall mean all securities of a
company entitling the holders thereof to vote in an annual election of directors
(without consideration of the rights of any class of stock other than the common
stock of the company to elect directors by a separate class vote).

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     (c) Definition of “409A Ownership/Control Change.” A “409A
Ownership/Control Change” shall be deemed to have occurred if a Change in
Control occurs which involves transactions which constitute a change in the
ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, within the meaning of Code
Section 409A(a)(2)(A)(v).
     10. Additional Award Forfeiture Provisions.
     The Committee may condition a Participant’s right to receive a grant of an
Award, to exercise the Award, to retain cash, Stock, other Awards, or other
property acquired in connection with an Award, or to retain the profit or gain
realized by a Participant in connection with an Award, including cash or other
proceeds received upon sale of Stock acquired in connection with an Award, upon
compliance by the Participant with specified conditions relating to
non-competition, confidentiality of information relating to or possessed by the
Company, non-solicitation of customers, suppliers, and employees of the Company,
cooperation in litigation, non-disparagement of the Company and its subsidiaries
and affiliates and the officers, directors and affiliates of the Company and its
subsidiaries and affiliates, and other restrictions upon or covenants of the
Participant, including during specified periods following termination of
employment or service to the Company.
     11. General Provisions.
     (a) Compliance with Legal and Other Requirements. The Company may, to the
extent deemed necessary or advisable by the Committee and subject to
Section 11(k), postpone the issuance or delivery of Stock or payment of other
benefits under any Award until completion of such registration or qualification
of such Stock or other required action under any federal or state law, rule or
regulation, listing or other required action with respect to any stock exchange
or automated quotation system upon which the Stock or other securities of the
Company are listed or quoted, or compliance with any other obligation of the
Company, as the Committee may consider appropriate, and may require any
Participant to make such representations, furnish such information and comply
with or be subject to such other conditions as it may consider appropriate in
connection with the issuance or delivery of Stock or payment of other benefits
in compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations. The foregoing notwithstanding, in connection
with a Change in Control, the Company shall take or cause to be taken no action,
and shall undertake or permit to arise no legal or contractual obligation, that
results or would result in any postponement of the issuance or delivery of Stock
or payment of benefits under any Award or the imposition of any other conditions
on such issuance, delivery or payment, to the extent that such postponement or
other condition would represent a greater burden on a Participant than existed
on the 90th day preceding the Change in Control.
     (b) Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Company or a subsidiary or affiliate
thereof), or assigned or transferred by such Participant otherwise than by will
or the laws of descent and distribution or to a Beneficiary upon the death of a
Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his
or her guardian or legal representative, except that Awards and other rights
(other than ISOs and SARs in tandem therewith) may be transferred to one or more
transferees during the lifetime of the Participant for purposes of
estate-planning, and may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent such transfers are permitted
by the Committee and the Committee has determined that there will be no transfer
of the Award to a third party for value, and subject to any terms and conditions
which the Committee may impose thereon (which may include limitations the
Committee may deem appropriate in order that offers and sales under the Plan
will meet

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applicable requirements of registration forms under the Securities Act of 1933
specified by the Securities and Exchange Commission). A Beneficiary, transferee,
or other person claiming any rights under the Plan from or through any
Participant shall be subject to all terms and conditions of the Plan and any
Award document applicable to such Participant, except as otherwise determined by
the Committee, and to any additional terms and conditions deemed necessary or
appropriate by the Committee.
     (c) Adjustments. In the event that any large, non-recurring dividend or
other distribution (whether in the form of cash or property other than Stock),
recapitalization, forward or reverse split, Stock dividend, reorganization,
merger, consolidation, spinoff, combination, repurchase, share exchange,
liquidation, dissolution, equity restructuring as defined under FAS 123R, or
other similar corporate transaction or event affects the Stock such that an
adjustment is determined by the Committee to be appropriate or, in the case of
any outstanding Award, which is necessary in order to prevent dilution or
enlargement of the rights of the Participant, then the Committee shall, in an
equitable manner as determined by the Committee, adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, including the number of shares available under
Section 4, (ii) the number and kind of shares of Stock by which annual
per-person Award limitations are measured under Section 5, (iii) the number and
kind of shares of Stock subject to or deliverable in respect of outstanding
Awards, (iv) the exercise price, grant price or purchase price relating to any
Award or, if deemed appropriate, the Committee may make provision for a payment
of cash or property to the holder of an outstanding Option (subject to
Section 11(l)), and (v) the performance goals or conditions of outstanding
Awards that are based on share prices. In addition, the Committee is authorized
to make adjustments in the terms and conditions of, and the criteria included
in, Awards (including Performance Awards and performance goals and any
hypothetical funding pool relating thereto) in recognition of unusual or
nonrecurring events (including, without limitation, events described in the
preceding sentence, as well as acquisitions and dispositions of businesses and
assets) affecting the Company, any subsidiary or affiliate or other business
unit, or the financial statements of the Company or any subsidiary or affiliate,
or in response to changes in applicable laws, regulations, accounting
principles, tax rates and regulations or business conditions or in view of the
Committee’s assessment of the business strategy of the Company, any subsidiary
or affiliate or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that the existence of such authority
(i) would cause Options, SARs, or Performance Awards granted under the Plan to
Participants designated by the Committee as Covered Employees and intended to
qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder to otherwise fail to qualify as “performance-based
compensation” under Code Section 162(m) and regulations thereunder, or
(ii) would cause the Committee to be deemed to have authority to change the
targets, within the meaning of Treasury Regulation 1.162-27(e)(4)(vi), under the
performance goals relating to Options or SARs granted to Covered Employees and
intended to qualify as “performance-based compensation” under Code Section
162(m) and regulations thereunder.
     (d) Tax Provisions.

  (i)   Withholding. The Company and any subsidiary or affiliate is authorized
to withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to

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      withhold or receive Stock or other property and to make cash payments in
respect thereof in satisfaction of a Participant’s withholding obligations,
either on a mandatory or elective basis in the discretion of the Committee, or
in satisfaction of other tax obligations. Other provisions of the Plan
notwithstanding, only the minimum amount of Stock deliverable in connection with
an Award necessary to satisfy statutory withholding requirements will be
withheld, unless withholding of any additional amount of Stock will not result
in additional accounting expense to the Company.

  (ii)   Required Consent to and Notification of Code Section 83(b) Election. No
election under Section 83(b) of the Code (to include in gross income in the year
of transfer the amounts specified in Code Section 83(b)) or under a similar
provision of the laws of a jurisdiction outside the United States may be made
unless expressly permitted by the terms of the Award document or by action of
the Committee in writing prior to the making of such election. In any case in
which a Participant is permitted to make such an election in connection with an
Award, the Participant shall notify the Company of such election within ten days
of filing notice of the election with the Internal Revenue Service or other
governmental authority, in addition to any filing and notification required
pursuant to regulations issued under Code Section 83(b) or other applicable
provision.     (iii)   Requirement of Notification Upon Disqualifying
Disposition Under Code Section 421(b). If any Participant shall make any
disposition of shares of Stock delivered pursuant to the exercise of an ISO
under the circumstances described in Code Section 421(b) (i.e., a disqualifying
disposition), such Participant shall notify the Company of such disposition
within ten days thereof.

     (e) Changes to the Plan. The Board may amend, suspend or terminate the Plan
or the Committee’s authority to grant Awards under the Plan without the consent
of shareholders or Participants; provided, however, that any amendment to the
Plan shall be submitted to the Company’s shareholders for approval not later
than the earliest annual meeting for which the record date is at or after the
date of such Board action if such shareholder approval is required by any
federal or state law or regulation or the rules of the New York Stock Exchange ,
or if such amendment would materially increase the number of shares reserved for
issuance and delivery under the Plan, and the Board may otherwise, in its
discretion, determine to submit other amendments to the Plan to shareholders for
approval. The Committee is authorized to amend outstanding awards, except as
limited by the Plan. The Board and Committee may not amend outstanding Awards
(including by means of an amendment to the Plan) without the consent of an
affected Participant if such an amendment would materially and adversely affect
the rights of such Participant with respect to the outstanding Award (for this
purpose, actions that alter the timing of federal income taxation of a
Participant will not be deemed material unless such action results in an income
tax penalty on the Participant, and any discretion that is reserved by the Board
or Committee with respect to an Award is unaffected by this provision). Without
the approval of shareholders, the Committee will not amend or replace previously
granted Options or SARs in a transaction that constitutes a “repricing,” which
for this purpose means any of the following or any other action that has the
same effect:

  •   Lowering the exercise price of an option or SAR after it is granted;     •
  Any other action that is treated as a repricing under generally accepted
accounting principles;     •   Canceling an option or SAR at a time when its
exercise price exceeds the fair market value of the underlying Stock, in
exchange for another option or SAR, restricted stock, other equity, cash or
other property; this shareholder approval requirement will apply to

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      any repurchase or buyout of such an option or SAR authorized under any
other provision of the Plan;

provided, however, that the foregoing transactions shall not be deemed a
repricing if pursuant to an adjustment authorized under Section 11(c). With
regard to other terms of Awards, the Committee shall have no authority to waive
or modify any such Award term after the Award has been granted to the extent the
waived or modified term would be mandatory under the Plan for any Award newly
granted at the date of the waiver or modification. A cancellation and exchange
described in clause (iii) of the preceding sentence will be considered a
repricing regardless of whether the Option, Restricted Stock or other equity is
delivered simultaneously with the cancellation, regardless of whether it is
treated as a repricing under generally accepted accounting principles, and
regardless of whether it is voluntary on the part of the Participant.
     (f) Right of Setoff. The Company or any subsidiary or affiliate may, to the
extent permitted by applicable law, deduct from and set off against any amounts
the Company or a subsidiary or affiliate may owe to the Participant from time to
time, including amounts payable in connection with any Award, owed as wages,
fringe benefits, or other compensation owed to the Participant, such amounts as
may be owed by the Participant to the Company, including but not limited to
amounts owed under Section 10(a), although the Participant shall remain liable
for any part of the Participant’s payment obligation not satisfied through such
deduction and setoff. By accepting any Award granted hereunder, the Participant
agrees to any deduction or setoff under this Section 11(f).
     (g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the creation
of trusts and deposit therein cash, Stock, other Awards or other property, or
make other arrangements to meet the Company’s obligations under the Plan. Such
trusts or other arrangements shall be consistent with the “unfunded” status of
the Plan unless the Committee otherwise determines with the consent of each
affected Participant.
     (h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Company for approval shall
be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements, apart from the
Plan, as it may deem desirable, including incentive arrangements and awards
which do not qualify under Code Section 162(m), and such other arrangements may
be either applicable generally or only in specific cases.
     (i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash consideration, the Participant
shall be repaid the amount of such cash consideration. No fractional shares of
Stock shall be issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.
     (j) Compliance with Code Section 162(m). It is the intent of the Company
that Options and SARs granted to Covered Employees and other Awards designated
as Awards to Covered Employees subject to Section 7 shall constitute qualified
“performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder, unless otherwise determined by the Committee at the time
of allocation of an Award. Accordingly, the

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terms of Sections 7(b) and (c), including the definitions of Covered Employee
and other terms used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder. The foregoing notwithstanding,
because the Committee cannot determine with certainty whether a given
Participant will be a Covered Employee with respect to a fiscal year that has
not yet been completed, the term Covered Employee as used herein shall mean only
a person designated by the Committee as likely to be a Covered Employee with
respect to a specified fiscal year. If any provision of the Plan or any Award
document relating to a Performance Award that is designated as intended to
comply with Code Section 162(m) does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder, such provision
shall be construed or deemed amended to the extent necessary to conform to such
requirements, and no provision shall be deemed to confer upon the Committee or
any other person discretion to increase the amount of compensation otherwise
payable in connection with any such Award upon attainment of the applicable
performance objectives.
(k) Certain Limitations on Awards to Ensure Compliance with Section 409A.

  (i)   409A Awards and Deferrals. Other provisions of the Plan notwithstanding,
the terms of any 409A Award (which for this purpose means only such an Award
held by an employee subject to United States federal income tax), including any
authority of the Company and rights of the Participant with respect to the 409A
Award, shall be limited to those terms permitted under Section 409A, and any
terms not permitted under Section 409A shall be automatically modified and
limited to the extent necessary to conform with Section 409A. The following
rules will apply to 409A Awards:

  (A)   If a Participant is permitted to elect to defer an Award or any payment
under an Award, such election will be permitted only at times in compliance with
Section 409A (including transition rules thereunder);     (B)   The Committee
may, in its discretion, require or permit on an elective basis a change in the
distribution terms applicable to 409A Awards (and Non-409A Awards that qualify
for the short-term deferral exemption under Section 409A) during 2007] in
accordance with, and to the fullest extent permitted by, Proposed Treasury
Regulation § 1.409A (including Preamble § XI.C) and IRS Notice 2005-1 and IRS
Notice 2006-79, and at any other time in accordance with Section 409A and
guidance thereunder. The Director of Human Resources of the Company is
authorized to modify any such outstanding Awards to permit election of different
deferral periods provided that any such modifications may not otherwise increase
the benefits to Participants or the costs of such Awards to the Company;     (C)
  The Company shall have no authority to accelerate distributions relating to
409A Awards in excess of the authority permitted under Section 409A;     (D)  
Any distribution of a 409A Award triggered by a Participant’s termination of
employment and intended to qualify under Section 409A(a)(2)(A)(i) shall be made
only at the time that the Participant has had a “separation from service” within
the meaning of Section 409A(a)(2)(A)(i) (or earlier at such time, after a
termination of employment, that there occurs another event triggering a
distribution under the Plan or the applicable Award agreement in compliance with
Section 409A);

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  (E)   Any distribution of a 409A Award subject to Section 409A(a)(2)(A)(i)
that would be made within six months following a separation from service of a
“Specified Employee” (or “key employee”) as defined under
Section 409A(a)(2)(B)(i) shall instead occur at the expiration of the six-month
period under Section 409A(a)(2)(B)(i). In the case of installments, this delay
shall not affect the timing of any installment otherwise payable after the
six-month delay period;     (F)   In the case of any distribution of a 409A
Award, if the timing of such distribution is not otherwise specified in the Plan
or an Award agreement or other governing document, the distribution shall be
made not later than 75 days after the date at which the settlement of the Award
is specified to occur;     (G)   If any portion of an Award that is scheduled to
vest at a single specified date (a vesting “tranche”) is partly deemed a 409A
Award and partly deemed exempt from Section 409A (as a short-term deferral or
otherwise), the time of settlement of the entire tranche will be governed by the
distribution rules applicable to the 409A Award [(except to the extent that this
rule cannot apply to a distribution that would otherwise occur in 2007; and    
(H)   The rules applicable to 409A Awards under this Section 11(k)(i) constitute
further restrictions on terms of Awards set forth elsewhere in this Plan. Thus,
for example, a 409A Option/SAR shall be subject to restrictions, including
restrictions on rights otherwise specified in Section 6(b) or 6(c), in order
that such Award shall not result in constructive receipt of income before
exercise or tax penalties under Section 409A.

  (ii)   Rules Applicable to Non-409A Options/SARs. With respect to Non-409A
Options/ SARs, in applying Code Sections 1563(a)(1), (2) and (3) for purposes of
determining a controlled group of corporations under Code Section 414(b), the
language “at least 20 percent” shall be used instead of “at least 80 percent” at
each place it appears in Sections 1563(a)(1), (2) and (3), and in applying
Treasury Regulation § 1.414(c)-2 (or any successor provision) for purposes of
determining trades or businesses (whether or not incorporated) that are under
common control for purposes of Section 414(c), the language “at least
20 percent” shall be used instead of “at least 80 percent” at each place it
appears in Treasury Regulation §1.414(c)-2.     (iii)   Distributions Upon
Vesting. In the case of any Award providing for a distribution upon the lapse of
a risk of forfeiture, if the timing of such distribution is not otherwise
specified in the Plan or an Award agreement or other governing document, the
distribution shall be made not later than March 15 of the year following the
year in which the risk of forfeiture lapsed.     (iv)   Scope and Application of
this Provision. For purposes of this Section 11(k), references to a term or
event (including any authority or right of the Company or a Participant) being
“permitted” under Section 409A mean that the term or event will not cause the
Participant to be deemed to be in constructive receipt of compensation relating
to the 409A Award prior to the distribution of cash, shares or other property or
to be liable for payment of interest or a tax penalty under Section 409A.

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     (l) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan and any Award document shall be
determined in accordance with the laws of the State of New Jersey, without
giving effect to principles of conflicts of laws, and applicable provisions of
federal law.
     (m) Awards to Participants Outside the United States. The Committee may
modify the terms of any Award under the Plan made to or held by a Participant
who is then resident or primarily employed outside of the United States, or
establish one or more sub-plans for such participants, in any manner deemed by
the Committee to be necessary or appropriate in order that such Award shall
conform to laws, regulations, and customs of the country in which the
Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant’s residence or
employment abroad shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the United States. An Award
may be modified under this Section 11(m) in a manner that is inconsistent with
the express terms of the Plan, so long as such modifications will not contravene
any applicable law or regulation or result in actual liability under Section
16(b) for the Participant whose Award is modified.
     (n) Limitation on Rights Conferred under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Company or a subsidiary or affiliate, (ii) interfering
in any way with the right of the Company or a subsidiary or affiliate to
terminate any Eligible Person’s or Participant’s employment or service at any
time (subject to the terms and provisions of any separate written agreements),
(iii) giving an Eligible Person or Participant any claim to be granted any Award
under the Plan or to be treated uniformly with other Participants and employees,
or (iv) conferring on a Participant any of the rights of a shareholder of the
Company unless and until the Participant is duly issued or transferred shares of
Stock in accordance with the terms of an Award or an Option is duly exercised.
Except as expressly provided in the Plan and an Award document, neither the Plan
nor any Award document shall confer on any person other than the Company and the
Participant any rights or remedies thereunder. Any Award shall not be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or any subsidiary or affiliate and shall not affect any benefits under
any other benefit plan at any time in effect und which the availability or
amount of benefits is related to the level of compensation (unless required by
any such other plan or arrangement with specific reference to Awards under this
Plan).
     (o) Severability. If any of the provisions of this Plan or any Award
document is finally held to be invalid, illegal or unenforceable (whether in
whole or in part), such provision shall be deemed modified to the extent, but
only to the extent, of such invalidity, illegality or unenforceability, and the
remaining provisions shall not be affected thereby; provided, that, if any of
such provisions is finally held to be invalid, illegal, or unenforceable because
it exceeds the maximum scope determined to be acceptable to permit such
provision to be enforceable, such provision shall be deemed to be modified to
the minimum extent necessary to modify such scope in order to make such
provision enforceable hereunder. The Plan and any Award documents contain the
entire agreement of the parties with respect to the subject matter thereof and
supersede all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them, whether written or
oral with respect to the subject matter thereof. No rule of strict construction
shall be applied against the Company, the Committee, or any other person in the
interpretation of any terms of the Plan, Award, or agreement or other document
relating thereto.
     (p) Plan Effective Date and Termination. The Plan shall become effective
if, and at such time as, the shareholders of the Company have approved it by a
majority of the votes

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cast at a meeting of shareholders by the holders of shares entitled to vote
thereon, provided that the total vote cast on the proposal represents over 50%
in interest of all securities entitled to vote on the proposal. The date of such
shareholder approval shall be the Effective Date. Upon such approval of the Plan
by the shareholders of the Company, no further awards shall be granted under the
Employee and Outside Director Long-Term Incentive Compensation Plan, but any
outstanding awards under that plan shall continue in accordance with their
terms. Unless earlier terminated by action of the Board of Directors, the
authority to make new grants under the Plan shall terminate on the date that is
ten years after the latest date upon which shareholders of the Company have
approved the Plan, and the Plan will remain in effect until such time as no
Stock remains available for delivery under the Plan and the Company has no
further rights or obligations under the Plan with respect to outstanding Awards
under the Plan.

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