Exhibit 10

KEY EXECUTIVE SEVERANCE PLAN OF

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Amended effective December 1, 2009

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TABLE OF CONTENTS

 

         Page  

ARTICLE I

PURPOSE OF THE PLAN

   1.1   Purpose      1   

ARTICLE II

DEFINITIONS

   2.1   “Accrued Obligation”      1    2.2   “Affiliate”      1    2.3  
“Annual Base Salary”      1    2.4   “Board”      1    2.5   “Cause”      1   
2.6   “Change in Control”      2    2.7   “Code”      3    2.8   “Committee”   
  3    2.9   “Company”      3    2.10   “Confidential Information”      3   
2.11   “Date of Termination”      4    2.12   “Disability”      4    2.13  
“Disability Effective Date”      4    2.14   “Eligible Employee”      4    2.15
  “Effective Date”      4    2.16   “Employer”      4    2.17   “Good Reason”   
  4    2.18   “Other Benefits”      5    2.19   “Participant”      5    2.20  
“Plan”      5    2.21   “Prior Equity Awards”      5    2.22   “Retirement”     
5    2.23   “Schedule A Participant”      5    2.24   “Schedule B Participant”
     5    2.25   “Specified Employee”      6   

 

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2.26   “Target Bonus”      6    2.27   “Target Long-Term Incentive”      6   

ARTICLE III

ELIGIBILITY AND PARTICIPATION

   3.1   Eligible Employees      6    3.2   Participation      6    3.3  
Release of Claims      6   

ARTICLE IV

SEVERANCE BENEFITS IN GENERAL

   4.1   Termination by Employer Other than for Cause      7    4.2  
Termination where a Participant experiences a cessation of employment in
connection with a reduction in force or Employer reorganization where the only
position offered to the Participant within the Company and Affiliates would
require the Participant to increase his or her one-way commuting distance by
more than 50 miles      9   

ARTICLE V

SEVERANCE BENEFITS AFTER A CHANGE IN CONTROL

   5.1   Termination By Employer Other Than For Cause or By Participant For Good
Reason (other than Good Reason as described in Subsection 2.17(d)) Within Two
Years After a Change in Control      12    5.2   Termination By Participant For
Good Reason as described in Subsection 2.17(d) Within Two Years After a Change
in Control      14    5.3   Termination By Employer For Cause or By Participant
Other Than For Good Reason      16    5.4   Death      16    5.5   Disability   
  17    5.6   Retirement      17   

ARTICLE VI

TIMING OF, LIMITATIONS ON AND ADJUSTMENTS TO PLAN PAYMENTS

   6.1   Time of Payments      17    6.2   Payment Offsets      17    6.3   Cap
on Excess Parachute Payments; Gross-Up Payments      17    6.4   Code Section
409A Compliance      18    6.5   Tax Withholding      18   

ARTICLE VII

RESTRICTIVE COVENANTS

  

 

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7.1   Confidentiality      18    7.2   Non-Compete      19    7.3  
Non-Solicitation      19    7.4   Enforcement      19   

ARTICLE VIII

AMENDMENT AND TERMINATION

   8.1   Amendment      19    8.2   Termination      20   

ARTICLE IX

ADMINISTRATION

   9.1   Plan Administrator      20    9.2   Responsibilities of Committee     
20    9.3   Allocation or Delegation of Duties and Responsibilities      20   
9.4   Expenses      21    9.5   Indemnification of Plan Administrator      21   
9.6   Reliance Upon Others      21    9.7   Notification      21    9.8  
Multiple Capacities      21   

ARTICLE X

CLAIMS PROCEDURE

   10.1   Submission of Claims      21    10.2   Computation and Review of
Claims      22   

ARTICLE XI

GENERAL PROVISIONS

   11.1   Construction      23    11.2   Unfunded Plan      23    11.3   No
Right to Continued Employment      23    11.4   Partial Invalidity      23   
11.5   Successors and Assigns      23    11.6   Waivers      24    11.7   Gender
and Number      24    11.8   Headings      24   

 

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Schedule A    Participants      25    Schedule B    Participants      26   
Exhibit I    Form of Restrictive Covenant Agreement      27    Exhibit II   
Form of Separation Agreement and General Release      29   

 

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ARTICLE I

PURPOSE OF THE PLAN

1.1 Purpose This Key Executive Severance Plan was established by the Company to
provide severance benefits to certain key executive-level employees of the
Company and its affiliates whose employment is terminated under the
circumstances described herein.

The American Jobs Creation Act of 2004 (the “AJCA”), which became law on
October 22, 2004, added new section 409A to the Code and imposes new
restrictions on deferred compensation, including certain severance arrangements.
It further provides that payments upon a separation from service will meet the
requirements of Code Section 409A only to the extent provided by guidance issued
by the Department of Treasury where such payments are made due to a change in
the ownership or effective control of the Company. The AJCA and any Treasury
guidance issued to implement the AJCA may result in additional restrictions on a
Participant’s rights relating to compensation considered to be deferred under
this Plan. This Plan automatically incorporates all applicable restrictions of
the AJCA and such regulations, and the Company will amend the Plan from time to
time to the extent necessary to comply with those requirements. The timing under
which a Participant will have a right to receive any payment under this Plan
will be deemed to be automatically modified, and a Participant’s rights under
the Plan limited to conform to any requirements under the AJCA and such
regulations.

ARTICLE II

DEFINITIONS

2.1 “Accrued Obligation” shall have the meaning set forth in Section 4.1(i)(A)
or Section 5.1(i)(A), as applicable.

2.2 “Affiliate” means any corporation, trade or business if it or the Company
are members of a controlled group of corporations, are under common control or
are members of an affiliated service group, within the meanings of Sections
414(b), 414(c) and 414(m), respectively, of the Code. The term “Affiliate” shall
also include any other entity required to be aggregated with the Company
pursuant to regulations under Section 414(o) of the Code.

2.3 “Annual Base Salary” means the annual rate of base salary payable to a
Participant for services performed for an Employer, as in effect immediately
prior to the Participant’s Date of Termination.

2.4 “Board” means the board of directors of the Company.

2.5 “Cause” means (a) the willful and continued failure by a Participant to
substantially perform his employment duties, (b) the willful engaging by the
Participant in gross misconduct that is materially and demonstrably injurious to
the Employer, (c) the willful violation of the Company’s Standards of Integrity
or other applicable corporate code of conduct, or (d) the conviction of the
Participant on or pleas of nolo contetendere to a felony charge. No act or
failure to act on the part of the Participant shall be considered “willful”
unless it is done, or omitted to be done, by the Participant in bad faith or
without reasonable belief that the

 

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Participant’s action or omission was in the best interests of the Employer. Any
act or failure to act that is based upon authority given pursuant to a
resolution duly adopted by the Board, or the advice of counsel for the Employer,
shall be conclusively presumed to be done, or omitted to be done, by the
Participant in good faith and in the best interests of the Employer.

Notwithstanding the forgoing, for purposes of the Plan, the termination of a
Participant’s employment with an Employer shall not be deemed to be for Cause
unless such termination is effected in accordance with the following procedures.
The Employer shall give the Participant written notice (“Notice of Termination
for Cause”) of its intention to terminate the Participant’s employment for
Cause, setting forth in reasonable detail the specific conduct of the
Participant that it considers to constitute Cause. Such notice shall be given no
later than 60 days after the act or failure (or the last in a series of acts or
failures) that the Employer alleges to constitute Cause. The Participant shall
have 30 days after receiving the Notice of Termination for Cause in which to
cure such act or failure, to the extent such cure is possible. In the case of a
termination under clause (a), (b) or (c) above, if the Participant fails to cure
such act or failure to the reasonable satisfaction of the Employer, the Employer
shall give the Participant a second written notice stating that in the good
faith opinion of the Employer, the Participant is guilty of the conduct
described in the Notice of Termination for Cause and that such conduct
constitutes Cause under the Plan.

2.6 “Change in Control” means the occurrence of any of the following events:

(a) any “person” (within the meaning of Section 13(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) is or becomes the beneficial owner
within the meaning of Rule 13d-3 under the Exchange Act (a “Beneficial Owner”),
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired directly
from the Company or its Affiliates) representing 25% or more of the combined
voting power of the Company’s then outstanding securities, excluding any person
who becomes such a Beneficial Owner in connection with a transaction described
in clause (i) of paragraph (c) below; or

(b) the following individuals cease for any reason to constitute a majority of
the number of directors of the Company then serving: individuals who, on the
Effective Date, constitute the Board and any new director (other than a director
whose initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company’s stockholders was approved
or recommended by a vote of at least two-thirds of the directors then still in
office who either were directors on the Effective Date or whose appointment,
election or nomination for election was previously so approved or recommended;
or

(c) there is consummated a merger or consolidation of the Company or any direct
or indirect wholly-owned subsidiary of the Company with any other corporation,
other than (i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of

 

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the surviving entity or any parent thereof), in combination with the ownership
of any trustee or other fiduciary holding securities under an employee benefit
plan of the Company or of its Affiliates, at least 75% of the combined voting
power of the securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company’s then outstanding securities; or

(d) the shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, at least 75% of the combined voting power of
the voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.

2.7 “Code” means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.

2.8 “Committee” means the Organization and Compensation Committee of the Board
or any successor of such Committee.

2.9 “Company” means Public Service Enterprise Group Incorporated and any
successors thereto.

2.10 “Confidential Information” means all trade secrets, proprietary and
confidential business information belonging to, used by, or in the possession of
the Company or any of its Affiliates, including but not limited to information,
knowledge or data related to business strategies, plans and financial
information, mergers, acquisitions or consolidations, purchase or sale of
property, leasing, pricing, sales programs or tactics, actual or past sellers,
purchasers, lessees, lessors or customers, those with whom the Company or its
Affiliates has begun negotiations for new business, costs, employee
compensation, marketing and development plans, inventions and technology,
whether such confidential information, knowledge or data is oral, written or
electronically recorded or stored, except information in the public domain,
information known by the Participant prior to employment with an Employer, and
information received by the Participant from sources other than the Company or
its Affiliates, without obligation of confidentiality.

 

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2.11 “Date of Termination” means the date of a Participant’s death, Disability
Effective Date, or the date on which the termination of the Participant’s
employment by an Employer for Cause or without Cause or by the Participant for
Good Reason or without Good Reason, including Retirement, is effective, as the
case may be.

2.12 “Disability” means that the Participant (a) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (b) is, by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a period of not
less than three months under an accident or health plan covering employees of an
Employer.

2.13 “Disability Effective Date” means the 30th day after the Participant’s
receipt of written notice of the Employer’s intention to terminate the
Participant’s employment on account of Disability, provided that, within the 30
days after the Participant’s receipt of such notice, the Participant shall not
have returned to full-time performance of his employment duties.

2.14 “Eligible Employee” means an individual who is designated as such in
accordance with Section 3.1.

2.15 “Effective Date” means the effective date of the Plan, December 20, 2004.

2.16 “Employer” means the Company and each Affiliate, and any successors
thereto.

2.17 “Good Reason” means,

(a) any reduction in the Participant’s Annual Base Salary, Target Bonus or
Target Long-Term Incentive, other than reductions pursuant to a broad-based
compensation reduction program or policy affecting the Participant and all
similarly situated employees of the Employer;

(b) any adverse change in the Participant’s title, authority, duties, or
responsibilities or the assignment to the Participant of any duties or
responsibilities inconsistent in any respect with those customarily associated
with the position of the Participant immediately prior to the Change in Control;

(c) the failure of any successor to the Company to assume this Plan in
accordance with Section 11.5(b);

(d) where the only comparable position offered to the Participant within the
Employer following a change in control would not otherwise meet the requirements
of subsections (a) and (b) of this section 2.17, but would require the
Participant to increase his or her one-way commuting distance from his or her
principal residence by more than 50 miles; or

 

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(e) any other material breach of the terms of the Plan by the Company that
either is not taken in good faith or, even if taken in good faith, is not
remedied by the Company promptly after receipt of notice thereof from the
Participant.

Notwithstanding the forgoing, for purposes of the Plan, the termination of a
Participant’s employment with an Employer shall not be deemed to be for Good
Reason unless such termination is effected in accordance with the following
procedures. The Participant shall give his Employer a written notice (“Notice of
Termination for Good Reason”) of the termination, setting forth in reasonable
detail the specific acts or omissions of the Employer that constitute Good
Reason and the specific provision(s) of the Plan on which the Participant
relies. Unless the Committee determines otherwise, a Notice of Termination for
Good Reason by the Participant must be made within 60 days after the Participant
first has actual knowledge of the act or omission (or the last in a series of
acts or omissions) that the Participant alleges to constitute Good Reason, and
the Employer shall have 30 days from the receipt of such Notice of Termination
for Good Reason to cure the conduct cited therein. A termination of employment
by the Participant for Good Reason shall be effective on the final day of such
30-day cure period unless prior to such time the Employer has cured the specific
conduct asserted by the Participant to constitute Good Reason to the reasonable
satisfaction of the Participant.

For purposes of the Plan, a Participant’s determination that an act or failure
to act constitutes Good Reason shall be presumed to be valid unless such
determination is decided to be unreasonable by the Committee or its delegate
pursuant to Article IX.

2.18 “Other Benefits” shall have the meaning set forth in Section 5.1, as
applicable.

2.19 “Participant” means an Eligible Employee who has satisfied the conditions
for participation in the Plan, as set out in Section 3.2, and is listed on
either Schedule A or Schedule B hereto, as the same may be amended from time to
time.

2.20 “Plan” means this Key Executive Severance Plan of Public Service Enterprise
Group Incorporated, as set forth herein and as may be amended, modified or
supplemented from time to time.

2.21 “Prior Equity Awards” shall have the meaning set forth in Article V.

2.22 “Retirement” means retirement under the terms of the Retirement Plan, as
defined in Article V; except, however, that the term “Retirement” for the
purposes of determining benefit entitlements under Article V shall not include
forced retirements or any termination by an Employer without Cause or voluntary
termination by the Participant for Good Reason that occurs on a date on which
the Participant is Retirement eligible.

2.23 “Schedule A Participant” shall mean a Participant listed on Schedule A
hereto.

2.24 “Schedule B Participant” shall mean a Participant listed on Schedule B
hereto.

 

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2.25 “Specified Employee” shall mean any individual who is a key employee (as
defined in Section 416(i) of the Code without regard to Section 416(i)(5)) of
the Code) of the Company at any time during the 12-month period ending on each
December 31 (the “identification date”). If an individual is a key employee as
of an identification date, the individual shall be treated as a Specified
Employee for the 12-month period beginning on the April 1 following the
identification date. Notwithstanding the foregoing, an individual shall not be
treated as a Specified Employee unless any stock of the Company or an Affiliate
is publicly traded on an established securities market or otherwise.

2.26 “Target Bonus” means the Participant’s target annual bonus, if any, under
the applicable annual incentive compensation plan of the Company for the fiscal
year in which the Date of Termination occurs.

2.27 “Target Long-Term Incentive” means the Participant’s target long-term
incentive award, if any, under the applicable long-term incentive compensation
plan of the Company.

ARTICLE III

ELIGIBILITY AND PARTICIPATION

3.1 Eligible Employees. Eligibility to participate in the Plan shall be limited
to certain key executives of an Employer who (a) are not parties to individual
employment or change in control agreements that provide for severance benefits,
and (b) are designated, by duly adopted resolution of the Committee, as Eligible
Employees.

3.2 Participation. As a condition to becoming a Participant and being entitled
to the benefits and protections provided under the Plan, each Eligible Employee
must execute and deliver to the Company, within 30 days after the later of the
Effective Date and the date such individual is designated by the Committee as an
Eligible Employee, a written agreement in the form attached hereto as Exhibit I
(or in such other form as may be satisfactory to the Company) to be bound by the
restrictive covenants set forth in Article VII. Schedules A and B hereto list
the Eligible Employees who have satisfied the conditions for Plan participation
and the date as of which each such Eligible Employee became a Participant. The
Committee shall cause Schedules A and B to be updated from time to time to
reflect the Participants who are currently participating in the Plan.

3.3 Release of Claims. Notwithstanding anything in the Plan to the contrary,
payment of any benefits under the Plan is expressly contingent upon the
Participant’s execution and delivery to the Company, within 30 days after the
Participant’s Date of Termination, of a written agreement, in the form attached
hereto as Exhibit II (or in such other form as may be satisfactory to the
Company) wherein the Participant releases and discharges the Company and each of
its Affiliates of any and all claims against the Company and its Affiliates
related in any way to the Participant’s employment with an Employer and the
termination of such employment.

 

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ARTICLE IV

SEVERANCE BENEFITS IN GENERAL

4.1 Termination by Employer Other than for Cause. Subject to Section 3.3
Section 4.2, Article V and Article VI, if a Participant’s employment is
involuntarily terminated by an Employer due to a reduction in force or a
reorganization of the Employer (or a Participant experiences a cessation of
employment in connection with a reduction in force or Employer reorganization
where the only position offered to the Participant within the Company and
Affiliates would require the Participant to accept a reduction in his or her
annual rate of base salary of more than 20% below the annual rate of base salary
of the Participant’s position immediately prior to such action):

(a) the Company shall pay to the Participant, in a lump sum in cash, the
aggregate of the amounts set forth in clauses (A) and (B) below (provided,
however, that the following occurrences shall not constitute a termination of
employment for purposes of this Article IV: (i) an involuntary termination of
employment for Cause; (ii) an involuntary termination of employment resulting
from the Participant’s unsatisfactory performance documented in accordance with
his or her Employer’s customary practice; (iii) a cessation of employment with
an Employer as the result of the Participant’s death, disability (as defined in
the Company’s long-term disability plan) or Retirement; or (iv) a cessation of
employment in connection with the sale of the Participant’s Employer, line or
unit of business of the Employer within which the Participant’s position is
located, business function of the Employer within which the Participant’s
position is located, or the assets related to the Employer, line or unit or
business, or business function within which the Participant’s position is
located, and the Participant accepts employment with the purchaser within 90
days of the closing of the transaction in a position that has an annual rate of
base salary that is at least 80 percent of the Participant’s annual rate of base
salary immediately prior to the closing of the sale):

 

  (A) The sum of:

 

  (1) the Participant’s base salary through the Date of Termination;

 

  (2) the product of (x) the Participant’s Target Bonus and (y) a fraction, the
numerator of which is the number of days in the current calendar year through
the Date of Termination, and the denominator of which is 365; and

 

  (3) any accrued vacation pay;

in each case to the extent not theretofore paid (the sum of the amounts
described in clauses (1), (2) and (3) shall be hereinafter referred to as the
“Accrued Obligations”); and

 

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(B) An amount equal to the product of 1.0 times (0.5 times if the Participant
were employed less than one year) the sum of the Participant’s Annual Base
Salary and Target Bonus.

(b) Long-Term Incentive Awards. Any stock awards, stock options, stock
appreciation rights or other equity-based awards that were outstanding
immediately prior to the Date of Termination (“Prior Equity Awards”) shall vest
and/or become exercisable in accordance with the underlying plan for such Prior
Equity Award;

(c) Annual Incentive Awards. As provided in subparagraph (a)(A)(2), Participant
shall receive a prorated annual incentive award pursuant to the performance
incentive program, if applicable, for the calendar year in which the
Participant’s Termination of Employment occurs. The award shall be calculated
based solely on 100 percent of the target incentive award and prorated based on
the number of days of employment in the calendar year in which the participant’s
Termination of Employment occurs through the employee’s Termination Date. Annual
incentive awards with respect to the calendar year in which a Participant’s
Termination Date occurs will be paid at the same time as awards for such
calendar year are paid to active employees of the Employer.

(d) Outplacement Services. Outplacement services approved by the Committee,
which may include individual or group counseling and administrative assistance
or workshops, shall be available beginning on the participant’s Termination Date
or such earlier date designated by the Participant’s business unit leadership.
Outplacement services shall continue to be available for the period up to 12
months.

(e) Educational Assistance. The Employer shall reimburse 90 percent of the costs
(up to a total of $3,000) of tuition, required books and mandatory fees incurred
for classes approved by the Committee that are successfully completed within two
years after a Participant’s Termination Date. “Successful completion” shall mean
the attainment of a final course grade of “C” or better. Reimbursement will be
made only upon the submission of bills or receipts in such form as the Committee
may require.

(f) Health Care Benefits.

Retiree Health Care Coverage. A Participant who has not otherwise satisfied the
eligibility criteria for participation prior to his or her Termination Date,
shall be entitled to elect retiree coverage under the Employer’s applicable
retiree group health care plans as though he or she otherwise satisfied such
plans’ eligibility requirements if:

 

  (A) the Participant has attained age 50 and completed ten or more Years of
Service as of his or her Termination Date but the sum of the Participant’s age
and Years of Service is less than 80; or

 

  (B) the Participant has attained age 49 and completed 20 or more Years of
Service as of his or her Termination Date but the sum of the Participant’s age
and Years of Service is less than 80.

 

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Such coverage shall commence no earlier than the Participant’s Termination Date.
The Participant shall be charged the full cost of retiree coverage under these
plans.

COBRA Continuation Coverage. Each Participant who is not eligible for, or does
not elect, the retiree health care coverage described in this subsection
(f) shall be entitled, pursuant to any continuation coverage rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), to
continue individual and dependent coverage under the Company’s group health care
plans following the Participant’s Termination Date. If continuation coverage is
elected, the Employer shall pay the same portion of the cost of medical coverage
that it paid immediately prior to the Participant’s Termination Date for active
employees during the one-year period following the participant’s termination
date that the Participant is receiving severance pay under Section 4.1, and the
Participant shall pay the balance. The Participant shall be charged the full
expense of medical coverage (102 percent of the cost of coverage) during the
remainder of the statutory coverage period, if any, and the full expense of
dental and (if applicable) vision and hearing coverage (102 percent of the cost
of coverage) during the entire statutory coverage period.

(g) Life Insurance. A Participant who is not eligible for coverage under the
Employer’s retiree life insurance plan shall be entitled, for the one-year
period following the Participant’s termination date to life insurance coverage
at the Employer’s expense in an amount equal to the group term life insurance
coverage in effect for such Participant under the Employer’s group term life
insurance plan for active employees as of his or her Termination Date.

(h) Other Benefits. A Participant shall not be entitled to any severance,
separation or early retirement incentive pay or benefits other than as provided
hereunder or under any qualified or nonqualified retirement plan or deferred
compensation arrangement maintained by the Employer. Except as provided in the
foregoing sentence, a Participant’s rights under any other employee benefit
plans maintained by the Company or an Affiliate shall be determined in
accordance with the provisions of such plans, including the Company’s right to
amend or terminate such plans at any time. (The amounts and benefits payable to
the Participant pursuant to sub paragraphs (b) (c), (d), (e), (f), and (g) shall
be hereinafter referred to as the “Other Benefits”).

4.2 Termination where a Participant experiences a cessation of employment in
connection with a reduction in force or Employer reorganization where the only
position offered to the Participant within the Company and Affiliates would
require the Participant to increase his or her one-way commuting distance by
more than 50 miles. Subject to Section 3.3 and Article V, if a Participant
experiences a cessation of employment in connection with a reduction in force or
Employer reorganization where the only position offered to the Participant
within the Company and Affiliates would require the Participant to increase his
or her one-way commuting distance by more than 50 miles:

 

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(a) Severance Pay. The Participant shall receive, in bi-weekly payments
concurrent with his or her Employer’s normal payroll cycle, an amount of
severance pay from his or her Employer calculated based upon the amount of the
Participant’s base salary, the number of Years of Service completed as of the
Participant’s Termination Date, as indicated below:

(A) Less than Thirteen Years of Service: If, as of the Participant’s Termination
Date he or she has completed fewer than thirteen Years of Service, the amount of
severance pay shall equal 26 weeks of base salary.

(B) Thirteen or More Years of Service: If, as of the Participant’s Termination
Date, he or she has completed thirteen or more Years of Service, the amount of
severance pay shall equal two weeks of base salary for each Year of Service, up
to a maximum of 52 weeks of base salary.

(b) Annual Incentive Awards. A Participant shall receive a prorated annual
incentive award pursuant to the performance incentive program, if applicable,
for the calendar year in which the Participant’s Termination of Employment
occurs. The award shall be calculated based solely on 100 percent of the target
incentive award and prorated based on the number of days of employment in the
calendar year in which the participant’s Termination of Employment occurs
through the employee’s Termination Date. Annual incentive awards with respect to
the calendar year in which a Participant’s Termination Date occurs will be paid
at the same time as awards for such calendar year are paid to active employees
of the Employer.

(c) Outplacement Services. Outplacement services approved by the Committee,
which may include individual or group counseling and administrative assistance
or workshops, shall be available beginning on the participant’s Termination Date
or such earlier date designated by the participant’s business unit leadership.
Outplacement services shall continue to be available for the period up to 12
months.

(d) Educational Assistance. The Employer shall reimburse 90 percent of the costs
(up to a total of $3,000) of tuition, required books and mandatory fees incurred
for classes approved by the Committee that are successfully completed within two
years after a Participant’s Termination Date. “Successful completion” shall mean
the attainment of a final course grade of “C” or better. Reimbursement will be
made only upon the submission of bills or receipts in such form as the Committee
may require.

(e) Health Care Benefits.

Retiree Health Care Coverage. An Eligible Employee who has not otherwise
satisfied the eligibility criteria for participation prior to his or her
Termination Date, shall be entitled to elect retiree coverage under the
Employer’s applicable retiree

 

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group health care plans as though he or she otherwise satisfied such plans’
eligibility requirements if:

(A) the Participant has attained age 50 and completed ten or more Years of
Service as of his or her Termination Date but the sum of the Participant’s age
and Years of Service is less than 80; or

(B) the Participant has attained age 49 and completed 20 or more Years of
Service as of his or her Termination Date but the sum of the Participant’s age
and Years of Service is less than 80.

Such coverage shall commence no earlier than the Participant’s Termination Date.
The Participant shall be charged the full cost of retiree coverage under these
plans.

COBRA Continuation Coverage. Each Participant who is not eligible for, or does
not elect, the retiree health care coverage described in this subsection
(v) shall be entitled, pursuant to any continuation coverage rights under COBRA
to continue individual and dependent coverage under the Company’s group health
care plans following the Participant’s Termination Date. If continuation
coverage is elected, the Employer shall pay the same portion of the cost of
medical coverage that it paid immediately prior to the Participant’s Termination
Date for active employees during the period that the Participant is receiving
severance pay under Section 5.2, and the Participant shall pay the balance. The
Participant shall be charged the full expense of medical coverage (102 percent
of the cost of coverage) during the remainder of the statutory coverage period,
if any, and the full expense of dental and (if applicable) vision and hearing
coverage (102 percent of the cost of coverage) during the entire statutory
coverage period.

(f) Life Insurance. A Participant who is not eligible for coverage under the
Employer’s retiree life insurance plan shall be entitled, during the period that
the Participant is receiving severance pay under this Section 5.2, to life
insurance coverage at the Employer’s expense in an amount equal to the group
term life insurance coverage in effect for such Participant under the Employer’s
group term life insurance plan for active employees as of his or her Termination
Date.

(g) Other Benefits. A Participant shall not be entitled to any severance,
separation or early retirement incentive pay or benefits other than as provided
under the Plan or under any qualified or nonqualified retirement plan or
deferred compensation arrangement maintained by the Employer. Except as provided
in the foregoing sentence, a Participant’s rights under any other employee
benefit plans maintained by the Company or an Affiliate shall be determined in
accordance with the provisions of such plans, including the Company’s right to
amend or terminate such plans at any time.

 

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ARTICLE V

SEVERANCE BENEFITS AFTER A CHANGE IN CONTROL

5.1 Termination By Employer Other Than For Cause or By Participant For Good
Reason (other than Good Reason as described in Subsection 2.17(d)) Within Two
Years After a Change in Control. Subject to Section 3.3 and Article VI, if,
within two years following the occurrence of a Change in Control, either (a) an
Employer shall terminate a Participant’s employment other than for Cause or
Disability or (b) a Participant shall voluntarily terminate his employment for
Good Reason pursuant to Subsections 2.17 (a), (b), (c) or (e):

(a) the Company shall pay to the Participant, in a lump sum in cash, the
aggregate of the amounts set forth in clauses A and B below:

 

  A. The sum of:

 

  (1) the Participant’s base salary through the Date of Termination;

 

  (2) the product of (x) the Participant’s Target Bonus and (y) a fraction, the
numerator of which is the number of days in the current calendar year through
the Date of Termination, and the denominator of which is 365; and

 

  (3) any accrued vacation pay;

in each case to the extent not theretofore paid (the sum of the amounts
described in clauses (1), (2) and (3) shall be hereinafter referred to as the
“Accrued Obligations”); and

 

 B.    (1)    in the case of a Schedule A Participant, the amount equal to the
product of two times the sum of the Schedule A Participant’s Annual Base Salary
and Target Bonus; or

 

  (2) in the case of a Schedule B Participant, the amount equal to the product
of three times the sum of the Schedule B Participant’s Annual Base Salary and
Target Bonus.

(b) any stock awards, stock options, stock appreciation rights or other
equity-based awards that were outstanding immediately prior to the Date of
Termination (“Prior Equity Awards”) shall vest and/or become exercisable in
accordance with the underlying plan for such Prior Equity Award;

(c) the Company shall pay the cost of the continued coverage of the Participant
and/or the Participant’s family under the Company’s medical and dental employee
benefit plans for 18 months after the Date of Termination provided that the
Participant makes an election to continue such coverage in the Company’s medical
and dental employee benefit plans under COBRA, subject to the requirements and
limitations

 

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thereof, and thereafter for an additional period of six months, in the case of a
Schedule A Participant, or 18 months, in the case of a Schedule B Participant;
provided however, that if the Participant becomes re-employed with another
employer and is eligible to receive medical or dental benefits under another
employer provided plan, the medical and dental benefits provided by the Company
under this Plan shall be secondary to those provided under such other plan
during the applicable period of eligibility;

(d) for two years after the Date of Termination in the case of a Schedule A
Participant or three years after the Date of Termination in the case of a
Schedule B Participant (or such longer period as may be provided by the terms of
the appropriate plan, program, practice or policy), the Company shall continue
benefits (other than medical and dental benefits) to the Participant and/or the
Participant’s family at least equal to those which would have been provided to
them in accordance with the welfare plans, programs, practices and policies
maintained by the Company if the Participant’s employment had not been
terminated or, if more favorable to the Participant, as in effect generally at
any time thereafter with respect to other peer executives of the Employer and
their families;

(e) the Participant’s eligibility (but not the time of commencement of such
benefits) for retiree benefits pursuant to the welfare plans, programs,
practices and policies maintained by the Company shall be determined as if the
Participant had (A) remained employed until two years (in the case of a Schedule
A Participant) or three years (in the case of a Schedule B Participant) after
the Date of Termination and (B) retired on the last day of such period;

(f) the Participant shall be paid, in a lump sum payment in cash, an amount
equal to the excess of:

(A) the actuarial equivalent of the benefit under the Company’s applicable
qualified defined benefit retirement plan in which the Participant is
participating immediately prior to his Date of Termination (the “Retirement
Plan”) (utilizing the rate used to determine lump sums and, to the extent
applicable, other actuarial assumptions no less favorable to the Participant
than those in effect under the Retirement Plan immediately prior to the
Effective Date), any supplemental executive retirement plans (“SERPs”) in which
the Participant participates and, to the extent applicable, any other defined
benefit retirement arrangement between the Participant and the Company (“Other
Pension Benefits”) which the Participant would receive if the Participant’s
employment continued for two or three additional years (for Schedule A
Participants and Schedule B Participants, respectively) beyond the Date of
Termination and, assuming that the Participant’s compensation for such deemed
additional period was the Participant’s Annual Base Salary as in effect
immediately prior to the Date of Termination and assuming a bonus in each year
during such deemed additional period equal to the Target Bonus, over

 

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(B) the actuarial equivalent of the Participant’s actual benefit (paid or
payable), if any, under the Retirement Plan, the SERPs and Other Pension
Benefits as of the Date of Termination (utilizing the rate used to determine
lump sums and, to the extent applicable, other actuarial assumptions no less
favorable to the Participant than those in effect under the Retirement Plan
immediately prior to the effective date of the Change in Control);

(g) any compensation previously deferred (other than pursuant to a tax-qualified
plan) by or on behalf of the Participant (together with any accrued interest or
earnings thereon), whether or not then vested, shall become vested on the Date
of Termination and shall be paid in accordance with the terms of the plan,
policy or practice under which it was deferred to the extent permitted by
guidance issued by the U.S. Department of Treasury under Section 409A of the
Code;

(h) the Company shall, at its sole expense as incurred, provide the Participant
with outplacement services suitable to the Participant’s position for a period
not to exceed one year following the Date of Termination with a nationally
recognized outplacement firm; and,

(i) to the extent not theretofore paid or provided, the Company shall pay or
provide to the Participant any other amounts or benefits required to be paid or
provided or which the Participant is entitled to receive under any plan,
program, policy, practice, contract or agreement of the Company (or other
Employer), including earned but unpaid stock and similar compensation, but
excluding medical or dental benefits if the Participant is eligible for such
benefits to be provided by a subsequent employer, and benefits payable under any
severance plan or policy (such other amounts and benefits that are payable to
the Participant shall be hereinafter referred to as the “Other Benefits”).

5.2 Termination By Participant For Good Reason as described in Subsection
2.17(d) Within Two Years After a Change in Control. Subject to Section 3.3 and
Article V, if, within two years following the occurrence of a Change in Control,
a Participant shall voluntarily terminate his or her employment for Good Reason
as described in Subsection 2.17(d):

(a) Severance Pay. The Participant shall receive, in bi-weekly payments
concurrent with his or her Employer’s normal payroll cycle, an amount of
severance pay from his or her Employer calculated based upon the amount of the
Participant’s base salary, the number of Years of Service completed as of the
Participant’s Termination Date, as indicated below:

(A) Less than Thirteen Years of Service: If, as of the Participant’s Termination
Date he or she has completed fewer than thirteen Years of Service, the amount of
severance pay shall equal 26 weeks of base salary.

(B) Thirteen or More Years of Service: If, as of the Participant’s Termination
Date, he or she has completed thirteen or more Years of

 

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Service, the amount of severance pay shall equal two weeks of base salary for
each Year of Service, up to a maximum of 52 weeks of base salary.

(b) Annual Incentive Awards. A Participant shall receive a prorated annual
incentive award pursuant to the performance incentive program, if applicable,
for the calendar year in which the Participant’s Termination of Employment
occurs. The award shall be calculated based solely on 100 percent of the target
incentive award and prorated based on the number of days of employment in the
calendar year in which the participant’s Termination of Employment occurs
through the employee’s Termination Date. Annual incentive awards with respect to
the calendar year in which a Participant’s Termination Date occurs will be paid
at the same time as awards for such calendar year are paid to active employees
of the Employer.

(c) Outplacement Services. Outplacement services approved by the Committee,
which may include individual or group counseling and administrative assistance
or workshops, shall be available beginning on the participant’s Termination Date
or such earlier date designated by the participant’s business unit leadership.
Outplacement services shall continue to be available for the period up to 12
months.

(d) Educational Assistance. The Employer shall reimburse 90 percent of the costs
(up to a total of $3,000) of tuition, required books and mandatory fees incurred
for classes approved by the Committee that are successfully completed within two
years after a Participant’s Termination Date. “Successful completion” shall mean
the attainment of a final course grade of “C” or better. Reimbursement will be
made only upon the submission of bills or receipts in such form as the Committee
may require.

(e) Health Care Benefits.

Retiree Health Care Coverage. An Eligible Employee who has not otherwise
satisfied the eligibility criteria for participation prior to his or her
Termination Date, shall be entitled to elect retiree coverage under the
Employer’s applicable retiree group health care plans as though he or she
otherwise satisfied such plans’ eligibility requirements if:

(A) the Participant has attained age 50 and completed ten or more Years of
Service as of his or her Termination Date but the sum of the Participant’s age
and Years of Service is less than 80; or

(B) the Participant has attained age 49 and completed 20 or more Years of
Service as of his or her Termination Date but the sum of the Participant’s age
and Years of Service is less than 80.

 

15

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Such coverage shall commence no earlier than the Participant’s Termination Date.
The Participant shall be charged the full cost of retiree coverage under these
plans.

COBRA Continuation Coverage. Each Participant who is not eligible for, or does
not elect, the retiree health care coverage described in this subsection
(v) shall be entitled, pursuant to any continuation coverage rights under COBRA
to continue individual and dependent coverage under the Company’s group health
care plans following the Participant’s Termination Date. If continuation
coverage is elected, the Employer shall pay the same portion of the cost of
medical coverage that it paid immediately prior to the Participant’s Termination
Date for active employees during the period that the Participant is receiving
severance pay under Section 5.2, and the Participant shall pay the balance. The
Participant shall be charged the full expense of medical coverage (102 percent
of the cost of coverage) during the remainder of the statutory coverage period,
if any, and the full expense of dental and (if applicable) vision and hearing
coverage (102 percent of the cost of coverage) during the entire statutory
coverage period.

(f) Life Insurance. A Participant who is not eligible for coverage under the
Employer’s retiree life insurance plan shall be entitled, during the period that
the Participant is receiving severance pay under this Section 5.2, to life
insurance coverage at the Employer’s expense in an amount equal to the group
term life insurance coverage in effect for such Participant under the Employer’s
group term life insurance plan for active employees as of his or her Termination
Date.

(g) Other Benefits. A Participant shall not be entitled to any severance,
separation or early retirement incentive pay or benefits other than as provided
under the Plan or under any qualified or nonqualified retirement plan or
deferred compensation arrangement maintained by the Employer. Except as provided
in the foregoing sentence, a Participant’s rights under any other employee
benefit plans maintained by the Company or an Affiliate shall be determined in
accordance with the provisions of such plans, including the Company’s right to
amend or terminate such plans at any time.

5.3 Termination By Employer For Cause or By Participant Other Than For Good
Reason. If, at any time after a Change in Control, either (a) an Employer shall
terminate a Participant’s employment for Cause or (b) the Participant shall
voluntarily terminate his employment other than for Good Reason, the Employer
shall have no further payment obligations to the Participant other than for the
Participant’s base salary through the Date of Termination and any accrued but
unpaid vacation pay. In such case, all such amounts shall be paid to the
Participant in a lump sum.

5.4 Death. If a Participant’s employment terminates by reason of the
Participant’s death after a Change in Control, all Accrued Obligations as of the
time of death shall be paid to the Participant’s estate or beneficiary, as
applicable, in a lump sum in cash and the Participant’s estate or beneficiary
shall be entitled to any Other Benefits in accordance with their terms. Any

 

16

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Prior Equity Awards shall vest and/or become exercisable, as the case may be in
accordance with the terms of such Prior Equity Awards and the Participant’s
estate or beneficiary, as the case may be, shall have the right to exercise any
such Prior Equity Award in accordance with its terms.

5.5 Disability. If a Participant’s employment is terminated by reason of
Disability after a Change in Control, all Accrued Obligations shall be paid to
the Participant in a lump sum in cash. Any Prior Equity Awards shall vest
immediately and/or become exercisable, as the case may be, in accordance with
the terms of such Prior Equity Awards and the Participant shall have the right
to exercise any such Prior Equity Award in accordance with its terms.

5.6 Retirement. If a Participant’s employment terminates as a result of
Retirement after a Change in Control, the Participant shall be paid the Accrued
Obligations in a lump sum in cash and the Participant shall be entitled to any
Other Benefits in accordance with their terms.

ARTICLE VI

TIMING OF, LIMITATIONS ON AND ADJUSTMENTS TO PLAN PAYMENTS

6.1 Time of Payments. Payments under the Plan shall be made as soon as
practicable after the Participant’s Date of Termination, except, however, that
any payment to a Participant that is a Specified Employee, shall be made as soon
as practicable after the earlier of (a) the six-month anniversary of the
Participant’s Date of Termination (other than by reason of death) and (b) the
date of the Participant’s death. Provided, however, that all payments hereunder
that are reimbursements of covered expenses incurred by the Participant shall be
made within the taxable year in which the expense is incurred.

6.2 Payment Offsets. Notwithstanding anything in the Plan to the contrary, in
the event a Participant is entitled to receive severance payments both under
this Plan and under the terms of either (a) an individual change of control or
employment agreement, (b) another severance pay plan or policy of an Employer or
(c) any existing or future law or regulation, the benefits payable under this
Plan shall be reduced by the amount of any severance benefits such Participant
is entitled to receive under such individual agreement, plan, policy, law or
regulation.

6.3 Cap on Excess Parachute Payments; Gross-Up Payments. Notwithstanding
anything in the Plan to the contrary, if (a) a Participant is a “disqualified
individual” (as defined in Section 280G(c) of the Code) and (b) the severance
benefits provided under Articles IV or V, as applicable, together with any other
payments the Participant has the right to receive from an Employer, would
constitute a “parachute payment” (as defined in Section 280G(b) of the Code)
(“Parachute Payments”), the following provisions shall apply:

(a) the severance benefits under Articles IV or V shall not exceed an amount
which, together with any other Parachute Payments the Participant has a right to
receive from the Employer, would be 2.99 times the Participant’s “base amount”
(as defined in Section 280G of the Code) so that no portion of the amounts
received by the Participant shall be subject to the excise tax imposed under
Section 4999 of the Code.

 

17

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(b) The determination of whether any limitation on the severance benefits
payable under Articles IV or V is necessary shall be made by the Company’s
independent auditor or such other certified public accounting firm as may be
jointly designated by the Participant and the Company (the “Accounting Firm”),
which shall provide detailed supporting calculations to the Participant and the
Company. The determinations of the Accounting Firm shall be conclusive and
binding on the Company and the Participant. All fees and expenses of the
Accounting Firm shall be borne solely by the Company.

(c) If through error or otherwise, a Participant shall receive payments under
the Plan, together with other Parachute Payments the Participant has the right
to receive from an Employer, in excess of 2.99 times his base amount, the
Participant shall immediately repay the excess to the Employer upon notification
from the Employer that an overpayment has been made. If the Participant fails to
repay the excess to the Employer within 10 business days of the date of the
Employer’s notification, the Participant will become liable to the Employer for
an amount equal to two (2) times the excess amount.

6.4 Code Section 409A Compliance. Notwithstanding anything in the Plan to the
contrary, all Plan benefit obligations and payments are subject to guidance
issued by the U.S. Department of Treasury under Section 409A of the Code. To the
extent required, the Company may modify the severance benefits payable hereunder
to comply with such guidance; provided, however, that the present value of the
aggregate Plan benefits payable to a Participant after such modification shall
not be less than the present value of the Plan benefits payable to the
Participant prior to the modification.

6.5 Tax Withholding. Notwithstanding any other provision of this Plan, the
Company may withhold from any amounts payable under this Plan such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.

ARTICLE VII

RESTRICTIVE COVENANTS

7.1 Confidentiality. As a condition to participation in the Plan, each
Participant agrees to hold in a fiduciary capacity for the benefit of the
Company and its Affiliates all Confidential Information which shall have been
obtained by the Participant during the Participant’s employment by the Employer;
except, however, that this Section 7.1 shall not apply to Confidential
Information that is or becomes public knowledge, unless such Confidential
Information became or becomes public knowledge due to acts of the Participant or
representatives of the Participant in violation of this Section 7.1. Upon
termination of the Participant’s employment, he shall return to the Company all
Confidential Information in his possession. After termination of the
Participant’s employment with the Employer, the Participant shall not, without
the prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such Confidential Information to

 

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anyone other than the Company and those designated by it, except (a) otherwise
publicly available information, (b) as may be necessary to enforce his rights
under the Plan or as necessary to defend himself against a claim asserted
directly or indirectly by the Company or its Affiliates or (c) as may be
compelled by service of a valid subpoena or other legal process. If the
Participant is served with a valid subpoena or other legal process, he must so
notify the Company within three business days. Unless and until a determination
has been made in accordance with Section 7.4 that the Participant has violated
this Section 7.1, an asserted violation of the provisions of this Section 7.1
shall not constitute a basis for deferring or withholding any amounts otherwise
payable to the Participant under the Plan.

7.2 Non-Compete. As a condition to participation in the Plan, each Participant
agrees, that, in the event the Participant voluntarily terminates his employment
other than for Good Reason, for the period of one year from Date of Termination
he will not, without the written consent of the Company, directly or indirectly
own, manage, operate, join, control, become employed by, consult to or
participate in the ownership, management, or control of any business which is in
direct competition with the Company or its Affiliates.

7.3 Non-Solicitation. As a condition to participation in the Plan, each
Participant agrees that, in the event the Participant voluntarily terminates his
employment other than for Good Reason, for the period of one year following the
Date of Termination, he will not, directly or indirectly, solicit or hire, or
encourage the solicitation or hiring by any employer other than the Company or
its Affiliates, for any position as an employee, independent contractor,
consultant or otherwise, any person who was a managerial or higher level
employee of an Employer at any time during the term of the Participant’s
employment by the Employer; provided, however, that this provision shall not
apply with respect to the solicitation of any person after six months from the
date on which such person’s employment by an Employer has terminated.

7.4 Enforcement. In the event of a breach by the Participant of any of the
covenants set forth in this Article VII, it is agreed that the Company shall
suffer irreparable harm for which money damages are not an adequate remedy, and
that, in the event of such breach, the Company shall be entitled to obtain an
order of a court of competent jurisdiction for equitable relief from such
breach, including, but not limited to, temporary restraining orders and
preliminary and/or permanent injunctions against the breach of such covenants by
the Participant. In the event that the Company should initiate any legal action
for the breach or enforcement of any of the provisions contained in this Article
VII and the Company does not prevail in such action, the Company shall promptly
reimburse the Participant the full amount of any court costs, filing fees,
attorney’s fees which the Participant incurs in defending such action, and any
loss of income during the period of such litigation.

ARTICLE VIII

AMENDMENT AND TERMINATION

8.1 Amendment. The Company may amend this Plan at any time, and from time to
time, by action of the Committee; provided, however, that no amendment adopted
after the

 

19

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effective date of a Change in Control shall have the effect of either
(a) removing an individual from the list of Participants, (b) adding conditions
for participation or the entitlement to receive benefits hereunder, (c) reducing
the amount of benefits payable to a Participant or (d) otherwise restricting a
Participant’s right to receive benefits under the Plan, except as may otherwise
be required to conform such payments to the requirements of Section 409A of the
Code, as provided in Section 1.1.

8.2 Termination. The Committee may terminate the Plan at any time prior to a
Change in Control. The Plan may not be terminated after the effective date of a
Change in Control.

ARTICLE IX

ADMINISTRATION

9.1 Plan Administrator. The Plan shall be administered by the Committee, which
shall have the duties and responsibilities for administering the Plan as are
specifically set forth in this Article IX.

9.2 Responsibilities of Committee.

(a) The Committee shall have responsibility for the day to day administration of
the Plan. In addition, the Committee shall have the specific powers, duties,
responsibilities and obligations specifically provided for herein.

(b) Subject to the express provisions of the Plan, the Committee shall have full
and exclusive authority to interpret the Plan and to make all other factual
determinations deemed necessary or advisable in the implementation and
administration of the Plan, including but not limited to determinations with
respect to the eligibility of Participants to receive benefits under the Plan
and the status and rights of such Participants and all other persons affected
hereunder. The Committee’s interpretation and construction of the Plan shall be
conclusive and binding on all persons.

(c) The Committee shall have sole authority to adopt rules and regulations,
which shall be administered by the Committee. In addition, the Committee shall
have the discretionary authority to issue rulings and interpretations concerning
the Plan and all matters arising thereunder, on a uniform and nondiscriminatory
basis, provided the same shall not be contrary to or inconsistent with any
provision of the Plan.

(d) As a condition of distributing any benefit under the Plan, the Committee may
prescribe the use of such forms and require the furnishing of such information
as the Plan Committee may deem appropriate for administering the Plan.

9.3 Allocation or Delegation of Duties and Responsibilities. In furtherance of
its duties and responsibilities under the Plan, the Committee may:

(a) Employ agents to carry out non-fiduciary responsibilities;

 

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(b) Employ agents to carry out fiduciary responsibilities;

(c) Consult with counsel, who may be counsel to the Company; and

(d) Delegate any of its duties and responsibilities hereunder to such officer or
officers of the Company as the Committee shall designate; except, however, that
the Committee may not delegate to any other person the designation of Eligible
Employees under Section 3.1 or the authority to consider and determine appeals
of alleged adverse benefit determinations.

9.4 Expenses. Unless otherwise agreed to by the Company, no person acting as a
fiduciary hereunder (who is an employee of an Employer) shall receive any
compensation for services as such. Expenses incurred by fiduciaries in
connection with the administration of the Plan shall be paid by the Company.

9.5 Indemnification of Plan Administrator. The Company shall indemnify, to the
fullest extent permitted by law, each person made or threatened to be made a
party to any civil or criminal action or proceeding by reason of the fact that
he, or his testator or intestate, was a member of the Committee, or a delegate
of the Committee, acting in the capacity of Plan administrator.

9.6 Reliance Upon Others. The Committee, any person to whom it may delegate such
of its duties and powers as provided herein, and the officers and directors of
the Company shall be entitled to rely conclusively upon and shall be fully
protected in any action taken by them in good faith in reliance upon any tables,
valuations, certificates, opinions, reports or other advice furnished to them by
any duly appointed actuary, accountant, legal counsel (who may be counsel for
the Company) or other specialist.

9.7 Notification. All notices, reports and statements in connection with the
Plan that are given, made, delivered or transmitted to a Participant shall be
deemed duly given, made, delivered, or transmitted when mailed, by such class as
the sender may deem appropriate, with postage prepaid and addressed to the
Participant at the address last appearing on the records of the Employer with
respect to this Plan. All notices, direct actions or other communications given,
made, delivered or transmitted by a Participant to an Employer or Committee
shall not be deemed to have been duly given, made, delivered, transmitted or
received unless and until actually received by the Employer or Committee.

9.8 Multiple Capacities. A person may serve in more than one fiduciary capacity
with respect to the Plan.

ARTICLE X

CLAIMS PROCEDURE

10.1 Submission of Claims. The initial claim by any Participant for benefits
under this Plan shall be submitted in writing to the Committee within 60 days
after the occurrence of

 

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the termination of employment that the Participant claims to have triggered
entitlement to Plan benefits.

10.2 Computation and Review of Claims. All benefits shall be computed by the
Committee or its delegate. All claims shall be approved or denied by the
Committee (or its delegate) as soon as practicable, but in no event later than
90 days after application by the claimant.

(a) Initial Denial of Claim—Any denial of a claim shall include:

(i) Reason or reasons for the denial;

(ii) Reference to pertinent Plan provisions on which the denial is based;

(iii) Description of any additional material or information necessary for the
claimant to perfect the claim together with an explanation of why the material
or information is necessary; and

(iv) Explanation of the Plan’s claim review procedure, described below.

(b) Review of a Denied Claim—A claimant shall have a reasonable opportunity to
appeal a denied claim to the Committee (or its delegate) for a full and fair
review. The claimant or a duly authorized representative:

(i) Shall have 60 days, after receipt of written notification of the denial of
claim in which to request a review.

(ii) May request a review upon written application to the Committee.

(iii) Shall submit written comments, documents, records and other information
relating to the claim.

(iv) May review, free of charge, pertinent Plan documents, records and other
information relevant to the claim.

(c) Committee Review—The Committee’s (or its delegate’s) review shall take into
account all comments, documents, records and other information submitted by the
claimant relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.

(d) Written Decision—The Committee (or its delegate) shall issue a decision on
the reviewed claim promptly but no later than 60 days after receipt of the
review. The Committee’s decision shall be in writing and shall include:

(i) Reasons for the decision,

 

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(ii) References to the Plan provisions on which the decision is based, and

(iii) Statement that the claimant is entitled to receive, upon request,
reasonable access to, and copies of, all documents, records and other
information relevant to the claim

(e) Binding Effect—The Committee’s (or its delegate’s) decision shall be final
and binding on the claimant and the Employer.

ARTICLE XI

GENERAL PROVISIONS

11.1 Construction. This Plan shall be construed and enforced in accordance with
and governed by the internal substantive laws (and not the laws relating to
conflict of laws or choice of laws) of the State of New Jersey, except to the
extent that such laws are preempted by Federal law.

11.2 Unfunded Plan. The obligations of the Company under this Plan are not
required to be funded in advance. Nothing contained in this Plan shall give an
Eligible Employee or Participant any right, title or interest in any property of
the Company or any of its Affiliates.

11.3 No Right to Continued Employment. Nothing contained herein shall be deemed
to give any Eligible Employee or Participant the right to be retained in the
employment of an Employer or to limit the rights of any Employer to discharge
any Eligible Employee or Participant at any time, with or without notice and
with or without Cause.

11.4 Partial Invalidity. The invalidity or unenforceability of any term or
provision, or any clause, or portion thereof, of this Plan shall in no way
impair or affect the validity or enforceability of any other provision of this
Plan, which shall remain in full force and effect.

11.5 Successors and Assigns.

(a) This Plan shall inure to the benefit of and be binding upon the Company and
its successors and assigns.

(b) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
the Company’s obligations under the Plan in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.

(c) In no event shall a Participant assign his interests under the Plan to any
other person without the prior written consent of the Committee.

 

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11.6 Waivers. Failure to strictly comply with any term, condition or requirement
set forth in the Plan shall not be deemed a waiver of such term, condition or
requirement, nor shall any waiver of any such term, condition or requirement at
any one time or times be deemed to result in a waiver of such term, condition or
requirement at any other time or times.

11.7 Gender and Number. Masculine pronouns include the feminine as well as the
neuter genders, and the singular shall include the plural, unless indicated
otherwise by the context.

11.8 Headings. The headings of the Plan are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.

 

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SCHEDULE A

As Amended as of November 17, 2009

PARTICIPANTS

 

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SCHEDULE B

As Amended as of November 17, 2009

PARTICIPANTS

 

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EXHIBIT I

Form of Restrictive Covenant Agreement

AGREEMENT, by and between Public Service Enterprise Group Incorporated, a New
Jersey Corporation (the “Company”) and [                    ] (“Executive”),
dated as of [                    ].

WHEREAS, the Company maintains the Key Executive Severance Plan of Public
Service Enterprise Group Incorporated (the “Plan”), effective December 20, 2004,
and as thereafter amended, modified or supplemented;

WHEREAS, Executive was designated as an Eligible Employee under the Plan by the
Organization and Compensation Committee of the Company’s Board of Directors;

WHEREAS, pursuant to Section 3.2 of the Plan, in order to be a Participant in
and be entitled to benefits and protections under the Plan, Executive must
execute and delivery to the Company within 30 days after Executive was
designated as an Eligible Employee a written agreement to be bound by the terms
and conditions of certain covenants set out in Article VII of the Plan, which is
hereby incorporated herein;

NOW THEREFORE, the parties agree as follows:

1. Executive has received a copy of the Plan and has read and understands the
terms of conditions of Section 7.1, Confidentiality, Section 7.2, Non-Compete,
and Section 7.3, Non-Solicitation, therein, as applied to Executive (the
“Covenants”).

2. Executive agrees to be bound by and comply with the terms of the Covenants in
consideration for becoming a Participant in the Plan.

3. Executive acknowledges that the Covenants are reasonable in the scope of the
activities restricted, the geographic area covered by the restrictions, the
duration of the restrictions, and that such Covenants are reasonably necessary
to protect the Company’s legitimate interests in its Confidential Information
and its relationships with its employees, customers and suppliers.

4. Executive acknowledges that the Covenants will not deprive Executive of the
ability to earn a livelihood or to support Executive’s dependents.

5. Executive shall be a Participant in the Plan and be entitled to all of the
rights and benefits provided thereunder as of the date of this Agreement.

 

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6. This Agreement shall be construed and enforced in accordance with and
governed by the internal substantive laws (and not the laws relating to conflict
of laws or choice of laws) of the State of New Jersey, except to the extent that
such laws are preempted by Federal law.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.

[This Agreement may be executed in counterparts.]

 

EXECUTIVE   PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED   By:     Title:     

 

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EXHIBIT II

Form of Separation Agreement and General Release

SEPARATION AGREEMENT AND GENERAL RELEASE, by and between Public Service
Enterprise Group Incorporated, a New Jersey Corporation, (the “Company”) and
[                    ] (“Executive”), dated as of [                    ], (“this
Agreement”).

WHEREAS, the Company maintains the Key Executive Severance Plan of Public
Service Enterprise Group Incorporated (the “Plan”), effective December 20, 2004,
and as thereafter amended, modified or supplemented;

WHEREAS, Executive was designated as an Eligible Employee under the Plan by the
Organization and Compensation Committee of the Company’s Board of Directors;

WHEREAS, the Company or one of its Affiliates terminated Executive’s employment
effective [date] (the “Termination Date”);

WHEREAS, pursuant to Section 3.3 of the Plan, in order to be a Participant in
and be entitled to benefits and protections under the Plan, Executive must
execute and delivery this Agreement to the Company within twenty-one days after
Executive receives this Agreement; and

WHEREAS, Executive and the Company desire to settle fully and finally any
differences, rights and duties arising between them, including, but in no way
limited to, any differences, rights and duties that have arisen or might arise
out of or are in any way related to Executive’s employment with the Company, and
the conclusion of that employment;

NOW THEREFORE, Executive and the Company agree as follows:

1. Terms. All capitalized terms in this Agreement shall have the same meanings
and definitions as assigned to such terms in the Plan.

2. Separation Payment. The Company acknowledges that the Executive is entitled
to and that the Company will provide the payments and benefits described in
Article IV or Article V of the Plan, all such payments and benefits to be paid
to Executive less all applicable withholdings.

3. Release of Claims. Executive, for himself and for his children, heirs,
administrators, representatives, executors, successors and assigns, releases and
gives up any and all claims and rights which he has, may have or hereafter may
have against the Company, its Affiliates and their respective subsidiaries,
affiliates, predecessors, successors, assigns, officers, directors,
shareholders, employees and agents and all of their predecessors, successors and
assigns (the “Releasees”) from the beginning of the world until the date of the
execution of this Agreement, including, but not limited to, any and all charges,
complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, remedies, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses (including attorneys’ fees and costs)
of any nature whatsoever, whether known or unknown, whether in law or equity
(collectively,

 

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“Claims”), including, but not limited to, any Claims related to Executive’s
employment with the Company and the conclusion thereof, any Claims based on
wrongful termination, any Claims based on contract whether express or implied,
written or oral, and any Claims arising under the United States and/or State
Constitutions, federal and/or common law, and/or rights arising out of alleged
violations of any federal, state or other government statutes, regulations or
ordinances including, without limitation, the National Labor Relations Act,
Title VII of the 1964 Civil Rights Act, the Age Discrimination in Employment
Act, the Older Workers’ Benefit Protection Act, the Sarbanes-Oxley Act, the New
Jersey Law Against Discrimination, the New Jersey Conscientious Employee
Protection Act, the Americans with Disabilities Act, the Civil Rights Act of
1866 (42 U.S.C. § 1981), the Civil Rights Act of 1991, the Equal Pay Act, the
Family and Medical Leave Act, the Fair Labor Standards Act and the Employee
Retirement Income Security Act of 1974, the New Jersey Wage and Hour Law, the
New Jersey Family Leave Act, the New Jersey Civil Union Law and the New Jersey
Domestic Partnership Act, all as amended. This release specifically includes,
but is not limited to, the right to the payment of wages, vacation, pension
benefits or any other employee benefits, and any other rights arising under
federal, state or local laws prohibiting discrimination and/or harassment on the
basis of age, race, color, religion, creed, sex, national origin, ancestry,
mental or physical disability, alienage or citizenship status, marital status,
or any other basis prohibited by law.

4. Covenant Not To Sue. Executive has not filed against the Company or any of
the Releasees, any complaints, charges or lawsuits with any government agency,
arbitral tribunal, self-regulatory body, or any court arising out of Executive’s
employment by the Company or any other matter arising on or prior to the date
hereof. Executive will not, directly or indirectly, commence or prosecute, or
assist in the filing, commencement or prosecution in any court, arbitral
tribunal, self-regulatory body or local or state government agency, any claim or
charge against the Company or any of the Releasees arising out of any of the
matters set forth in this Agreement or based upon any common law or statutory
claim against the Company or any of the Releasees that can be brought under
federal, state or local law. Notwithstanding the foregoing, Executive shall not
be limited from commencing a proceeding for the sole purpose of enforcing his
rights under this Agreement or under the Plan, provided Executive first complies
with the Claims Review procedures described in Article X of the Plan.

5. No Admission of Liability. This Agreement does not constitute or imply an
admission of liability or wrongdoing by Executive, the Company or any of the
Releasees.

6. No Disparagement. Executive and the officers and directors of the Company and
its Affiliates agree that they will not make, or cause to be made, any
statements, observations or opinions, or communicate any information (whether
oral or written) that disparages or is likely in any way to harm the reputation
in the case of the officers and directors of the Company and its Affiliates,
Executive, and in the case of Executive, the Company, its Affiliates or any of
the Releasees.

7. Confidentiality. The terms of this Agreement are CONFIDENTIAL. Executive
agrees not to tell anyone about this Agreement and not to disclose any
information contained in this Agreement to anyone, other than to his lawyer,
financial advisor or immediate family members, to enforce this Agreement, or to
respond to a valid subpoena or other legal process. If

 

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Executive does tell his lawyer, financial advisor or immediate family members
about this Agreement or its contents, he must immediately tell them that they
must keep it confidential as well. The Company agrees that it will keep the
terms of this Agreement confidential, except as is necessary to administer this
Agreement, as required by law or to respond to a valid subpoena or other legal
process.

8. No Reliance. Executive represents that in executing this Agreement he does
not rely and has not relied upon any representation or statement not set forth
in this Agreement that the Company or any of its agents, representatives or
attorneys may have made with regard to the subject matter, basis or effect of
this Agreement.

9. Governing Law. This Agreement shall be construed in accordance with the laws
of the State of New Jersey without regard to any state’s conflict of law
provisions.

10. Remedy for Breach. In the event of any breach of this Agreement, the parties
may only institute an action for specific enforcement of the terms of this
Agreement and the Plan and seek damages resulting from such breach. Executive
may not institute any proceeding based on any Claims related to his employment
with the Company or the conclusion of his employment because of a breach of this
Agreement or the Plan by the Company. The prevailing party in any such action
shall be entitled to an award of attorneys’ fees and costs in addition to any
other legal or equitable relief, except that the Company will not be entitled to
its attorneys’ fees or other damages if Executive challenges the validity or
enforceability of this Agreement.

11. Severability. If at any time, after the date of the execution of this
Agreement, any provision of this Agreement shall be held in any court or agency
of competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect. In the event that a court or agency of
competent jurisdiction concludes that the release contained in paragraph 3 or
the covenant not to sue contained in paragraph 4 are illegal, void or
unenforceable, Executive agrees to execute a release and covenant not to sue
that are legal, valid and enforceable.

12. Entire Agreement. This Agreement, the Plan and the Restrictive Covenant
Agreement required by Section 3.2 of the Plan set forth the entire agreement
between the parties with respect to the termination of Executive’s employment
and supersede any and all prior understandings and agreements between the
parties. Neither party shall have any obligation toward the other except as set
forth herein and therein.

13. Modifications. This Agreement may not be modified except in writing signed
by all parties.

14. Enforceability. The parties are bound by this Agreement. Anyone who succeeds
to the parties’ rights and responsibilities, such as their heirs, executors,
successors or assigns, is also bound.

15. Headings. The headings contained in this Agreement are for the convenience
of reference only and are not intended to define, limit, expand or describe the
scope or intent of any provision of this Agreement.

 

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16. Acknowledgements. Executive acknowledges that:

 

  a. Executive has carefully read and understands this Agreement;

 

  b. Executive has been given twenty-one (21) days to consider his rights and
obligations under this Agreement and to consult with an attorney;

 

  c. The Company advised Executive to consult with an attorney and/or any other
advisors of his choice before signing this Agreement;

 

  d. Executive understands that this Agreement is LEGALLY BINDING and by signing
it he gives up certain rights;

 

  e. Executive has voluntarily chosen to enter into this Agreement and has not
been forced or pressured in any way to sign it;

 

  f. Executive KNOWINGLY AND VOLUNTARILY RELEASES the Company and the Releasees
from any and all claims Executive may have, known or unknown, in exchange for
the benefits Executive has obtained by signing, and that these benefits are in
addition to any benefit Executive would have otherwise received if he did not
sign this Agreement;

 

  g. The General Release in this Agreement includes a WAIVER OF ALL RIGHTS AND
CLAIMS Executive may have under the Age Discrimination In Employment Act of 1967
(29 U.S.C. §621 et seq.); and

 

  h. Executive has seven (7) days after he signs this Agreement to revoke it by
notifying the Company in writing. Executive must deliver the written revocation
to the Company’s General Counsel so that it is actually received by the Company
within seven (7) days of the date Executive signs this Agreement. This Agreement
will not become effective or enforceable until the Company receives a copy of
this Agreement signed by Executive and the seven (7) day revocation period has
expired without Executive revoking this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

EXECUTIVE     PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED       By:        
Name:       Title:  

 

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