EXHIBIT
4.3

     

    WARWICK
VALLEY TELEPHONE COMPANY

     

    2008
LONG-TERM INCENTIVE PLAN

     

    
      	
              1.

            	
              Purpose

            


    

     

    The
purpose of the Warwick Valley Telephone Company 2008 Long-Term Incentive Plan
(the “Plan”) is to assist the Company and its Affiliates in attracting,
motivating and retaining selected individuals to serve as employees, directors,
consultants and advisors of the Company and its Affiliates by providing
incentives to such individuals through the ownership and performance of the
Company’s common stock.

     

    
      	
              2.

            	
              Definitions

            


    

     

    (a)           “Affiliate” means any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the relevant time each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all classes of stock in
one of the other corporations in the chain.

     

    (b)          “Award” means an
Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit
Award or Performance Award granted under the Plan.

     

    (c)           “Award Agreement”
means the document or agreement evidencing the grant of an Award by the
Company.

     

    (d)          “Board” means the
board of directors of the Company.

     

    (e)           “Code” means the
Internal Revenue Code of 1986, as amended from time to time.

     

    (f)           “Committee” means the
Compensation Committee of the Board or any successor committee of the Board
designated by the Board to administer the Plan.  The Committee shall
consist of not less than such number of Directors as shall be required to permit
Awards granted under the Plan to qualify under Rule 16b-3 of the Exchange
Act.  Each member of the Committee shall be (i) a “non-employee
director” within the meaning of Rule 16b-3 of the Exchange Act, (ii) an “outside
director” within the meaning of Section 162(m) of the Code, and (iii) an
“independent director” for purpose of the NASDAQ rules and
regulations.

     

    (g)           “Company” means
Warwick Valley Telephone Company, a New York corporation.

     

    (h)          “Covered Employee”
means an employee of the Company or its Affiliates who is a “covered employee”
within the meaning of Section 162(m) of the Code.

     

    (i)  
         “Director” means a
non-employee member of the Board.

     

    (j)    
       “Eligible Person”
means any employee, Director, consultant or advisor providing services to the
Company or an Affiliate whom the Committee determines to be an Eligible
Person.  An Eligible Person must be an individual.

     

    (k)           “Exchange Act” means
the Securities Exchange Act of 1934, as amended from time to time.

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (l)       
    “Fair Market Value”
means, with respect to any property other than Shares, the market value of such
property determined by such methods or procedures as established from time to
time by the Committee.  The Fair Market Value of Shares as of any date
shall be the per Share closing price of the Shares as reported on NASDAQ on that
date (or if there were no reported prices on such date, on the last preceding
date on which the prices were reported) or, if the Company is not then listed on
NASDAQ, on such other principal securities exchange on which the Shares are
traded, and if the Company is not listed on NASDAQ or any other securities
exchange, the Fair Market Value of Shares shall be determined by the Committee
in its sole discretion using appropriate criteria.

     

    (m)          “Incentive Stock
Option” means a stock option granted under Section 5 that is intended to
meet the requirements of Section 422 of the Code.

     

    (n)           “Limitations” has the
meaning set forth in Section 9(e).

     

    (o)           “Non-Qualified Stock
Option” means a stock option granted under Section 5 that is not intended
to be an Incentive Stock Option

     

    (p)           “Option” means an
Incentive Stock Option or a Non-Qualified Stock Option.

     

    (q)           “Participant” means an
Eligible Person who receives an Award under the Plan.

     

    (r)           “Performance Award”
means any Award of Performance Cash or Performance Shares granted pursuant to
Section 8.

     

    (s)           “Performance Cash”
means any cash incentives granted pursuant to Section 8 that will be paid to the
Participant upon the achievement of such performance goals as the Committee
shall establish.

     

    (t)           “Performance Period”
means that period established by the Committee during which any performance
goals specified by the Committee with respect to such Award are to be
measured.

     

    (u)          “Performance Share”
means any grant pursuant to Section 8 of a unit valued by reference to a
designated number of Shares, which value will be paid to the Participant upon
achievement of such performance goals as the Committee shall
establish.

     

    (v)          “Restricted Stock”
means any Share issued with the restriction that the holder may not sell,
transfer, pledge or assign such Share and with such other restrictions as the
Committee, in its sole discretion, may impose (including any restriction on the
right to vote such Share and the right to receive any dividends).

     

    (w)          “Restricted Stock
Unit” means an Award that is valued by reference to a Share, which value
may be paid to the Participant by delivery of such property as the Committee
shall determine, including without limitation, cash or Shares, or any
combination thereof, and that has such restrictions as the Committee, in its
sole discretion, may impose.

     

    (x)           “Shares” means the
shares of common stock of the Company, par value $0.01 per share.

     

    (y)          “Stock Appreciation
Right” means the right granted to a Participant pursuant to Section
6.

     

    
      
         


      

      
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    (z)           “Substitute Awards”
means Awards granted or Shares issued by the Company in assumption of, or in
substitution or exchange for, awards previously granted, or the right or
obligation to make future awards, in each case by a company acquired by the
Company or any Affiliate or with which the Company or any Affiliate
combines.

     

    (aa)         “Vesting Period” has
the meaning set forth in Section 7(a).

     

    
      	
              3.

            	
              Available
      Shares

            


    

     

    (a)           Aggregate Shares
Available.  Subject to adjustment as provided in
Section 11(b), a total of 500,000 Shares shall be authorized for issuance
under the Plan.  Shares to be issued under the Plan may be either
authorized but unissued Shares, or Shares that have been reacquired by the
Company and designated as treasury shares.

     

    (b)           Accounting for
Awards.

     

    (i)           For
purposes of this Section 3, if an Award entitles the holder thereof to receive
or purchase Shares, the number of Shares covered by such Award or to which such
Award relates shall be counted on the date of grant of such Award against the
aggregate number of Shares available for granting Awards under the
Plan.

     

    (ii)          If
any Shares subject to an Award are forfeited, expire or otherwise terminate
without issuance of such Shares, or any Award is settled for cash or otherwise
does not result in the issuance of all or a portion of the Shares subject to
such Award, such Shares shall, to the extent of such forfeiture, expiration,
termination, cash settlement or non-issuance, again be available for issuance
under the Plan; provided, however, in the case of a Stock Appreciation Right,
the number of shares available for issuance under the Plan shall be reduced by
the number of Shares underlying the Stock Appreciation Right, and not just the
Shares actually issued upon the exercise of the Stock Appreciation
Right.

     

    (iii)         In
the event that (1) any Option or other Award granted hereunder is exercised
through the tendering of Shares (either actually or by attestation) or by the
withholding of Shares by the Company, or (2) withholding tax liabilities arising
from such Option or other Award are satisfied by the tendering of Shares (either
actually or by attestation) or by the withholding of Shares by the Company, then
the Shares so tendered or withheld shall be available for issuance under the
Plan.

     

    (c)           Plan Limitation on
Restricted Stock and Restricted Stock Units.  Subject to
adjustment as provided in Section 11(b), no more than 200,000 Shares shall
be available under the Plan for issuance pursuant to grants of Restricted Stock
and Restricted Stock Units; provided, however, that if any Awards of Restricted
Stock Units terminate or are forfeited or cancelled without the issuance of any
Shares or if the Shares underlying an Award of Restricted Stock are forfeited or
otherwise reacquired by the Company prior to vesting, then the Shares subject to
such termination, forfeiture, cancellation or reacquisition by the Company shall
again be available for grants of Restricted Stock and Restricted Stock Units for
purposes of this limitation on grants of such Awards.

     

    
      	
              4.

            	
              Eligibility
      and Administration

            


    

     

    (a)           Eligibility.  Any
Eligible Person shall be eligible to be designated a Participant.  In
determining which Eligible Persons shall receive an Award and the terms of any
Award, the Committee may take into account the nature of the services rendered
by the respective Eligible Persons, their present and potential contributions to
the success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant.  Notwithstanding the foregoing, an
Incentive Stock Option may only be granted to an employee and an Incentive Stock
Option may not be granted to an employee of an Affiliate unless such Affiliate
is also a “subsidiary corporation” of the Company within the meaning of Section
424(f) of the Code.

     

    
      
         


      

      
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    (b)           Administration.

     

    (i)           The
Plan shall be administered by the Committee.  The Committee shall have
full power and authority, subject to the provisions of the Plan to:
(1) select the Eligible Persons to receive Awards; (2) determine the
type or types of Awards, not inconsistent with the provisions of the Plan, to be
granted to each Participant; (3) determine the number of Shares to be
covered by each Award; (4) determine the terms and conditions, not
inconsistent with the provisions of the Plan, of any Award; (5) determine
whether, to what extent and under what circumstances Awards may be settled in
cash, Shares or other property; (6) determine whether, to what extent and
under what circumstances any Award shall be canceled or suspended;
(7) interpret and administer the Plan and any Award Agreement; (8) correct
any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent that the Committee shall deem
desirable to carry it into effect; (9) establish such rules and regulations
and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; (10) determine whether any Award (other than an
Option or Stock Appreciation Right) will have dividend equivalents; and
(11) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the
Plan.  Decisions of the Committee shall be final, conclusive and
binding on all persons or entities, including the Company, any Participant, and
any Affiliate.  Notwithstanding the foregoing, any action or
determination by the Committee specifically affecting or relating to an Award to
a director shall require the prior approval of the Board.

     

    (ii)           Other
than pursuant to Section 11(b), the Committee may not, without the approval of
the Company’s shareholders, (a) lower the exercise price of an Option or the
strike price of a Stock Appreciation Right after it is granted, (b) cancel
an Option or Stock Appreciation Right in exchange for cash or another Award
(other than in connection with Substitute Awards), or (c) take any other action
with respect to an Option or Stock Appreciation Right that would be treated as a
repricing under the NASDAQ rules and regulations.

     

    (iii)         The
Committee may delegate its powers and duties under the Plan to one or more
directors (including a director who is also an officer of the Company) or a
committee of directors, subject to such terms, conditions and limitations as the
Committee may establish in its sole discretion; provided, however, that the
Committee shall not delegate its powers and duties under the Plan (1) with
regard to officers or directors of the Company or any Affiliate who are subject
to Section 16 of the Exchange Act or (2) in such a manner as would cause the
Plan not to comply with the requirements of Section 162(m) of the
Code.  In addition, the Committee may authorize one or more officers
of the Company to grant Awards under the Plan, to the extent permitted by
applicable law; provided, however, that such officers shall not be authorized to
grant Awards to officers or directors of the Company or any Affiliate who are
subject to Section 16 of the Exchange Act.

     

    (iv)         Notwithstanding
anything to the contrary contained herein, the Board may, at any time and from
time to time, without any further action of the Committee, exercise the powers
and duties of the Committee under the Plan, unless the exercise of such powers
and duties by the Board would cause the Plan not to comply with the requirements
of Section 162(m) of the Code, Section 16 of the Exchange Act, the NASDAQ rules
and regulations or other pertinent laws.

     

    
      
         


      

      
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              5.

            	
              Options

            


    

     

    (a)           Grant.  Options
may be granted hereunder to Participants either alone or in addition to other
Awards granted under the Plan.  Any Option shall be subject to the
terms and conditions of this Section and to such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall deem desirable.  The receipt of an Option pursuant to the Plan
shall impose no obligation on the recipient to exercise such
Option.

     

    (b)          Exercise
Price.  Other than in connection with Substitute Awards, the
exercise price per Share of each Option shall not be less than 100 percent of
the Fair Market Value of one Share on the date of grant of such
Option.

     

    (c)           Term.  The
term of each Option shall be fixed by the Committee in its sole discretion;
provided that no Option shall be exercisable after the expiration of ten years
from the date the Option is granted.

     

    (d)           Exercise.

     

    (i)           Vested
Options granted under the Plan shall be exercised by the Participant (or by the
Participant’s executors, administrators, guardian or legal representative, as
may be provided in an Award Agreement) as to all or part of the Shares covered
thereby, by giving notice of exercise to the Company or its designated agent,
specifying the number of Shares to be purchased.  The notice of
exercise shall be in such form, made in such manner, and in compliance with such
other requirements consistent with the provisions of the Plan as the Committee
may prescribe from time to time.

     

    (ii)          Unless
otherwise provided in an Award Agreement, full payment of an Option’s exercise
price shall be made at the time of exercise and shall be made (1) in cash or
cash equivalents (including certified check or bank check or wire transfer of
immediately available funds), (2) by tendering previously acquired Shares
(either actually or by attestation, valued at their then Fair Market Value), (3)
with the consent of the Committee, by withholding Shares otherwise issuable in
connection with the exercise of the Option, (4) through any other method
specified in an Award Agreement, or (5) any combination of any of the
foregoing.  The notice of exercise, accompanied by such payment, shall
be delivered to the Company at its principal business office or such other
office as the Committee may from time to time direct, and shall be in such form,
containing such further provisions consistent with the provisions of the Plan,
as the Committee may from time to time prescribe.  In no event may any
Option be exercised for a fraction of a Share.  No adjustment shall be
made for cash dividends or other rights for which the record date is prior to
the date of such issuance.  Except for Substitute Awards, or as may be
set forth in an Award Agreement with respect to the retirement, death or
disability of a Participant or a change of control of the Company, Options
granted to employees of the Company or any Affiliate will not be exercisable
before the expiration of one year from the date the Option is granted (but may
become exercisable pro rata over such time).

     

    (e)           Incentive Stock
Options.  The Committee may grant Incentive Stock Options to
any employee of the Company or any Affiliate, subject to the requirements of
Section 422 of the Code.  Solely for purposes of determining whether
Shares are available for the grant of Incentive Stock Options under the Plan,
the maximum aggregate number of Shares that may be issued pursuant to “incentive
stock options” granted under the Plan shall be 500,000 Shares, subject to
adjustments provided in Section 11(b).

     

    
      
         


      

      
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              6.

            	
              Stock
      Appreciation Rights

            


    

     

    (a)           Grant.  Stock
Appreciation Rights may be granted hereunder to Participants in conjunction with
all or part of any Option granted under the Plan, or at any subsequent time
during the term of such Option, or without regard to any Option, in each case
upon such terms and conditions as the Committee may establish in its sole
discretion.  The receipt of a Stock Appreciation Right pursuant to the
Plan shall impose no obligation on the recipient to exercise such Stock
Appreciation Right.

     

    (b)           Strike
Price.  Other than in connection with Substitute Awards, the
strike price per Share of any Stock Appreciation Right shall not be less than
100 percent of the Fair Market Value of one Share on the date of grant of such
Stock Appreciation Right.

     

    (c)           Term.  The
term of each Stock Appreciation Right shall be fixed by the Committee in its
sole discretion; provided that no Stock Appreciation Right shall be exercisable
after the expiration of ten years from the date the Stock Appreciation Right is
granted.

     

    (d)           Exercise.

     

    (i)           Except
for Substitute Awards, or as may be set forth in an Award Agreement with respect
to the retirement, death or disability of a Participant or a change of control
of the Company, Stock Appreciation Rights granted to employees of the Company or
any Affiliate will not be exercisable before the expiration of one year from the
date the Stock Appreciation Right is granted (but may become exercisable pro
rata over such time).

     

    (ii)          Vested
Stock Appreciation Rights granted under the Plan shall be exercised by the
Participant (or by the Participant’s executors, administrators, guardian or
legal representative, as may be provided in an Award Agreement) as to all or
part of the Shares covered thereby, by giving notice of exercise to the Company
or its designated agent, specifying the number of Shares so
exercised.  The notice of exercise shall be in such form, made in such
manner, and in compliance with such other requirements consistent with the
provisions of the Plan as the Committee may prescribe from time to
time.

     

    (iii)         Upon
the exercise of a Stock Appreciation Right, the holder shall have the right to
receive with respect to each Share so exercised the excess of the Fair
Market Value of one Share on the date of exercise over the per-Share strike
price of the Stock Appreciation Right.  Upon the exercise of a Stock
Appreciation Right, the Committee shall determine in its sole discretion whether
payment shall be made in cash, in whole Shares or other property, or any
combination thereof.

     

    
      	
              7.

            	
              Restricted
      Stock and Restricted Stock Units

            


    

     

    (a)           Grant.  Awards
of Restricted Stock and of Restricted Stock Units may be issued to Participants
either alone or in addition to other Awards granted under the Plan, and such
Restricted Stock Awards and Restricted Stock Unit Awards shall also be available
as a form of payment of Performance Awards and other earned cash-based incentive
compensation.  A Restricted Stock Award or Restricted Stock Unit Award
shall be subject to vesting restrictions imposed by the Committee covering a
period of time specified by the Committee (the “Vesting
Period”).   The Committee has absolute discretion to determine
whether any consideration (other than services) is to be received by the Company
or any Affiliate as a condition precedent to the issuance of Restricted Stock or
Restricted Stock Units.

     

    
      
         


      

      
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    (b)           Rights of Holders of
Restricted Stock.  Unless otherwise provided in the Award
Agreement, beginning on the date of grant of the Restricted Stock Award, the
Participant shall become a shareholder of the Company with respect to all Shares
subject to the Award Agreement and shall have all of the rights of a
shareholder, including the right to vote such Shares and the right to receive
distributions made with respect to such Shares.  Except as otherwise
provided in an Award Agreement, any Shares or any other property (other than
cash) distributed as a dividend or otherwise with respect to any Restricted
Stock Award as to which the restrictions have not yet lapsed shall be subject to
the same restrictions as such Restricted Stock Award.

     

    (c)           Rights of Holders of
Restricted Stock Units.  A Participant receiving a Restricted
Stock Unit Award shall not possess voting rights or the right to receive cash
dividends with respect to such Award.  Except as otherwise provided in
an Award Agreement, any Shares or any other property (other than cash)
distributed as a dividend or otherwise with respect to any Restricted Stock Unit
Award as to which the restrictions have not yet lapsed shall be subject to the
same restrictions as such Restricted Stock Unit Award.

     

    (d)           Minimum Vesting
Period.  Except for Substitute Awards, or as may be set forth
in an Award Agreement with respect to the retirement, death or disability of a
Participant or a change of control of the Company, or special circumstances
determined by the Committee, such as the achievement of performance objectives
(which shall have a minimum Vesting Period of one year), Restricted Stock Awards
and Restricted Stock Unit Awards subject solely to the continued employment of
employees of the Company or an Affiliate shall have a Vesting Period of not less
than three years from date of grant (but permitting pro rata vesting over such
time); provided that such restrictions shall not be applicable to (i) grants to
new hires to replace forfeited awards from a prior employer, or (ii) grants of
Restricted Stock or Restricted Stock Units in payment of Performance Awards and
other earned cash-based incentive compensation. Subject to the foregoing
minimum Vesting Period requirements, the Committee may, in its sole discretion
and subject to the limitations imposed under Section 162(m) of the Code and the
regulations thereunder in the case of a Restricted Stock Award or Restricted
Stock Unit Award intended to comply with the performance-based exception under
Section 162(m) of the Code, waive the forfeiture period and any other conditions
set forth in any Award Agreement subject to such terms and conditions as the
Committee shall deem appropriate.  The minimum Vesting Period
requirements of this Section shall not apply to Restricted Stock Awards or
Restricted Stock Unit Awards granted to directors or any consultant or advisor
who provides services to the Company or an Affiliate.

     

    
      	
              8.

            	
              Performance
      Awards

            


    

     

    (a)           Grant.  Performance
Awards in the form of Performance Cash or Performance Shares, as determined by
the Committee in its sole discretion, may be granted hereunder to Participants,
for no consideration or for such minimum consideration as may be required by
applicable law, either alone or in addition to other Awards granted under the
Plan. The performance goals to be achieved for each Performance Period shall be
conclusively determined by the Committee and may be based upon the criteria set
forth in Section 9(b).

     

    (b)           Terms and
Conditions.  The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall be determined
by the Committee upon the grant of each Performance Award; provided, however,
that a Performance Period shall not be shorter than 12 months.  The
amount of the Award to be distributed shall be conclusively determined by the
Committee.

     

    (c)           Payment.  Except
as may be provided in an Award Agreement with respect to the retirement, death
or disability of a Participant or a change of control of the Company,
Performance Awards will be distributed only after the end of the relevant
Performance Period.  Performance Awards may be paid in cash, Shares,
other property, or any combination thereof, in the sole discretion of the
Committee.  Performance Awards may be paid in a lump sum or in
installments following the close of the Performance Period or, in accordance
with procedures established by the Committee, on a deferred basis subject to the
requirements of Section 409A of the Code.

     

    
      
         


      

      
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              9.

            	
              Section
      162(m) Qualifying Performance-Based
Compensation

            


    

     

    (a)           Covered
Employees.  Notwithstanding any other provision of the Plan, if
the Committee determines at the time a Restricted Stock Award, a Restricted
Stock Unit Award or a Performance Award is granted to a Participant who is, or
is likely to be, as of the end of the tax year in which the Company would claim
a tax deduction in connection with such Award, a Covered Employee, then the
Committee may provide that this Section 9 is applicable to such
Award.

     

    (b)           Performance
Criteria. 
If the Committee determines that a Restricted Stock Award, a Restricted Stock
Unit or a Performance Award is intended to be subject to this Section 9,
the lapsing of restrictions thereon and the distribution of cash, Shares or
other property pursuant thereto, as applicable, shall be subject to the
achievement of one or more objective performance goals established by the
Committee in its sole discretion, which shall be based on the attainment of
specified levels of one or any combination of the following:  net
sales; revenue; revenue growth or product revenue growth; operating income
(before or after taxes); pre- or after-tax income (before or after allocation of
corporate overhead and bonus); earnings per share; net income (before or after
taxes); return on equity; total shareholder return; return on assets or net
assets; appreciation in and/or maintenance of the price of the Shares or any
other publicly-traded securities of the Company; market share; gross profits;
earnings (including earnings before taxes, earnings before interest and taxes or
earnings before interest, taxes, depreciation and amortization); economic
value-added models or equivalent metrics; comparisons with various stock market
indices; reductions in costs; cash flow or cash flow per share (before or after
dividends); return on capital (including return on total capital or return on
invested capital); cash flow return on investment; improvement in or attainment
of expense levels or working capital levels; operating margins, gross margins or
cash margin; year-end cash; debt reductions; shareholder equity; market share;
regulatory achievements; and implementation, completion or attainment of
measurable objectives with respect to research, development, products or
projects, production volume levels, acquisitions and divestitures and recruiting
and maintaining personnel.  Such performance goals also may be based
solely by reference to the Company’s performance or the performance of a
Affiliate, division, business segment or business unit of the Company, or based
upon the relative performance of other companies or upon comparisons of any of
the indicators of performance relative to other companies.  The
Committee may also exclude charges related to an event or occurrence which the
Committee determines should appropriately be excluded, including (1)
restructurings, discontinued operations, extraordinary items, and other unusual
or non-recurring charges, (2) an event either not directly related to the
operations of the Company or not within the reasonable control of the Company’s
management, or (3) the cumulative effects of tax or accounting changes in
accordance with US generally accepted accounting principles.  Such
performance goals shall be set by the Committee within the time period
prescribed by, and shall otherwise comply with the requirements of,
Section 162(m) of the Code and the regulations thereunder.

     

    (c)           Adjustments.  Notwithstanding
any provision of the Plan, with respect to any Restricted Stock Award,
Restricted Stock Unit Award or Performance Award that is subject to this
Section 9, the Committee may adjust downwards, but not upwards, the amount
payable pursuant to such Award, and the Committee may not waive the achievement
of the applicable performance goals, except in the case of the death or
disability of the Participant or as otherwise determined by the Committee in
special circumstances.

     

    (d)           Restrictions.  The
Committee shall have the power to impose such other restrictions on Awards
subject to this Section as it may deem necessary or appropriate to ensure
that such Awards satisfy all requirements for “performance-based compensation”
within the meaning of Section 162(m) of the Code.

     

    
      
         


      

      
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    (e)           Limitations on Grants to
Individual Participants.  Subject to adjustment as provided in
Section 11(b), no Participant may be granted (i) Options or Stock Appreciation
Rights during any calendar year with respect to more than 60,000 Shares or (ii)
Restricted Stock Awards, Restricted Stock Unit Awards or Performance Awards in
any calendar year that are intended to comply with the performance-based
exception under Section 162(m) of the Code and are denominated in Shares with
respect to more than 30,000 Shares (the “Limitations”).  In addition
to the foregoing, the maximum dollar value payable to any Participant in any
calendar year with respect to Performance Awards that are intended to comply
with the performance-based exception under Section 162(m) of the Code and are
denominated in cash is $2,000,000.  If an Award is cancelled, the
cancelled Award shall continue to be counted toward the applicable
Limitations.

     

    
      	
              10.

            	
              Generally
      Applicable Provisions

            


    

     

    (a)           Award
Agreements.  The terms of an Award granted under the Plan shall
be set forth in a written Award Agreement which shall contain provisions
determined by the Committee and not inconsistent with the Plan. The terms of
Awards need not be the same with respect to each type of Award or each
Participant.

     

    (b)           Transferability of
Awards.  No Award and no Shares subject to Awards that have not
been issued or as to which any applicable restriction, performance or deferral
period has not lapsed, may be sold, assigned, transferred, pledged or otherwise
encumbered, other than by will or the laws of descent and distribution, and such
Award may be exercised during the life of the Participant only by the
Participant or the Participant’s guardian or legal representative.

     

    (c)           Termination of
Employment.  The Committee shall determine and set forth in
each Award Agreement whether any Awards granted in such Award Agreement will
continue to be exercisable, and the terms of such exercise, on and after the
date that a Participant ceases to be employed by or to provide services to the
Company or any Affiliate (including as a Director), whether by reason of death,
disability, voluntary or involuntary termination of employment or services, or
otherwise.  The date of termination of a Participant’s employment or
services will be determined by the Committee, which determination will be
final.

     

    (d)           Dividend
Equivalents.  Subject to the provisions of the Plan and any
Award Agreement, the recipient of an Award (other than an Option or Stock
Appreciation Right) may, if so determined by the Committee, be entitled to
receive, currently or on a deferred basis, cash, stock or other property
dividends, or cash payments in amounts equivalent to cash, stock or other
property dividends on Shares with respect to the number of Shares covered by the
Award, as determined by the Committee, in its sole discretion.  The
Committee may provide that any such amounts or dividend equivalents shall be
deemed to have been reinvested in additional Shares or otherwise reinvested and
may provide that any such amounts or dividend equivalents are subject to the
same vesting or performance conditions as the underlying Award.

     

    
      
         


      

      
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    (e)           Tax
Withholding.  The Company shall have the right to make all
payments or distributions pursuant to the Plan to a Participant net of any
applicable federal, state and local taxes required to be paid or withheld as a
result of (i) the grant of any Award, (ii) the exercise of an Option or Stock
Appreciation Right, (iii) the delivery of Shares or cash, (iv) the lapse of any
restrictions in connection with any Award or (v) any other event occurring
pursuant to the Plan.  The Company or any Affiliate shall have the
right to withhold from wages or other amounts otherwise payable to such
Participant such withholding taxes as may be required by law, or to otherwise
require the Participant to pay such withholding taxes.  If the
Participant shall fail to make such tax payments as are required, the Company or
its Affiliates shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to such Participant or
to take such other action as may be necessary to satisfy such withholding
obligations.  The Committee shall be authorized to establish
procedures for election by Participants to satisfy such obligation for the
payment of such taxes by tendering previously acquired Shares (either actually
or by attestation, valued at their then Fair Market Value), or by directing the
Company to retain Shares (up to the Participant’s minimum required tax
withholding rate or such other rate that will not trigger a negative accounting
impact) otherwise deliverable in connection with the Award.

     

    
      	
              11.

            	
              Miscellaneous

            


    

     

    (a)           Amendment and Termination of
the Plan.  The Board may, from time to time, alter, amend,
suspend or terminate the Plan as it shall deem advisable, subject to any
requirement for shareholder approval imposed by applicable law, including the
rules and regulations of the principal securities market on which the Shares are
traded; provided that the Board may not amend the Plan in any manner that would
result in noncompliance with Rule 16b-3 of the Exchange Act; and further
provided that the Board may not, without the approval of the Company’s
shareholders, amend the Plan to (i) increase the number of Shares that may be
the subject of Awards under the Plan (except for adjustments pursuant to Section
11(b)), (ii) expand the types of Awards available under the Plan, (iii)
materially expand the class of persons eligible to participate in the Plan, (iv)
increase the maximum permissible term of any Option specified by Section 5(c) or
the maximum permissible term of a Stock Appreciation Right specified by Section
6(c), (v) expand the permissible performance criteria under Section 9(b), or
(vi) amend any provision of Section 3(c), Section 5(b), Section 6(b),
Section 7(d) or Section 9(e).  The Board may not, without the
approval of the Company’s shareholders, take any other action with respect to an
Option or Stock Appreciation Right that may be treated as a repricing under the
rules and regulations of the principal securities market on which the Shares are
traded, including a reduction of the exercise price of an Option or the grant
price of a Stock Appreciation Right or the exchange of an Option or Stock
Appreciation Right for cash or another Award.  In addition, no
amendments to, or termination of, the Plan shall in any way impair the rights of
a Participant under any Award previously granted without such Participant’s
consent.

     

    (b)          Adjustments.  In
the event of any merger, reorganization, consolidation, recapitalization,
dividend or distribution (whether in cash, shares or other property, other than
a regular cash dividend), stock split, reverse stock split, spin-off or similar
transaction or other change in corporate structure affecting the Shares or the
value thereof, such adjustments and other substitutions shall be made to the
Plan and to Awards as the Committee, in its sole discretion, deems equitable or
appropriate taking into consideration the accounting and tax consequences,
including such adjustments in the aggregate number, class and kind of securities
that may be delivered under the Plan, the maximum number of Shares that may be
issued as Restricted Stock Awards and Restricted Stock Unit Awards, the
Limitations, the maximum number of Shares that may be issued as Incentive Stock
Options and, in the aggregate or to any one Participant, in the number, class,
kind and exercise or strike price of securities subject to outstanding Awards
granted under the Plan (including, if the Committee deems appropriate, the
substitution of similar options to purchase the shares of, or other awards
denominated in the shares of, another company) as the Committee may determine to
be appropriate in its sole discretion; provided, however, that the number of
Shares subject to any Award shall always be a whole number.

     

    
      
         


      

      
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    (c)           No Right to Awards or to
Continued Employment or Service.  Nothing in the Plan nor the
grant of an Award hereunder shall confer upon any employee or Director the right
to continue in the employment or service of the Company or any Affiliate or
affect any right that the Company or any Affiliate may have to terminate the
employment or service of (or to demote or to exclude from future Awards under
the Plan) any such employee or Director at any time for any
reason.  Except as specifically provided by the Committee, the Company
shall not be liable for the loss of existing or potential profit from an Award
granted in the event of termination of an employment or other
relationship.  No employee or Participant shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment of employees or Participants under the Plan.

     

    (d)           Substitute
Awards.  Notwithstanding any other provision of the Plan, the
terms of Substitute Awards may vary from the terms set forth in the Plan to the
extent the Committee deems appropriate to conform, in whole or in part, to the
provisions of the awards in substitution for which they are
granted.

     

    (e)           Cancellation of
Award.  Notwithstanding anything to the contrary contained
herein, an Award Agreement may provide that the Award shall be canceled if the
Participant, without the consent of the Company, while employed by the Company
or any Affiliate or after termination of such employment or service, establishes
a relationship with a competitor of the Company or any Affiliate or engages in
activity that is in conflict with or adverse to the interest of the Company or
any Affiliate, as determined by the Committee in its sole
discretion.  The Committee may provide in an Award Agreement that if
within the time period specified in the Agreement the Participant establishes a
relationship with a competitor or engages in an activity referred to in the
preceding sentence, the Participant will forfeit any gain realized on the
vesting or exercise of the Award and must repay such gain to the
Company.

     

    (f)           Stop Transfer
Orders.  All certificates for Shares delivered under the Plan
pursuant to any Award shall be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Shares are then listed, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such
restrictions.

     

    (g)           Nature of
Payments.  All Awards made pursuant to the Plan are in
consideration of services performed or to be performed for the Company or any
Affiliate, division or business unit of the Company.  Any income or
gain realized pursuant to Awards under the Plan and any Stock Appreciation
Rights constitute a special incentive payment to the Participant and shall not
be taken into account, to the extent permissible under applicable law, as
compensation for purposes of any of the employee benefit plans of the Company or
any Affiliate except as may be determined by the Committee or by the Board or
board of directors of the applicable Affiliate.

     

    (h)           Other
Plans.  Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

     

    (i)           Severability.  If
any provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part by a court of competent jurisdiction, such
provision shall (i) be deemed limited to the extent that such court of competent
jurisdiction deems it lawful, valid and/or enforceable and as so limited shall
remain in full force and effect, and (ii) not affect any other provision of
the Plan or part thereof, each of which shall remain in full force and
effect.  If the making of any payment or the provision of any other
benefit required under the Plan shall be held unlawful or otherwise invalid or
unenforceable by a court of competent jurisdiction, such unlawfulness,
invalidity or unenforceability shall not prevent any other payment or benefit
from being made or provided under the Plan, and if the making of any payment in
full or the provision of any other benefit required under the Plan in full would
be unlawful or otherwise invalid or unenforceable, then such unlawfulness,
invalidity or unenforceability shall not prevent such payment or benefit from
being made or provided in part, to the extent that it would not be unlawful,
invalid or unenforceable, and the maximum payment or benefit that would not be
unlawful, invalid or unenforceable shall be made or provided under the
Plan.

     

    
      
         


      

      
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    (j)           Unfunded Status of the
Plan.  The Plan is intended to constitute an “unfunded” plan
for incentive compensation.  With respect to any payments not yet made
to a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.  In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver the Shares or payments in lieu of or with respect to Awards
hereunder; provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.

     

    (k)           Governing
Law.  The Plan and all determinations made and actions taken
thereunder, to the extent not otherwise governed by the Code or the laws of the
United States, shall be governed by the laws of the State of New York, without
reference to principles of conflict of laws, and construed
accordingly.

     

    (l)           Effective Date of Plan;
Termination of Plan.  The Plan shall be effective on the later
to occur of:  (i) the date of the approval of the Plan by the
shareholders of the Company; (ii) the approval by or consent to the Plan by
the New York Public Service Commission; (iii) the approval by or consent to the
Plan by the New Jersey Public Utilities Board; and (iv) the satisfaction by the
Company of the requirements of any other regulatory authority necessary for the
Plan to become effective.  The Plan shall be null and void and of no
effect if the foregoing conditions are not fulfilled and in such event each
Award shall, notwithstanding any of the preceding provisions of the Plan, be
null and void and of no effect.  Awards may be granted under the Plan
at any time and from time to time on or prior to the tenth anniversary of the
effective date of the Plan, on which date the Plan will expire except as to
Awards then outstanding under the Plan.  Such outstanding Awards shall
remain in effect until they have been exercised or terminated, or have
expired.

     

    (m)          Compliance with Section 409A
of the Code.  The Plan is intended to comply and shall be
administered in a manner that is intended to comply with Section 409A of the
Code and shall be construed and interpreted in accordance with such
intent.  To the extent that an Award or the payment, settlement or
deferral thereof is subject to Section 409A of the Code, the Award shall be
granted, paid, settled or deferred in a manner that will comply with Section
409A of the Code, including regulations or other guidance issued with respect
thereto, except as otherwise determined by the Committee. Any provision of the
Plan that would cause the grant of an Award or the payment, settlement or
deferral thereof to fail to satisfy Section 409A of the Code shall be amended to
comply with Section 409A of the Code on a timely basis, which may be made on a
retroactive basis, in accordance with regulations and other guidance issued
under Section 409A of the Code.

     

    (n)           Captions.  The
captions in the Plan are for convenience of reference only, and are not intended
to narrow, limit or affect the substance or interpretation of the provisions
contained herein.

     

    *           *           *           *           *


    
      
         


      

      
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