Document:

Exhibit 10a(11)

PUBLIC
SERVICE ENTERPRISE GROUP INCORPORATED

SENIOR
MANAGEMENT INCENTIVE COMPENSATION PLAN

Amended
effective January 1, 2009

TABLE
OF CONTENTS

	
 

	
 

	
 

	
 

	
I.

	
PURPOSE

	
 

	
1

	
 

	
 

	
 

	
 

	
II.

	
DEFINITIONS

	
 

	
2

	
 

	
 

	
 

	
 

	
III.

	
ADMINISTRATION

	
 

	
4

	
 

	
 

	
 

	
 

	
IV.

	
ELIGIBILITY

	
 

	
5

	
 

	
 

	
 

	
 

	
V.

	
AWARD FUND

	
 

	
6

	
 

	
 

	
 

	
 

	
VI.

	
TARGET INCENTIVE AWARDS

	
 

	
6

	
 

	
 

	
 

	
 

	
VII.

	
AWARDS

	
 

	
7

	
 

	
 

	
 

	
 

	
VIII.

	
LIMITATIONS

	
 

	
8

	
 

	
 

	
 

	
 

	
IX.

	
LIMITATION OF ACTIONS

	
 

	
8

	
 

	
 

	
 

	
 

	
X.

	
CLAIMS PROCEDURES

	
 

	
9

	
 

	
 

	
 

	
 

	
XI.

	
PLAN AMENDMENT, SUSPENSION OR TERMINATION

	
 

	
10

	
 

	
 

	
 

	
 

	
XII.

	
OTHER COMPENSATION PLANS

	
 

	
10

	
 

	
 

	
 

	
 

	
XIII.

	
MISCELLANEOUS

	
 

	
10

i

PUBLIC
SERVICE ENTERPRISE GROUP INCORPORATED

SENIOR
MANAGEMENT INCENTIVE COMPENSATION PLAN

I. PURPOSE

                    The
purposes of this Plan are to foster attainment of the financial and operating objectives
of the Company and its Participating Affiliates, which are important to
customers and stockholders by providing incentive to members of management who
contribute to attainment of these objectives. This Plan is designed to provide
for awards to selected salaried employees in executive or other important
positions, who, individually or as members of a group, contribute in a
substantial degree to the success of the Company and its Participating
Affiliates, and who are in a position to have a direct and significant impact
on the growth and success of the Company and its Participating Affiliates, thus
affording to them a means of participating in that success and an incentive to
contribute further to that success. This Plan also serves to supplement the
Company’s and Participating Affiliates’ salary and benefit programs so as to
provide overall compensation for such executives which is competitive with
corporations with which the Company and its Participating Affiliates must
compete for executive talent and to assist the Company and its Participating
Affiliates in attracting and retaining executives who are important to their
continued success.

                    The
Plan was adopted as the Management Incentive Compensation Plan effective
January 1, 2001. It was amended, effective January 1, 2009, to change its name
to the Senior Management Incentive Compensation Plan.

1

II. DEFINITIONS

                    The
following words and phrases shall have the meanings set forth below:

	
 

	
 

	
 

	
          (a)
 “Administrative Regulations” shall mean the procedures and regulations
 established by the Committee pursuant to Section III hereof for the purpose
 of administering the Plan.

	
 

	
 

	
 

	
          (b)
 “Affiliate”
 shall mean any organization which is a member of a controlled group of
 corporations (as defined in Code section 414(b), as modified by Code section
 415(h)) which includes the Company; or any trades or businesses (whether or
 not incorporated) which are under common control (as defined in Code section
 414(c), as modified by Code section 415(h)) with the Company; or a member of
 an affiliated service group (as defined in Code section 414(m)) which
 includes the Company or any other entity required to be aggregated with the
 Company pursuant to regulations under Code section 414(o).

	
 

	
 

	
 

	
          (c)
 “Award” shall mean the amount determined by the Committee pursuant to Section
 VII hereof.

	
 

	
 

	
 

	
          (d)
 “Award Fund” shall mean the aggregate amount made available in any Plan Year
 pursuant to Section V hereof from which awards determined under Section VII
 hereof may be made.

	
 

	
 

	
 

	
          (e) “Code”
 - the Internal Revenue Code of 1986, as amended, or as it may be amended from
 time to time.

2

	
 

	
 

	
 

	
          (f)
 “Committee” shall mean the Organization and Compensation Committee of the
 Board of Directors of the Company, the membership on which shall be limited
 to directors of the Company who are not Employees.

	
 

	
 

	
 

	
          (g)
 “Company” shall mean Public Service Enterprise Group Incorporated, a New
 Jersey corporation, or any successor thereto.

	
 

	
 

	
 

	
          (h) “Employee”
 shall mean any person not included in a unit of employees covered by a
 collective bargaining agreement who is an employee (such term having its
 customary meaning) of the Company or a Participating Affiliate, whether
 full-time or part-time, and whether or not an officers or director, and who
 is receiving remuneration for personal services rendered to the Company or
 Participating Affiliate other than (i) solely as a director of the Company or
 a Participating Affiliate, (ii) as a temporary employee, (iii) as a
 consultant or (iv) as an independent contractor (regardless of whether a
 determination is made by the Internal Revenue Service or other governmental
 agency or court after the individual is engaged to perform such services that
 the individual is an employee of the Company or Participating Affiliate for
 the purposes of the Code or otherwise).

	
 

	
 

	
 

	
          (i)
 “Net Income” shall mean the amount reported by the Company as consolidated
 income before extraordinary items and the cumulative effect of accounting
 changes, adjusted, however, by adding any amount that has been expensed
 (after taxes) for awards under this Plan in computing such Net Income.

3

	
 

	
 

	
 

	
          (j)
 “Participant” shall mean an Employee who is subject to Section 16 of the
 Securities and Exchange Act of 1934, as amended, or who has been designated
 by the Committee to participate in the Plan pursuant to Section IV hereof.

	
 

	
 

	
 

	
          (k) “Participating
 Affiliate” shall mean any Affiliate of the Company that adopts this Plan with
 the approval of the Board of Directors of the Company. As a condition to
 participating in this Plan, such Affiliate shall authorize the Board of
 Directors of the Company and the Committee to act for it in all matters
 arising under or with respect to this Plan and shall comply with such other
 terms and conditions as may be imposed by the Board of Directors of the
 Company.

	
 

	
 

	
 

	
          (l)
 “Plan” shall mean this Public Service Enterprise Group Incorporated Senior
 Management Incentive Compensation Plan as amended from time to time.

	
 

	
 

	
 

	
          (m)
 “Plan Year” shall mean the calendar year.

	
 

	
 

	
 

	
          (n)
 “Subsidiary” shall mean any corporation, limited liability company or other
 entity, domestic or foreign (other than the Company), 50% or more of the
 total voting power of which is held by the Company and/or a Subsidiary for
 Subsidiaries.

	
 

	
 

	
 

	
          (o)
 “Target Incentive Awards” shall mean the amounts determined by the Committee
 pursuant to Section VII hereof.

III. ADMINISTRATION

          (a)
The Committee shall administer the Plan. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select Participants, to
designate Target Incentive Awards for each Participant and to determine the
performance objectives and the amount of all Awards under this Plan. The
Committee may not, however, alter Award Fund 

4

provided by Article V of this Plan or the maximum
Award provided by Article VII of this Plan. The Committee shall also have,
subject to the provisions of the Plan, full and final authority to interpret
the Plan, to establish and revise such Administrative Regulations as it deems
necessary for the proper administration of the Plan and to make any other
determinations that it believes necessary or advisable for the administration
of the Plan. The committee may delegate such responsibilities, other than final
approval of Awards or appeals of alleged adverse determinations under the Plan,
to the Chief Executive Officer of the Company or to any other officer of the
Company or any Participating Affiliate.

          (b)
All decisions and determinations by the Committee shall be final and binding
upon all parties, including stockholders, Participants, legal representatives
and other Employees.

          (c)
The Committee may rely conclusively on the determinations made by the Company’s
independent public accountants.

IV. ELIGIBILITY

          (a)
Those Employees who are subject to Section 16 of the Securities Exchange Act of
1934, as amended, and those Employees who are key officers or management
Employees of the Company, a Subsidiary or an Affiliate who, in the opinion of
the Committee, are in a position to have a direct and significant impact on
achieving the Company’s long-term objectives are eligible to participate in the
Plan.

          (b)
The Committee may select such Employees of the Company or Participating
Affiliate (individually or by position) for participation in the Plan upon such
terms as it deems appropriate, due to the Employee’s responsibilities and
his/her opportunity to contribute substantially to the attainment of financial
and operating objectives of the Company or 

5

Participating Affiliate. A determination of
participation for a Plan Year shall be made no later than the beginning of that
Plan Year. Provided, however, that an Employee whose duties and
responsibilities change significantly during a Plan Year may be added or
deleted as a Participant by the Committee. Provided further, the Committee may
prorate the Incentive Award of any Participant if appropriate to reflect any
such change in duties and responsibilities during a Plan Year. 

          (c)
Participation in the Plan in one Plan Year shall not guarantee participation in
another Plan Year.

          (d)
The Committee shall have sole discretion as to whether to suspend operation of
the Plan for any period of time.

V. AWARD FUND

          In
each Plan Year, an Award Fund shall be established equal to 2.5% of Net Income.
No amounts are paid under the Plan for any Plan Year unless the Company has Net
Income. However, the Committee shall have the right to decrease the amount of
the Award Fund in any Plan Year.

VI. TARGET
INCENTIVE AWARDS

          (a)
For each Plan Year, the Committee shall determine:

	
 

	
 

	
 

	
 

	
(i)

	
Whether or not the Plan shall be in operation for
 such Plan Year.

	
 

	
 

	
 

	
 

	
(ii)

	
The names of those Employees who will participate in
 the Plan for such Plan Year.

	
 

	
 

	
 

	
 

	
(iii)

	
The Target Incentive Award for each Participant. For
 any Participant not subject to Section 162(m) of the Code, other performance
 measures or 

6

	
 

	
 

	
 

	
 

	
 

	
objectives, whether quantitative or qualitative, may
 be established. The Committee shall establish the specific targets for any
 such selected measures. These targets may be set at a specific level or may
 be expressed as relative to the comparable measure at comparison companies or
 a defined index.

          (b)
At any time after the commencement of a Plan Year, but prior to the close
thereof, the Committee may, in its discretion, eliminate or add Participants,
or increase or decrease the Target Award of any Participant; but the Committee
may not alter Award Fund or the maximum Award provided by Articles V and VII of
this Plan.

VII. AWARDS

          (a)
The chief executive officers of the Company may receive an award not to exceed
10% of the maximum Award Fund for that Plan Year.

          (b)
All other Participants may receive an award not to exceed that amount which is
90% of the maximum Award Fund for that Plan Year divided by the number of
Participants, other than the chief executive officer, in the Plan for that Plan
Year.

          (c)
The committee, however, shall have the right to pay to the chief executive
officer less than 10% of the maximum Award Fund, and pay to the other Participants,
less than that amount which is 90% of the maximum Award Fund divided by the
number of Participants, other than the chief executive officer, in the Plan for
that Plan Year.

          All
such determinations, except in the case of the award for the chief executive
officer, shall be made after considering the recommendations of the chief
executive officer and such 

7

other matters as the Committee shall deem relevant. In
making such determinations, the Committee may, in addition to achievement of short-term
business objectives, take into account achievement by key executives of
long-term goals of the Company. All awards shall be charged against the Award
Fund and shall be made in one lump sum cash payment as soon as practicable
after determined by the Committee.

VIII. LIMITATIONS

          Although
this Plan sets the maximum amount that may be paid to a Participant in any
given year, the Committee shall retain the right to decrease the maximum or
eliminate any Award to any Participants. No director, officer or Employee of
the Company, its Subsidiaries or its Affiliates nor any other person shall have
the authority to enter into any agreement with any person for the making or
payment of an Award or to make any representation or warranty with respect thereto.

          Neither
the action of the Company in establishing the Plan, nor any action taken by it
or by the Committee under the provisions hereof, nor any provision of the Plan,
shall be construed as giving to any Employee the right to be retained in the
employ of the Company, its Subsidiaries or its Affiliates.

          The
Company may offset against any payments to be made to a Participant or his/her
beneficiary under this Plan any amounts owing to the Company, its Subsidiaries
or its Affiliates from the Participant for any reason.

IX. LIMITATION
OF ACTIONS

          Every
asserted right of action by or on behalf of the Company or by or on behalf of
the stockholder against any past, present or future member of the Committee or
director, officer of 

8

Employee of the Company or any Subsidiary or Affiliate
thereof, arising out of or in connection with this Plan, shall, irrespective of
the place where such right of action may arise or be asserted and irrespective
of the place of residence of any such member director, officer or Employee,
cease and be barred upon the expiration of three years (i) from the date of the
alleged act or omission in respect of which such right of action arises or (ii)
from the date upon which the Company’s Annual Report to Stockholders setting
forth the aggregate amount of the awards to all or any part of which such
action may relate is made generally available to stockholders, whichever date
is earlier; and every asserted right of action by or on behalf of any Employee,
past, present or future, or any beneficiary, spouse, child or legal
representative thereof, against the Company or any Subsidiary or Affiliate
thereof, arising out of or in connection with this Plan, shall, irrespective of
the place where such right of action may arise or be asserted, cease and be
barred by the expiration of three years from the date of the alleged act or
omission in respect of which such right of action arises.

X. CLAIMS
PROCEDURE

          In
the case of any Participant (whether active, retired or terminated) or
beneficiary whose claim for an award under this Plan has been denied, the
Company shall provide adequate notice in writing of such adverse determination
setting forth the specific reasons for such denial in a manner calculated to be
understood by the recipient thereof. Such Participant or beneficiary shall be
afforded a reasonable opportunity for a full and fair review of the decision
denying the claim by the Committee.

9

XI. PLAN
AMENDMENT, SUSPENSION OR TERMINATION

          The
Board of Directors or the stockholders may discontinue the Plan at any time and
may, from time to time, amend or revise the terms of the Plan as permitted by
applicable statutes; provided, however, that no such discontinuance, amendment
or revision shall materially adversely affect any right or obligation with
respect to any award theretofore made. Any amendment or revision that increases
the cost of the Plan by a substantial proportion may be made only by the
stockholders. The Plan will continue in operation until discontinued as herein
provided.

XII. OTHER
COMPENSATION PLANS

          The
adoption of this Plan shall not affect any other incentive compensation plan,
stock option plan or any other compensation plan in effect for the Company or
any Affiliate, nor shall the Plan preclude the Company or any Affiliate from
establishing any other form of incentive compensation plan, stock option plan
or any other compensation plan.

XIII. MISCELLANEOUS

          (a)
The costs and expenses of administering the Plan shall be borne by the Company
and its Affiliates and shall not be charged against any Award or to any
Participant receiving an Award.

          (b)
To the extent not preempted by Federal law, this Plan and actions taken in
connection herewith shall be governed and construed in accordance with the laws
of the State of New Jersey without reference to its Conflict of Laws
principles.

          (c)
The captions and section numbers appearing in this Plan are inserted only as a
matter of convenience. They do not define, limit or describe the scope or
intent of the provisions 

10

of the Plan. In this Plan, words in the singular
number include the plural and in the plural include the singular; and words of
the masculine gender include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender. The invalidity
or unenforceability of any provision hereof shall in no way affect the validity
or enforceability of any other provision.

          (d)
Every direction, revocation or notice authorized or required by the Plan shall
be deemed delivered to the Company (a) on the date it is personally delivered
to its principal executive offices to the attention of the Compensation Manager
of PSEG Services Corporation or (b) three business days after it is sent by
registered or certified mail, postage prepaid, addressed to the Company (attn:
Compensation Manager of PSEG Services Corporation) at such offices; and shall
be deemed delivered to a Participant (a) on the date it is personally delivered
to him or her, or (b) three business days after it is sent by registered or
certified mail, postage prepaid, addressed to him or her at the last address
shown for him or her on the records of the Company.

          (e)
Except as otherwise provided herein, this Plan shall inure to the benefit of
and be binding upon the Company, its successors and assigns, including but not
limited to any corporation which may acquire all or substantially all of the
Company’s assets and business or with or into which the Company may be
consolidated or merged.

          (f)
Failure by the Company or the Committee to insist upon strict compliance with
any of the terms, covenants or conditions hereof shall not be deemed a waiver
of any such term, covenant or condition, nor shall any waiver or relinquishment
of any right or power hereunder at any one or more times be deemed a waiver or
relinquishment of any such right or power at any other time or times.

11

          (g) The
Company shall have the right to deduct from any Award payment any sum required
to be withheld by federal, state, or local tax law. There is no obligation
hereunder that any Participant or other person be advised in advance of the
existence of the tax or the amount so required to be withheld.

12Exhibit 10a(14)

KEY
EXECUTIVE SEVERANCE PLAN OF

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Amended
effective September 22, 2008

TABLE OF CONTENTS

	
 

	
 

	
 

	
 

	
 

	
Page 

	
 

	
 

	

	
ARTICLE I

	
 

	
PURPOSE OF THE PLAN

	
 

	
 

	
1.1

	
Purpose

	
1

	
 

	
ARTICLE II

	
 

	
DEFINITIONS

	
 

	
 

	
2.1

	
“Accrued Obligation”

	
1

	
 

	
2.2

	
“Affiliate”

	
1

	
 

	
2.3

	
“Annual Base Salary”

	
1

	
 

	
2.4

	
“Board”

	
1

	
 

	
2.5

	
“Cause”

	
1

	
 

	
2.6

	
“Change in Control”

	
2

	
 

	
2.7

	
“Code”

	
3

	
 

	
2.8

	
“Committee”

	
3

	
 

	
2.9

	
“Company”

	
3

	
 

	
2.10

	
“Confidential
 Information”

	
3

	
 

	
2.11

	
“Date of Termination”

	
4

	
 

	
2.12

	
“Disability”

	
4

	
 

	
2.13

	
“Disability Effective Date”

	
4

	
 

	
2.14

	
“Eligible Employee”

	
4

	
 

	
2.15

	
“Effective Date”

	
4

	
 

	
2.16

	
“Employer”

	
4

	
 

	
2.17

	
“Good Reason”

	
4

	
 

	
2.18

	
“Other Benefits”

	
5

	
 

	
2.19

	
“Participant”

	
5

	
 

	
2.20

	
“Plan”

	
5

	
 

	
2.21

	
“Prior Equity Awards”

	
5

	
 

	
2.22

	
“Retirement”

	
5

	
 

	
2.23

	
“Schedule A
 Participant”

	
5

	
 

	
2.24

	
“Schedule B
 Participant”

	
5

i

	
 

	
 

	
 

	
2.25

	
“Target Bonus”

	
5

	
 

	
2.26

	
“Target Long-Term
 Incentive”

	
6

	
 

	
ARTICLE III

	
 

	
ELIGIBILITY AND PARTICIPATION

	
 

	
 

	
3.1

	
Eligible Employees

	
6

	
 

	
3.2

	
Participation

	
6

	
 

	
3.3

	
Release of Claims

	
6

	
 

	
ARTICLE IV

	
 

	
SEVERANCE BENEFITS IN GENERAL

	
 

	
 

	
4.1

	
Termination by
 Employer Other than for Cause

	
6

	
 

	
ARTICLE V

	
 

	
SEVERANCE BENEFITS AFTER A CHANGE IN CONTROL

	
 

	
 

	
5.1

	
Termination By
 Employer Other Than For Cause or By Participant For Good Reason (other than
 Good Reason as described in Subsection 2.17(d)) Within Two Years After a
 Change in Control

	
9

	
 

	
5.2

	
Termination By
 Participant For Good Reason as described in Subsection 2.17(d) Within Two
 Years After a Change in Control

	
11

	
 

	
5.3

	
Termination By
 Employer For Cause or By Participant Other Than For Good Reason

	
13

	
 

	
5.4

	
Death

	
13

	
 

	
5.5

	
Disability

	
14

	
 

	
5.6

	
Retirement

	
14

	
 

	
ARTICLE VI

	
 

	
TIMING OF, LIMITATIONS ON AND ADJUSTMENTS TO PLAN PAYMENTS

	
 

	
 

	
6.1

	
Time of Payments

	
14

	
 

	
6.2

	
Payment Offsets

	
14

	
 

	
6.3

	
Cap on Excess
 Parachute Payments; Gross-Up Payments

	
14

	
 

	
6.4

	
Code Section 409A
 Compliance

	
17

	
 

	
6.5

	
Tax Withholding

	
17

	
 

	
ARTICLE VII

	
 

	
RESTRICTIVE COVENANTS

	
 

	
 

	
7.1

	
Confidentiality

	
18

	
 

	
7.2

	
Non-Compete

	
18

	
 

	
7.3

	
Non-Solicitation

	
18

	
 

	
7.4

	
Enforcement

	
19

ii

	
 

	
 

	
 

	
ARTICLE VIII

	
 

	
AMENDMENT AND TERMINATION

	
 

	
 

	
8.1

	
Amendment

	
19

	
 

	
8.2

	
Termination

	
19

	
 

	
ARTICLE IX

	
 

	
ADMINISTRATION

	
 

	
 

	
9.1

	
Plan Administrator

	
19

	
 

	
9.2

	
Responsibilities of
 Committee

	
19

	
 

	
9.3

	
Allocation or
 Delegation of Duties and Responsibilities

	
20

	
 

	
9.4

	
Expenses

	
20

	
 

	
9.5

	
Indemnification of Plan
 Administrator

	
20

	
 

	
9.6

	
Reliance Upon Others

	
20

	
 

	
9.7

	
Notification

	
21

	
 

	
9.8

	
Multiple Capacities

	
21

	
 

	
ARTICLE X

	
 

	
CLAIMS PROCEDURE

	
 

	
 

	
10.1

	
Submission of Claims

	
21

	
 

	
10.2

	
Computation and
 Review of Claims

	
21

	
 

	
ARTICLE XI

	
 

	
GENERAL PROVISIONS

	
 

	
 

	
11.1

	
Construction

	
22

	
 

	
11.2

	
Unfunded Plan

	
22

	
 

	
11.3

	
No Right to Continued
 Employment

	
22

	
 

	
11.4

	
Partial Invalidity

	
23

	
 

	
11.5

	
Successors and
 Assigns

	
23

	
 

	
11.6

	
Waivers

	
23

	
 

	
11.7

	
Gender and Number

	
23

	
 

	
11.8

	
Headings

	
23

	
 

	
 

	
 

	
Schedule A

	
Participants

	
24

	
 

	
Schedule B

	
Participants

	
25

	
 

	
Exhibit I

	
Form of Restrictive
 Covenant Agreement

	
26

	
 

	
Exhibit II

	
Form of Separation
 Agreement and General Release

	
27

iii

ARTICLE I

PURPOSE OF THE PLAN

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

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

ARTICLE II

DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

2

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

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

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

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

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

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

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

3

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

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

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

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

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

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

          2.17
 “Good Reason” means, 

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

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

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

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

4

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

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

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

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

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

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

          2.21
“Prior Equity Awards” shall have
the meaning set forth in Section 5.1(ii).

          2.22
“Retirement” means
retirement under the terms of the Retirement Plan, as defined in Section
5.1(vi)(A).

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

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

          2.25
“Target Bonus” means the
Participant’s target annual bonus, if any, under the applicable
annual incentive compensation plan of the Company for the fiscal year in which
the Date of Termination occurs.

5

          2.26
“Target Long-Term Incentive” means the
Participant’s target long-term incentive award, if any, under the applicable
long-term incentive compensation plan of the Company.

ARTICLE III

ELIGIBILITY AND PARTICIPATION

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

          3.2
Participation. As a condition to becoming a
Participant and being entitled to the benefits and protections provided under
the Plan, each Eligible Employee must execute and deliver to the Company,
within 30 days after the later of the Effective Date and the date such
individual is designated by the Committee as an Eligible Employee, a written
agreement in the form attached hereto as Exhibit I (or in such other form as
may be satisfactory to the Company) to be bound by the restrictive covenants
set forth in Sections 7.1, 7.2 and 7.3. Schedules A and B hereto list the
Eligible Employees who have satisfied the conditions for Plan participation and
the date as of which each such Eligible Employee became a Participant. The
Committee shall cause Schedules A and B to be updated from time to time to
reflect the Participants who are currently participating in the Plan.

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

ARTICLE IV

SEVERANCE BENEFITS IN GENERAL

          4.1
Termination by Employer Other than for Cause. Subject to Section 3.3 and
Article VI, if an Employer shall terminate a Participant’s employment
other than for Cause, death or Disability:

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

          (i)
The sum of:

	
 

	
 

	
 

	
 

	
(1)

	
the Participant’s base salary through the Date of
 Termination;

6

	
 

	
 

	
 

	
 

	
(2)

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

	
 

	
 

	
 

	
 

	
(3)

	
any accrued vacation pay;

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

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

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

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

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

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

          (f)
Health Care Benefits.

          Retiree
Health Care Coverage. A Participant who has not otherwise satisfied the
eligibility criteria for participation prior to his or her Termination Date,
shall be entitled to 

7

elect retiree coverage under the Employer’s applicable
retiree group health care plans as though he or she otherwise satisfied such
plans’ eligibility requirements if:

	
 

	
 

	
 

	
 

	
(A)

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

	
 

	
 

	
 

	
 

	
(B)

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

	
 

	
 

	
 

	
 

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

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

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

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

8

ARTICLE V

SEVERANCE BENEFITS AFTER A CHANGE IN CONTROL

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

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
    A.

	
The sum of: 

	
 

	
 

	
 

	
 

	
 

	
 

	
(1)

	
the
 Participant’s base salary through the Date of Termination;

	
 

	
 

	
 

	
 

	
 

	
 

	
(2)

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

	
 

	
 

	
 

	
 

	
 

	
 

	
(3)

	
any accrued
 vacation pay; 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
    B.

	
(1)

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

	
 

	
 

	
 

	
 

	
 

	
 

	
(2)

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

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

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

9

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

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

10

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

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

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

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

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

11

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

	
          (v)
 Health Care Benefits.

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

12

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

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

          5.3
Termination By Employer For Cause or By Participant Other Than For Good
Reason If, at any time after a Change in Control, either (a) an Employer
shall terminate a Participant’s employment for Cause or (b) the Participant
shall voluntarily terminate his employment other than for Good Reason, the
Employer shall have no further payment obligations to the Participant other
than for amounts described in Sections 5.1(i) (A) and 5.1(iii) and the timely
payment or provision of Other Benefits. In such case, all such amounts shall be
paid to the Participant in a lump sum. 

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

13

Prior Equity
Awards shall vest and/or become exercisable, as the case may be, as of the Date
of Termination and the Participant’s estate or beneficiary, as the case may be,
shall have the right to exercise any such Prior Equity Award until the earlier
of (a) one year from the Date of Termination (or such longer period as may be
provided under the terms of any such Prior Equity Award) and (b) the normal
expiration date of such Prior Equity Award. 

          5.5
Disability. If a Participant’s employment is terminated by reason of
Disability after a Change in Control, all Accrued Obligations shall be paid to
the Participant in a lump sum in cash. Any Prior Equity Awards shall vest
immediately and/or become exercisable, as the case may be, and the Participant
shall have the right to exercise any such Prior Equity Award until the earlier
of (a) one year from the Date of Termination (or such longer period as may be
provided under the terms of any such Prior Equity Award) and (b) the normal
expiration date of such Prior Equity Award. 

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

ARTICLE VI

TIMING OF, LIMITATIONS ON AND ADJUSTMENTS TO
PLAN PAYMENTS

          6.1
Time of Payments. Payments under the Plan shall be made as soon as
practicable after the Participant’s Date of Termination, except, however, that
any payment that is subject to the requirements of Section 409A of the Code
shall be made as soon as practicable after the earlier of (i) the six-month
anniversary of the Participant’s Date of Termination (other than by reason of
death) and (ii) the date of the Participant’s death. 

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

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

	
 

	
 

	
 

	
 

	
 

	
(a)

	
Schedule A
Participants 

	
 

	
 

	
 

	
 

	
 

	
          (i)
 In the case of a Schedule A Participant, the severance benefits under Articles
 IV or V shall not exceed an amount which, together with any other Parachute
 Payments the Participant has a right to receive from the Employer, would

14

	
 

	
 

	
 

	
 

	
 

	
be 2.99
 times the Participant’s “base amount” (as defined in Section 280G of the
 Code) so that no portion of the amounts received by the Participant shall be
 subject to the excise tax imposed under Section 4999 of the Code.

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
(b)

	
Schedule B
 Participants

	
 

	
 

	
 

	
 

	
 

	
          (i)
 In the event it shall be determined that any severance benefits payable to a
 Schedule B Participant under Articles IV or V (together with any other
 Parachute Payments the Participant has a right to receive from the Employer)
 would be subject to the excise tax imposed by Section 4999 of the Code or any
 interest or penalties are incurred by the Participant with respect to such
 excise tax (such excise tax, together with any such interest and penalties,
 are hereinafter collectively referred to as the “Excise Tax”), then the
 Participant shall be entitled to receive an additional payment (a “Gross-Up
 Payment”) in an amount such that after payment by the Participant of all
 taxes (including any interest or penalties imposed with respect to such
 taxes), including, without limitation, any income and employment taxes (and
 any interest and penalties imposed with respect thereto) and Excise Tax imposed
 upon the Gross-Up Payment, the Participant retains an amount of the Gross-Up
 Payment equal to the Excise Tax imposed upon the Parachute Payments.

	
 

	
 

	
 

	
          (ii)
 Subject to the provisions of Section 6.3(b)(iii), all determinations required
 to be made under this Section 6.3(b), including whether and when a Gross-Up
 Payment is required and the amount of such Gross-Up Payment and the
 assumptions to be utilized in arriving at such determination, shall be made
 by the Accounting Firm, which shall provide detailed supporting calculations
 to the Participant and the Company. All fees and expenses of the Accounting
 Firm shall be borne solely by the Company. Any Gross-Up Payment, as
 determined pursuant to this Section 6.3(b), shall be paid by the Company to the
 Participant as soon as practicable after the receipt of the Accounting Firm’s

15

	
 

	
 

	
 

	
 

	
 

	
determination.
 Any determination by the Accounting Firm shall be binding upon the
 Participant and the Company. As a result of the uncertainty in the
 application of Section 4999 of the Code at the time of the initial
 determination by the Accounting Firm hereunder, it is possible that Gross-Up
 Payments which will not have been made by the Company should have been made
 (“Underpayment”), consistent with the calculations required to be made
 hereunder. In the event that the Company exhausts its remedies pursuant to
 Section 6.3(b)(iii) and the Participant thereafter is required to make a
 payment of any Excise Tax, the Accounting Firm shall determine the amount of
 the Underpayment that has occurred and any such Underpayment shall be
 promptly paid by the Company to or for the benefit of the Participant.

	
 

	
 

	
 

	
          (iii) A
 Schedule B Participant shall notify the Company in writing of any claim by
 the Internal Revenue Service that, if successful, would require the payment
 by the Company of the Gross-Up Payment. Such notification shall be given as
 soon as practicable but no later than ten business days after the Participant
 is informed in writing of such claim and shall apprise the Company of the
 nature of such claim and the date on which such claim is requested to be
 paid. The Participant shall not pay such claim prior to the expiration of the
 30-day period following the date on which he gives such notice to the Company
 (or such shorter period ending on the date that any payment of taxes with
 respect to such claim is due). If the Company notifies the Participant in
 writing prior to the expiration of such period that it desires to contest
 such claim, the Participant shall:

	
 

	
 

	
 

	
 

	
 

	
 

	
                    (A)
 give the Company any information reasonably requested by the Company relating
 to such claim,

	
 

	
 

	
 

	
 

	
 

	
                    (B)
 take such action in connection with contesting such claim as the Company
 shall reasonably request in writing from time to time, including, without
 limitation, accepting legal representation with respect to such claim by an
 attorney reasonably selected by the Company,

	
 

	
 

	
 

	
 

	
 

	
                    (C)
 cooperate with the Company in good faith in order effectively to contest such
 claim, and

	
 

	
 

	
 

	
 

	
 

	
                    (D)
 permit the Company to participate in any proceedings relating to such claim;

	
 

	
 

	
 

	
 

	
 

	
provided
 however, that the Company shall bear and pay directly all costs and expenses
 (including additional interest and penalties) incurred in connection with
 such contest and shall indemnify and hold the Participant harmless, on an
 after-tax basis, for any Excise Tax or income tax (including interest and
 penalties with respect thereto) imposed as a result of such representation
 and payment of costs and expenses. Without limitation on the foregoing
 provisions of this Section 6.3(b)(iii), the Company shall control all
 proceedings taken in connection with such contest and, at its sole option,
 may pursue or forgo any and all administrative appeals, proceedings, hearings
 and conferences with the taxing authority in respect of such claim and may,
 at its sole option, either direct the Participant to pay the tax claimed and
 sue for a refund or contest the claim in any permissible

16

	
 

	
 

	
 

	
 

	
 

	
 

	
manner, and
 the Participant agrees to prosecute such contest to a determination before
 any administrative tribunal, in a court of initial jurisdiction and in one or
 more appellate courts, as the Company shall determine; provided however, that
 if the Company directs the Participant to pay such claim and sue for a
 refund, the Company shall advance the amount of such payment to the
 Participant, on an interest-free basis and shall indemnify and hold the
 Participant harmless, on an after-tax basis, from any Excise Tax or income
 tax (including interest or penalties with respect thereto) imposed with
 respect to such advance or with respect to any imputed income with respect to
 such advance; and further provided that any extension of the statute of
 limitations relating to payment of taxes for the taxable year of the
 Participant with respect to which such contested amount is claimed to be due
 is limited solely to such contested amount. Furthermore, the Company’s
 control of the contest shall be limited to issues with respect to which a
 Gross-Up Payment would be payable hereunder and the Participant shall be
 entitled to settle or contest, as the case may be, any other issue raised by
 the Internal Revenue Service or any other taxing authority.

	
 

	
 

	
 

	
 

	
          (iv)
 If, after the receipt by a Schedule B Participant of an amount advanced by
 the Company pursuant to Section 6.3(b)(iii), the Participant becomes entitled
 to receive any refund with respect to such claim, the Participant shall
 (subject to the Company’s complying with the requirements of Section
 6.3(b)(iii)) promptly pay to the Company the amount of such refund (together
 with any interest paid or credited thereon after taxes applicable thereto).
 If, after the receipt by the Participant of an amount advanced by the Company
 pursuant to Section 6.3(b)(iii), a determination is made that the Participant
 shall not be entitled to any refund with respect to such claim and the
 Company does not notify the Participant in writing of its intent to contest
 such denial of refund prior to the expiration of 30 days after such
 determination, then such advance shall be forgiven and shall not be required
 to be repaid and the amount of such advance shall offset, to the extent
 thereof, the amount of Gross-Up Payment required to be paid.

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

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

17

ARTICLE VII

RESTRICTIVE COVENANTS

          7.1
Confidentiality. As a condition to participation in the Plan, each
Participant agrees to hold in a fiduciary capacity for the benefit of the
Company and its Affiliates all Confidential Information which shall have been
obtained by the Participant during the Participant’s employment by the
Employer; except, however, that this Section 7.1 shall not apply to
Confidential Information that is or becomes public knowledge, unless such
Confidential Information became or becomes public knowledge due to acts of the
Participant or representatives of the Participant in violation of this Section
7.1. Upon termination of the Participant’s employment, he shall return to the
Company all Confidential Information in his possession. After termination of
the Participant’s employment with the Employer, the Participant shall not,
without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such Confidential
Information to anyone other than the Company and those designated by it, except
(x) otherwise publicly available information, (y) as may be necessary to
enforce his rights under the Plan or as necessary to defend himself against a
claim asserted directly or indirectly by the Company or its Affiliates; or (z)
as may be compelled by service of a valid subpoena or other legal process. If
the Participant is served with a valid subpoena or other legal process, he must
so notify the Company within three business days. Unless and until a
determination has been made in accordance with Section 7.4 that the Participant
has violated this Section 7.1, an asserted violation of the provisions of this
Section 7.1 shall not constitute a basis for deferring or withholding any
amounts otherwise payable to the Participant under the Plan. 

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

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

18

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

ARTICLE VIII

AMENDMENT AND TERMINATION

          8.1
Amendment. The Company may amend this Plan at any time, and from time to time,
by action of the Committee; provided, however, that no amendment adopted after
the effective date of a Change in Control shall have the effect of either (i)
removing an individual from the list of Participants, (ii) adding conditions
for participation or the entitlement to receive benefits hereunder, (iii)
reducing the amount of benefits payable to a Participant or (iv) otherwise restricting
a Participant’s right to receive benefits under the Plan, except as may
otherwise be required to conform such payments to the requirements of Section
409A of the Code, as provided in Section 1.1. 

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

ARTICLE IX

ADMINISTRATION

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

          9.2
Responsibilities of Committee. 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
          (b)
 Subject to the express provisions of the Plan, the Committee shall have full
 and exclusive authority to interpret the Plan and to make all other factual
 determinations deemed necessary or advisable in the implementation and
 administration of the Plan, including but not limited to determinations with
 respect to the eligibility of Participants to

19

	
 

	
 

	
 

	
 

	
receive
 benefits under the Plan and the status and rights of such Participants and
 all other persons affected hereunder. The Committee’s interpretation and
 construction of the Plan shall be conclusive and binding on all persons.

	
 

	
 

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

	
 

	
 

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

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

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

                    (b)
Employ agents to carry out fiduciary responsibilities;

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

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

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

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

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

20

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

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

ARTICLE X

CLAIMS PROCEDURE

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

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

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
                    (i)
 Reason or reasons for the denial; 

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

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

21

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

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

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

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

	
 

	
 

	
 

	
 

	
 

	
                    (i)
 Reasons for the decision,

	
 

	
 

	
 

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

	
 

	
 

	
 

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

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

ARTICLE XI

GENERAL PROVISIONS

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

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

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

22

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

          11.5
Successors and Assigns. 

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

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

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

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

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

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

23

SCHEDULE A

As Amended October 18, 2005 

PARTICIPANTS

(New Schedule A to be approved by the
Committee on 9/22/08)

24

SCHEDULE B

(New Schedule B to be approved by the
Committee on 9/22/08)

25

EXHIBIT I

Form of Restrictive Covenant Agreement

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

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

          WHEREAS,
Executive was designated as an Eligible Employee under the Plan by the
Organization and Compensation Committee of the Company’s board of directors on
___________; 

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

          NOW
THEREFORE, the parties agree as follows: 

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

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

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

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

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

26

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

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

[This Agreement may be executed in
counterparts.]

	
 

	
 

	
 

	
 

	
EXECUTIVE 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
PUBLIC
 SERVICE ENTERPRISE

 GROUP INCORPORATED 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Title:

	
 

	
 

	
 

	

27

EXHIBIT II

Form of Separation Agreement and General
Release

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

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

          WHEREAS,
Executive was designated as an Eligible Employee under the Plan by the
Organization and Compensation Committee of the Company’s board of directors on
___________ and became a Participant in the Plan as of [date] ; 

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

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

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

          NOW
THEREFORE, Executive and the Company agree as follows: 

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

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

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

28

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

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

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

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

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

29

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

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

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

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

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

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

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

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

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

30

          16.
Acknowledgements. Executive acknowledges that: 

	
 

	
 

	
 

	
 

	
a.

	
Executive
 has carefully read and understands this Agreement; 

	
 

	
 

	
 

	
 

	
b.

	
Executive
 has been given forty-five (45) days to consider his rights and obligations
 under this Agreement and to consult with an attorney; 

	
 

	
 

	
 

	
 

	
c.

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

	
 

	
 

	
 

	
 

	
d.

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

	
 

	
 

	
 

	
 

	
e.

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

	
 

	
 

	
 

	
 

	
f.

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

	
 

	
 

	
 

	
 

	
g.

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

	
 

	
 

	
 

	
 

	
h.

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

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

	
 

	
 

	
 

	
 

	
          EXECUTIVE

	
 

	
 

	
PUBLIC
 SERVICE ENTERPRISE GROUP

 INCORPORATED 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	
 

	
 

	
Title

31

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