Document:

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                       [This Space For Recording Use only]

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                                    MORTGAGE,

                        SECURITY AGREEMENT AND FINANCING
                      STATEMENT (INCLUDING FIXTURE FILING)

                          Dated as of December 15, 2004

                                     between

                                  REXUS L.L.C.,
                                  as Mortgagee

                                       and

                              ITT INDUSTRIES, INC.,
                                  as Mortgagor

LOCATION OF SECURITY PROPERTY:

Street Address: 100 Kingsland Road
                Clifton, New Jersey
County:         Passaic
Block:          83.01
Lot:            1.01

                              Record and Return to:

                                    Jones Day
                              222 East 41st Street
                               New York, NY 10017
                      Attention: Leonard C. Pojednic, Esq.

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                      [This Space For Recorder's Use Only]

                        MORTGAGE, SECURITY AGREEMENT AND
                 FINANCING STATEMENT (INCLUDING FIXTURE FILING)

      THIS MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT (INCLUDING
FIXTURE FILING), dated as of December 15, 2004 (this "Mortgage"), between REXUS
L.L.C., a Delaware limited liability company with an address at c/o Societe
Generale, (Canada), as Lessor Administrator, 1501 McGill College, Bureau 1800,
Montreal, Quebec, H3A 3MB, Canada as the Mortgagee (the "Mortgagee"), and ITT
INDUSTRIES, INC., an Indiana corporation, with an address at 4 West Red Oak
Lane, White Plains, New York 10604, as Mortgagor (the "Mortgagor"). For purposes
of this Mortgage, capitalized terms used herein and not otherwise defined herein
or in Schedule IV hereto shall have the meanings assigned to them in Appendix A
to the Master Lease (as defined below), and the rules of interpretation set
forth in such Appendix A shall apply to this Mortgage.

      WHEREAS, pursuant to a Participation Agreement, dated as of the date
hereof (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Participation Agreement"), among the Mortgagee, the
Mortgagor, and the Investors named therein, the Investors and the Mortgagee have
agreed to finance the acquisition from Mortgagor of the six properties
identified in the Operative Documents (the "Other Properties");

      WHEREAS, Mortgagee and Mortgagor have executed that certain Master Lease
and Deed of Trust, Deed to Secure Debt and Mortgage dated as of the date hereof
(the "Master Lease"), as supplemented by that certain Lease Supplement, dated as
of the date hereof (the "Related Lease Supplement"), pursuant to which the
Mortgagee leased to the Mortgagor the Other Properties which term includes all
Improvements thereon and all other improvements now located or which hereafter
may be constructed thereon and all Appurtenant Rights with respect thereto;

      WHEREAS, all Obligations of Mortgagor to Mortgagee and the Investors under
the Master Lease and the other Operative Documents are personal, full recourse
obligations of Mortgagor;

      WHEREAS, Mortgagor is the sole owner of the land described in Schedule I
hereto and all buildings and improvements located or to be located thereon and
all Appurtenant Rights with respect thereto and all equipment (the "Subject
Property");

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      WHEREAS, pursuant to the Participation Agreement, the Master Lease and the
other Operative Documents, Mortgagor has agreed to deliver to Mortgagee this
Mortgage for the purpose of securing all Obligations of Mortgagor to Mortgagee
under the Participation Agreement, the Master Lease and the other Operative
Documents; and

      WHEREAS, Mortgagee's receipt of this Mortgage is a requirement and
precondition of the Participation Agreement and the other Operative Document:

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

      SECTION 1. Grant of Mortgage Lien and Security Interest: Assignment of
Rents. To secure to the Mortgagee the payment and performance of the Obligations
for a principal amount not to exceed One Hundred Sixty Five Million and 00/100
US Dollars ($165,000,000.00), which is the maximum amount of principal
indebtedness secured hereby, together with all interest, expenses and other sums
which may from time to time become due and payable to the Mortgagee under the
Operative Documents or by reason of the exercise of its rights and remedies
under this Mortgage or any of the Operative Documents:

            (a)   The Mortgagor does hereby mortgage, grant, bargain, sell,
                  convey, assign, transfer and set over to the Mortgagee, with
                  power of sale, to the extent permitted by Applicable Law: (i)
                  all of the Mortgagor's right, title and interest in the
                  Subject Property, all condemnation and insurance proceeds
                  relative to the subject property and all profits as described
                  below; and (ii) all of the Mortgagor's right, title and
                  interest in and to all proceeds of the conversion, whether
                  voluntary or involuntary, of any of the above-described
                  property into cash or other liquid claims, including, without
                  limitation, all awards, payments or proceeds, including
                  interest thereon, and the right to receive the same, which may
                  be made as a result of casualty, any exercise of the right of
                  eminent domain or deed in lieu thereof, the alteration of the
                  grade of any street and any injury to or decrease in the value
                  thereof, the foregoing being referred to hereinafter as the
                  "Security Property".

                  TO HAVE AND TO HOLD the Security Property, subject however to
                  Permitted Property Liens (which shall include the items set
                  forth on Schedule II), unto the Mortgagee, its successors and
                  assigns forever.

                  (i)   Protective Advances. The Mortgagee shall have the right,
                        but not the obligation, to make protective advances with
                        respect to the Security Property for the payment of
                        taxes, assessments, insurance premiums or costs incurred
                        for the protection of the Security Property, and such
                        protective advances, together with interest thereon at
                        the Overdue Rate from the date of each such advance
                        until it is repaid in full, shall be secured by this
                        Mortgage to the

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                        fullest extent and with the highest priority
                        contemplated by Applicable Law.

                  (ii)  Mortgage. The Mortgagor and the Mortgagee intend that
                        this Mortgage shall secure Mortgagor's obligation to
                        repay the unpaid balance of advances made by the
                        Mortgagee and/or the holder hereof under the Master
                        Lease and other Operative Documents to the fullest
                        extent and with the highest priority contemplated by
                        applicable law. The obligations secured hereby shall
                        include, without limitation, all Basic Rent, Accrual
                        Rent and Fixed Rent as well as all Supplemental Rent due
                        from Mortgagor under the Master Lease. The maximum
                        amount of advances, exclusive of interest thereon
                        (whether or not identified as interest and including
                        specifically all Accrual Rent under the Master Lease),
                        and exclusive of advances made for the payment of real
                        estate taxes, assessments, insurance premiums and costs
                        incurred for the protection of the Security Property,
                        all of which are also secured by this Supplement, which
                        may be outstanding at any time is One Hundred Sixty Five
                        Million and 00/100 Dollars ($165,000,000.00).

            (b)   The Mortgagor hereby grants to the Mortgagee a security
                  interest in the Mortgagor's interest in that portion of the
                  Security Property (the "UCC Property") subject to the Uniform
                  Commercial Code of the State of New Jersey (the "UCC"). This
                  Mortgage shall also be deemed to be a security agreement and
                  shall support any financing statement showing the Mortgagee's
                  interest as a secured party with respect to any portion of the
                  UCC Property described in such financing statement. The
                  Mortgagor agrees, at its sole cost and expense, to execute,
                  deliver and file from time to time such further instruments as
                  may be requested by the Mortgagee to confirm and perfect the
                  lien of the security interest in the collateral described in
                  this Mortgage.

            (c)   The Mortgagor hereby irrevocably assigns, conveys, transfers
                  and sets over unto the Mortgagee all and every part of the
                  rents, issues and profits (collectively, the "Profits") that
                  may from time to time become due and payable on account of any
                  and all subleases or other occupancy agreements now existing,
                  or that may hereafter come into existence with respect to the
                  Subject Property or any part thereof, including any guaranties
                  of such sublease or occupancy agreements (collectively, the
                  "Subleases") provided, that, unless a Lease Event of Default
                  is continuing, the Mortgagor shall have the right to collect
                  and retain such Profits. Upon request of the Mortgagee, the
                  Mortgagor shall execute and cause to be recorded, at its
                  expense, supplemental or additional assignments of any
                  Subleases of the Subject Property. Upon the occurrence and
                  during the continuance of a Lease Event of Default, the
                  Mortgagee is hereby fully authorized and empowered in its
                  discretion (in addition to all other powers and rights herein
                  granted), to apply for and collect and receive all such

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                  Profits and enforce such guaranty or guaranties, and all money
                  so received under and by virtue of this assignment shall be
                  applied as further security for the payment and performance of
                  the Obligations secured hereby.

            (d)   Notwithstanding that this Mortgage is an absolute assignment
                  of the Profits and the Subleases and not merely the collateral
                  assignment of, or the grant of a lien or security interest in,
                  the Profits and the Subleases, the Mortgagee grants to the
                  Mortgagor a revocable license to collect and receive the
                  Profits and to retain, use and enjoy such Profits. Such
                  license shall be automatically revoked upon the occurrence and
                  during the continuance of any Lease Event of Default.

            (e)   It is intended that this Mortgage shall be a Lessor Mortgage
                  and that the Subject Property be a Security Property and a
                  Property as those terms are defined in the Participation
                  Agreement and the other Operative Documents and that all terms
                  covenants conditions and requirements of said Operative
                  Documents applicable thereto shall apply to the Subject
                  Property including without limitation those relating to sale,
                  lease or further encumbrance of any Property.

      SECTION 2. Remedies. (a) Upon the occurrence and during the continuance of
a Lease Event of Default each of which is also a default under this Mortgage,
the Mortgagee may exercise any one or more of the following rights and remedies
as it, in its sole discretion, may deem necessary or appropriate:

                  (i)   collect interest on all past due sums at the Overdue
                        Rate;

                  (ii)  terminate the Master Lease and, either in person or by
                        agent, with or without bringing any action or
                        proceeding, or by a receiver appointed by a court, and
                        without regard to the adequacy of security, enter upon
                        and take possession of the Security Property, or any
                        part thereof, in its own name, and do any acts which it
                        deems necessary or desirable to preserve the value,
                        marketability or rentability of the Security Property,
                        or any part thereof or interest therein, to increase the
                        income therefrom or to protect the security hereof and,
                        with or without taking possession of the Security
                        Property, to sue for or otherwise to collect the Profits
                        thereof, including, without limitation, those past due
                        and unpaid, and to apply the same, less costs and
                        expenses of operation and collection, including, without
                        limitation, reasonable attorneys' fees, upon any
                        Obligations secured hereby, all in such order as the
                        Mortgagee may determine. The entering upon and taking
                        possession of the Security Property, and the collection
                        of such Profits and the application thereof as
                        aforesaid, shall not cure or waive any Lease Event of
                        Default or notice of a Lease Event of Default hereunder
                        or invalidate any act done in response to such Lease
                        Event of Default and, notwithstanding the continuance in

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                        possession of the Mortgagee or the collection, receipt
                        and application of Profits by the Mortgagee, the
                        Mortgagee shall be entitled to exercise every right
                        provided for herein or by law upon the occurrence and
                        during the continuance of any Lease Event of Default,
                        including, without limitation, the right to exercise the
                        power of sale;

                  (iii) declare all Obligations and sums secured hereby
                        immediately due and payable by delivery to the Mortgagor
                        of written declaration of the occurrence and continuance
                        of a Lease Event of Default and to the extent permitted
                        by Applicable Law, conduct a non-judicial foreclosure by
                        power of sale;

                  (iv)  foreclose this mortgage in the manner provided by
                        Applicable Law for the foreclosure of mortgages on real
                        property;

                  (v)   whether or not a judicial or non-judicial foreclosure
                        has been commenced, declare immediately due and payable
                        without notice or demand, except as otherwise required
                        hereunder or under Applicable Law, all amounts payable
                        by the Mortgagor hereunder or under the other Operative
                        Documents which are then unpaid, with all interest and
                        sums accrued and accelerate payment thereof
                        notwithstanding contrary terms of payment stated therein
                        and exercise all other rights and remedies available
                        hereunder, under Applicable Law, in equity or otherwise;

                  (vi)  without regard to the adequacy of its security or the
                        then value of the Security Property or the interest of
                        the Mortgagor therein, apply to any court having
                        jurisdiction to appoint a receiver or receivers of the
                        Security Property and the Mortgagor hereby irrevocably
                        consents to such appointment and, to the extent
                        permitted by Applicable Law, waives notice of any
                        application therefor. Any such receiver or receivers
                        shall have all the usual powers and duties of receivers
                        in like or similar cases and all the powers of the
                        Mortgagee provided for herein, and shall continue as a
                        receiver and exercise all such powers until the date of
                        confirmation of sale of the Security Property unless
                        such receivership is sooner terminated by the Mortgagee
                        in its sole discretion or as a court of competent
                        jurisdiction shall direct.

                  Upon the occurrence and during the continuance of a Lease
                  Event of Default, the Mortgagee shall be entitled to enforce
                  payment and performance of any Obligations secured hereby and
                  to exercise all rights and powers hereunder or any laws now or
                  hereafter in force notwithstanding that some or all of said
                  Obligations secured hereby may now or hereafter be otherwise
                  secured, whether by mortgage, deed of trust, pledge, lien,
                  assignment or otherwise. To the extent permitted by

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                  Applicable Law, neither the acceptance nor the enforcement
                  hereof, whether by court action or pursuant to the power of
                  sale or other powers herein contained, shall prejudice or in
                  any manner affect the Mortgagee's right to realize upon or
                  enforce any other security now or hereafter held by the
                  Mortgagee and, to the extent permitted by Applicable Law, the
                  Mortgagee shall be entitled to enforce the rights and remedies
                  provided for herein and any other security now or hereafter
                  held by the Mortgagee in such order and manner as it may in
                  its absolute discretion determine. No remedy conferred upon or
                  reserved to the Mortgagee is intended to be exclusive of any
                  other remedy, but each shall be cumulative and shall be in
                  addition to every other remedy given hereby or now or
                  hereafter existing at law or in equity or by statute. To the
                  extent permitted by Applicable Law, every power or remedy
                  given hereby to the Mortgagee or to which the Mortgagee may be
                  otherwise entitled, may be exercised, concurrently or
                  independently, from time to time and as often as may be deemed
                  expedient by the Mortgagee, and the Mortgagee may pursue
                  inconsistent remedies.

            (b)   Upon the occurrence and during the continuance of a Lease
                  Event of Default, the Mortgagee, in addition to and not in
                  lieu of or in diminution of the rights and remedies provided
                  above shall have all of the rights and remedies of a secured
                  party under the UCC, which rights and remedies may be
                  exercised without application to any court to the extent
                  permitted by the UCC.

      SECTION 3. Applicable Law; Certain Particular Provisions. This Mortgage
shall be governed by and construed in accordance with the laws of the State of
New Jersey ("Applicable Law") and each of the Mortgagee and the Mortgagor agree
to submit to jurisdiction and the laying of venue for any suit on this Mortgage
in such state. The terms and provisions set forth in Schedule III attached
hereto are hereby incorporated by reference as though fully set forth herein. In
the event of any conflict between the terms and provisions contained in the body
of this Mortgage and the terms and provisions set forth in Schedule III, the
terms and provisions set forth in Schedule III shall govern and control.

      SECTION 4. Satisfaction of the Mortgage, Security Interest and Assignment
of Rents and Subleases. If the Mortgagor complies with the provisions of this
Mortgage and irrevocably pays and performs (to the reasonable satisfaction of
Mortgagor) all of the Obligations secured hereby, in accordance with the
provisions of the Master Lease, and the other Operative Documents and in the
manner and at the times set forth therein, without deduction, fraud or delay,
then and from thenceforth this Mortgage and the estate hereby granted and
created in favor of the Mortgagee, shall cease and become void, anything
hereinbefore contained to the contrary notwithstanding.

      SECTION 5. Maximum Interest Rate. No provision of this Mortgage or any
transaction related thereto shall require the payment or permit the collection
of interest or any other amount in excess of the maximum permitted by Applicable
Law. If any excess of interest or any other amount in such respect is herein or
any other Operative Document provided for, the Mortgagor

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shall not be obligated to pay such excess interest or any other amounts in
excess of the amount permitted by applicable law, and the right to demand the
payment of any such excess shall be and hereby is waived, and this provision
shall control any other provision of this Mortgage and the other Operative
Documents.

      SECTION 6. Security Agreement and Fixture Financing Statement. This
Mortgage is both a real property mortgage and a "security agreement" within the
meaning of the UCC. The Subject Property includes both real and personal
property and all other rights and interests, whether tangible or intangible in
nature, of Mortgagee in the Subject Property. Mortgagor has herein granted to
Mortgagee, as security for the Obligations, a security interest in the UCC
Property to the full extent that the UCC Property may be subject to the UCC. The
information contained in this Section 6 is provided in order that this Mortgage
shall comply with the requirements of the UCC for mortgages to be effective as
financing statement filed as a fixture filing. The name of the "debtor" is ITT
INDUSTRIES, INC.; the name of the "secured party" is REXUS L.L.C.; the mailing
address of the "secured party" from which information concerning the security
interest may be obtained and the mailing address of the "debtor" are as set
forth in Schedule V hereto. The types, or the items, of collateral covered
hereby consist of the UCC Property identified in Section 1 which constitute
fixtures or personal property. The Mortgagee is the record owner of the Land.

      SECTION 7. Notices. For purposes of this instrument as a fixture filing,
and for all other purposes, unless otherwise specifically provided herein, all
notices, offers, acceptances, rejections, consents, requests, demands or other
communications to or upon the respective parties hereto shall be in writing and
shall be given in the manner set forth in Section 26.4 of the Master Lease and
delivered to Mortgagor or Mortgagee at the addresses set forth above.

                       [Signature Block on Following Page]

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      IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly
executed by an officer thereunto duly authorized as of the date and year first
above written.

                                ITT INDUSTRIES, INC., as Mortgagor

                                     By: /s/ Donald Foley
                                         ----------------
                                     Name: Donald Foley
                                     Title: Senior Vice President, Treasurer and
                                     Director of Tax

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                                   Schedule I

                                Legal Description

Commencing at a point on the westerly side of River Road (55 feet wide), 30 feet
from the centerline of previous 50 ft. R.O.W., said point being the dividing
line between Block 83.01 Lot 4 and Block 83.01 Lot 1.01 and running the
following courses and distances; thence

Section  1. Along the dividing line between Block 83.01 Lot 1.01 and Block 83.01
         Lot 4 North 69 degrees 00'57" East a distance of 5.20 feet to the Point
         of Beginning; thence

A.       South 05 degrees 05'53" West, a distance of 84.32 feet; thence
B.       South 06 degrees 35'47" East, a distance of 143.14 feet; thence
C.       South 11 degrees 26'17" East, a distance of 103.17 feet; thence
D.       North 87 degrees 33'42" West, a distance of 418.94 feet; thence
E.       South 25 degrees 25'19" West, a distance of 193.71 feet; thence
F.       North 87 degrees 33'42" West, a distance of 170.64 feet; thence
G.       North 64 degrees 34'55" West, a distance of 163.25 feet; thence
H.       North 87 degrees 33'42" West, a distance of 190.32 feet; thence
I.       South 08 degrees 24'41" West, a distance of 112.10 feet; thence
J.       North 81 degrees 21'01" West, a distance of 51.42 feet; thence
K.       South 08 degrees 58'57" West, a distance of 11.07 feet; thence
L.       North 81 degrees 06'09" West, a distance of 204.71 feet; thence
M.       North 05 degrees 22'50" West, a distance of 193.17 feet; thence
N.       South 85 degrees 10'45" West, a distance of 181.84 feet; thence
O.       North 50 degrees 31'04" West, a distance of 79.81 feet; thence
P.       North 21 degrees 43'47" West, a distance of 350.63 feet; thence
Q.       North 04 degrees 55'42" West, a distance of 95.18 feet; thence
R.       North 00 degrees 00'51" East, a distance of 299.57 feet; thence
S.       South 89 degrees 59'09" East, a distance of 78.00 feet; thence
T.       North 00 degrees 00'51" East, a distance of 25.00 feet; thence
U.       South 89 degrees 59'09" East, a distance of 374.44 feet; thence
V.       South 74 degrees 48'47" East, a distance of 87.22 (Survey) 86.15 (Deed)
         feet; thence
W.       South 72 degrees 56'47" East, a distance of 262.88 feet; thence

X.       South 67 degrees 53'17" East, a distance of 129.78 feet; thence
Y.       South 58 degrees 23'37" East, a distance of 293.48 feet; thence
Z.       South 69 degrees 00'57" East, a distance of 527.06 feet to the Point
         of Beginning.
Encompassing an area of 1,131,200 sf or 25.969 Acres.

<PAGE>

                                   Schedule II

                       Additional Permitted Property Liens

                                      None

<PAGE>

                                  Schedule III

                              Local Law Provisions

      1. Warranty of Title. At the time of the recordation of this Mortgage,
Mortgagor is well seized of an indefeasible estate in fee simple in the portion
of the Security Property which constitutes real property and owns good title to
the portion of the Security Property which constitutes personal property, and
Mortgagor has good right, full power and lawful authority to convey, mortgage
and grant a security interest therein and to assign any Rents due Mortgagor
relative to the Security Property. Said title of Mortgagor in the Security
Property is free and clear of all liens, charges, easements, covenants,
conditions, restrictions and encumbrances whatsoever, other than liens expressly
permitted under the Loan Agreement, including, as to the personal property and
fixtures, security agreements, conditional sales contracts and anything of a
similar nature. Mortgagor shall and will forever defend the title to the
Security Property against the claims of all persons whomsoever.

      2. Mortgage Taxes. In the event of the passage of any federal, state or
local governmental law, order, rule or regulation subsequent to the date hereof
which changes or modifies in any manner the laws now in force governing the
taxation of mortgages or debts secured by mortgages or the manner of collecting
taxes so as to materially and adversely affect Mortgagee, all sums secured by
this Mortgage and all interest accrued thereon shall become due forthwith at the
option of Mortgagee and be payable 60 days after notice to Mortgagor.
Notwithstanding the foregoing, instead of paying all the sums secured by this
Mortgage and all interest accrued thereon as provided above, Mortgagor shall
have the right to pay to Mortgagee an amount which will place Mortgagee in
exactly the same position Mortgagee would have been in had the events outlined
above not occurred, provided, however, if such payment may, in Mortgagee's
judgment, be considered unlawful by a court of competent jurisdiction, then such
payment may not be made and all sums secured by this Mortgage and all interest
accrued thereon shall become due forthwith at the option of Mortgagee and
payable 60 days after notice to Mortgagor as aforesaid.

      3. No Tax Credits. Mortgagor shall not claim or demand or be entitled to
receive any credit or credits on any principal or interest payable with respect
to any Obligations, for so much of the taxes, assessments or similar charges
assessed against the Security Property, or any part thereof, as are applicable
to the Obligations or to Mortgagee's interest in the Security Property. No
deduction shall be claimed from the taxable value of the Security Property or
any part thereof by reason of the Obligations or this Mortgage.

      4. Further Assurances; After Acquired Property. At any time and from time
to time, upon request from Mortgagee, Mortgagor shall make, execute and deliver,
or cause to be made, executed and delivered, to Mortgagee and, where
appropriate, to cause to be recorded or filed, or both, and from time to time
thereafter to be re-recorded or refiled, or both, at such time and in such
offices and places as shall be deemed desirable by Mortgagee, any and all such
other and further mortgages, security agreements, financing statements,
continuation statements, instruments of further assurances, certificates and
other documents as may, in the opinion of

<PAGE>

Mortgagee, be necessary or desirable in order to effectuate, complete or
perfect, or to continue and preserve (i) the obligations of the Mortgagor under
this Mortgage and the other Operative Documents, and (ii) the lien and security
interest of this Mortgage as a first and prior lien and security interest upon
all of the Security Property, whether now or hereafter acquired by Mortgagor.
Upon any failure by Mortgagor to so make, execute and deliver each of such
documents after written demand, Mortgagee may make, execute, record, file,
re-record and refile, as appropriate, any and all such mortgages, security
agreements, financing statements, continuation statements, instruments,
certificates and documents for and in the name of Mortgagor, and Mortgagor
hereby irrevocably appoints Mortgagee as its agent and attorney-in-fact in
connection therewith. The lien and security interest hereof will automatically
attach, without further act, to all after-acquired property owned by Mortgagor
attached to or used in connection with the operation of the Security Property or
any part thereof.

      5. Receiver. If a Lease Event of Default shall have occurred and be
continuing, Mortgagee, upon application to a court of competent jurisdiction,
shall be entitled as a matter of strict right without notice and without regard
to the occupancy or value of any security for the Obligations or the insolvency
of any party bound for its payment to the appointment of a receiver to take
possession of and to operate the Security Property and to collect and apply the
rents, issues, profits, revenues, awards and other benefits thereof. The
receiver shall have all of the rights and powers to the fullest extent permitted
by law. Mortgagor shall pay to Mortgagee upon demand all of Mortgagee's costs
and expenses, including, without limitation, receiver's fees and expenses and
attorneys' fees and expenses, incurred pursuant to this Section plus interest
thereon accruing at the Default Rate, and all such amounts shall be additional
indebtedness comprising Obligations.

      6. Mortgagee's Power of Enforcement. If a Lease Event of Default shall
have occurred and be continuing, Mortgagee may, either with or without entry or
taking possession as herein provided or otherwise, proceed by suit or suits at
law or in equity or by any other appropriate proceeding or remedy (i) to enforce
payment of the Obligations or the performance of any term, covenant, condition
or agreement of this Mortgage or any other right, (ii) to foreclose this
Mortgage and to sell the Security Property as an entirety or otherwise, as
Mortgagee may determine, and (iii) to pursue any other remedy available to it,
including, without limitation, any remedy available to it under any of the
Operative Documents, all as Mortgagee shall deem most effectual for such
purposes. Mortgagee may take action either by such proceedings or by the
exercise of its powers with respect to entry or taking possession, as Mortgagee
may determine. Mortgagee may elect to pursue any one or more or all of the
foregoing.

      7. Purchase by Mortgagee. Upon any foreclosure sale, Mortgagee may bid for
and purchase the Security Property and shall be entitled to apply all or any
part of any indebtedness or obligation secured hereby as a credit to the
purchase price.

      8. Fees and Expenses; Application of Proceeds of Sale. In any suit to
foreclose the lien hereof, there shall be allowed and included as additional
indebtedness secured hereby (and part of the Obligations) in the decree for
sale, to the extent permitted by law, all costs and expenses which may be paid
or incurred by or on behalf of Mortgagee or the holder of the Notes

<PAGE>

for attorneys' fees and expenses, appraiser's fees and expenses, receiver's fees
and expenses, insurance, taxes, outlays for documentary and expert evidence,
costs for preservation of the Security Property, stenographer's charges,
publication cost and costs of procuring all abstracts of title, title searches
and examinations, and similar data and assurances with respect to title as
Mortgagee may deem to be necessary either to prosecute such suit or to evidence
to bidders at any sale which may be had pursuant to such decree the true
condition of the title to or value of the Security Property, or for any other
reasonable purpose. The amount of any such costs and expenses which may be paid
or incurred after the decree for sale is entered may be estimated and the amount
of such estimate may be allowed and included as additional indebtedness secured
hereby (and part of the Obligations) in the decree for sale. In the event of a
foreclosure sale of the Security Property, the proceeds of said sale shall be
applied first to the expenses of such sale and of all proceedings in connection
therewith, including, without limitation, attorneys' fees and expenses, then to
insurance premiums, liens, assessments, taxes and charges, including, without
limitation, utility charges, then to payment of the outstanding principal
balance of any Obligations secured hereby, then to the Remaining Obligations.

      9. Waiver of Appraisement, Valuation, Stay, Extension and Redemption Laws.
Mortgagor agrees, to the fullest extent permitted by law, that if a Lease Event
of Default occurs hereunder, neither Mortgagor nor anyone claiming through or
under Mortgagor shall or will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension, homestead or redemption laws now or
hereafter in force, in order to prevent or hinder the enforcement or foreclosure
of this Mortgage, or the absolute sale of the Security Property hereby conveyed,
or the final and absolute putting into possession thereof, immediately after
such sale, of the purchasers thereat, and Mortgagor, for itself and all who may
at any time claim by, through or under it, hereby waives and releases, to the
fullest extent permitted by law, the benefit of all such laws and any and all
rights to have the assets comprised in the security intended to be created
hereby marshalled upon any foreclosure of the lien hereof.

      10. Leases. Mortgagee, at its option, is authorized to foreclose this
Mortgage subject to the rights of any tenants of the Security Property, or to
name said tenants in the foreclosure, and the failure to make such tenants
parties to any such foreclosure proceedings and to foreclose their rights will
not be, nor be asserted to be by Mortgagor, a defense to any proceedings
instituted by Mortgagee to collect the sums secured hereby, or any deficiency
remaining unpaid after the foreclosure sale of the Security Property.

      11. Discontinuance of Proceedings and Restoration of the Parties. In case
Mortgagee shall have proceeded to enforce any right, power or remedy under this
Mortgage by foreclosure, entry or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason, or shall have been determined
adversely to Mortgagee, then and in every such case, Mortgagor and Mortgagee
shall be restored to their former positions and rights hereunder, and all
rights, powers and remedies of Mortgagee shall continue as if no such proceeding
had been taken.

      12. Suits to Protect the Security Property. Upon the occurrence of a Lease
Event of Default hereunder, Mortgagee shall have the power (i) to institute and
maintain such suits and proceedings as it may deem expedient to prevent any
impairment of the Security Property by any

<PAGE>

acts which may be unlawful or in violation of this Mortgage; (ii) to preserve or
protect its interest in the Security Property and in the rents, issues, profits,
revenues, awards and other benefits arising therefrom; and (iii) to restrain the
enforcement of or compliance with any legislation or other governmental
enactment, regulation, rule, order or other requirement that may be
unconstitutional or otherwise invalid, if the enforcement of or compliance with
such enactment, regulation, rule, order or other requirement would impair the
security hereunder or be prejudicial to the interest of Mortgagee, and all costs
and expenses incurred by Mortgagee in connection therewith (including, without
limitation, attorneys' fees and expenses) shall be paid by Mortgagor to
Mortgagee on demand with interest at the Default Rate, and all such amounts
shall be additional indebtedness secured hereby (and part of the Obligations).

      13. Mortgagee May File Proofs of Claim. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings affecting Mortgagor, its creditors or its property, Mortgagee,
to the extent permitted by law, shall be entitled to file such proofs of claim
and other documents as may be necessary or advisable in order to have the claims
of Mortgagee allowed in such proceedings for the entire amount due and payable
by Mortgagor under this Mortgage at the date of the institution of such
proceedings and for any additional amount which may become due and payable by
Mortgagor hereunder after such date.

      14. Assignment. For $10.00 and other good and valuable consideration,
including the indebtedness evidenced by the Operative Documents, the receipt and
sufficiency of which are hereby acknowledged, Mortgagor has granted, bargained,
sold and conveyed, and by these presents does grant, bargain, sell and convey
absolutely unto Mortgagee any leases and the rents payable to Mortgagor relative
to the Security Property, subject only to the hereinafter referenced License, to
have and to hold the Leases and the Rents unto Mortgagee, forever, and Mortgagor
does hereby bind itself, its successors and assigns to warrant and forever
defend the title to the leases and the rents unto Mortgagee against every person
whomsoever lawfully claiming or to claim the same or any part thereof by or
through Mortgagor; provided, however, if Mortgagor shall pay or cause to be paid
and shall perform and discharge or cause to be performed and discharged, the
Obligations on or before the date same is to be paid, performed and discharged,
then this assignment shall terminate and be of no further force and effect, and
all rights, titles and interests conveyed pursuant to this assignment shall
become revested in Mortgagor without the necessity of any further act or
requirement by Mortgagor or Mortgagee. Notwithstanding any provisions herein,
Mortgagor may only lease the Security Property to third parties in accordance
with the Operative Documents.

      15. Limited License. Mortgagee hereby grants to Mortgagor a limited
license (the "License"), nonexclusive with the rights of Mortgagee reserved in
this Mortgage, to exercise and enjoy all incidences of ownership of the Leases
and the Rents, including specifically but without limitation the right to
collect, demand, sue for, attach, levy, recover and receive the Rents, and to
give proper receipts, releases and acquittances therefor. Mortgagor hereby
agrees to receive all Rents and hold the same as a trust fund to be applied, and
to apply the Rent so collected, to the payment, satisfaction and discharge of
the indebtedness described in the Operative Documents as and when the same shall
become due and payable. Thereafter, Mortgagor may use the balance of the Rent
collected in any manner not inconsistent with the Operative Documents.

<PAGE>

      16. Enforcement of Leases. Subject to and in accordance with the terms and
conditions of Section 1.16 of this Mortgage, Mortgagor shall (a) duly and
punctually perform and comply with any and all representations, warranties,
covenants and agreements expressed as binding upon the landlord under any Lease,
(b) maintain each of the Leases in full force and effect during the term
thereof, (c) to the extent commercially reasonable, appear in and defend any
action or proceeding in any manner connected with any of the Leases, (d) deliver
to Mortgagee copies of executed counterparts of all Leases and (e) deliver to
Mortgagee such further information, and execute and deliver to Mortgagee such
further assurances and assignments, with respect to the Leases as Mortgagee may
from time to time reasonably request. Without Mortgagee's prior written consent,
Mortgagor shall not materially discount any future accruing Rent, or assign or
grant a security interest in or to the License or any of the Leases.

      17. Suits; Attornment. Subject to the License and the provisions of
Section 2.1.2 of this Mortgage, Mortgagee hereby reserves and may exercise the
right and Mortgagor hereby acknowledges that Mortgagee has the right (but not
the obligation), upon the occurrence and during the continuance of a Lease Event
of Default, to collect, demand, sue for, attach, levy, recover and receive any
Rent, to give proper receipts, releases and acquittances therefor and, after
deducting the expenses of collection, to apply the net proceeds thereof as a
credit upon any portion of any indebtedness secured hereby selected by
Mortgagee, notwithstanding that such portion selected may not then be due and
payable or that such portion is otherwise adequately secured. Mortgagor hereby
authorizes and directs any lessee of the Security Property to deliver any such
payment to, and otherwise to attorn all other obligations under the Leases
direct to, Mortgagee. Mortgagor hereby ratifies and confirms all that Mortgagee
shall do or cause to be done by virtue and in compliance with the terms of this
assignment. No lessee shall be required to inquire into the authority of
Mortgagee to collect any Rent, and any lessee's obligation to Mortgagor shall be
absolutely discharged to the extent of its payment to Mortgagee.

      18. Remedies. Upon or at any time after the occurrence of a Lease Event of
Default, Mortgagee, at its option and in addition to the remedies provided in
this Mortgage, shall have the complete, continuing and absolute right, power and
authority to terminate the License solely by the giving of written notice of
termination to Mortgagor. Upon Mortgagee's giving of such notice, the License
shall immediately terminate without any further action being required of
Mortgagee. Thereafter, as long as any Event of Default shall exist, Mortgagee
shall have the exclusive right, power and authority to take any and all action
as described above, regardless of whether a foreclosure sale of the remainder of
the Security Property has occurred under this Mortgage, or whether Mortgagee has
taken possession of the remainder of the Security Property or attempted to do
any of the same. No action referred to above or in this Section taken by
Mortgagee shall constitute an election of remedy. Notwithstanding any term to
the contrary herein, in the event of such a termination of Mortgagor's License,
such License shall be reinstated when and if the applicable Event of Default
shall have been cured or waived.

      19. No Obligation of Mortgagee. Neither the acceptance by Mortgagee of the
assignment granted in this Mortgage, nor the granting of any other right, power,
privilege or authority in this Mortgage, nor the exercise of any of the
aforesaid, shall (a) prior to the actual taking of physical possession and
operational control of the Security Property by Mortgagee, be deemed to
constitute Mortgagee as a "mortgagee in possession" or (b) at any time
thereafter,

<PAGE>

obligate Mortgagee (i) to appear in or defend any action or proceeding relating
to the Leases, the Rents or the remainder of the Security Property, (ii) to take
any action hereunder, (iii) to expend any money or incur any expenses or perform
or discharge any obligation, duty or liability with respect to any Lease, (iv)
to assume any obligation or responsibility for any deposits which are not
physically delivered to Mortgagee or (v) for any injury or damage to person or
property sustained in or about the Security Property.

      20. Mortgagor's Indemnities. So long as the License is in effect,
Mortgagor shall indemnify and hold Mortgagee harmless from and against any and
all liability, loss, cost, damage or expense which Mortgagee incurs under or by
reason of this assignment, or for any action taken by Mortgagee hereunder in
accordance with the terms hereof, or by reason of or in defense of any and all
claims and demands whatsoever which are asserted against Mortgagee arising out
of the Leases. In the event Mortgagee incurs any such liability, loss, cost,
damage or expense, the amount thereof together with all reasonable attorneys'
fees and interest thereon at the Default Rate shall be payable by Mortgagor to
Mortgagee, within 10 days after demand by Mortgagee, and shall be secured by
this Mortgage, provided that Mortgagor shall have no duty or liability hereunder
to indemnify and hold Mortgagee harmless from matters resulting from the willful
misconduct or gross negligence of Mortgagee.

<PAGE>

                                   Schedule IV

                                  Defined Terms

      "Appurtenant Rights" means, with respect to the Land and the Subject
Property, (i) all agreements, easements, rights of way or use, rights of ingress
or egress, privileges, appurtenances, tenements, and other rights and benefits
at any time belonging or pertaining to the Land and the Subject Property,
including the use of any streets, ways, alleys, vaults or strips of land
adjoining, abutting, adjacent or contiguous to the Land and (ii) all permits,
licenses and rights, whether or not of record, appurtenant to the Land and (iii)
all of the Lessee/Mortgagor's right, title and interest in all general
intangibles relating to the design, development, operation, management and use
of the Subject Property, all certificates of occupancy, zoning variances,
building, use or other permits, approvals, authorizations and consents obtained
from and all materials prepared for filing or filed with any Governmental
Authority in connection with the development, use, operation or management of
the Subject Property, all construction, service, engineering, consulting,
leasing, architectural and other similar contracts concerning the design,
construction, management, operation, occupancy and/or use of the Subject
Property, all architectural drawings, plans, specifications, soil tests,
feasibility studies, appraisals, environmental studies, engineering reports and
similar materials relating to any portion of or all of the Subject Property, and
all payment and performance bonds or warranties or guarantees relating to the
Subject Property, all to the extent assignable.

      "Equipment" means any equipment the removal of which could reasonably be
expected to affect the value or utility of the Land or the Subject Property,
taken together or separately, including heating, electrical, switch gear, power
supply, lighting, plumbing, ventilation, air conditioning and air cooling
systems, refrigerating equipment, generators, locking and unlocking equipment,
communication systems, sprinkler system and fire prevention systems, security
systems and fixtures of all kinds; provided, however, that the term "Equipment"
shall expressly exclude all inventory, furniture and furnishings.EX-10.1

 

Exhibit 10.1

THE HARTFORD INCENTIVE STOCK PLAN

(as amended effective as of January 1, 2005)

1. Purpose

     The purpose of the Plan is to motivate and reward superior
performance on the part of Key Employees of The Hartford and to thereby
attract and retain Key Employees of superior ability. In addition, the
Plan is intended to further opportunities for stock ownership by such Key
Employees and Directors in order to increase their proprietary interest
in The Hartford and, as a result, their interest in the success of the
Company. Awards will be made, in the discretion of the Committee, to Key
Employees (including officers and directors who are also Key Employees)
whose responsibilities and decisions directly affect the performance of
any Participating Company and its subsidiaries, and also to Directors.
Such incentive awards may consist of stock options and stock appreciation
rights payable in stock or cash for Key Employees or Directors, and
performance shares, restricted stock, restricted units or any combination
of the foregoing for Key Employees, as the Committee may determine.

2. Definitions

     When used herein, the following terms shall have the following
meanings:

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

     “Award” means an award granted to any Key Employee or Director in
accordance with the provisions of the Plan in the form of Options,
Rights, Performance Shares or Restricted Stock, or any combination of the
foregoing, as applicable.

     “Award Document” means the written notice, agreement, or other
document evidencing each Award granted under the Plan.

     “Beneficial Owner” means any Person who, directly or indirectly, has
the right to vote or dispose of or has “beneficial ownership” (within the
meaning of Rule 13d-3 under the Act) of any securities of a company,
including any such right pursuant to any agreement, arrangement or
understanding (whether or not in writing), provided that: (a) a Person
shall not be deemed the Beneficial Owner of any security as a result of
an agreement, arrangement or understanding to vote such security (i)
arising solely from a revocable proxy or consent given in response to a
public proxy or consent solicitation made pursuant to, and in accordance
with, the Act and the applicable rules and regulations thereunder, or
(ii) made in connection with, or to otherwise participate in, a proxy or
consent solicitation made, or to be made, pursuant to, and in accordance
with, the applicable provisions of the Act and the applicable rules and
regulations thereunder, in either case described in clause (i) or (ii)
above,
whether or not such agreement, arrangement or understanding is also
then reportable by such Person on Schedule 13D under the Act (or any
comparable or successor report); and (b) a

 

 

Person engaged in business as
an underwriter of securities shall not be deemed to be the Beneficial
Owner of any security acquired through such Person’s participation in
good faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.

     “Beneficiary” means the beneficiary or beneficiaries designated
pursuant to the Plan to receive the amount, if any, payable under the
Plan upon the death of an Award recipient.

     “Board” means the Board of Directors of the Company.

     “Change of Control” means the occurrence of an event defined in
Section 9 of the Plan.

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

     “Committee” means the Compensation and Personnel Committee of the
Board or such other committee as may be designated by the Board to
administer the Plan.

     “Company” means The Hartford Financial Services Group, Inc. and its
successors and assigns.

     “Director” means a member of the Board who is not an employee of any
Participating Company.

     “Dividend Equivalents” means an amount credited with respect to an
outstanding Restricted Unit equal to the cash dividends paid or property
distributions awarded upon one share of Stock.

     “Eligible Employee” means an Employee as defined in the Plan;
provided, however, that except as the Board or the Committee, pursuant to
authority delegated by the Board, may otherwise provide on a basis
uniformly applicable to all persons similarly situated, “Eligible
Employee” shall not include any “Ineligible Person,” which includes: (a)
a person who (i) holds a position with the Company’s “HARTEMP” Program,
(ii) is hired to work for a Participating Company through a temporary
employment agency, or (iii) is hired to a position with a Participating
Company with notice on his or her date of hire that the position will
terminate on a certain date; (b) a person who is a leased employee
(within the meaning of Code Section 414(n)(2)) of a Participating Company
or is otherwise employed by or through a temporary help firm, technical
help firm, staffing firm, employee leasing firm, or professional employer
organization, regardless of whether such person is an Employee of a
Participating Company, and (c) a person who performs services for a
Participating Company as an independent contractor or under any other
non-employee classification, or who is classified by a Participating
Company as, or determined by a Participating Company to be, an
independent contractor, regardless of whether such person is
characterized or ultimately determined by the Internal Revenue Service or
any other Federal, State or local governmental
authority or regulatory body to be an employee of a Participating Company
or its affiliates for income or wage tax purposes or for any other
purpose.

 

 

     Notwithstanding any provision in the Plan to the contrary, if any
person is an Ineligible Person, or otherwise does not qualify as an
Eligible Employee, or otherwise is ineligible to participate in the Plan,
and such person is later required by a court or governmental authority or
regulatory body to be classified as a person who is eligible to
participate in the Plan, such person shall not be eligible to participate
in the Plan, notwithstanding such classification, unless and until
designated as an Eligible Employee by the Committee, and if so
designated, the participation of such person in the Plan shall be
prospective only.

     “Employee” means any person regularly employed by a Participating
Company, but shall not include any person who performs services for a
Participating Company as an independent contractor or under any other
non-employee classification, or who is classified by a Participating
Company as, or determined by a Participating Company to be, an
independent contractor.

     “Fair Market Value,” unless otherwise indicated in the provisions of
this Plan, means, as of any date, the composite closing price for one
share of Stock on the New York Stock Exchange or, if no sales of Stock
have taken place on such date, the composite closing price on the most
recent date on which selling prices were quoted, the determination to be
made in the discretion of the Committee.

     “Formula Price” means the highest of: (a) the highest composite
daily closing price of the Stock during the period beginning on the 60th
calendar day prior to the Change of Control and ending on the date of
such Change of Control, (b) the highest gross price paid for the Stock
during the same period of time, as reported in a report on Schedule 13D
filed with the Securities and Exchange Commission, or (c) the highest
gross price paid or to be paid for a share of Stock (whether by way of
exchange, conversion, distribution upon merger, liquidation or otherwise)
in any of the transactions set forth in Section 9 of the Plan as
constituting a Change of Control; provided that in the case of the
exercise of any such Right related to an Incentive Stock Option, “Formula
Price” shall mean the Fair Market Value of the Stock at the time of such
exercise.

     “Incentive Stock Option” means a stock option qualified under
Section 422 of the Code.

     “Key Employee” means an Eligible Employee (including any officer or
director who is also an Eligible Employee) whose responsibilities and
decisions, in the judgment of the Committee, directly affect the
performance of the Company and its subsidiaries.

     “Option” means an option awarded under Section 5 of the Plan to
purchase Stock of the Company, which option may be an Incentive Stock
Option or a non-qualified stock option.

     “Participating Company” means the Company or any subsidiary or other
affiliate of the Company; provided, however, for Incentive Stock Options
only, “Participating Company”

 

 

means the Company or any corporation which
at the time such Option is granted qualifies as a “subsidiary” of the
Company under Section 424(f) of the Code.

     “Performance Share” means a performance share awarded under Section
6 of the Plan.

     “Person” has the meaning ascribed to such term in Section 3(a)(9) of
the Act, as supplemented by Section 13(d)(3) of the Act; provided,
however, that Person shall not include: (a) the Company, any subsidiary
of the Company or any other Person controlled by the Company, (b) any
trustee or other fiduciary holding securities under any employee benefit
plan of the Company or of any subsidiary of the Company, or (c) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
securities of the Company.

     “Plan” means The Hartford Incentive Stock Plan, as the same may be
amended, administered or interpreted from time to time.

     “Plan Year” means the calendar year.

     “Potential Change of Control” means the occurrence of an event
defined in Section 9 of the Plan.

     “Retirement” means the following:

     (a) Key Employees Hired Before 2001. Solely with
respect to a Key
Employee with an original hire date with a Participating Company before
January 1, 2001 who: (i) is covered in whole or in part under the final
average pay formula of the Retirement Plan, or (ii) is not eligible for
coverage under the Retirement Plan, “Retirement” means satisfaction of
the requirements for early or normal retirement under the final average
pay formula of the Retirement Plan (assuming such Key Employee were
covered under the final average pay formula of the Retirement Plan),
provided such event results in such Key Employee’s separation from
employment with the Company, or

     (b) Key Employees Hired During 2001. Solely with respect to a Key
Employee with an original hire date with a Participating Company on or
after January 1, 2001 but before January 1, 2002 who: (i) is covered
under the cash balance formula of the Retirement Plan, or (ii) is not
eligible for coverage under the Retirement Plan, “Retirement” means
satisfaction of the requirements for early or normal retirement under the
final average pay formula of the Retirement Plan (assuming such Key
Employee were covered under the final average pay formula of the
Retirement Plan), provided such event results in such Member’s separation
from the employment of the Company.

     “Retirement Plan” means The Hartford Retirement Plan for U.S.
Employees, as amended from time to time.

     “Restricted Stock” means Stock awarded under Section 7 of the Plan
subject to such

 

 

restrictions as the Committee deems appropriate or
desirable.

     “Restricted Unit” means a contractual right awarded under Section 7
of the Plan to receive pursuant to the Plan one share of Stock at the end
of a specified period of time, subject to such restrictions as the
Committee deems appropriate or desirable.

     “Restriction Period” means, in the case of Performance Shares,
Restricted Stock or Restricted Units the period established by the
Committee pursuant to Section 6 or 7, as applicable, during which shares
of Stock or other rights of the recipient of such an Award (or his or her
permissive assigns) remain subject to forfeiture pending completion of a
period of service or such other criteria or conditions as the Committee
shall specify.

     "Right” means a stock appreciation right awarded in connection with
an Option under Section 5 of the Plan.

     “Stock” means the common stock ($.01 par value) of The Hartford.

     “The Hartford” means the Company and its subsidiaries, and their
successors and assigns.

     “Total Disability” means the complete and permanent inability of a
Key Employee to perform all of his or her duties under the terms of his
or her employment with any Participating Company, as determined by the
Committee upon the basis of such evidence, including independent medical
reports and data, as the Committee deems appropriate or necessary.

     “Transferee” means any person or entity to whom or to which a
non-qualified stock option has been transferred and assigned in
accordance with Section 5(h) of the Plan.

3. Shares Subject to the Plan

     The aggregate number of shares of Stock which may be awarded under
the Plan shall be subject to a maximum limit applicable to all Awards for
the duration of the Plan (the “Maximum Limit”). The Maximum Limit shall
be eight percent (8%) of the total of the outstanding shares of Stock as
of the date of shareholder approval of the Plan.

     In addition to the foregoing, in no event shall more than twenty
percent (20%) of the total number of shares on a cumulative basis be
available for Restricted Stock, Restricted Units and Performance Share
Awards. Further, for any Plan Year: (a) no individual Key Employee may
receive an Award of Options for more than 1,000,000 shares, and (b) no
individual Key Employee may receive an Award of Performance Shares for
more than 200,000 shares.

     Subject to the above limitations, shares of Stock to be issued under
the Plan may be made available from the authorized but unissued shares,
or shares held by the Company in

 

 

treasury or from shares purchased in the
open market.

     For the purpose of computing the total number of shares of Stock
available for Awards under the Plan, there shall be counted against the
foregoing limitations the number of shares of Stock subject to issuance
upon exercise or settlement of Awards and the number of shares of Stock
which equals the value of performance share Awards, in each case
determined as at the dates on which such Awards are granted. If any
Awards under the Plan are forfeited, terminated, expire unexercised, are
settled in cash in lieu of Stock or are exchanged for other Awards, the
shares of Stock which were theretofore subject to such Awards shall again
be available for Awards under the Plan to the extent of such forfeiture,
termination, expiration, cash settlement or exchange of such Awards.
Further, any shares of Stock that are exchanged (either actually or
constructively) by optionees as full or partial payment to the Company of
the purchase price of shares of Stock being acquired through the exercise
of an Option granted under the Plan may be available for subsequent
Awards.

 

 

4. Grant of Awards and Award Documents

     (a) Subject to the provisions of the Plan, the Committee shall: (i)
determine and designate from time to time those Key Employees and
Directors or groups of Key Employees and Directors to whom Awards are to
be granted, (ii) determine the form or forms of Award to be granted to
any Key Employee and any Director; (iii) determine the amount or number
of shares of Stock subject to each Award; and (iv) determine the terms
and conditions of each Award.

     (b) Each Award granted under the Plan shall be evidenced by a
written Award Document. Such Award Document shall be subject to and
incorporate the express terms and conditions of each Award, if any,
required under the Plan or required by the Committee.

5. Stock Options and Rights

     (a) With respect to Options and Rights, the Committee shall: (i)
authorize the granting of Incentive Stock Options, non-qualified stock
options, or a combination of Incentive Stock Options and non-qualified
stock options; (ii) authorize the granting of Rights which may be granted
in connection with all or part of any Option granted under this Plan,
either concurrently with the grant of the Option or at any time thereafter during the term of the Option; (iii) determine the number of
shares of Stock subject to each Option or the number of shares of Stock
that shall be used to determine the value of a Right; and (iv) determine
the time or times when and the manner in which each Option or Right shall
be exercisable and the duration of the exercise period.

     (b) Any option issued hereunder which is intended to qualify as an
Incentive Stock Option shall be subject to such limitations or
requirements as may be necessary for the purposes of Section 422 of the
Code or any regulations and rulings thereunder to the extent and in such
form as determined by the Committee in its discretion.

     (c) The exercise period for a non-qualified stock option and any
related Right shall not exceed ten years and two days from the date of
grant, and the exercise period for an Incentive Stock Option and any
related Right shall not exceed ten years from the date of grant.

     (d) The Option price per share shall be determined by the Committee
at the time any Option is granted and shall be not less than the Fair
Market Value of one share of Stock on the date the Option is granted.

     (e) No part of any Option or Right may be exercised until the Key
Employee who has been granted the Award shall have remained in the employ
of a Participating Company for such period after the date of grant as the
Committee may specify, if any, and the Committee may further require
exercisability in installments.

 

 

     (f) Except as provided in Section 9, the purchase price of the shares of Stock as to which an Option is exercised shall be paid to the
Company at the time of exercise either in cash, Stock already owned by
the optionee, or a combination of the foregoing having a total Fair
Market Value equal to the purchase price. The Committee shall determine
acceptable methods for tendering Stock as payment upon exercise of an
Option and may impose such limitations and prohibitions on the use of
Stock for such purpose as it deems appropriate.

     (g) In case of a Key Employee’s termination of employment with all
Participating Companies, the following provisions shall apply:

            (i) If a Key Employee who has been granted an Option shall die
before such Option has expired, his or her Option may be exercised in
full by: (A) the person or persons to whom the Key Employee’s rights
under the Option pass by will, or if no such person has such right, by
his or her executors or administrators; (B) his or her Transferee(s)
(with respect to non-qualified Options); or (C) his or her Beneficiary
designated pursuant to the Plan, at any time, or from time to time,
within five years after the date of the Key Employee’s death or within
such other period, and subject to such terms and conditions as the
Committee may specify, but not later than the expiration date specified
in Section 5(c) above. Any such Options not fully exercisable immediately
prior to such optionee’s death shall become fully exercisable upon such
death unless the Committee, in its sole discretion, shall otherwise
determine.

            (ii) If the Key Employee’s employment with all Participating
Companies terminates: (A) because of his or her Total Disability, or (B)
solely in the case of a Key Employee with an original hire date with a
Participating Company before January 1, 2002, because of his or her
voluntary termination of employment due to Retirement; he or she may
exercise his or her Options in full at any time, or from time to time,
within five years after the date of the termination of his or her
employment, or within such other period, and subject to such terms and
conditions as the Committee may specify, but not later than the
expiration date specified in Section 5(c) above. Any such Options not
fully exercisable immediately prior to such optionee’s Total Disability
or Retirement shall become fully exercisable upon such Total Disability
or Retirement unless the Committee, in its sole discretion, shall
otherwise determine.

            (iii) If the Key Employee shall be terminated for cause as
determined by the Committee, all of such Key Employee’s Options or Rights
outstanding at the date of such termination (whether or not then
exercisable) shall be canceled without further action by the Key
Employee, the Committee or the Company coincident with the effective date
of such termination.

            (iv) Except as provided in Section 5(g)(ii) or Section 9, if a Key
Employee’s employment terminates for any other reason (including a
voluntary resignation), he or she may exercise his or her Options, to the
extent that he or she shall have been entitled to do so at the date of
the termination of his or her employment, at any time, or from time to
time, within four months after the date of the termination of his or her employment, or within such other period, and
subject to such terms and conditions, as the

 

 

Committee may specify, but not later than the expiration date specified
in Section 5(c) above. All Options and Rights held by such Key Employee
or any of his or her assigns that are not eligible to be exercised upon
the date of such termination shall be canceled without further action by
the Key Employee, the Committee or the Company coincident with the
effective date of such termination.

     (h) Except as provided in this Section 5(h) or required by
applicable law, no Option or Right granted under the Plan shall be
transferable other than by will or by the laws of descent and
distribution. During the lifetime of the optionee, an Option or Right
shall be exercisable only by the Key Employee or Director to whom the
Option or Right is granted. Notwithstanding the foregoing, all or a
portion of a non-qualified Option
may be transferred and assigned by such persons designated by the
Committee, to such persons or groups of persons designated as permissible
Transferees by the Committee, and upon such terms and conditions as the
Committee may from time to time authorize and determine in its sole
discretion.

     (i) Except as provided in Section 9, if a Director’s service on the
Board terminates for any reason, including without limitation,
termination due to death, disability or retirement, such Director (or
Beneficiary, in the event of death) may exercise any Option or Right
granted to him or her only to the extent determined by the Committee as
set forth in such Director’s Award Document and/or any administrative
rules or other terms and conditions adopted by the Committee from time to
time applicable to such Option or Right granted to such Director.

     (j) With respect to an Incentive Stock Option, the Committee shall
specify such terms and provisions as the Committee may determine to be
necessary or desirable in order to qualify such Option as an “incentive
stock option” within the meaning of Section 422 of the Code.

     (k) With respect to the exercisability and settlement of Rights:

            (i) Upon exercise of a Right, a Key Employee or Director shall be
entitled, subject to such terms and conditions the Committee may specify,
to receive upon exercise thereof all or a portion of the excess of (A)
the Fair Market Value of a specified number of shares of Stock at the
time of exercise, as determined by the Committee, over (B) a specified
amount which shall not, subject to Section 5(d), be less than the Fair
Market Value of such specified number of shares of Stock at the time the
Right is granted. Upon exercise of a Right, payment of such excess shall
be made as the Committee shall specify in cash, the issuance or transfer
to the Key Employee or Director of whole shares of Stock with a Fair
Market Value at such time equal to any excess, or a combination of cash
and shares of Stock with a combined Fair Market Value at such time equal
to any such excess, all as determined by the Committee. The Company will
not issue a fractional share of Stock and, if a fractional share would
otherwise be issuable, the Company shall pay cash equal to the Fair
Market Value of the fractional share of Stock at such time.

            (ii) In the event of the exercise of such Right, the Company’s
obligation in

 

 

respect of any related Option or such portion thereof will be discharged
by payment of the Right so exercised.

6. Performance Shares

     (a) Subject to the provisions of the Plan, the Committee shall: (i)
determine and designate from time to time those Key Employees or groups
of Key Employees to whom Awards of Performance Shares are to be made,
(ii) determine the performance period (the “Performance Period”) and
performance objectives (the “Performance Objectives”) applicable to such
Awards, (iii) determine whether to impose a restriction period (the
“Restriction Period”) following the completion of the Performance Period
applicable to any Key Employees or groups of Key Employees, (iv)
determine the form of settlement of a Performance Share, and (v)
generally determine the terms and conditions of each such Award. At any
date, each Performance Share shall have a value equal to the Fair Market
Value of a
share of Stock at such date; provided that the Committee may limit
the aggregate amount payable upon the settlement of any Award. The
maximum award for any individual employee in any given year shall be
200,000 Performance Shares.

     (b) The Committee shall determine a Performance Period of not less
than one nor more than five years. Performance Periods may overlap and
Key Employees may participate simultaneously with respect to Performance
Shares for which different Performance Periods are prescribed.

     (c) The Committee may impose a Restriction Period of any duration
determined appropriate in its sole discretion, which shall apply
immediately following the completion of the Performance Period to which
it relates.

     (d) The Committee shall determine the Performance Objectives of
Awards of Performance Shares. Performance Objectives may vary from Key
Employee to Key Employee and between groups of Key Employees and shall be
based upon one or more of the following objective criteria, as the
Committee deems appropriate, which may be (i) determined solely by
reference to the performance of the Company, any subsidiary or affiliate
of the Company or any division or unit of any of the foregoing, or (ii)
based on comparative performance of any one or more of the following
relative to other entities: (A) earnings per share, (B) return on equity,
(C) cash flow, (D) return on total capital, (E) return on assets, (F)
economic value added, (G) increase in surplus, (H) reductions in
operating expenses, (I) increases in operating margins, (J) earnings
before income taxes and depreciation, (K) total shareholder return, (L)
return on invested capital, (M) cost reductions and savings, (N) earnings
before interest, taxes, depreciation and amortization (“EBITDA”), (O)
pre-tax operating income, (P) productivity improvements, or (iii) a Key
Employee’s attainment of personal objectives with respect to any of the
foregoing criteria or other criteria such as growth and profitability,
customer satisfaction, leadership effectiveness, business development,
negotiating transactions and sales or developing long term business
goals. If during the course of a Performance Period there shall occur
significant events which the

 

 

Committee expects to have a substantial effect on the applicable
Performance Objectives during such period, the Committee may revise such
Performance Objectives.

     (e) At the beginning of a Performance Period, the Committee shall
determine for each Key Employee or group of Key Employees the number of
Performance Shares or the percentage of Performance Shares which shall be
paid to the Key Employee or member of the group of Key Employees
following completion of the Performance Period or if later, following any
applicable Restriction Period, if the applicable Performance Objectives
are met in whole or in part.

     (f) If a Key Employee terminates service with all Participating
Companies during a Performance Period or any applicable Restriction
Period: (i) because of death, (ii) because of Total Disability, (iii)
solely in the case of a Key Employee with an original hire date with a
Participating Company before January 1, 2002, because of his or her
voluntary termination of employment due to Retirement, or (iv) under
other circumstances where the Committee in its sole discretion finds that
a waiver would be in the best interests of the Company; that Key Employee
may, as determined by the Committee, be entitled to payment in settlement
of such Performance Shares at the end of the Performance Period or if
later, at the end of any applicable Restriction Period, based upon the
extent to which the Performance Objectives were satisfied at the end of
such Performance Period and prorated for the portion of the Performance
Period together with any applicable Restriction Period during which the
Key Employee was actively employed by any Participating Company;
provided, however, the Committee may provide for an earlier payment in
settlement of such Performance Shares in such amount and under such terms
and conditions as the Committee deems appropriate or desirable. If a Key
Employee terminates service with all Participating Companies during a
Performance Period or any applicable Restriction Period for any other
reason, then such Key Employee shall not be entitled to any Award with
respect to that Performance Period and/or Restriction Period unless the
Committee shall otherwise determine.

     (g) Each Award of a Performance Share shall be paid in whole shares
of Stock, or cash, or a combination of Stock and cash either as a lump
sum payment or in annual installments, all as the Committee shall
determine, with payment to commence as soon as practicable after the end
of the relevant Performance Period or if later, at the end of any
applicable Restriction Period.

     (h) Except as otherwise required by applicable law, no Performance
Share granted under the Plan shall be transferable other than by will or
by the laws of descent or distribution.

 

 

7. Restricted Stock and Restricted Units

     (a) Except as provided in Section 9, Restricted Stock and Restricted
Units shall be subject to a Restriction Period specified by the
Committee. The Committee may provide for the lapse of a Restriction
Period in installments where deemed appropriate, and it may also require
the achievement of predetermined performance objectives in order for such
Restriction Period to lapse. Except as otherwise provided in the Plan or
as specified by the Committee, certificates for shares related to an
award of Restricted Stock or Restricted Units shall be delivered to a Key
Employee or Director as soon as administratively practicable following
the end of the applicable Restriction Period.

     (b) Except when the Committee determines otherwise pursuant to
Section 7(d), if a Key Employee terminates employment with all
Participating Companies for any reason before the expiration of the
Restriction Period, all shares of Restricted Stock and all rights with
respect to any award of Restricted Units still subject to restriction
shall be forfeited by the Key Employee and shall be reacquired by the
Company.

     (c) Except as otherwise provided in this Section 7 or required by
applicable law, no shares of Restricted Stock received by a Key Employee
or Director and no rights conveyed by an award of Restricted Units shall
be sold, exchanged, transferred, pledged, hypothecated or otherwise
disposed of during the Restriction Period.

     (d) In the event that a Key Employee’s employment terminates due to:
(i) death, (ii) Total Disability, (iii) solely in the case of a Key
Employee with an original hire date with a Participating Company before
January 1, 2002, a voluntary termination of employment due to Retirement,
or (iv) such other circumstances that the Committee finds that a waiver
of the applicable restrictions (or any portion thereof) would be in the
best interests of the Company, any or all remaining restrictions (or the
designated portion thereof) with respect to such Key Employee’s
Restricted Stock or Restricted Units shall lapse upon the date of such
termination.

     (e) Except as provided in Section 9, if a Director’s service on the
Board terminates for any reason, including without limitation due to
death, disability or retirement, prior to the lapse of any applicable
Restriction Period, such Director (or Beneficiary, in the event of death)
shall be or become vested in, or entitled to payment in respect of, such
Award to the extent determined by the Committee as set forth in such
Director’s Award Document and/or any administrative rules or other terms
and conditions adopted by the Committee from time to time applicable to
such Award granted to such Director.

     (f) The Committee may require, on such terms and conditions as it
deems appropriate or desirable, that the certificates for Stock delivered
under the Plan in respect of any grant of Restricted Stock may be held in
custody by a bank or other institution, or that the Company may itself
hold such shares in custody until the Restriction Period expires or until
restrictions thereon otherwise lapse, or later as provided in Section 14
hereof. The Committee may require, as a condition of any Award of
Restricted Stock that the Key Employee shall have delivered a stock power
endorsed in blank relating to the Restricted

 

 

Stock.

     (g) At the discretion of the Committee, the Restricted Unit account
of a Key Employee or Director may be credited with Dividend Equivalents
during the Restricted Period which shall be subject to the same terms and
conditions (and become payable and be paid) as the Restricted Units to
which they relate. Unless the Committee shall otherwise determine at or
after grant, all Dividend Equivalents payable in respect of Restricted
Units shall be deemed reinvested in that number of Restricted Units
determined based on the Fair Market Value on the date the corresponding
dividend on the Stock is payable to stockholders.

     (h) Nothing in this Section 7 shall preclude a Key Employee from
exchanging any shares of Restricted Stock subject to the restrictions
contained herein for any other shares of Stock that are similarly
restricted.

     (i) Subject to Section 7(f) and Section 8, each Key Employee or
Director awarded Restricted Stock under the Plan shall be issued a
certificate for the shares of Stock. Such certificate shall be registered
in the name of the Key Employee or Director, and shall bear an
appropriate legend reciting the terms, conditions and restrictions, if
any, applicable to such Award and shall be subject to appropriate
stop-transfer orders. Upon the lapse of the Restricted Period with
respect to Restricted Stock, such shares shall no longer be subject to
the restrictions imposed under this Section 7 and the Company shall issue
or have issued new share certificates without the legend referred to
herein in exchange for those certificates previously issued. Upon the
lapse of the Restricted Period with respect to any Restricted Units, the
Company shall deliver to the Key Employee or Director (or, if applicable,
his or her beneficiary or permitted assigns, one share of Stock for each
Restricted Unit as to which restrictions have lapsed (including any such
Restricted Units related to any Dividend Equivalents credited with
respect to such Restricted Units). The Committee may, in its sole
discretion, elect to pay cash or part cash and part Stock in lieu of
delivering only Stock for Restricted Units. If a cash payment is made in
lieu of delivering Stock, the amount of such cash payment for each share
of Stock to which a Key Employee or Director is entitled shall be equal
to the Fair Market Value on the date on which the Restricted Period
lapsed with respect to the related Restricted Unit. Notwithstanding the
foregoing, the Committee may require or permit the deferral of payment in
respect of Restricted Units to a date or dates (including, without
limitation, the date the Key Employee’s employment or a Director’s
services on the Board terminates) subsequent to the date that the
Restriction Period lapses on such terms and conditions (including,
without limitation, the manner in which the amounts payable shall be
deemed invested during the period of deferral) as it shall determine from
time to time.

     (j) Except for the restrictions set forth herein and unless
otherwise determined by the Committee, the Key Employee or Director shall
have all the rights of a shareholder with respect to such shares of
Restricted Stock, including but not limited to, the right to vote and the
right to receive dividends. A Key Employee or Director shall not have
any right, in respect of Restricted Units awarded pursuant to the Plan,
to vote on any matter submitted to the Company’s stockholders until such
time, if at all, as the shares of Stock attributable to such Restricted
Units have been issued.

 

 

     (k) In addition, the Committee may permit Key Employees and
Directors or any group of Key Employees and Directors to elect to receive
Restricted Units in exchange for or in lieu of other compensation
(including salaries, annual bonuses, annual retainer and meeting fees)
that would otherwise have been payable to such Key Employees or Directors
in cash. The Committee shall establish the terms and conditions of any
such Restricted Units, including the Restriction Period applicable
thereto, and the date on which Stock shall be issued in respect thereof.
The Committee shall establish the terms and conditions applicable to any
election by a Director to receive Restricted Units (including the time at
which any such election shall be made).

8. Certificates for Awards of Stock

     (a) The Company shall not be required to issue or deliver any
certificates for shares of Stock prior to: (i) the listing of such
shares on any stock exchange on which the Stock may then be listed, (ii)
the completion of any registration or qualification of such shares under
any federal or state law, or any ruling or regulation of any government
body which the Company shall, in its sole discretion, determine to be
necessary or advisable, and (iii) the satisfaction of any tax withholding
obligations as provided in Section 14 hereof.

     (b) All certificates for shares of Stock delivered under the Plan
shall also be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and
other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed and any applicable federal
or state securities laws, and the Committee may cause a legend or legends
to be placed on any such certificates to make appropriate reference to
such restrictions. In making such determination, the Committee may rely
upon an opinion of counsel for the Company.

     (c) Except to the extent such shares are subject to forfeiture
during any applicable Restriction Period, each Key Employee or Director
who receives Stock in settlement of or as part of an Award, shall have
all of the rights of a shareholder with respect to such shares, including
the right to vote the shares and receive dividends and other
distributions. No Key Employee or Director awarded an Option, a Right, a
Restricted Unit or a Performance Share shall have any right as a
shareholder with respect to any shares of Stock covered by his or her
Option, Right, Restricted Unit or Performance Share prior to the date of
issuance to him or her of a certificate or certificates for such shares.

9. Change of Control

     (a) For purposes of this Plan, a Change of Control shall occur if:

           (i) a report on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Act disclosing that
any Person, other than the Company or a subsidiary of the Company or any
employee benefit plan sponsored

 

 

by the Company or a subsidiary of the Company is the Beneficial
Owner of twenty percent or more of the outstanding stock of the Company
entitled to vote in the election of directors of the Company;

           (ii) any Person other than the Company or a subsidiary of the
Company or any employee benefit plan sponsored by the Company or a
subsidiary of the Company shall purchase shares pursuant to a tender
offer or exchange offer to acquire any stock of the Company (or
securities convertible into stock) for cash, securities or any other
consideration, provided that after consummation of the offer, the Person
in question is the Beneficial Owner of fifteen percent or more of the
outstanding stock of the Company entitled to vote in the election of
directors of the Company (calculated as provided in paragraph (d) of Rule
13d-3 under the Act in the case of rights to acquire stock);

           (iii) any merger, consolidation, recapitalization or
reorganization of the Company approved by the stockholders of the Company
shall be consummated, other than any such transaction immediately
following which the persons who were the Beneficial Owners of the
outstanding securities of the Company entitled to vote in the election of
directors of the Company immediately prior to such transaction are the
Beneficial Owners of at least 55% of the total voting power represented
by the securities of the entity surviving such transaction entitled to
vote in the election of directors of such entity (or the ultimate parent
of such entity) in substantially the same relative proportions as their
ownership of the securities of the Company entitled to vote in the
election of directors of the Company immediately prior to such
transaction; provided that, such continuity of ownership (and
preservation of relative voting power) shall be deemed to be satisfied if
the failure to meet such threshold (or to preserve such relative voting
power) is due solely to the acquisition of voting securities by an
employee benefit plan of the Company, such surviving entity or any
subsidiary of such surviving entity;

           (iv) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all the assets of
the Company approved by the stockholders of the Company shall be
consummated; or

           (v) within any 24 month period, the persons who were directors of
the Company immediately before the beginning of such period (the
“Incumbent Directors”) shall cease (for any reason other than death) to
constitute at least a majority of the Board or the board of directors of
any successor to the Company, provided that any director who was not a
director at the beginning of such period shall be deemed to be an
Incumbent Director if such director (A) was elected to the Board by, or
on the recommendation of or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent Directors either actually
or by prior operation of this clause (v), and (B) was not designated by a
Person who has entered into an agreement with the Company to effect a
transaction described in Section 9(a)(iii) or Section 9(a)(iv) of the
Plan.

     (b) For purposes of this Plan, a Potential Change of
Control shall occur if:

           (i) A Person shall commence a tender offer, which if successfully

 

 

consummated, would result in such Person being the Beneficial Owner of at
least 15% of the stock of the Company entitled to vote in the election of
directors of the Company;

           (ii) The Company enters into an agreement, the consummation of which
would constitute a Change of Control;

           (iii) Solicitation of proxies for the election of directors of the
Company by anyone other than the Company, which, if such directors were
elected, would result in the occurrence of a Change of Control as
described in Section 9(a)(v); or

           (iv) Any other event shall occur which is deemed to be a Potential
Change of Control by the Board, the Committee, or any other appropriate
committee of the Board in its sole discretion.

     (c) Notwithstanding any provision in this Plan to the contrary,
upon the occurrence of a Change of Control:

           (i) Each Option and related Right outstanding on the date such
Change of Control occurs, and which is not then fully vested and
exercisable, shall immediately vest and become exercisable to the full
extent of the original grant for the remainder of its term.

           (ii) The surviving or resulting corporation may, in its discretion,
provide for the assumption or replacement of each outstanding Option and
related Right granted under the Plan on terms which are no less favorable
to the optionee than those applicable to the Options and Rights
immediately prior to the Change of Control. If the surviving or
resulting corporation offers to assume or replace the Options and Rights,
the optionee may elect to have his or her Options and Rights assumed or
replaced, in whole or in part, or to surrender on the date the Change of
Control occurs his or her Options and Rights, in whole or in part, for
cash equal to the excess of the Formula Price over the exercise price.

           (iii) In the event the successor corporation does not offer to
assume or replace the outstanding Options and Rights as described in
Section 9(b)(ii) hereof, each Option and Right will be exercised on the
date such Change of Control occurs for cash equal to the excess of the
Formula Price over the exercise price.

           (iv) The restrictions applicable to shares of Restricted Stock or to
Restricted Units held by Key Employees pursuant to Section 7 shall lapse
upon the occurrence of a Change of Control, and such Key Employees shall
be entitled to elect, at any time during the 60 calendar days following
such Change of Control, to receive immediately after the date the Key
Employee makes such election either of the following: (A) unrestricted
certificates for all of such shares, or (B) a lump sum cash amount equal
to the number of such shares multiplied by the Formula Price. If a Key
Employee does not make any election during the foregoing 60 day period,
such Key Employee shall be deemed to have made the election described in
Section 9(b)(vi)(A) as of the 60th day of such period, and unrestricted
certificates shall be issued to such Key Employee immediately following
such day as described in Section 9(b)(vi)(A) hereof.

 

 

           (v) If a Change of Control occurs during the course of a Performance
Period or any Restriction Period applicable to an Award of Performance
Shares pursuant to Section 6, then a Key Employee shall be deemed to have
satisfied the Performance Objectives and to have completed any applicable
Restriction Period effective on the date of such occurrence. Such Key
Employee shall be paid, immediately following the occurrence of such
Change of Control, a lump sum cash amount equal to the number of
outstanding Performance Shares awarded to such Key Employee multiplied by
the Formula Price.

     (d) Notwithstanding any provision in this Plan to the contrary, in
the event of a Change of Control as described in Section 9(b)(iii) or
Section 9(b)(iv) of the Plan, in the case of an awardee whose employment
or service involuntarily terminates on or after the date of a shareholder
approval described in either of such Sections but before the date of a
consummation described in either of such Sections, the date of
termination of such an awardee’s employment or service shall be deemed
for purposes of the Plan to be the day following the date of the
applicable consummation.

10. Beneficiary

     (a) Each Key Employee, Director and/or his or her Transferee may
file with the Company a written designation of one or more persons as the
Beneficiary who shall be entitled to receive the Award, if any, payable
under the Plan upon his or her death. A Key Employee, Director or
Transferee may from time to time revoke or change his or her Beneficiary
designation without the consent of any prior Beneficiary by filing a new
designation with the Company. The last such designation received by the
Company shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Company prior to the Key Employee’s, Director’s or Transferee’s death, as
the case may be, and in no event shall it be effective as of a date prior
to such receipt.

     (b) If no such Beneficiary designation is in effect at the time of
death of a Key Employee, Director or Transferee, as the case may be, or
if no designated Beneficiary survives the Key Employee, Director or
Transferee or if such designation conflicts with applicable law, the
estate of the Key Employee, Director or Transferee, as the case may be,
shall be entitled to receive the Award, if any, payable under the Plan
upon his or her death. If the Committee is in doubt as to the right of
any person to receive such Award, the Company may retain such Award,
without liability for any interest thereon, until the Committee
determines the rights thereto, or the Company may pay such Award into any
court of appropriate jurisdiction and such payment shall be a complete
discharge of the liability of the Company therefor.

 

 

11. Administration of the Plan

     (a) All decisions, determinations or actions of the Committee made
or taken pursuant to grants of authority under the Plan shall be made or
taken in the sole discretion of the Committee and shall be final,
conclusive and binding on all persons for all purposes.

     (b) The Committee shall have full power, discretion and authority to
interpret, construe and administer the Plan and any part thereof, and its
interpretations and constructions thereof and actions taken thereunder
shall be, except as otherwise determined by the Board, final, conclusive
and binding on all persons for all purposes.

     (c) The Committee’s decisions and determinations under the Plan need
not be uniform and may be made selectively among Key Employees and
Directors, whether or not such Key Employees and Directors are similarly
situated.

     (d) The Committee may, in its sole discretion, delegate such of its
powers as it deems appropriate to the Company’s Executive Vice President,
Human Resources (or other person holding a similar position) or the
Company’s Chief Executive Officer, except that Awards to executive
officers shall be made, and matters related thereto shall be determined,
solely by the Committee or the Board or any other appropriate committee
of the Board.

12. Amendment, Extension or Termination

     The Board or the Committee may, at any time, amend or modify the
Plan and, specifically, may make such modifications to the Plan as it
deems necessary to avoid the application of Section 162(m) of the Code
and the Treasury regulations issued thereunder. However: (i) with
respect only to Incentive Stock Options, no amendment shall, without
approval by a majority of the Company’s stockholders, (A) alter the group
of persons eligible to participate in the Plan, or (B) except as provided
in Section 13 increase the maximum number of shares of Stock which are
available for Awards under the Plan; or, (ii) with respect to all
Options, allow the Committee to reprice the Options. The Board may
suspend or terminate the Plan at any time without the consent of such
person. Notwithstanding anything in this Plan to the contrary, the Plan
shall not be amended, modified, suspended or terminated during the period
in which a Change of Control is threatened. For purposes of the
preceding sentence, a Change of Control shall be deemed to be threatened
for the period beginning on the date of any Potential Change of Control,
and ending upon the earlier of: (I) the second anniversary of the date of
such Potential Change of Control, (II) the date a Change of Control
occurs, or (III) the date the Board or the Committee determines in good
faith that a Change of Control is no longer threatened. Further,
notwithstanding anything in this Plan to the contrary, no amendment,
modification, suspension or termination following a Change of Control
shall adversely impair or reduce the rights of any person with respect to
a prior Award without the consent of such person.

 

 

13. Adjustments in Event of Change in Common Stock

     In the event of any reorganization, merger, recapitalization,
consolidation, liquidation, stock dividend, stock split,
reclassification, combination of shares, rights offering, split-up or
extraordinary dividend (including a spin-off) or divestiture, or any
other change in the corporate structure or shares, the Committee may make
such adjustment in the Stock subject to Awards, including Stock subject
to purchase by an Option or issuable in respect of Restricted Units, or
the terms, conditions or restrictions on Stock or Awards, including the
price payable upon the exercise of such Option and the number of shares
subject to Restricted Stock or Restricted Unit Awards, as the Committee
deems equitable.

14. Miscellaneous

     (a) If a Change of Control has not occurred and if the Committee
determines that a Key Employee has taken action inimical to the best
interests of any Participating Company, the Committee may, in its sole
discretion, terminate in whole or in part such portion of any Option
(including any related Right) as has not yet become exercisable at the
time of termination, terminate any Performance Share Award for which the
Performance Period or any applicable Restriction Period has not been
completed or terminate any Award of Restricted Stock or Restricted Units
for which the Restriction Period has not lapsed.

     (b) Except as provided in Section 9, nothing in this Plan or any
Award granted hereunder shall confer upon any employee any right to
continue in the employ of any Participating Company or interfere in any
way with the right of any Participating Company to terminate his or her
employment at any time. No Award payable under the Plan shall be deemed
salary or compensation for the purpose of computing benefits under any
employee benefit plan or other arrangement of any Participating Company
for the benefit of its employees unless the Company shall determine
otherwise. No Key Employee shall have any claim to an Award until it is
actually granted under the Plan. To the extent that any person acquires a
right to receive payments from the Company under this Plan, such right
shall be no greater than the right of an unsecured general creditor of
the Company. All payments to
be made hereunder shall be paid from the general funds of the Company and
no special or separate fund shall be established and no segregation of
assets shall be made to assure payment of such amounts except as provided
in Section 7(e) with respect to Restricted Stock.

     (c) The Committee shall have the right to make such provisions as
deemed appropriate in its sole discretion to satisfy any obligation of
the Company to withhold federal, state or local income or other taxes
incurred by reason of the operation of the Plan or an Award under the
Plan, including but not limited to at any time: (i) requiring a Key
Employee to submit payment to the Company for such taxes before making
settlement of any Award of Stock or other amount due under the Plan, (ii)
withholding such taxes from wages or other amounts due to the Key
Employee before making settlement of any Award of Stock or other amount
due under the Plan, (iii) making settlement of any Award of Stock or
other amount due under the Plan to a Key Employee part in Stock and part
in cash to facilitate satisfaction

 

 

of such withholding obligations, or (iv) receiving Stock already
owned by, or withholding Stock otherwise due to, the Key Employee in an
amount determined necessary to satisfy such withholding obligations;
provided, however, that, notwithstanding any language herein to the
contrary, any Key Employee who is an executive officer of the Company
(within the meaning of Section 16 of the Act) shall have the right to
satisfy his or her obligations to the Company pursuant to this Section
14(c) by instructing the Company not to deliver to the Key Employee Stock
otherwise deliverable to the Key Employee in an amount sufficient to
satisfy such obligations to the Company.

     (d) The Plan and the grant of Awards shall be subject to all
applicable federal and state laws, rules, and regulations and to such
approvals by any government or regulatory agency as may be required.

     (e) The terms of the Plan shall be binding upon the Company and its
successors and assigns.

     (f) Captions preceding the sections hereof are inserted solely as a
matter of convenience and in no way define or limit the scope or intent
of any provision hereof.

15. Effective Date, Term of Plan and Shareholder Approval

     The effective date of the Plan shall be May 18, 2000. No Award shall
be granted under this Plan after the Plan’s termination date. The Plan’s
termination date shall be the earlier of: (a) May 18, 2010, or (b) the
date on which the Maximum Limit (as defined in Section 3 of the Plan) is
reached; provided, however, that the Plan will continue in effect for
existing Awards as long as any such Award is outstanding.

 

 

Annex A

THE HARTFORD

FORM OF KEY EMPLOYEE / DIRECTOR RESTRICTED STOCK AWARD

	 	 	 
	Notice of Award / Award Agreement

	 	[Date]
	 
	 	 
	[Name]
	 	 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Effective this date, you have been granted a restricted stock award as
summarized below:

The Hartford Financial Services Group, Inc. (“The Hartford”) Restricted Stock
Award

(Under The Hartford Incentive Stock Plan (“The Plan”))

[XXX] Shares of The Hartford Common Stock

This award of restricted stock is subject to the period of restriction as
indicated below during which you may not sell, exchange, transfer, pledge,
hypothecate or otherwise dispose of the shares awarded. One or more legended
stock certificates evidencing your award will be held by The Hartford during
the period of restriction. While your shares are being held by The Hartford,
you will enjoy the benefits of share ownership including dividend payments and
voting rights. Unless otherwise provided by the Plan, your shares will vest
provided that you are continuously and actively employed by The Hartford until
the end of the vesting period, at which time you will be issued one or more
unrestricted stock certificates after satisfactory payment of applicable taxes.
For further details regarding your award, including circumstances in which
your shares may vest earlier than the time identified below, refer to the
Summary of the provisions of the Plan relating to restricted stock attached
hereto as Attachment A and the copy of the Plan attached hereto as Attachment
B. One or more beneficiaries for your shares may be designated on the
Beneficiary Designation Form attached hereto as Attachment C. Unless revoked,
your Beneficiary Designation will apply to all restricted shares previously
awarded to you under the Plan and any restricted shares that may be awarded to
you in the future under the Plan. Should you wish to make a beneficiary
designation, the Beneficiary Designation Form must be returned to Executive
Compensation, HO-1-141, The Hartford, Hartford Plaza, Hartford, CT 06115. If
the form is not returned to Executive Compensation, your shares transferable to a
designated beneficiary will be transferred to your estate in the event of your
death.

	 	 	 
	DIRECTORS	 	 
	Restricted Shares	 	Restriction Period
	
100% of Shares awarded

	 	[Three years from date of award]
	 
	EXECUTIVES	 	 
	
Restricted Shares

	 	Restriction Period
	
1/3 of Shares Awarded

	 	[Three years from date of award]
	
2/3 of Shares Awarded

	 	[Five years from date of award]

Your restricted stock award is subject to the terms and conditions set forth in
this notice, the attached Summary, the Plan, and the administrative rules,
procedures and interpretations adopted pursuant to the Plan, and such
amendments as may be made to each of the foregoing from time to time. The
foregoing documents, including any amendments, collectively constitute your
restricted stock award agreement with The Hartford for purposes of the award
referred to herein.

	 	 	 
	

	 	Ann M. de Raismes
	

	 	Executive Vice President, Human Resources
	

	 	The Hartford Financial Services Group, Inc.
	

	 	 
	

	 	Business Address:
	

	 	THE HARTFORD
	

	 	HARTFORD PLAZA
	

	 	HARTFORD,                CT                06115

 

 

Annex B

FORM OF STOCK OPTION/PERFORMANCE SHARES/RESTRICTED STOCK UNITS AWARD FOR KEY EMPLOYEES

[DATE]

Key Employee

Address

City, State, Zip

I am pleased to inform you that
effective [DATE], the Compensation and
Personnel Committee (the “Committee”) of the Board of Directors of The Hartford
Financial Services Group, Inc. (“The Hartford”) approved an award on your
behalf under The Hartford’s Long-term Incentive Compensation Program. Your
award is comprised of [three] parts: [a stock option,] [performance shares and]
[restricted stock units].

You have been granted a non-qualified
option to purchase all or any portion of
x,xxx shares of common stock of The Hartford under the terms of The Hartford
Incentive Stock Plan (the “Plan”) at an exercise price of $[XXX] per share,
being the New York Stock Exchange closing price of The Hartford’s common stock
on [DATE] (the date of grant of the option). This option will become
exercisable [at the later of (i) three years from the grant date
or (ii) when the closing price of The Hartford's common stock reaches
125% of the grant price for ten consecutive trading days].

You have also been
granted xxxxxx [operating division] performance shares of
The Hartford’s common stock. This is a contingent award, and the extent to
which you may ultimately receive all or any of these performance shares depends
upon whether and to what extent the following two performance objectives are
achieved over the [three-year] performance period, [DATE – DATE]:
The Hartford’s
operating income and The Hartford’s return on equity relative to targets
established by the Committee.

You have also been granted xxxxxx restricted stock units of The Hartford. Each
restricted stock unit represents a contractual right to receive, pursuant to
the terms of The Hartford’s Incentive Stock Plan, one share of common stock of
The Hartford per restricted stock unit at the end of the
[three-year] period from [DATE] to
[DATE] (the “Service Period”). This is a contingent award, and remains subject
to forfeiture pending completion of the Service Period.

The estimated value of your
long-term award ([the option], [the performance
shares]
[and the restricted stock units]) as of the date of grant was $XXXX.
Ultimately, the value of the award will depend on the stock price at the time
of option exercise [or at the end of the Service Period in the
case of restricted stock units], whether and to what extent the performance share objectives
are achieved, and other factors.

Enclosed is information
related to performance shares and restricted stock units. More information on
option awards can be obtained from The Hartford’s Intranet Directory as
follows:

From iConnect, select the LifeStyle tab, under My Personal Finance Links,
select Stock Options Information. Some of the information and documents
available include the following: The Hartford Incentive Stock Plan Prospectus,
Beneficiary Designation Forms, Service Provider to Contact, and award treatment
upon termination of employment.

You are strongly urged to review all of the above documents, as well as the
other information provided, at your earliest convenience, and certainly prior
to exercising your options.

If you cannot access the information, please contact Executive Compensation,
The Hartford, HO-1-141, Hartford Plaza, Hartford, CT 06115, (860) 547-5980,
for paper copies.

Please note that this letter and the Plan constitute your option and
performance share agreement and restricted stock unit agreement with The Hartford. Although you are not required
to sign any formal documents, your option and performance share and
restricted stock unit grants are
subject to all of the terms and conditions of the Plan, as it may be amended
from time to time, and all of the rules, procedures and interpretations of the
Plan that the Committee may adopt from time to time. Specifically, please
refer to Sections 5, 6 and 7 of the Plan for information on what happens to your
option and performance shares and restricted stock units should your employment with The Hartford
terminate. You have already received information about exercising your
options from the Plan’s stock option broker, UBS. These exercise procedures
must be followed, and may change from time to time.

Your selection as an award recipient is significant recognition of your past
and anticipated future contributions to The Hartford’s success. Please accept
this award with my warm congratulations.

Sincerely,

Ramani Ayer

 

 

Annex C

THE HARTFORD

FORM OF NON-QUALIFIED STOCK OPTION AWARD FOR NON-EMPLOYEE DIRECTORS

	 	 	 
	Notice of Award

	 	[Date]

	 	 	 
	[Name]

	 	THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Effective [DATE], in conjunction with your service on the Board of Directors of
The Hartford Financial Services Group, Inc. (“The Hartford”), you have been
granted a non-qualified stock option.

This option provides the ability for you to purchase all or any portion of
x,xxx shares of common stock of The Hartford under the terms of The Hartford
Incentive Stock Plan (the “Plan”) at an exercise price of $xx.xx per share,
being the New York Stock Exchange closing price of The Hartford’s common stock
on [DATE] (the date of the grant of the option). Your option will vest
provided you actively and continuously serve as a director of The Hartford
until vesting occurs (unless otherwise provided by the Plan). The vesting
schedule that applies to your option is as follows: one-third of the option
will become exercisable one year after the date of grant, an additional
one-third of the option will become exercisable two years after the date of
grant, and the option will become exercisable in full three years after the
date of grant. (Your options may vest earlier before the end of the vesting
period in certain circumstances described in the Plan.) However, any
unexercised portion expires in full on [DATE].

Please note that this notice, the Plan, and the administrative rules of the
Compensation and Personnel Committee (the “Committee”) of the Board of
Directors of The Hartford with respect to the Non-Employee Directors’ Option
Program (a copy of which is attached hereto) constitute your option agreement
with The Hartford. Although you are not required to sign any formal documents,
your option grant is subject to all of the terms and conditions of the Plan, as
it may be amended from time to time, and all of the rules, procedures and
interpretations of the Plan that the Committee may adopt from time to time.
Specifically, please refer to the Plan and the administrative rules for
information on what happens to your option should your service as a director of
The Hartford terminate. Enclosed are a Plan prospectus (Attachment A) that
includes a copy of the Plan and related information, a copy of the
administrative rules for the Plan (Attachment B) and a form for you to
designate a beneficiary for your option (Attachment C). Should you wish to
designate a beneficiary for your option, the Beneficiary Designation Form must
be returned to me at The Hartford, Hartford Plaza, HO-1-01, Hartford, CT 06115,
Fax (860) 547-4562. If the form is not returned to me, your option
transferable to a designated beneficiary will be transferred to your estate in
the event of your death, except to the extent that you previously filed a
Beneficiary Designation Form applicable to future awards under the Plan.
Unless revoked, your Beneficiary Designation Form will apply to all options
previously granted under the Plan and any options that may be awarded to you in
the future under the Plan. You will receive information about exercising your
option from the Plan’s stock option administrator. These exercise procedures
must be followed, and may change from time to time.

	 	 	 
	

	 	
	

	 	Ann M. de Raismes
	

	 	Executive Vice President, Human Resources
	

	 	The Hartford Financial Services Group, Inc.
	

	 	 
	

	 	Business Address:
	

	 	THE HARTFORD
	

	 	HARTFORD PLAZA
	

	 	HARTFORD, CT 06115

23

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