EXHIBIT (10) (D)

 

VALLEY NATIONAL BANCORP

LONG-TERM STOCK INCENTIVE PLAN

(Adopted by Directors January 10, 1989

Adopted by Shareholders March 28, 1989)

(As Amended by Directors March 16, 1993 and

January 18, 1994 and Adopted by Shareholders March 22, 1994)

(As Amended by Directors April 6, 2000)

(As Amended by Directors May 1, 2001)

(As Clarified by Directors through June 19, 2001)

(As Amended by Directors August 20, 2002)

(As Amended by Directors March 16, 2004)

 

1. Purpose. The purpose of the Plan is to provide additional incentive to those
officers and key employees of the Company and its Subsidiaries and retain
competent and dedicated individuals whose efforts will result in the long-term
growth whose substantial contributions are essential to the continued growth and
success of the Company’s business in order to strengthen their commitment to the
Company and its Subsidiaries, to motivate such officers and employees to
faithfully and diligently perform their assigned responsibilities and to attract
and profitability of the Company. To accomplish such purposes, the Plan provides
that the Company may grant Incentive Stock Options, Nonqualified Stock Options,
Restricted Stock Awards and Stock Appreciation Rights.

 

2. Definitions. For purposes of this Plan:

 

(a) “Adjusted Fair Market Value” means, in the event of a Change of Control, the
greater of (i) the highest Fair Market Value of the Shares during the sixty (60)
day period ending on the date of such Change in Control or (ii) in the case of a
Change in Control described in Section 2(h)(ii) or 2(h)(iii), the highest price
per Share paid to holders of the Shares in any transaction constituting or
resulting from such Change in Control.

 

(b) “Agreement” means the written agreement between the Company and an Optionee
or Grantee evidencing the grant of an Option or Award and setting forth the
terms and conditions thereof.

 

(c) “Award” means a grant of Restricted Stock or Stock Appreciation Rights, or
any or all of them.

 

(d) “Bank” means Valley National Bank, a Subsidiary.

 

(e) “Board” means the Board of Directors of the Company.

 

(f) “Cause” means the willful failure by an Optionee or Grantee to perform his
duties with the Company or with any Subsidiary or the willful engaging in
conduct which is injurious to the Company or any Subsidiary, monetarily or
otherwise.

 

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(g) “Change in Capitalization” means any increase, reduction, change or exchange
of Shares for a different number or kind of shares or other securities of the
Company by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, issuance of warrants or rights, stock dividend,
stock split or reverse stock split, combination or exchange of shares,
repurchase of shares, change in corporate structure or otherwise.

 

(h) “Change in Control” means any of the following events: (i) when the Company
or a Subsidiary acquires actual knowledge that any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act), other than an affiliate of
the Company or a Subsidiary or an employee benefit plan established or
maintained by the Company, a Subsidiary or any of their respective affiliates,
is or becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange
Act) directly or indirectly, of securities of the Company representing more than
twenty-five percent (25%) of the combined voting power of the Company’s then
outstanding securities (a “Control Person”), (ii) upon the first purchase of the
Company’s common stock pursuant to a tender or exchange offer (other than a
tender or exchange offer made by the Company, a Subsidiary or an employee
benefit plan established or maintained by the Company, a Subsidiary or any of
their respective affiliates), (iii) upon the approval by the Company’s
stockholders of (A) a merger or consolidation of the Company with or into
another corporation (other than a merger or consolidation which is approved by
at least two-thirds of the Continuing Directors (as hereinafter defined) or the
definitive agreement for which provides that at least two-thirds of the
directors of the surviving or resulting corporation immediately after the
transaction are Continuing Directors (in either case, a “Non-Control
Transaction”)), (B) a sale or disposition of all or substantially all of the
Company’s assets or (C) a plan of liquidation or dissolution of the Company,
(iv) if during any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board (the “Continuing Directors”) cease
for any reason to constitute at least two-thirds thereof or, following a
Non-Control Transaction, two-thirds of the board of directors of the surviving
or resulting corporation; provided that any individual whose election or
nomination for election as a member of the Board (or, following a Non-Control
Transaction, the board of directors of the surviving or resulting corporation)
was approved by a vote of at least two-thirds of the Continuing Directors then
in office shall be considered a Continuing Director, or (v) upon a sale of (A)
common stock of the Bank if after such sale any person (as such term is used in
Section 13(d) and 14(d)(2) of the Exchange Act) other than the Company, an
employee benefit plan established or maintained by the Company or a Subsidiary,
or an affiliate of the Company or a Subsidiary, owns a majority of the Bank’s
common stock or (B) all or substantially all of the Bank’s assets (other than in
the ordinary course of business). No person shall be considered a Control Person
for purposes of clause (i) above if (A) such person is or becomes the beneficial
owner, directly or indirectly, of more than ten percent (10%) but less than
twenty-five percent (25%) of the combined voting power of the Company’s then
outstanding securities if the acquisition of all voting securities in excess of
ten percent (10%) was approved in advance by a majority of the Continuing
Directors then in office or (B) such person acquires in excess of ten percent
(10%) of the combined voting power of the Company’s then outstanding voting
securities in violation of law and by order of a court of competent
jurisdiction, settlement or otherwise, disposes or is required to dispose of all
securities acquired in violation of law.

 

(i) “Code” means the Internal Revenue Code of 1986, as amended.

 

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(j) “Committee” means a committee consisting of at least three (3) Disinterested
Persons appointed by the Board to administer the Plan and to perform the
functions set forth herein.

 

(k) “Company” means Valley National Bancorp, a New Jersey corporation.

 

(l) “Disability” means the condition which results when an individual has become
permanently and totally disabled within the meaning of Section 105(d)(4) of the
Code.

 

(m) “Disinterested Person” means a person (within the meaning of Rule 16b-3
under the Exchange Act) who at the time he exercises discretion as a member of
the Committee is not and at any time within one (1) year prior thereto has not
been eligible for selection (within the meaning of Rule 16b-3 of the Exchange
Act) as a person to whom Shares may be allocated or to whom stock options or
stock appreciation rights may be granted pursuant to this Plan or any other plan
of the Company or any Subsidiary entitling participants therein to acquire
stock, stock options or stock appreciation rights of the Company or any
Subsidiary.

 

(n) “Eligible Employee” means any officer or other key employee of the Company
or a Subsidiary designated by the Committee as eligible to receive Options or
Awards subject to the conditions set forth herein.

 

(o) “Escrow Agent” means the escrow agent under the Escrow Agreement, designated
by the Committee.

 

(p) “Escrow Agreement” means an agreement between the Company, the Escrow Agent
and a Grantee, in the form specified by the Committee, under which shares of
Restricted Stock awarded pursuant hereto shall be held by the Escrow Agent until
either (a) the restrictions relating to such shares expire and the shares are
delivered to the Grantee or (b) the Company reacquires the shares pursuant
hereto and the shares are delivered to the Company.

 

(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(r) “Fair Market Value” means the fair market value of the Shares as determined
by the Committee in its sole discretion; provided, however, that (A) if the
Shares are admitted to quotation on the National Association of Securities
Dealers Automated Quotation System (“NASDAQ”) or other comparable quotation
system and have been designated as a National Market System (“NMS”) security,
Fair Market Value on any date shall be the last sale price reported for the
Shares on such system on such date or on the last day preceding such date on
which a sale was reported, (B) if the Shares are admitted to quotation on NASDAQ
and have not been designated a NMS security, Fair Market Value on any date shall
be the average of the highest bid and lowest asked prices of the Shares on such
system on such date, or (C) if the Shares are admitted to trading on a national
securities exchange, Fair Market Value on any date shall be the last sale price
reported for the Shares on such exchange on such date or on the last date
preceding such date on which a sale was reported.

 

(s) “Grantee” means a person to whom an Award has been granted under the Plan.

 

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(t) “Incentive Stock Option” means an Option within the meaning of Section 422A
of the Code.

 

(u) “Nonqualified Stock Option” means an Option which is not an Incentive Stock
Option.

 

(v) “Option” means an Incentive Stock Option, a Nonqualified Stock Option, or
either or both of them.

 

(w) “Optionee” means a person to whom an Option has been granted under the Plan.

 

(x) “Parent” means any corporation in an unbroken chain of corporations ending
with the Company, if each of the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of
stock of one of the other corporations in such chain.

 

(y) “Plan” means the Valley National Bancorp Long-term Stock Incentive Plan as
set forth in this instrument and as it may be amended from time to time.

 

(z) “Restricted Stock” means Shares issued or transferred to an Eligible
Employee which are subject to restrictions as provided in Section 8 hereof.

 

(aa) “Retirement” means the retirement from active employment with the Company
of an employee or officer but only if such person meets all of the requirements
contained in clause (i) or contained in clause (ii) below:

 

(i) he has a minimum combined total of years of service and age equal to eighty
(80); he is age sixty-two (62) or older; and he provides six (6) months’ prior
written notice to the Company of the retirement; or

 

(ii) he has a minimum of five (5) years of service; he is age sixty-five (65) or
older and he provides six (6) months’ prior written notice to the Company of the
retirement.”

 

“Years of service” shall be defined the same way as it is under Valley’s pension
plan, provided that for this purpose years of service will mean only employment
by the Company, and will not include employment by any company or entity
acquired by the Company for the period prior to its acquisition by the Company.
An employee or officer who retires but fails to meet such requirements shall not
be deemed to be within the definition of “Retirement” for any purpose under this
Plan or any Award or Option granted thereunder; provided, however, after a
Change in Control transaction, no prior notice of a Retirement shall be required
for purposes of this Plan only and any Optionee (as defined in the Plan) who
meets all of the other conditions contained in clause (i) or contained in clause
(ii), but is terminated without Cause, shall be deemed to meet all the
conditions for Retirement for purposes of the Plan only and shall be deemed to
have terminated employment due to Retirement for purposes of this Plan only.

 

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(ab) “Shares” means the common stock, no par value, of the Company (including
any new, additional or different stock or securities resulting from a Change in
Capitalization).

 

(ac) “Stock Appreciation Right” means a right to receive all or some portion of
the increase in the value of shares of Common Stock as provided in Section 7
hereof.

 

(ad) “Subsidiary” means any corporation in an unbroken chain of corporations,
beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

 

(ae) “Successor Corporation” means a corporation, or a parent or subsidiary
thereof, which issues or assumes a stock option in a transaction to which
Section 425(a) of the Code applies.

 

(af) “Ten-Percent Stockholder” means an eligible Employee, who, at the time an
Incentive Stock Option is to be granted to him, owns (within the meaning of
Section 422A(b)(6) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company, a Parent
or a Subsidiary within the meaning of Section 422A(b)(6) of the Code.

 

3. Administration.

 

(a) The Plan shall be administered by the Committee which shall hold meetings at
such times as may be necessary for the proper administration of the Plan. The
Committee shall keep minutes of its meetings. A majority of the Committee shall
constitute a quorum and a majority of a quorum may authorize any action. Each
member of the Committee shall be a Disinterested Person. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan, the Options or the
Awards, and all members of the Committee shall be fully indemnified by the
Company with respect to any such action, determination or interpretation.

 

Subject to the express terms and conditions set forth herein, the Committee
shall have the power from time to time:

 

(1) to determine those Eligible Employees to whom Options shall be granted under
the Plan and the number of Incentive Stock Options and/or Nonqualified Options
to be granted to each eligible Employee and to prescribe the terms and
conditions (which need not be identical) of each Option, including the purchase
price per share of each Option;

 

(2) to select those Eligible Employees to whom Awards shall be granted under the
Plan and to determine the number of shares of Restricted Stock and/or Stock
Appreciation Rights to be granted pursuant to each Award, the terms and
conditions of each Award, including the restrictions or performance criteria
relating to such shares or rights, the purchase price per share, if any, of
Restricted Stock and whether Stock Appreciation Rights will be granted alone or
in conjunction with an Option;

 

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(3) to construe and interpret the Plan and the Options and Awards granted
thereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem necessary or
advisable to make the Plan fully effective, and all decisions and determinations
by the Committee in the exercise of this power shall be final and binding upon
the Company or a Subsidiary, the Optionees and the Grantees, as the case may be;

 

(4) to determine the duration and purposes for leaves of absence which may be
granted to an Optionee or Grantee without constituting a termination of
employment or service for purposes of the Plan; and

 

(5) generally, to exercise such powers and to perform such acts as are deemed
necessary or advisable to promote the best interests of the Company with respect
to the Plan.

 

4. Stock Subject to Plan.

 

(a) The maximum number of Shares that may be issued or transferred pursuant to
all Options and Awards under this Plan is 4,005,708 of which not more than
507,872 Shares may be issued or transferred pursuant to Options and/or Awards to
any one Eligible Employee. Subject to the foregoing aggregate limitations, the
maximum number of Shares (i) that may be issued or transferred pursuant to
Options or Awards for Incentive Stock Options, Non-Qualified Stock Options and
Stock Appreciation Rights shall be 3,446,427 and (ii) that may be issued or
transferred pursuant to Awards of Restricted Stock shall be 559,279. In each
case. upon a Change in Capitalization after January 18, 1994, the Shares shall
be adjusted to the number and kind of Shares of stock or other securities
existing after such Change in Capitalization.

 

The number of Shares set forth herein includes Shares awarded pursuant to all
Options and Awards issued or transferred under this Plan prior to the date of
the amendment to this section and the number of Shares takes into account all
Changes in Capitalization prior to January 18, 1994.

 

(b) Whenever any outstanding Option or portion thereof expires, is cancelled or
is otherwise terminated (other than by exercise of the Option or any related
Stock Appreciation Right), the shares of Common Stock allocable to the
unexercised portion of such Option may again be the subject of Options and
Awards hereunder.

 

(c) Whenever any Shares subject to an Award or Option are resold to the Company,
or are forfeited for any reason pursuant to the terms of the Plan, such Shares
may again be the subject of Options and Awards hereunder.

 

5. Eligibility. Subject to the provisions of the Plan, the Committee shall have
full and final authority to select those eligible Employees who will receive
Options and/or Awards but no person shall receive any Options or Awards unless
he is an employee of the Company or a Subsidiary at the time the Option or Award
is granted.

 

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6. Stock Options. The Committee may grant Options in accordance with the Plan,
the terms and conditions of which shall be set forth in an Agreement. Each
Option and Option Agreement shall be subject to the following conditions:

 

(a) Purchase Price. The purchase price or the manner in which the purchase price
is to be determined for Shares under each Option shall be set forth in the
Agreement, provided that the purchase price per Share under each Incentive Stock
Option shall not be less than 100% of the Fair Market Value of a Share at the
time the Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and under each Nonqualified Stock Option
shall not be less than 80% of the Fair Market Value of a Share at the time the
Option is granted.

 

(b) Duration. Options granted hereunder shall be for such term as the Committee
shall determine, provided that (i) no Incentive Stock Option shall be
exercisable after the expiration of ten (10) years from the date it is granted
(five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder) and (ii) no Nonqualified Stock Option shall be
exercisable after the expiration of ten (10) years and one (1) day from the date
it is granted. The Committee may, subsequent to the granting of any Option,
extend the term thereof but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.

 

(c) Non-transferability. No Option granted hereunder shall be transferable by
the Optionee to whom granted otherwise than by will or the laws of descent and
distribution, and an Option may be exercised during the lifetime of such
Optionee only by the Optionee or his guardian or legal representative. The terms
of such Option shall be binding upon the beneficiaries, executors,
administrators, heirs and successors of the Optionee.

 

(d) Stock Options; Vesting. Subject to Section 6(h) hereof, each Option shall be
exercisable in such installments (which need not be equal) and at such times as
may be designated by the Committee and set forth in the Option Agreement. Unless
otherwise provided in the Agreement, to the extent not exercised, installments
shall accumulate and be exercisable, in whole or in part, at any time after
becoming exercisable, but not later than the date the Option expires. Upon the
death, Disability or Retirement of an Optionee, all Options shall become
immediately exercisable. Notwithstanding the foregoing, the Committee may
accelerate the exercisability of any Option or portion thereof at any time.

 

(e) Method of Exercise. The exercise of an Option shall be made only by a
written notice delivered in person or by mail to the Secretary of the Company at
the Company’s principal executive office, specifying the number of Shares to be
purchased and accompanied by payment therefor and otherwise in accordance with
the Agreement pursuant to which the Option was granted. The purchase price for
any shares purchased pursuant to the exercise of an Option shall be paid in full
upon such exercise in cash, by check, or, at the discretion of the Committee and
upon such terms and conditions as the Committee shall approve, by transferring
Shares to the Company. Any Shares transferred to the Company as payment of the
purchase price under an Option shall be valued at their Fair Market Value on the
day preceding the date of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the Option and
the Agreement evidencing any related Stock Appreciation Right to the Secretary
of the Company who shall endorse thereon a notation of such exercise and return
such Agreement to the Optionee. Not less than 100 Shares may be purchased at any
time upon the exercise of an Option

 

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unless the number of Shares so purchased constitutes the total number of Shares
then purchasable under the Option.

 

(f) Rights of Optionees. No Optionee shall be deemed for any purpose to be the
owner of any Shares subject to any Option unless and until (i) the Option shall
have been exercised pursuant to the terms thereof, (ii) the Company shall have
issued and delivered the Shares to the Optionee, and (iii) the Optionee’s name
shall have been entered as a stockholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other ownership
rights with respect to such Shares.

 

(g) Termination of Employment. In the event that an Optionee ceases to be
employed by the Company or any Subsidiary, any outstanding Options held by such
Optionee shall, unless the Option Agreement evidencing such Option provides
otherwise, terminate as follows:

 

(1) If the Optionee’s termination of employment is due to his death or
Disability, the Option shall be exercisable for a period of one (1) year
following such termination of employment, and shall thereafter terminate;
provided, however, that the Company shall have given written notice to the
Optionee’s designated beneficiary for the Plan as permitted under Section 17(c)
or, if there is no designated beneficiary for the Plan, then to the Optionee’s
spouse, or if such spouse does not survive the Optionee, to the Optionee’s
designated beneficiaries under the Company’s group term life insurance plan,
within the six (6) months following the Optionee’s termination of employment;

 

(2) If the Optionee’s termination of employment is by the Company or a
Subsidiary for Cause or is by the Optionee (other than due to the Optionee’s
Retirement), the Option shall terminate on the date of the Optionee’s
termination of employment;

 

(3) If the Optionee’s termination of employment is due to the Optionee’s
Retirement, the Option shall be exercisable for the remaining term of the Option
and thereafter shall be unaffected by the death or Disability of the Optionee.
(An Optionee who exercises his or her Options more than ninety (90) days after
the termination of employment due to Retirement shall acknowledge that the
Options so exercised will not be Incentive Stock Options.); and

 

(4) If the Optionee’s termination of employment is for any other reason
(including an Optionee’s ceasing to be employed by a Subsidiary as a result of
the sale of such Subsidiary or an interest in such Subsidiary), the Option shall
be exercisable (to the extent exercisable at the time of the Optionee’s
termination of employment) for a period of ninety (90) days following such
termination of employment, and shall thereafter terminate.

 

Notwithstanding the foregoing, the Committee may provide, either at the time an
Option is granted or thereafter, that the Option may be exercised after the
periods provided for in this Section 6(g), but in no event beyond the term of
the Option.

 

(h) Effect of Change in Control. In the event of a Change in Control, (A) all
Options outstanding on the date of such Change in Control shall, for a period of
sixty (60) days following such Change in Control, become immediately and fully
exercisable, and (B) an Optionee will be permitted to surrender for cancellation
within sixty (60) days after such Change in Control any Option or portion of an
Option which was granted more than six (6) months prior to the date of

 

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such surrender, to the extent not yet exercised, and to receive a cash payment
in an amount equal to the excess, if any, of (1) in the case of a Nonqualified
Stock Option, the Adjusted Fair Market Value of the Shares subject to the Option
or portion thereof surrendered or (2) in the case of an Incentive Stock Option,
the Fair Market Value of the Shares subject to the Option or portion thereof
surrendered, over the aggregate purchase price for such Shares under the Option.

 

(i) Substitution and Modification. Subject to the terms of the Plan, the
Committee may modify outstanding Options or accept the surrender of outstanding
Options (to the extent not exercised) and grant new Options in substitution for
them. Notwithstanding the foregoing, no modification of an Option shall alter or
impair any rights or obligations under the Option without the Optionee’s
consent.

 

7. Stock Appreciation Rights. The Committee may, in its discretion, either alone
or in connection with the grant of an Option, grant Stock Appreciation Rights in
accordance with the Plan, the terms and conditions of which shall be set forth
in an Agreement. If granted in connection with an Option, a Stock Appreciation
Right shall cover the same shares covered by the Option (or such lesser number
of shares as the Committee may determine) and shall, except as provided in this
Section 7, be subject to the same terms and conditions as the related Option.

 

(a) Time of Grant. A Stock Appreciation Right may be granted:

 

(i) at any time if unrelated to an Option; or

 

(ii) if related to an Option, either at the time of grant, or at any time
thereafter during the term of the Option.

 

(b) Stock Appreciation Rights Related to an Option.

 

(i) Payment. A Stock Appreciation Right granted in connection with an Option
shall entitle the holder thereof, upon exercise of the Stock Appreciation Right
or any portion thereof, to receive payment of an amount computed pursuant to
Section 7(b)(iii).

 

(ii) Exercise. Subject to Section 7(f), a Stock Appreciation Right granted in
connection with an Option shall be exercisable at such time or times and only to
the extent that the related Option is exercisable, and will not be transferable
except to the extent the related Option may be transferable. A Stock
Appreciation Right granted in connection with an Incentive Stock Option shall be
exercisable only if the Fair Market Value of a Share on the date of exercise
exceeds the purchase price specified in the related Incentive Stock Option.

 

(iii) Amount Payable. Except as otherwise provided in Section 7(g), upon the
exercise of Stock Appreciation Right related to an Option, the Grantee shall be
entitled to receive an amount determined by multiplying (A) the excess of the
Fair Market Value of a Share on the date of exercise of such Stock Appreciation
Right over the per Share purchase price under the related Option, by (B) the
number of Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.

 

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(iv) Treatment of Related Options and Stock Appreciation Rights Upon Exercise.
Except as provided in Section 7(b)(v), (A) upon the exercise of a Stock
Appreciation Right granted in connection with an Option, the Option shall be
cancelled to the extent of the number of Shares as to which the Stock
Appreciation Right is exercised and (B) upon the exercise of an Option granted
in connection with a Stock Appreciation Right or the surrender of such Option
pursuant to Section 6(h), the Stock Appreciation Right shall be cancelled to the
extent of the number of Shares as to which the Option is exercised or
surrendered.

 

(v) Simultaneous Exercise of Stock Appreciation Right and Option. The Committee
may provide, either at the time a Stock Appreciation Right is granted in
connection with a Nonqualified Stock Option or thereafter during the term of the
Stock Appreciation Right, that, subject to Section 7(f), upon exercise of such
Option or the surrender of the Option pursuant to Section 6(h), the Stock
Appreciation Right shall automatically be deemed to be exercised to the extent
of the number of Shares as to which the Option is exercised or surrendered. In
such event, the Grantee shall be entitled to receive the amount described in
Section 7(b)(iii) or 7(g) hereof, as the case may be (or some percentage of such
amount if so provided in the Agreement evidencing the Stock Appreciation Right),
in addition to the Shares acquired or cash received pursuant to the exercise or
surrender of the Option. If a Stock Appreciation Right Agreement contains an
automatic exercise provision described in this Section 7(b)(v) and the Option or
any portion thereof to which it relates is exercised within six (6) months from
the date the Stock Appreciation Right is granted, such automatic exercise
provision shall not be effective with respect to that exercise of the Option.
The inclusion in an Agreement evidencing a Stock Appreciation Right of a
provision described in this Section 7(b)(v) may be in addition to and not in
lieu of the right to exercise the Stock Appreciation Right as otherwise provided
herein and in the Agreement.

 

(c) Stock Appreciation Rights Unrelated to an Option. The Committee may grant to
Eligible Employees Stock Appreciation Rights unrelated to Options. Stock
Appreciation Rights unrelated to Options shall contain such terms and conditions
as to exercisability, vesting and duration as the Committee shall determine, but
in no event shall they have a term of greater than ten (10) years. Upon the
death, Disability or Retirement of a Grantee, all Stock Appreciation Rights
shall become immediately exercisable. Upon the death or Disability of a Grantee,
the Stock Appreciation Rights held by that Grantee shall be exercisable for a
period of one (1) year following such termination of employment, and shall
thereafter terminate. Upon the Retirement of a Grantee, the Stock Appreciation
Rights held by that Grantee shall be exercisable for a period of ninety (90)
days following such termination of employment, and shall thereafter terminate.
Except as otherwise provided in Section 7(g), the amount payable upon exercise
of such Stock Appreciation Rights shall be determined in accordance with Section
7(b)(iii), except that “Fair Market Value of a Share on the date of the grant of
the Stock Appreciation Right” shall be substituted for “purchase price under the
related Option.”

 

(d) Method of Exercise. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered in person or by mail to the Secretary
of the Company at the Company’s principal executive office, specifying the
number of Shares with respect to which the Stock Appreciation Right is being
exercised. If requested by the Committee, the Grantee shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised and the
Agreement evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreements to
the Grantee.

 

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(e) Form of Payment. Payment of the amount determined under Sections 7(b)(iii)
or 7(c), may be made solely in whole shares of Common Stock in a number
determined at their Fair Market Value on the date of exercise of the Stock
Appreciation Right or, alternatively, at the sole discretion of the Committee,
solely in cash, or in a combination of cash and Shares as the Committee deems
advisable. In the event that a Stock Appreciation Right is exercised within the
sixty-day period following a Change in Control, any amount payable shall be
solely in cash. If the Committee decides to make full payment in Shares, and the
amount payable results in a fractional Share, payment for the fractional Share
will be made in cash. Notwithstanding the foregoing, no payment in the form of
cash may be made upon the exercise of a Stock Appreciation Right pursuant to
Section 7(b)(iii) or 7(c) to an officer of the Company or a Subsidiary who is
subject to Section 16(b) of the Exchange Act, unless the exercise of such Stock
Appreciation Right is made during the period beginning on the third business day
and ending on the twelfth business day following the date of release for
publication of the Company’s quarterly or annual statements of earnings.

 

(f) Restrictions. No Stock Appreciation Right may be exercised before the date
six (6) months after the date it is granted, except in the event that the death
or Disability of the Grantee occurs before the expiration of the six-month
period.

 

(g) Effect of Change in Control. In the event of a Change in Control, subject to
Section 7(f), all Stock Appreciation Rights shall, for a period of sixty (60)
days following such Change in Control, become immediately and fully exercisable.
Notwithstanding Sections 7(b)(iii) and 7(c), upon the exercise, during the sixty
(60) day period following a Change in Control, of a Stock Appreciation Right
(other than a Stock Appreciation Right granted in connection with an Incentive
Stock Option) or any portion thereof, the amount payable shall be determined by
reference to the Adjusted Fair Market Value (rather than by reference to the
Fair Market Value) of the Shares on the date of such exercise.

 

8. Restricted Stock. The Committee may grant Awards of Restricted Stock which
shall be evidenced by an Agreement between the Company and the Grantee. Each
Agreement shall contain such restrictions, terms and conditions as the Committee
may require and (without limiting the generality of the foregoing) such
Agreements may require that an appropriate legend be placed on Share
certificates. Awards of Restricted Stock shall be subject to the following terms
and provisions:

 

(a) Rights of Grantee.

 

(i) Shares of Restricted Stock granted pursuant to an Award hereunder shall be
issued in the name of the Grantee as soon as reasonably practicable after the
Award is granted and the purchase price, if any, is paid by the Grantee,
provided that the Grantee has executed an Agreement evidencing the Award, an
Escrow Agreement, appropriate blank stock powers and any other documents which
the Committee, in its absolute discretion, may require as a condition to the
issuance of such Shares. If a Grantee shall fail to execute the Agreement
evidencing a Restricted Stock Award, an Escrow Agreement or appropriate blank
stock powers or shall fail to pay the purchase price, if any, for the Restricted
Stock, the Award shall be null and void. Shares issued in connection with a
Restricted Stock Award, together with the stock powers, shall be deposited with
the Escrow Agent. Except as restricted by the terms of the Agreement, upon the
delivery of the Shares to the Escrow Agent, the Grantee shall have all of the
rights of a stockholder

 

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with respect to such Shares, including the right to vote the shares and to
receive, subject to Section 8(d), all dividends or other distributions paid or
made with respect to the Shares.

 

(ii) If a Grantee receives rights or warrants with respect to any Shares which
were awarded to him as Restricted Stock, such rights or warrants or any Shares
or other securities he acquires by the exercise of such rights or warrants may
be held, exercised, sold or otherwise disposed of by the Grantee free and clear
of the restrictions and obligations provided by this Plan.

 

(b) Non-transferability. Until any restrictions upon the Shares of Restricted
Stock awarded to a Grantee shall have lapsed in the manner set forth in Section
8(c), such Shares shall not be sold, transferred or otherwise disposed of and
shall not be pledged or otherwise hypothecated, nor shall they be delivered to
the Grantee. Upon the termination of employment of the Grantee, all of such
Shares with respect to which restrictions have not lapsed shall be resold by the
Grantee to the Company at the same price paid by the Grantee for such Shares or
shall be forfeited and automatically transferred to and reacquired by the
Company at no cost to the Company if no purchase price had been paid for such
Shares. The Committee may also impose such other restrictions and conditions on
the Shares as it deems appropriate.

 

(c) Lapse of Restrictions.

 

(i) Restrictions upon Shares of Restricted Stock awarded hereunder shall lapse
at such time or times and on such terms, conditions and satisfaction of
performance criteria as the Committee may determine; provided, however, that the
restrictions upon such Shares shall lapse only if the Grantee on the date of
such lapse is then and has continuously been an employee of the Company or a
Subsidiary from the date the Award was granted, or unless the Committee sets a
later date for the lapse of such restrictions.

 

(ii) In the event of a Change in Control, all restrictions upon any Shares of
Restricted Stock shall lapse immediately and all such Shares shall become fully
vested in the Grantee thereof.

 

(iii) In the event of termination of employment as a result of death, Disability
or Retirement of a Grantee, all restrictions upon Shares of Restricted Stock
awarded to such Grantee shall thereupon immediately lapse. The Committee may
also decide at any time in its absolute discretion and on such terms and
conditions as it deems appropriate, to remove or modify the restrictions upon
Shares of Restricted Stock awarded hereunder, unless the Committee sets a later
date for the lapse of such restrictions.

 

(d) Treatment of Dividends. At the time of an Award of Shares of Restricted
Stock, the Committee may, in its discretion, determine that the payment to the
Grantee of dividends, or a specified portion thereof, declared or paid on Shares
of Restricted Stock by the Company shall be deferred until the earlier to occur
of (i) the lapsing of the restrictions imposed upon such Shares, in which case
such dividends shall be paid over to the Grantee, or (ii) the forfeiture of such
Shares under Section 8(b) hereof, in which case such dividends shall be
forfeited to the Company, and such dividends shall be held by the Company for
the account of the Grantee until such time. In the event of such deferral,
interest shall be credited on the amount of such dividends held by the Company
for

 

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the account of the Grantee from time to time at such rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends,
together with interest accrued thereon as aforesaid, shall be made upon the
earlier to occur of the events specified in (i) and (ii) of the immediately
preceding sentence, in the manner specified therein.

 

(e) Delivery of Shares. When the restrictions imposed hereunder and in the Plan
expire or have been cancelled with respect to one or more shares of Restricted
Stock, the Company shall notify the Grantee and the Escrow Agent of same. The
Escrow Agent shall then return the certificate covering the Shares of Restricted
Stock to the Company and upon receipt of such certificate the Company shall
deliver to the Grantee (or such Grantee’s legal representative, beneficiary or
heir) a certificate for a number of shares of Common Stock, without any legend
or restrictions (except those required by any federal or state securities laws),
equivalent to the number of Shares of Restricted Stock for which restrictions
have been cancelled or have expired. A new certificate covering Shares of
Restricted Stock previously awarded to the Grantee which remain restricted shall
be issued to the Grantee and held by the Escrow Agent and the Agreement, as it
relates to such shares, shall remain in effect.

 

9. Loans.

 

(a) The Company shall not make or arrange any personal loans to a Grantee or
Optionee who is an executive officer of the Company in connection with the
purchase of Shares pursuant to an Award or in connection with the exercise of an
Option. Such prohibition shall not prevent the Company or a Subsidiary from
making or arranging such loans to an Optionee or Grantee who is not an executive
officer of the Company (if approved by the Committee) in connection with the
purchase of Shares pursuant to an Award or in connection with the exercise of an
Option, subject to the following terms and conditions and such other terms and
conditions not inconsistent with the Plan.

 

(b) No loan made in connection with the purchase of Shares pursuant to an Award
or in connection with the exercise of an Option under the Plan shall exceed the
sum of (i) the aggregate purchase price payable pursuant to the Option or Award
with respect to which the loan is made, plus (ii) the amount of the reasonably
estimated income taxes payable by the Optionee or Grantee with respect to the
Option or Award. In no event may any such loan exceed the Fair Market Value, at
the date of exercise, of any such Shares.

 

(c) No loan shall have an initial term exceeding ten (10) years; provided, that
loans under the Plan shall be renewable at the discretion of the Committee; and
provided, further, that the indebtedness under each loan shall become due and
payable, as the case may be, on a date no later than (i) one (1) year after
termination of the Optionee’s or Grantee’s employment due to death, Retirement
or Disability, or (ii) the date of termination of the Optionee’s or Grantee’s
employment for any reason other than death, Retirement or Disability.

 

(d) Loans in connection with the purchase of Shares pursuant to an Award or in
connection with the exercise of an Option under the Plan may be satisfied by an
Optionee or Grantee, as determined by the Committee, in cash or, with the
consent of the Committee, in whole or in part by the transfer to the Company of
Shares whose Fair Market Value on the date of such payment is equal to the cash
amount for which such Shares are transferred.

 

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(e) A loan in connection with the purchase of Shares pursuant to an Award or in
connection with the exercise of an Option shall be secured by a pledge of Shares
with a Fair Market Value of not less than the principal amount of the loan.
After partial repayment of a loan, pledged shares that are no longer required as
security may be released to the Optionee or Grantee.

 

(f) Every loan in connection with the purchase of Shares pursuant to an Award or
in connection with the exercise of an Option shall meet all applicable laws,
regulations and rules of the Federal Reserve Board and any other governmental
agency having jurisdiction.

 

10. Adjustment Upon Changes in Capitalization.

 

(a) In the event of a Change in Capitalization, the Committee shall conclusively
determine the appropriate adjustments, if any, to the maximum number and class
of shares of stock with respect to which Options or Awards may be granted under
the Plan, the number and class of shares as to which Options or Awards have been
granted under the Plan, and the purchase price therefor, if applicable.

 

(b) Any such adjustment in the Shares or other securities subject to outstanding
Incentive Stock Options (including any adjustments in the purchase price) shall
be made in such manner as not to constitute a modification as defined by Section
425(h)(3) of the Code and only to the extent otherwise permitted by Sections
422A and 425 of the Code.

 

(c) If, by reason of a Change in Capitalization, a Grantee of an Award shall be
entitled to new, additional or different shares of stock or securities (other
than rights or warrants to purchase securities), such new additional or
different shares shall thereupon be subject to all of the conditions,
restrictions and performance criteria which were applicable to the Shares or
units pursuant to the Award prior to such Change in Capitalization.

 

11. Effect of Certain Transactions. In the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in which the Company
is not the surviving corporation or (iii) the sale or disposition of all or
substantially all of the Company’s assets, the Plan and the Options and Awards
issued hereunder shall terminate on the effective date of such transaction,
unless provision is made in connection with such transaction for the assumption
of Options or Awards theretofore granted under the Plan, or the substitution for
such Options or Awards of new options or awards of the Successor Corporation,
with appropriate adjustment as to the number and kind of shares and the purchase
price for shares thereunder.

 

12. Release of Financial Information. A copy of the Company’s annual report to
stockholders shall be delivered to each Optionee and Grantee at the time such
report is distributed to the Company’s stockholders. Upon request the Company
shall furnish to each Optionee and Grantee a copy of its most recent annual
report and each quarterly report and current report filed under the Exchange
Act, since the end of the Company’s prior fiscal year.

 

13. Termination and Amendment of the Plan. The Plan shall terminate on the day
preceding the tenth anniversary of its effective date and no Option or Award may
be granted thereafter. The Board may sooner terminate or amend the Plan at any
time, and from time to time; provided, however, that, except as provided in
Sections 10 and 11 hereof, no amendment shall be effective unless approved by
the stockholders of the Company in accordance with applicable law

 

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and regulations at an annual or special meeting held within twelve months before
or after the date of adoption of such amendment, where such amendment will:

 

(a) increase the number of Shares as to which Options or Awards may be granted
under the Plan;

 

(b) change the class of persons eligible to participate in the Plan;

 

(c) change the minimum purchase price of Shares pursuant to Options or Awards as
provided herein;

 

(d) extend the maximum period for granting or exercising Options provided
herein; or

 

(e) otherwise materially increase the benefits accruing to Eligible Employees
under the Plan.

 

Except as provided in Sections 10 and 11 hereof, rights and obligations under
any Option or Award granted before any amendment of the Plan shall not be
altered or impaired by such amendment, except with the consent of the Optionee
or Grantee, as the case may be.

 

14. Non-Exclusivity of the Plan. The adoption of the Plan by the Board shall not
be construed as amending, modifying or rescinding any previously approved
incentive arrangement or as creating any limitations on the power of the Board
to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or only in specific
cases.

 

15. Limitation of Liability. As illustrative of the limitations of liability of
the Company, but not intended to be exhaustive thereof, nothing in the Plan
shall be construed to;

 

(a) give any person any right to be granted an Option or Award other than at the
sole discretion of the Committee;

 

(b) give any person any rights whatsoever with respect to Shares except as
specifically provided in the Plan;

 

(c) limit in any way the right of the Company to terminate the employment of any
person at any time; or

 

(d) be evidence of any agreement or understanding, expressed or implied, that
the Company will employ any person in any particular position at any particular
rate of compensation or for any particular period of time.

 

16. Regulations and Other Approvals; Governing Law.

 

(a) This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of New Jersey
without giving effect to the choice of law principles thereof, except to the
extent that such law is preempted by federal law.

 

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(b) The obligation of the Company to sell or deliver Shares with respect to
Options and Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

 

(c) The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the provisions of
the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.

 

(d) Except as otherwise provided in Section 13, the Board may make such changes
as may be necessary or appropriate to comply with the rules and regulations of
any government authority or to obtain for Eligible Employees granted Incentive
Stock Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.

 

(e) Each Option and Award is subject to the requirement that, if at any time the
Committee determines, in its absolute discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Shares, no Options shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions unacceptable to the Committee.

 

(f) In the event that the disposition of Shares acquired pursuant to the Plan is
not covered by a then current registration statement under the Securities Act of
1933, as amended, and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent required by the
Securities Act of 1933, as amended, or regulations thereunder, and the Committee
may require any individual receiving Shares pursuant to the Plan, as a condition
precedent to receipt of such Shares (including upon exercise of an Option), to
represent to the Company in writing that the Shares acquired by such individual
are acquired for investment only and not with a view to distribution.

 

17. Miscellaneous.

 

(a) Multiple Agreements. The terms of each Option or Award may differ from other
Options or Awards granted under the Plan at the same time, or at some other
time. The Committee may also grant more than one Option or Award to a given
Eligible Employee during the term of the Plan, either in addition to, or in
substitution for, one or more Options or Awards previously granted to that
Eligible Employee. The grant of multiple Options and/or Awards may be evidenced
by a single Agreement or multiple Agreements, as determined by the Committee.

 

(b) Withholding of Taxes. The Company shall have the right to deduct from any
distribution of cash to any Optionee or Grantee an amount equal to the federal,
state and local income taxes and other amounts required by law to be withheld
with respect to any Option or Award. Notwithstanding anything to the contrary
contained herein, if an Optionee or Grantee is entitled to receive Shares upon
exercise of an Option or pursuant to an Award, the Company shall

 

16

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have the right to require such Optionee or Grantee, prior to the delivery of
such Shares, to pay to the Company the amount of any federal, state or local
income taxes and other amounts which the Company is required by law to withhold.
The Agreement evidencing any Incentive Stock Options granted under this Plan
shall provide that if the Optionee makes a disposition, within the meaning of
Section 425(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to him or her pursuant to his or her exercise of the Incentive
Stock Option within the two-year period commencing on the day after the date of
grant of such Option or within the one-year period commencing on the day after
the date of transfer of the Share or Shares to the Optionee pursuant to the
exercise of such Option, he or she shall, within ten (10) days of such
disposition, notify the Company thereof and immediately deliver to the Company
any amount of federal income tax withholding required by law.

 

(c) Designation of Beneficiary. Each Optionee and Grantee may, with the consent
of the Committee, designate a person or persons to receive in the event of
his/her death, any Option or Award or any amount payable pursuant thereto, to
which he/she would then be entitled. Such designation will be made upon forms
supplied by and delivered to the Company and may be revoked in writing. If an
Optionee fails effectively to designate a beneficiary, then his/her estate will
be deemed to be the beneficiary.

 

18. Effective Date. The effective date of the Plan shall be the date of its
adoption by the Board, subject only to the approval by the affirmative vote of a
majority of the votes eligible to be cast at a meeting of stockholders to be
held within twelve (12) months of such adoption.

 

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