Document:

Unassociated Document

     

    
       

      
        Exhibit
10.1

      

      

      CENTER
BANCORP, INC.

      

      2009
EQUITY INCENTIVE PLAN

      

      1.           Purposes of the
Plan.  The purposes of this Center Bancorp, Inc. 2009 Equity
Incentive Plan (the “Plan”) are: to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentives to Employees and Consultants,
and to promote the success of the Company and any Parent or
Subsidiary.  Options granted under the Plan may be Incentive Stock
Options or Nonstatutory Stock Options, as determined by the Administrator at the
time of grant.  Stock Awards and Unrestricted Shares may also be
granted under the Plan.

      

      2.           Definitions.  As
used herein, the following definitions shall apply:

      

       “Administrator” means
a Committee which has been delegated the responsibility of administering the
Plan in accordance with Section 4 of the Plan or, if there is no such Committee,
the Board.

      

       “Applicable Laws”
means the requirements relating to the administration of equity compensation
plans under the applicable corporate and securities laws of any of the states in
the United States, U.S. federal securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or will
be, granted under the Plan.

      

       “Award” means an
Option, a Stock Award or the grant of Unrestricted Shares.

      

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

      

      “Cause”, with respect
to any Service Provider, means, unless otherwise specifically defined in an
Option Agreement or Stock Award Agreement, such Service Provider’s
(i) conviction of, or plea of nolo contendere to, a felony or crime
involving moral turpitude; (ii) fraud on, or misappropriation of any funds
or property of, the Company or any Parent or Subsidiary; (iii) personal
dishonesty, willful misconduct, willful violation of any law, rule or regulation
(other than minor traffic violations or similar offenses) or breach of fiduciary
duty which involves personal profit; (iv) willful misconduct in connection
with the Service Provider’s duties; (v) chronic use of alcohol, drugs or
other similar substances which affects the Service Provider’s performance of
services; or (vi) material breach of any provision of any employment,
non-disclosure, non-competition, non-solicitation or other similar agreement
executed by the Service Provider for the benefit of the Company or any Parent or
Subsidiary, all as reasonably determined by the Committee, which determination
will be conclusive.  Notwithstanding the foregoing, if a Service
Provider and the Company (or a Parent or Subsidiary) have entered into an
employment agreement, consulting agreement or other similar agreement that
specifically defines “cause,” then with respect to such Service Provider,
“Cause” shall have the meaning defined in that employment agreement, consulting
agreement or other agreement

      

      “Change in Control”
means:

      

      (a)           the
consummation of any consolidation or merger of the Company in which the Company
is not the continuing or surviving corporation or pursuant to which shares of
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the shares of the Company’s
Common Stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger; or

       

      
        
          
          

        

        
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      (b)           the
consummation of any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the assets
of the Company, other than to a subsidiary or affiliate; or

      

      (c)           an
approval by the shareholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company; or

      

      (d)           any
action pursuant to which any person (as such term is defined in Section 13(d) of
the Exchange Act), corporation or other entity (other than any benefit plan
sponsored by the Company or any of its Subsidiaries) shall become the
“beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of shares of capital stock entitled to vote
generally for the election of directors of the Company (“Voting Securities”)
representing fifty percent or more of the combined voting power of the Company’s
then outstanding Voting Securities (calculated as provided in Rule 13d-3(d) in
the case of rights to acquire any such securities), unless, prior to such person
so becoming such beneficial owner, the Board shall determine that such person so
becoming such beneficial owner shall not constitute a Change in Control;
or

      

      (e)           the
individuals (A) who, as of the date on which this Plan is first adopted by the
Board, constitute the Board (the “Original Directors”)
and (B) who thereafter are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of at least two
thirds of the Original Directors then still in office (such Directors being
called “Additional
Original Directors”) and (C) who thereafter are elected to the Board and
whose election or nomination for election to the Board was approved by a vote of
at least two thirds of the Original Directors and Additional Original Directors
then still in office, cease for any reason to constitute a majority of the
members of the Board.

      

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

      

       “Committee” means a
committee of Directors appointed by the Board in accordance with Section 4 of
the Plan.

      

       “Common Stock” means
the common stock of the Company.

      

       “Company” means Center
Bancorp, Inc., a New Jersey corporation.

      

       “Consultant” means any
person, including an advisor, engaged by the Company or a Parent or Subsidiary
to render services to such entity, other than an Employee or a
Director.

      

       “Director” means a
member of the Board.

      

       “Disability” means
total and permanent disability as defined in Section 22(e)(3) of the
Code.

      

       “Employee” means any
person, including officers and Directors, serving as an employee of the Company
or any Parent or Subsidiary.  An individual shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its Parent,
any Subsidiary or any successor.  For purposes of an Option initially
granted as an Incentive Stock Option, if a leave of absence of more than three
months precludes such Option from being treated as an Incentive Stock Option
under the Code, such Option thereafter shall be treated as a Nonstatutory Stock
Option for purposes of this Plan.  Neither service as a Director nor
payment of a director’s fee by the Company shall be sufficient to constitute
“employment” by the Company.

       

      
        
          
          

        

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

      

       “Fair Market Value”
means, as of any date, the value of Common Stock determined as
follows:

      

      (i)           if
the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq National Market or The
Nasdaq SmallCap Market of The Nasdaq Stock Market, the Fair Market Value of a
Share of Common Stock shall be the closing sales price of a Share of Common
Stock as quoted on such exchange or system for such date (or the most recent
trading day preceding such date if there were no trades on such date), as
reported in The Wall
Street Journal or such other source as the Committee deems
reliable;

      

      (ii)          if
the Common Stock is regularly quoted by a recognized securities dealer but is
not listed in the manner contemplated by clause (i) above, the Fair Market Value
of a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock for such date (or the most recent trading day
preceding such date if there were no trades on such date), as reported in The Wall Street Journal
or such other source as the Committee deems reliable; or

      

      (iii)        
if neither clause (i) above nor clause (ii) above applies, the Fair Market Value
shall be determined in good faith by the Administrator based on the reasonable
application of a reasonable valuation method.

      

       “Incentive Stock
Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated
thereunder.

      

       “Nonstatutory Stock
Option” means an Option not intended to qualify as an Incentive Stock
Option.

      

       “Notice of Grant”
means a written or electronic notice evidencing certain terms and conditions of
an individual Option grant, Stock Award grant or grant of Unrestricted
Shares.  The Notice of Grant applicable to Stock Options shall be part
of the Option Agreement.

      

       “Option” means a stock
option granted pursuant to the Plan.

      

       “Option Agreement”
means an agreement between the Company and an Optionee evidencing the terms and
conditions of an individual Option grant.  Each Option Agreement shall
be subject to the terms and conditions of the Plan.

      

       “Optioned Stock” means
the Common Stock subject to an Option.

      

       “Optionee” means the
holder of an outstanding Option granted under the Plan.

       

      
        
          
          

        

        
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        “Parent” means a
“parent corporation” of the Company (or, in the context of Section 15(c) of the
Plan, of a successor corporation), whether now or hereafter existing, as defined
in Section 424(e) of the Code.

      

       “Participant” shall
mean any person who holds an Option, Restricted Stock, a Stock Award or
Unrestricted Shares granted or issued pursuant to the Plan.

       

      “Restricted Stock”
means Shares that are subject to restrictions pursuant to Section 11
hereof.

       

       

      “Restricted Stock
Unit” means a right granted under and subject to restrictions pursuant to
Section 12 hereof.

       

      “Rule 16b-3” means
Rule 16b-3 of the Exchange Act or any successor to such Rule 16b-3, as such rule
is in effect when discretion is being exercised with respect to the
Plan.

      

      “Section 16(b)” means
Section 16(b) of the Exchange Act.

      

      “Service Provider”
means an Employee or Consultant.

      

      “Share” means a share
of the Common Stock, as adjusted in accordance with Section 15 of the
Plan.

      

      “Stock Award” means an
Award of Shares pursuant to Section 11 of the Plan or an award of Restricted
Stock Units pursuant to Section 12 of the Plan.

      

      “Stock Award
Agreement” means an agreement, approved by the Administrator, providing
the terms and conditions of a Stock Award.

      

      “Stock Award Shares”
means Shares subject to a Stock Award.

      

      “Stock Awardee” means
the holder of an outstanding Stock Award granted under the Plan

      

      “Subsidiary” means a
“subsidiary corporation” of the Company (or, in the context of Section 15(c) of
the Plan, of a successor corporation), whether now or hereafter existing, as
defined in Section 424(f) of the Code.

      

       “Unrestricted Shares”
means a grant of Shares made on an unrestricted basis pursuant to Section 14 of
the Plan.

      

      3.           Stock Subject to the
Plan.  Subject to the provisions of Section 15 of the Plan, the
maximum aggregate number of Shares that may be issued under the Plan is 400,000
Shares.  The Shares may be authorized but unissued, or reacquired,
shares of Common Stock.  If an Option expires or becomes unexercisable
without having been exercised in full or is canceled or terminated, or if any
Shares of Restricted Stock or Shares underlying a Stock Award are forfeited, the
Shares that were subject thereto shall be added back to the Shares available for
issuance under the Plan.

       

      

      4.           Administration of the
Plan.

       

      
        
          
          

        

        
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        (a)           Procedure.

        
           

        

      

      (i)           Multiple Administrative
Bodies.  Different Committees with respect to different groups
of Service Providers may administer the Plan.

      

      (ii)          Section 162(m).  To
the extent that the Administrator determines it to be desirable to qualify
Awards granted hereunder as “performance-based compensation” within the meaning
of Section 162(m) of the Code, the Plan shall be administered by a Committee of
two or more “outside directors” within the meaning of Section 162(m) of the Code
and the regulations promulgated thereunder.

      

      (iii)         Rule 16b-3.  If the
Company is subject to Section 16(b), the transactions contemplated hereunder
shall (from the date that the Company is first subject to Section 16(b)), be
structured to satisfy the requirements for exemption under Rule
16b-3.

      

      (iv)        
Other
Administration.  Other than as provided above, the Plan shall
be administered by (A) the Board or (B) a Committee, which committee shall be
constituted to satisfy Applicable Laws.

      

      (b)         Powers of the
Administrator.  Subject to the provisions of the Plan, and in
the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:

      

      (i) 
         to determine the Fair
Market Value;

      

      (ii)         
to select the Service Providers to whom Options, Stock Awards and Unrestricted
Shares may be granted hereunder;

      

      (iii)         to
determine the number of shares of Common Stock to be covered by each Award
granted hereunder;

      

      (iv)         to
approve forms of agreement for use under the Plan;

      

      (v)         
to determine the terms and conditions, not inconsistent with the terms of the
Plan or of any Award granted hereunder.  Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options may be exercised (which may be based on performance criteria), any
vesting, acceleration or waiver of forfeiture provisions, and any restriction or
limitation regarding any Option or Stock Award, or the Shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

      

      (vi)         to
construe and interpret the terms of the Plan, Awards granted pursuant to the
Plan and agreements entered into pursuant to the Plan;

      

      (vii)        to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax
laws;

       

      
        
          
          

        

        
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      (viii)      to
modify or amend each Award (subject to Section 19(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of
Options longer than is otherwise provided for in the Plan;

      

      (ix)         to
allow grantees to satisfy withholding tax obligations by having the Company
withhold from the Shares to be issued upon exercise of an Option that number of
Shares having a Fair Market Value equal to the amount required to be withheld,
provided that withholding is calculated at the minimum statutory withholding
level.  The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined.  All determinations to have Shares withheld for this
purpose shall be made by the Administrator in its discretion;

      

       

      (x)      
   to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by such
Option shall have declined by 50% from the date of grant to the date that is one
year after the date of grant;

      

      (xi)         to
authorize any person to execute on behalf of the Company any agreement entered
into pursuant to the Plan and any instrument required to effect the grant of an
Award previously granted by the Administrator; and

      

      (xii)        to
make all other determinations deemed necessary or advisable for administering
the Plan.

      

      (c)         Effect of Administrator’s
Decision.  The Administrator’s decisions, determinations and
interpretations shall be final and binding on all holders of Awards and
Restricted Stock.  None of the Board, the Committee or the
Administrator, nor any member or delegate thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with the Plan, and each of the foregoing shall be entitled in all
cases to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including without limitation reasonable
attorneys’ fees) arising or resulting therefrom to the fullest extent permitted
by law and/or under any directors’ and officers’ liability insurance coverage
which may be in effect from time to time.

      

      5.           Eligibility.  Nonstatutory
Stock Options, Stock Awards and Unrestricted Shares may be granted to Service
Providers.  Incentive Stock Options may be granted only to
Employees.  Notwithstanding anything contained herein to the contrary,
an Award may be granted to a person who is not then a Service Provider;
provided, however, that the grant of such Award shall be conditioned upon such
person becoming a Service Provider at or prior to the time of the execution of
the agreement evidencing such Award.

      

      6.           Limitations.

      

      (a)         Each
Option shall be designated in the Option Agreement as either an Incentive Stock
Option or a Nonstatutory Stock Option.  However, notwithstanding such
designation, if a single Employee becomes eligible in any given year to exercise
Incentive Stock Options for Shares having a Fair Market Value in excess of
$100,000, those Options representing the excess shall be treated as Nonstatutory
Stock Options.  In the previous sentence, “Incentive Stock Options”
include Incentive Stock Options granted under any plan of the Company or any
Parent or any Subsidiary.  For the purpose of deciding which Options
apply to Shares that “exceed” the $100,000 limit, Incentive Stock Options shall
be taken into account in the same order as granted.  The Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.

       

      
        
          
          

        

        
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      (b)         Neither
the Plan nor any Award nor any agreement entered into pursuant to the Plan shall
confer upon a Participant any right with respect to continuing the grantee’s
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, for any reason or no reason.

      

      (c)         No
Service Provider shall be granted, in any fiscal year of the Company, Options to
purchase more than 100,000 Shares (subject to adjustment in accordance with
Section 15).

      

      7.           Term of the
Plan.  Subject to Section 22 of the Plan, the Plan shall become
effective upon its adoption by the Board.  It shall continue in effect
for a term of ten (10) years unless terminated earlier under Section 18 of the
Plan.

      

      8.           Term of
Options.  The term of each Option shall be stated in the
applicable Option Agreement.  In the case of an Incentive Stock
Option, the term shall be ten (10) years from the date of grant or such shorter
term as may be provided in the applicable Option Agreement.  However,
in the case of an Incentive Stock Option granted to an Optionee who, at the time
the Incentive Stock Option is granted, owns, directly or indirectly, stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the applicable Option Agreement.

      

      9.           Option Exercise Price;
Exercisability.

      

      (a)         Exercise
Price.  The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be no less than 100% of the Fair
Market Value per Share as of the date of grant; provided, however, that in the
case of an Incentive Stock Option granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share as of the date of grant, or

      

      (b)         Exercise Period and
Conditions.  At the time that an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and
shall determine any conditions that must be satisfied before the Option may be
exercised.

      

      10.         Exercise of Options;
Consideration.

      

      (a)         Procedure for Exercise; Rights as a
Shareholder.  Any Option granted hereunder shall be exercisable
according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Option
Agreement.  Unless the Administrator provides otherwise, vesting of
Options granted hereunder shall be tolled during any unpaid leave of
absence.  An Option may not be exercised for a fraction of a
Share.  An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is
exercised.  Full payment may consist of any consideration and method
of payment authorized by the Administrator and permitted by the Option Agreement
and Section 10(e) of the Plan.  Shares issued upon exercise of an
Option shall be issued in the name of the Optionee.  Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option.  The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 15 of the Plan.  Exercising an
Option in any manner shall decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.

       

      
        
          
          

        

        
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      (b)         Termination of Relationship as a
Service Provider.  If an Optionee ceases to be a Service
Provider, other than upon the Optionee’s death or Disability or upon a
termination of such Optionee’s employment with Cause, the Optionee may exercise
his or her Option within such period of time as is specified in the Option
Agreement to the extent that the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement).  In the absence of a specified time in
the Option Agreement and except as otherwise provided in Sections 10(c), 10(d)
and 10(e) of this Plan, the Option shall remain exercisable for a period of 90
days following the Optionee’s termination (but in no event later than the
expiration of the term of such Option).  If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the
Plan.  If, after termination, the Optionee does not exercise his or
her Option in full within the time specified by the Administrator, the
unexercised portion of the Option shall terminate, and the Shares covered by
such unexercised portion of the Option shall revert to the Plan.  An
Optionee who changes his or her status as a Service Provider (e.g., from being
an Employee to being a Consultant) shall not be deemed to have ceased being a
Service Provider for purposes of this Section 10(b), nor shall a transfer of
employment among the Company and any Subsidiary be considered a termination of
employment; however, if an Optionee owning Incentive Stock Options ceases being
an Employee but continues as a Service Provider, such Incentive Stock Options
shall be deemed to be Nonstatutory Options three months after the date of such
cessation.

      

      (c)         Disability of an
Optionee.  If an Optionee ceases to be a Service Provider as a
result of the Optionee’s Disability, the Optionee may exercise his or her Option
within such period of time as is specified in the Option Agreement to the extent
the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option
Agreement).  In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for one year following the
Optionee’s termination (but in no event later than the expiration of the term of
such Option).  If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan.  If, after
termination, the Optionee does not exercise his or her Option in full within the
time specified herein, the unexercised portion of the Option shall terminate,
and the Shares covered by such unexercised portion of the Option shall revert to
the Plan.

      

      (d)         Death of an
Optionee.  If an Optionee dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee’s estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for one year following the Optionee’s death ((but in no event later
than the expiration of the term of such Option).  If, at the time of
death, the Optionee is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option shall revert to the
Plan.  If the Option is not so exercised in full within the time
specified herein, the unexercised portion of the Option shall terminate, and the
Shares covered by the unexercised portion of such Option shall revert to the
Plan.

       

      
        
          
          

        

        
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      (e)         Termination for Cause. If a
Service Provider’s relationship with the Company is terminated for Cause, then,
unless otherwise provided in such Service Provider’s Option Agreement, such
Service Provider shall have no right to exercise any of such Service Provider’s
Options at any time on or after the effective date of such
termination.

      

      (f)         Form of
Consideration.  The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment.  In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the time
of grant.  Such consideration may consist any of the following as
determined by the Administrator from time to time:

      

      (i)          cash;

      

      (ii)        
check;

      

      (iii)        Shares
which have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be
exercised;

      

      (iv)        consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan, including any net-settlement or
broker-assisted cashless exercise program;

      

      (v)         any
combination of the foregoing methods of payment; or

      

      (vi)        such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.

      

      11.         Stock Awards.  The
Administrator may, in its sole discretion, grant (or sell at par value or such
higher purchase price as it determines) Shares to any Service Provider subject
to such terms and conditions as the Administrator sets forth in a Stock Award
Agreement evidencing such grant.  Stock Awards may be granted or sold
in respect of past services or other valid consideration or in lieu of any cash
compensation otherwise payable to such individual.  The grant of Stock
Awards under this Section 11 shall be subject to the following
provisions:

      

      (a)         At
the time a Stock Award under this Section 11 is made, the Administrator shall
establish a vesting period (the “Restricted Period”) applicable to the Stock
Award Shares subject to such Stock Award.  The Administrator may, in
its sole discretion, at the time a grant is made, prescribe restrictions in
addition to the expiration of the Restricted Period, including the satisfaction
of corporate or individual performance objectives.  None of the Stock
Award Shares may be sold, transferred, assigned, pledged or otherwise encumbered
or disposed of during the Restricted Period applicable to such Stock Award
Shares or prior to the satisfaction of any other restrictions prescribed by the
Administrator with respect to such Stock Award Shares.

      

      (b)         The
Company shall issue, in the name of each Service Provider to whom Stock Award
Shares have been granted, stock certificates representing the total number of
Stock Award Shares granted to such person, as soon as reasonably practicable
after the grant.  The Company, at the direction of the Administrator,
shall hold such certificates, properly endorsed for transfer, for the Stock
Awardee’s benefit until such time as the Stock Award Shares are forfeited to the
Company, or the restrictions lapse.

       

      
        
          
          

        

        
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      (c)         Unless
otherwise provided by the Administrator, holders of Stock Award Shares shall
have the right to vote such Shares and have the right to receive any cash
dividends with respect to such Shares.  All distributions, if any,
received by a Stock Awardee with respect to Stock Award Shares as a result of
any stock split, stock distribution, combination of shares, or other similar
transaction shall be subject to the restrictions of this Section
11.

      

      (d)         Any
Stock Award Shares granted to a Service Provider pursuant to the Plan shall be
forfeited if the Stock Awardee voluntarily terminates employment with the
Company or its subsidiaries or resigns or voluntarily terminates his consultancy
arrangement or directorship with the Company or its subsidiaries, or if the
Stock Awardee’s employment or the consultant’s consultancy arrangement or
directorship is terminated for Cause prior to the expiration or termination of
the applicable Restricted Period and the satisfaction of any other conditions
applicable to such Stock Award Shares.  Upon such forfeiture, the
Stock Award Shares that are forfeited shall be retained in the treasury of the
Company and be available for subsequent awards under the Plan.  If the
Stock Awardee’s employment, consultancy arrangement or directorship terminates
for any other reason, the Stock Award Shares held by such person shall be
forfeited, unless the Administrator, in its sole discretion, shall determine
otherwise.

      

      (e)         Upon
the expiration or termination of the Restricted Period and the satisfaction of
any other conditions prescribed by the Committee, the restrictions applicable to
the Stock Award Shares shall lapse and, at the Stock Awardee’s request, a stock
certificate for the number of Stock Award Shares with respect to which the
restrictions have lapsed shall be delivered, free of all such restrictions, to
the Stock Awardee or his beneficiary or estate, as the case may be.

      

      12.         Restricted Stock
Units.  The Committee may, in its sole discretion, grant
Restricted Stock Units to a Service Provider subject to such terms and
conditions as the Committee sets forth in a Stock Award Agreement evidencing
such grant.  “Restricted Stock Units” are Awards denominated in units
evidencing the right to receive Shares of Common Stock, or an amount of cash
determined based upon the Fair Market Value of Shares of Common Stock, which may
vest over such period of time and/or upon satisfaction of such performance
criteria or objectives as is determined by the Committee at the time of grant
and set forth in the applicable Stock Award Agreement, without payment of any
amounts by the Stock Awardee thereof (except to the extent required by
law).  Prior to delivery of shares of Common Stock with respect to an
award of Restricted Stock Units, the Stock Awardee shall have no rights as a
stockholder of the Company.

      

      Upon
satisfaction and/or achievement of the applicable vesting requirements relating
to an award of Restricted Stock Units, the Stock Awardee shall be entitled to
receive a number of shares of Common Stock that are equal to the number of
Restricted Stock Units that became vested.  To the extent, if any, set
forth in the applicable Stock Award Agreement, cash dividend equivalents may be
paid during, or may be accumulated and paid at the end of, the applicable
vesting period, as determined by the Committee.

      

      Unless
otherwise provided by the Stock Award Agreement, any Restricted Stock Units
granted to a Service Provider pursuant to the Plan shall be forfeited if the
Stock Awardee terminates employment or his or her consultancy arrangement with
the Company or its subsidiaries terminates for any reason prior to the
expiration or termination of the applicable vesting period and/or the
achievement of such other vesting conditions applicable to the
award.

      

      Prior to
the delivery of any shares of Common Stock in connection with an award of
Restricted Stock Units, the Stock Awardee shall pay or make adequate provision
acceptable to the Company for the satisfaction of the statutory minimum
prescribed amount of federal and state income tax and other withholding
obligations of the Company, including by having the Company withhold from the
number of shares of Common Stock otherwise deliverable in connection with an
award of Restricted Stock Units, a number of shares of Common Stock having a
Fair Market Value equal to an amount sufficient to satisfy such tax withholding
obligations.

       

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

       

      13.         Unrestricted
Shares.  The Administrator may grant Unrestricted Shares in
accordance with the following provisions:

      

      (a)         The
Administrator may cause the Company to grant Unrestricted Shares to Service
Providers at such time or times, in such amounts and for such reasons as the
Administrator, in its sole discretion, shall determine. No payment shall be
required for Unrestricted Shares.

      

      (b)         The
Company shall issue, in the name of each Service Provider to whom Unrestricted
Shares have been granted, stock certificates representing the total number of
Unrestricted Shares granted to such individual, and shall deliver such
certificates to such Service Provider as soon as reasonably practicable after
the date of grant or on such later date as the Administrator shall determine at
the time of grant.

      

      14.         Non-Transferability.  Unless
determined otherwise by the Administrator, an Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.  If the Administrator
makes an Option transferable, such Option shall contain such additional terms
and conditions as the Administrator deems
appropriate.  Notwithstanding the foregoing, the Administrator, in its
sole discretion, may provide in the Option Agreement regarding a given Option
that the Optionee may transfer, without consideration for the transfer, his or
her Nonstatutory Stock Options to members of his or her immediate family, to
trusts for the benefit of such family members, or to partnerships in which such
family members are the only partners, provided that the transferee agrees in
writing with the Company to be bound by all of the terms and conditions of this
Plan and the applicable Option. During the period when Shares of Restricted
Stock and Stock Award Shares are restricted (by virtue of vesting schedules or
otherwise), such Shares may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution.

      

      15.         Adjustments Upon Changes in
Capitalization, Change in Control.

      

      (a)         Changes in
Capitalization.  Subject to any required action by the
shareholders of the Company, the number and type of shares covered by each
outstanding Option and Stock Award, the number and type of shares of Restricted
Stock outstanding and the number and type of shares which have been authorized
for issuance under the Plan but as to which no Options or Stock Awards have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option or Stock Award, as well as the exercise price per share
of each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.”  Such adjustment shall be made by
the Administrator, whose determination in that respect shall be final, binding
and conclusive.  Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares of Common Stock
subject to an Award hereunder.

       

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

       

      (b)           Change in
Control.  Notwithstanding anything to the contrary set forth in
the Plan, upon or in anticipation of any Change in Control, the Board may, in
its sole and absolute discretion and without the need for the consent of any
Participant, take one or more of the following actions contingent upon the
occurrence of that Change in Control: (i) cause any or all outstanding Options
held by Participants affected by the Change in Control to become vested and
immediately exercisable, in whole or in part; (ii) cause any or all outstanding
Restricted Stock or Restricted Stock Units held by Participants
affected by the Change in Control to become non-forfeitable, in whole or in
part; (iii) cancel any Option in exchange for a substitute option in a manner
consistent with the requirements of Treas. Reg. §1.424-1(a)
(notwithstanding the fact that the original Option may never have been intended
to satisfy the requirements for treatment as an Incentive Stock Option); (iv)
cancel any Restricted Stock or Restricted Stock Units held by a Participant
affected by the Change in Control in exchange for restricted stock of or
restricted stock units in respect of the capital stock of any successor
corporation; (v) redeem any Restricted Stock held by a Participant affected by
the Change in Control for cash and/or other substitute consideration with a
value equal to the Fair Market Value of an unrestricted Share on the date of the
Change in Control; (vi) cancel any Option held by a Participant affected by the
Change in Control in exchange for cash and/or other substitute consideration
with a value equal to (A) the number of Shares subject to that Option,
multiplied by (B) the difference, if any, between the Fair Market Value per
Share on the date of the Change in Control and the exercise price of that
Option; provided, that
if the Fair Market Value per Share on the date of the Change in Control does not
exceed the exercise price of any such Option, the Board may cancel that Option
without any payment of consideration therefor; or (vii) cancel any Restricted
Stock Unit held by a Participant affected by the Change in Control in exchange
for cash and/or other substitute consideration with a value equal to the Fair
Market Value per Share on the date of the Change in Control.

      

      16.         Substitute
Options.  In the event that the Company, directly or
indirectly, acquires another entity, the Board may authorize the issuance of
stock options (“Substitute Options”) to the individuals performing services for
the acquired entity in substitution of stock options previously granted to those
individuals in connection with their performance of services for such entity
upon such terms and conditions as the Board shall determine, taking into account
the conditions of Code Section 424(a), as from time to time amended or
superceded, in the case of a Substitute Option that is intended to be an
Incentive Stock Option.  Shares of capital stock underlying Substitute
Stock Options shall not constitute Shares issued pursuant to the Plan for any
purpose.

      

      17.         Date of Grant.  The
date of grant of an Option, Stock Award or Unrestricted Share shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, Stock Award or Unrestricted Share, or such other later date as is
determined by the Administrator.  Notice of the determination shall be
provided to each grantee within a reasonable time after the date of such
grant.

      

      18.         Amendment and Termination of the
Plan.

      

      (a)         Amendment and
Termination.  The Board may at any time amend, alter, suspend
or terminate the Plan.

      

      (b)         Shareholder
Approval.  The Company shall obtain shareholder approval of any
Plan amendment to the extent necessary to comply with Applicable
Laws.

      

      (c)         Effect of Amendment or
Termination.  No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any grantee, unless mutually
agreed otherwise between the grantee and the Administrator, which agreement must
be in writing and signed by the grantee and the Company.  Termination
of the Plan shall not affect the Administrator’s ability to exercise the powers
granted to it hereunder with respect to Awards granted under the Plan prior to
the date of such termination.

       

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

       

      19.         Conditions Upon Issuance of
Shares.

      

      (a)         Legal
Compliance.  Shares shall not be issued in connection with the
grant of any Stock Award or Unrestricted Share or the exercise of any Option
unless such grant or the exercise of such Option and the issuance and delivery
of such Shares shall comply with Applicable Laws and shall be further subject to
the approval of counsel for the Company with respect to such
compliance.

      

      (b)         Investment
Representations.  As a condition to the grant of any Stock
Award or Unrestricted Share or the exercise of any Option, the Company may
require the person receiving such Award or exercising such Option to represent
and warrant at the time of any such exercise or grant that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

      

      (c)         Additional
Conditions.  The Administrator shall have the authority to
condition the grant of any Award in such other manner that the Administrator
determines to be appropriate, provided that such condition is not inconsistent
with the terms of the Plan.  Such conditions may include, among other
things, obligations of recipients to execute lock-up agreements and shareholder
agreements in the future.

       

      (d)         Trading Policy
Restrictions.  Option exercises and other Awards under the Plan
shall be subject to the terms and conditions of any insider trading policy
established by the Company or the Administrator.

      

      20.         Inability to Obtain
Authority.  The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.

      

      21.         Reservation of
Shares.  The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.

      

      22.         Shareholder
Approval.  The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted.  Such shareholder approval shall be obtained in the manner
and to the degree required under Applicable Laws.  Notwithstanding any
provision in the Plan to the contrary, any exercise of an Option granted before
the Company has obtained shareholder approval of the Plan in accordance with
this Section 22 shall be conditioned upon obtaining such shareholder approval of
the Plan in accordance with this Section 22.

      

      23.         Withholding; Notice of
Sale.  The Company shall be entitled to withhold from any
amounts payable to an Employee any amounts which the Company determines, in its
discretion, are required to be withheld under any Applicable Law as a result of
any action taken by a holder of an Award.

      

      24.         Governing Law.  This
Plan shall be governed by the laws of the state of New Jersey, without regard to
conflict of law principles.

      

      
        
          
          

        

        
          -19-Exhibit 10.1
    

    

    

    
      May 20, 2009
    

    

    

    

    

    
      Mr. Matthew Appel
5055 Shoreline Drive
Frisco, Texas  75034

    

    

    

    
      Dear Matt:
    

    

    

    
      On behalf of Zale Corporation, I am pleased to make you the following
      offer, effective May 27, 2009, as Executive Vice President,
      Finance.  Effective June 15, 2009, you will become Executive Vice
      President, Chief Financial Officer.  This letter outlines the terms of
      your offer:
    

    

    

    
    	
          
            Reporting to:
          

        	
           
        	
          
            Chief Executive Officer
          

        
	

        	

        	
           
        
	
          
            Base Compensation:
          

        	

        	
          
            Fifteen thousand three hundred eighty-four dollars and sixty-two
            cents ($15,384.62) per bi-weekly pay period which, if annualized,
            is equal to Four hundred thousand dollars ($400,000).
          

        
	
          
             
          

        	

        	
          
             
          

          
             
          

        
	
          
            Stock Grant:
          

        	

        	
          
            100,000 options for shares of Zale stock with an exercise price
            equal to the price at the close of market on the day you join the
            Company. Shares will vest over four years at 25% on each
            anniversary of your award.
          

        
	
          
             
          

        	

        	
          
             
          

          
             
          

        
	

        	

        	
          
            20,000 restricted stock units, with vesting contingent upon
            continued employment (25% on 2nd anniversary of issue date, 25% on
            3rd anniversary, 50% on 4th anniversary).
          

        
	

        	

        	
           
        
	
          
            Incentive Compensation:
          

        	

        	
          
            Beginning with FY’10 (August 1, 2009 – July 31, 2010) you will be
            eligible for participation in the Company’s Annual Bonus Program
            (as may be amended from time to time) at a target level of 75% and
            a maximum level of 150% of base salary, based on achievement of
            our financial plan.
          

        

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          
            Benefits:
          

        	
           
        	
          
            Participation in all benefits generally available to the Company’s
            Executives:
          

        
	

        	

        	
          
            • Company’s medical/dental plans
          

        
	

        	

        	
          
            • Group life insurance (2x base salary)
          

        
	

        	

        	
          
            • 401(k) Savings and Investment Plan (after one year of service)
          

        
	

        	

        	
          
            • Executive LTD
          

        

    

    
      Zale will pay the employer portion of the medical benefits under COBRA
      until you are eligible for coverage of medical benefits under the Zale
      Plan.
    

    

    

    
    	
          
            Vacation:
          

        	
           
        	
          
            You will receive 4 weeks (160 hours) of vacation per fiscal year.
          

        

    

    

    

    
      Employment at Zale is subject to the terms and conditions contained in
      Zale’s Management Policies and Guidelines, and is not for a specific
      time and can be terminated by you or by Zale at any time for any reason,
      with or without cause.  This offer of employment is contingent upon the
      completion of a background check satisfactory to Zale.  This letter is a
      summary of the terms of your employment by Zale.  We agree to provide
      you with an Employment Security Agreement (“ESA”), effective as of May
      27, 2009, which will provide for:  (a) severance in the event of a
      Qualifying Termination as defined in the ESA that is other than for
      cause in a non-change of control context in the amount of six (6) months
      salary and average earned bonus; and (b) severance in the event of a
      Qualifying Termination as defined in the ESA that is other than for
      cause in a Change of Control context as defined in the ESA to include,
      among other triggers, a 50% threshold for purposes of Section 3(a)(9)
      and 13(d) of the Securities Exchange Act of 1934, in the amount of
      thirty six (36) months salary and average earned bonus, subject to a
      280G Conditional Cap.
    

    

    

    
      Matt, I am delighted to extend this offer and I look forward to you
      joining us.
    

    

    

    
    	
           
        	
          
            Sincerely,
          

        
	

        	
           
        
	

        	
          
            /s/ Neal Goldberg
          

        
	

        	
          
            Neal Goldberg
          

        
	

        	
          
            Chief Executive Officer
          

        

    

    

    

    
    	
          
            Accepted:
          

        
	

        	

        	
           
        
	
          
            /s/ Matthew Appel
          

        	

        
	
          
            Matthew Appel
          

        	

        
	

        	
           
        
	
          
            Dated:
          

        	
          
            May 25, 2009

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