EXHIBIT 10 (H)
PEAPACK-GLADSTONE FINANCIAL CORPORATION
2006 LONG-TERM STOCK INCENTIVE PLAN
(Adopted by Directors January 12, 2006)
(Adopted by Shareholders April 25, 2006)
1. Purpose. The purpose of the Plan is to provide additional incentive to
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those officers, key employees and independent contractors of the Company
and its Subsidiaries, and certain members of the Board of Directors of the
Company whose substantial contributions are essential to the continued
growth and success of the Company's business in order to strengthen their
commitment to the Company and its Subsidiaries, to motivate such officers,
employees, independent contractors and Directors to faithfully and
diligently perform their assigned responsibilities and to attract and
retain competent and dedicated individuals whose efforts will result in
the long-term growth and profitability of the Company. To accomplish such
purposes, the Plan provides that the Company may grant Incentive Stock
Options, Nonqualified Stock Options, Restricted Stock Awards and Stock
Appreciation Rights.
2. Definitions. For purposes of this Plan:
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(a) "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and
setting forth the terms and conditions thereof.
(b) "Award" means a grant of Restricted Stock or Stock Appreciation
Rights, or either or both of them.
(c) "Bank" means Peapack-Gladstone Bank, a Subsidiary.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" means an intentional failure to perform stated duties,
breach of a fiduciary duty involving personal dishonesty, or willful
violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order.
Notwithstanding anything else herein to the contrary, in the event
that an employee, Director or independent contractor is terminated
or removed for Cause, or resigns at a time when Cause exists, or if,
following termination, resignation or removal it is determined that
Cause existed at the time of such termination, resignation or
removal, then any and all Options and Awards will automatically be
terminated and void as of the date that Cause arose, and no notice
to that effect is required in order to effect that result.
(f) "Change in Capitalization" means any increase, reduction, change or
exchange of Shares for a different number or kind of shares or other
securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of
warrants or rights, stock dividend, stock split or reverse stock
split, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.
(g) "Change in Control" means an event of a nature that: (1) any
"person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) who is not now presently but becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 25% or more
of the Company's outstanding securities except for any securities
purchased by any tax-qualified employee benefit plan of the Company;
or (2) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote
of at least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's
stockholders was approved by the same Nominating Committee serving
under an Incumbent Board, shall be, for purposes of this clause (2),
considered as though he were a member of the Incumbent Board; or (3)
consummation of regulatory approval to implement a plan of
reorganization, merger, consolidation, sale of all or substantially
all the assets of the Company or similar transaction in which the
Company is not the resulting entity or such plan, merger,
consolidation, sale or similar transaction occurs; or (4) a proxy
statement soliciting proxies from shareholders of the Company shall
be distributed by someone other than the current management of the
Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Company
or similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then subject
to the plan or transaction are exchanged for or converted into cash
or property or securities not issued by the Company; or (5) a tender
offer is made for 25% or more of the voting securities of the
Company.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Committee" means a committee consisting solely of two (2) or more
directors who are Non-Employee Directors (as defined in Rule 16b-3
of the Exchange Act as it may be amended from time to time) of the
Company and outside directors as defined pursuant to Section 162(m)
of the Code (as it may be amended from time to time) appointed by
the Board to administer the Plan and to perform the functions set
forth herein. Directors appointed by the Board to the Committee
shall have the authority to act notwithstanding the failure to be so
qualified.
(j) "Company" means Peapack-Gladstone Financial Corporation, a New
Jersey corporation.
(k) "Director" means a member of the Board who is not also serving as an
employee of the Company.
(l) "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee, independent
contractor or Director to perform the work customarily assigned to
him. Additionally, a medical doctor selected or approved by the
Board must advise the Committee that it is either not possible to
determine when such Disability will terminate or that it appears
probable that such Disability will be permanent during the remainder
of the individual's lifetime.
(m) "Eligible Employee" means any officer or other key employee of the
Company or a Subsidiary designated by the Committee as eligible to
receive Options or Awards subject to the conditions set forth
herein.
(n) "Escrow Agent" means the escrow agent under the Escrow Agreement,
designated by the Committee. The Bank may be appointed as the Escrow
Agent.
(o) "Escrow Agreement" means an agreement between the Company, the
Escrow Agent and a Grantee, in the form specified by the Committee,
under which shares of Restricted Stock awarded pursuant hereto shall
be held by the Escrow Agent until either (a) the restrictions
relating to such shares expire and the shares are delivered to the
Grantee or (b) the Company reacquires the shares pursuant hereto and
the shares are delivered to the Company.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(q) "Fair Market Value" means the fair market value of the Shares as
determined by the Committee in its sole discretion; provided,
however, that (A) if the Shares are admitted to quotation on the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other comparable quotation system and have been
designated as a National Market System ("NMS") security, Fair Market
Value on any date shall be the last sale price reported for the
Shares on such system on such date or on the last day preceding such
date on which a sale was reported, (B) if the Shares are admitted to
quotation on NASDAQ and have not been designated a NMS security,
Fair Market Value on any date shall be the average of the highest
bid and lowest asked prices of the Shares on such system on such
date, or (C) if the Shares are admitted to trading on a national
securities exchange, Fair Market Value on any date shall be the last
sale price reported for the Shares on such exchange on such date or
on the last date preceding such date on which a sale was reported.
(r) "Grantee" means a person to whom an Award has been granted under the
Plan.
(s) "Incentive Stock Option" means an Option within the meaning of
Section 422 of the Code.
(t) "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
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(u) "Option" means an Incentive Stock Option, a Nonqualified Stock
Option, or either or both of them.
(v) "Optionee" means a person to whom an Option has been granted under
the Plan.
(w) "Parent" means any corporation in an unbroken chain of corporations
ending with the Company, if each of the corporations other than the
Company owns stock possessing 50% or more of the total combined
voting power of all classes of stock of one of the other
corporations in such chain.
(x) "Plan" means the Peapack-Gladstone Financial Corporation 2006
Long-Term Stock Incentive Plan as set forth in this instrument and
as it may be amended from time to time.
(y) "Restricted Stock" means Shares issued or transferred to an Eligible
Employee or Director which are subject to restrictions as provided
in Section 8 hereof.
(z) "Retirement" means the retirement from active employment of an
employee or officer, but only if such person meets all of the
following requirements: (i) he has a minimum combined total of years
of service to the Company or any Subsidiary (excluding service to
any acquired company) and age equal to eighty (80), (ii) he is age
sixty-two (62) or older, and (iii) he provides six (6) months prior
written notice to the Company of the retirement. For Directors, the
term "Retirement" shall mean the date on which the Director ceases
to be a member of the Board after both attaining age sixty (60) and
completing at least ten (10) years of service on the Board.
(aa) "Shares" means the common stock, no par value, of the Company
(including any new, additional or different stock or securities
resulting from a Change in Capitalization).
(ab) "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of shares of Common Stock as
provided in Section 7 hereof.
(ac) "Subsidiary" means any corporation in an unbroken chain of
corporations, beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain
owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such
chain.
(ad) "Successor Corporation" means a corporation, or a parent or
subsidiary thereof, which issues or assumes a stock option in a
transaction to which Section 425(a) of the Code applies.
(ae) "Ten-Percent Shareholder" means an eligible Employee, who, at the
time an Incentive Stock Option is to be granted to him, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, a Parent or a Subsidiary within the
meaning of Section 422(b)(6) of the Code.
3. Administration.
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(a) The Plan shall be administered by the Committee which shall hold meetings
at such times as may be necessary for the proper administration of the
Plan. The Committee shall keep minutes of its meetings. A majority of the
Committee shall constitute a quorum and a majority of a quorum may
authorize any action. Each member of the Committee shall be a Non-Employee
Director (as defined in Rule 16b-3 of the Exchange Act as it may be
amended from time to time) and an outside director as defined pursuant to
Section 162(m) of the Code as it may be amended from time to time. No
failure to be so qualified shall invalidate any Option or Award or any
action or inaction under the Plan. No member of the Committee shall be
personally liable for any action, determination or interpretation made in
good faith with respect to the Plan, the Options or the Awards, and all
members of the Committee shall be fully indemnified by the Company with
respect to any such action, determination or interpretation.
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Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(1) to determine those Eligible Employees to whom Options shall be
granted under the Plan and the number of Incentive Stock Options
and/or Nonqualified Options to be granted to each eligible Employee
and to prescribe the terms and conditions (which need not be
identical) of each Option, including the purchase price per share of
each Option;
(2) to select those Eligible Employees to whom Awards shall be granted
under the Plan and to determine the number of shares of Restricted
Stock and/or Stock Appreciation Rights to be granted pursuant to
each Award, the terms and conditions of each Award, including the
restrictions or performance criteria relating to such shares or
rights, the purchase price per share, if any, of Restricted Stock
and whether Stock Appreciation Rights will be granted alone or in
conjunction with an Option;
(3) to construe and interpret the Plan and the Options and Awards
granted thereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not
limited to, correcting any defect or supplying any omission, or
reconciling any inconsistency in the Plan or in any Agreement, in
the manner and to the extent it shall deem necessary or advisable to
make the Plan fully effective, and all decisions and determinations
by the Committee in the exercise of this power shall be final and
binding upon the Company or a Subsidiary, the Optionees and the
Grantees, as the case may be;
(4) to determine the duration and purposes for leaves of absence which
may be granted to an Optionee or Grantee without constituting a
termination of employment or service for purposes of the Plan;
(5) generally, to exercise such powers and to perform such acts as are
deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
Subject to the terms and conditions set forth herein, the Committee may,
from time to time, recommend the grant of Options and Awards to the
Directors in such numbers and upon such terms as it deems appropriate, but
all such grants must be approved by the Company's Board of Directors.
4. Stock Subject to Plan.
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(a) The maximum number of Shares that may be issued or transferred
pursuant to all Options and Awards under this Plan is 400,000. The
maximum number of Shares that may be issued or transferred pursuant
to Options or Awards for Incentive Stock Options shall be 400,000.
Upon a Change in Capitalization after the adoption of this Plan by
the Board, the Shares shall be adjusted to the number and kind of
Shares of stock or other securities existing after such Change in
Capitalization.
(b) Whenever any outstanding Option or portion thereof expires, is
cancelled or is otherwise terminated (other than by exercise of the
Option or any related Stock Appreciation Right), the shares of
Common Stock allocable to the unexercised portion of such Option may
again be the subject of Options and Awards hereunder.
(c) Whenever any Shares subject to an Award or Option are resold to the
Company, or are forfeited for any reason pursuant to the terms of
the Plan, such Shares may again be the subject of Options and Awards
hereunder.
5. Eligibility. Subject to the provisions of the Plan, the Committee (or,
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with respect to Directors, the Board) shall have full and final authority
to select those Eligible Employees and independent contractors who will
receive Options and/or Awards, but no person shall receive any Options or
Awards unless he or she is an employee of the Company or a Subsidiary, or
a Director or independent contractor, at the time the Option or Award is
granted.
6. Stock Options. The Committee (or, with respect to Directors, the Board)
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may grant Options in accordance with the Plan, the terms and conditions of
which shall be set forth in an Agreement. Each Option and Option Agreement
shall be subject to the following conditions:
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(a) Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Option
shall be set forth in the Agreement, provided that the purchase
price per Share under each Incentive Stock Option shall not be less
than 100% of the Fair Market Value of a Share at the time the Option
is granted (110% in the case of an Incentive Stock Option granted to
a Ten-Percent Shareholder) and each Nonqualified Stock Option shall
not be less than 100% of the Fair Market Value of a Share at the
time the Option is granted. Incentive Stock Options cannot be
granted to Directors or independent contractors.
(b) Duration. Options granted hereunder shall be for such term as the
Committee shall determine, provided that (i) no Incentive Stock
Option shall be exercisable after the expiration of ten (10) years
from the date it is granted (five (5) years in the case of an
Incentive Stock Option granted to a Ten-Percent Shareholder) and
(ii) no Nonqualified Stock Option shall be exercisable after the
expiration of ten (10) years and one (1) day from the date it is
granted.
(c) Non-Transferability. No Option granted hereunder shall be
transferable by the Optionee to whom granted otherwise than by will
or the laws of descent and distribution, and an Option may be
exercised during the lifetime of such Optionee only by the Optionee
or his guardian or legal representative. The terms of such Option
shall be binding upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
(d) Stock Options; Vesting. Subject to Section 6(h) hereof, each Option
shall be exercisable in such installments (which need not be equal)
and at such times as may be designated by the Committee or the Board
as set forth in the Option Agreement. Unless otherwise provided in
the Agreement, to the extent not exercised, installments shall
accumulate and be exercisable, in whole or in part, at any time
after becoming exercisable, but not later than the date the Option
expires. Upon the death, Disability or Retirement of an Optionee,
all Options shall become immediately exercisable. Notwithstanding
the foregoing, the Committee (or, with respect to Directors, the
Board) may accelerate the exercisability of any Option or portion
thereof at any time.
(e) Method of Exercise. The exercise of an Option shall be made only by
a written notice delivered in person or by mail to the Secretary of
the Company at the Company's principal executive office, specifying
the number of Shares to be purchased and accompanied by payment
therefore and otherwise in accordance with the Agreement pursuant to
which the Option was granted. The purchase price for any shares
purchased pursuant to the exercise of an Option shall be paid in
full upon such exercise in cash, by check, or, at the discretion of
the Committee and upon such terms and conditions as the Committee
shall approve, by transferring Shares to the Company. Any Shares
transferred to the Company as payment of the purchase price under an
Option shall be valued at their Fair Market Value on the day
preceding the date of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the
Option and the Agreement evidencing any related Stock Appreciation
Right to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such Agreement to the Optionee.
(f) Rights of Optionees. No Optionee shall be deemed for any purpose to
be the owner of any Shares subject to any Option unless and until
(i) the Option shall have been exercised pursuant to the terms
thereof, (ii) the Company shall have issued and delivered the Shares
to the Optionee, and (iii) the Optionee's name shall have been
entered as a shareholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares.
(g) Termination of Employment. In the event that an Optionee who is not
a Director ceases to be employed by the Company or any Subsidiary,
any outstanding Options held by such Optionee shall, unless the
Option Agreement evidencing such Option provides otherwise,
terminate as follows:
(1) If the Optionee's termination of employment is due to his
death or Disability, the Options shall become fully vested and
shall be exercisable for a period of three years following
such termination of employment, and shall thereafter
terminate;
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(2) If the Optionee's termination of employment is by the Optionee
(other than due to the Optionee's Retirement), the Option
shall terminate on the date of the termination of employment;
(3) If the termination of employment is due to the Optionee's
Retirement, the Option shall become fully vested and shall be
exercisable for 90 days (three years for an Option designated
initially as a Nonqualified Stock Option); and
(4) If the Optionee's termination of employment is for any other
reason, the Option (to the extent exercisable at the time of
the Optionee's termination of employment) shall be exercisable
for a period of ninety (90) days following such termination of
employment, and shall thereafter terminate, except that with
respect to an Option initially designated as a Nonqualified
Stock Option, if the Optionee's termination of employment
occurs within 12 months of a Change in Control, the Option
shall be exercisable for three years following the termination
of employment.
Notwithstanding the foregoing, the Committee may provide, either at the time an
Option is granted or thereafter, that the Option may be exercised after the
periods provided for in this Section 6(g), but in no event beyond the term of
the Option. Notwithstanding anything to the contrary in this Section 6(g), no
Option shall be exercisable beyond the term of the Option.
(h) Termination of Service for Directors. Upon the termination of a
Director's service as a member of the Board for any reason other
than Disability, Change in Control or death, the Director's Options
shall be exercisable only as to those Shares which were immediately
exercisable by the Director at the date of termination. In the event
of the death, Retirement or Disability of a Director, all Options
held by the Director shall become immediately exercisable. Upon
termination of the Director's service due to or within 12 months
after a Change in Control, all Options held by the Director shall
become immediately exercisable. Options granted to a Director shall
expire and no longer be exercisable upon the earlier of (i) one
hundred twenty (120) months following the date of grant, or (ii)
three (3) years following the date on which the Director ceases to
serve as a Director (for any reason other than Cause).
(i) Effect of Change in Control. In the event of a Change in Control,
all Options (other than Options granted to Directors) outstanding on
the date of such Change in Control shall become immediately and
fully exercisable. Notwithstanding anything else herein to the
contrary, in the event of a Change in Control, the Board in its sole
discretion has the authority to terminate any and all Options and
Awards, and to pay to the holder of the Options or Awards the value
of such Options and Awards.
7. Stock Appreciation Rights. The Committee may, in its discretion, either
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alone or in connection with the grant of an Option, grant Stock
Appreciation Rights in accordance with the Plan, the terms and conditions
of which shall be set forth in an Agreement. If granted in connection with
an Option, a Stock Appreciation Right shall cover the same shares covered
by the Option (or such lesser number of shares as the Committee may
determine) and shall, except as provided in this Section 7, be subject to
the same terms and conditions as the related Option.
(a) Time of Grant. A Stock Appreciation Right may be granted:
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(i) at any time if unrelated to an Option; or
(ii) if related to an Option, either at the time of grant, or at
any time thereafter during the term of the Option.
(b) Stock Appreciation Rights Related to an Option.
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(1) Payment. A Stock Appreciation Right granted in connection with
an Option shall entitle the holder thereof, upon exercise of
the Stock Appreciation Right or any portion thereof, to
receive payment of an amount computed pursuant to Section
7(b)(3).
(2) Exercise. Subject to Section 7(f), a Stock Appreciation Right
granted in connection with an Option shall be exercisable at
such time or times and only to the extent that the related
Option is exercisable, and will
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not be transferable except to the extent the related Option
may be transferable. A Stock Appreciation Right granted in
connection with an Incentive Stock Option shall be exercisable
only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related
Incentive Stock Option.
(3) Amount Payable. Except as otherwise provided in Section 7(g),
upon the exercise of a Stock Appreciation Right related to an
Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market
Value of a Share on the date of exercise of such Stock
Appreciation Right over the per Share purchase price under the
related Option, by (B) the number of Shares as to which such
Stock Appreciation Right is being exercised. Notwithstanding
the foregoing, the Committee may limit in any manner the
amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock
Appreciation Right at the time it is granted.
(4) Treatment of Related Options and Stock Appreciation Rights
Upon Exercise. Except as provided in Section 7(b)(v), (A) upon
the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be cancelled to
the extent of the number of Shares as to which the Stock
Appreciation Right is exercised and (B) upon the exercise of
an Option granted in connection with a Stock Appreciation
Right, the Stock Appreciation Right shall be cancelled to the
extent of the number of Shares as to which the Option is
exercised.
(5) Simultaneous Exercise of Stock Appreciation Right and Option.
The Committee may provide, either at the time a Stock
Appreciation Right is granted in connection with a
Nonqualified Stock Option or thereafter during the term of the
Stock Appreciation Right, that, subject to Section 7(f), upon
exercise of such Option, the Stock Appreciation Right shall
automatically be deemed to be exercised to the extent of the
number of Shares as to which the Option is exercised. In such
event, the Grantee shall be entitled to receive the amount
described in Section 7(b)(3) or 7(g) hereof, as the case may
be (or some percentage of such amount if so provided in the
Agreement evidencing the Stock Appreciation Right), in
addition to the Shares acquired pursuant to the exercise of
the Option. If a Stock Appreciation Right Agreement contains
an automatic exercise provision described in this Section
7(b)(5) and the Option or any portion thereof to which it
relates is exercised within six (6) months from the date the
Stock Appreciation Right is granted, such automatic exercise
provision shall not be effective with respect to that exercise
of the Option. The inclusion in an Agreement evidencing a
Stock Appreciation Right of a provision described in this
Section 7(b)(5) may be in addition to and not in lieu of the
right to exercise the Stock Appreciation Right as otherwise
provided herein and in the Agreement.
(c) Stock Appreciation Rights Unrelated to an Option. The Committee may
grant to Eligible Employees and independent contractors (and the
Board may grant to Directors) Stock Appreciation Rights unrelated to
Options. Stock Appreciation Rights unrelated to Options shall
contain such terms and conditions as to exercisability, vesting and
duration as the Committee or the Board shall determine, but in no
event shall they have a term of greater than ten (10) years. Upon
the death, Disability or Retirement of a Grantee, all Stock
Appreciation Rights shall become immediately exercisable. Upon the
death or Disability of a Grantee, the Stock Appreciation Rights held
by that Grantee shall be exercisable for a period of one (1) year
following such termination of employment or service, and shall
thereafter terminate. Upon the Retirement of a Grantee, the Stock
Appreciation Rights held by that Grantee shall be exercisable for a
period of ninety (90) days following such Retirement, and shall
thereafter terminate. Except as otherwise provided in Section 7(g),
the amount payable upon exercise of such Stock Appreciation Rights
shall be determined in accordance with Section 7(b)(3), except that
"Fair Market Value of a Share on the date of the grant of the Stock
Appreciation Right" shall be substituted for "purchase price under
the related Option."
(d) Method of Exercise. Stock Appreciation Rights shall be exercised by
a Grantee only by a written notice delivered in person or by mail to
the Secretary of the Company at the Company's principal executive
office, specifying the number of Shares with respect to which the
Stock Appreciation Right is being exercised. If requested by the
Committee, the Grantee shall deliver the Agreement evidencing the
Stock Appreciation Right being exercised and the Agreement
evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such
Agreements to the Grantee.
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(e) Form of Payment. Payment of the amount determined under Sections
7(b)(3) or 7(c), may be made solely in whole shares of Common Stock
in a number determined at their Fair Market Value on the date of
exercise of the Stock Appreciation Right or, alternatively, at the
sole discretion of the Committee, solely in cash, or in a
combination of cash and Shares as the Committee deems advisable. In
the event that a Stock Appreciation Right is exercised within the
sixty-day period following a Change in Control, any amount payable
shall be solely in cash. If the Committee decides to make full
payment in Shares, and the amount payable results in a fractional
Share, payment for the fractional Share will be made in cash.
Notwithstanding the foregoing, no payment in the form of cash may be
made upon the exercise of a Stock Appreciation Right pursuant to
Section 7(b)(3) or 7(c) to an officer of the Company or a Subsidiary
who is subject to Section 16(b) of the Exchange Act, unless the
exercise of such Stock Appreciation Right is made during the period
beginning on the third business day and ending on the twelfth
business day following the date of release for publication of the
Company's quarterly or annual statements of earnings.
(f) Restrictions. No Stock Appreciation Right may be exercised before
the date six (6) months after the date it is granted, except in the
event that the death or Disability of the Grantee occurs before the
expiration of the six-month period.
(g) Effect of Change in Control. In the event of a Change in Control,
subject to Section 7(f), all Stock Appreciation Rights shall become
immediately and fully exercisable.
8. Restricted Stock. The Committee (or, with respect to Directors, the Board)
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may grant Awards of Restricted Stock which shall be evidenced by an
Agreement between the Company and the Grantee. Each Agreement shall
contain such restrictions, terms and conditions as the Committee or Board
may require and (without limiting the generality of the foregoing) such
Agreements may require that an appropriate legend be placed on Share
certificates. Awards of Restricted Stock shall be subject to the following
terms and provisions:
(a) Rights of Grantee.
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(1) Shares of Restricted Stock granted pursuant to an Award
hereunder shall be issued in the name of the Grantee as soon
as reasonably practicable after the Award is granted and the
purchase price, if any, is paid by the Grantee; provided, that
the Grantee has executed an Agreement evidencing the Award, an
Escrow Agreement, appropriate blank stock powers and any other
documents which the Committee, in its absolute discretion, may
require as a condition to the issuance of such Shares. If a
Grantee shall fail to execute the Agreement evidencing a
Restricted Stock Award, an Escrow Agreement or appropriate
blank stock powers or shall fail to pay the purchase price, if
any, for the Restricted Stock, the Award shall be null and
void. Shares issued in connection with a Restricted Stock
Award, together with the stock powers, shall be deposited with
the Escrow Agent. Except as restricted by the terms of the
Agreement, upon the delivery of the Shares to the Escrow
Agent, the Grantee shall have all of the rights of a
shareholder with respect to such Shares, including the right
to vote the shares and to receive, subject to Section 8(d),
all dividends or other distributions paid or made with respect
to the Shares.
(2) If a Grantee receives rights or warrants with respect to any
Shares which were awarded to him as Restricted Stock, such
rights or warrants or any Shares or other securities he
acquires by the exercise of such rights or warrants may be
held, exercised, sold or otherwise disposed of by the Grantee
free and clear of the restrictions and obligations provided by
this Plan.
(b) Non-Transferability. Until any restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the
manner set forth in Section 8(c), such Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or
otherwise hypothecated, nor shall they be delivered to the Grantee.
Upon the termination of employment of the Grantee, all of such
Shares with respect to which restrictions have not lapsed shall be
resold by the Grantee to the Company at the same price paid by the
Grantee for such Shares or shall be forfeited and automatically
transferred to and reacquired by the Company at no cost to the
Company if no purchase price had been paid for such Shares. The
Committee may also impose such other restrictions and conditions on
the Shares as it deems appropriate.
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(c) Lapse of Restrictions.
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(1) Restrictions upon Shares of Restricted Stock awarded hereunder
shall lapse at such time or times and on such terms,
conditions and satisfaction of performance criteria as the
Committee (or, when applicable, the Board) may determine;
provided, however, that the restrictions upon such Shares
shall lapse only if the Grantee on the date of such lapse is
then and has continuously been an employee of the Company or a
Subsidiary (or a member of the Board) from the date the Award
was granted, or unless the Committee sets a later date for the
lapse of such restrictions.
(2) In the event of a Change in Control, all restrictions upon any
Shares of Restricted Stock shall lapse immediately and all
such Shares shall become fully vested in the Grantee thereof.
(3) In the event of termination of employment (or termination of
service as a Director) as a result of death, Disability or
Retirement of a Grantee, all restrictions upon Shares of
Restricted Stock awarded to such Grantee shall thereupon
immediately lapse. The Committee or Board may also decide at
any time in its absolute discretion and on such terms and
conditions as it deems appropriate, to remove or modify the
restrictions upon Shares of Restricted Stock awarded
hereunder, unless the Committee or the Board sets a later date
for the lapse of such restrictions.
(d) Treatment of Dividends. At the time of an Award of Shares of
Restricted Stock, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion
thereof, declared or paid on Shares of Restricted Stock by the
Company, shall be deferred until the earlier to occur of (i) the
lapsing of the restrictions imposed upon such Shares, in which case
such dividends shall be paid over to the Grantee, or (ii) the
forfeiture of such Shares under Section 8(b) hereof, in which case
such dividends shall be forfeited to the Company, and such dividends
shall be held by the Company for the account of the Grantee until
such time. In the event of such deferral, interest shall be credited
on the amount of such dividends held by the Company for the account
of the Grantee from time to time at such rate per annum as the
Committee, in its discretion, may determine. Payment of deferred
dividends, together with interest accrued thereon as aforesaid,
shall be made upon the earlier to occur of the events specified in
(i) and (ii) of the immediately preceding sentence, in the manner
specified therein.
(e) Delivery of Shares. When the restrictions imposed hereunder and in
the Plan expire or have been cancelled with respect to one or more
shares of Restricted Stock, the Company shall notify the Grantee and
the Escrow Agent of same. The Escrow Agent shall then return the
certificate covering the Shares of Restricted Stock to the Company
and upon receipt of such certificate the Company shall deliver to
the Grantee (or such Grantee's legal representative, beneficiary or
heir) a certificate for a number of shares of Common Stock, without
any legend or restrictions (except those required by any federal or
state securities laws), equivalent to the number of Shares of
Restricted Stock for which restrictions have been cancelled or have
expired. A new certificate covering Shares of Restricted Stock
previously awarded to the Grantee which remain restricted shall be
issued to the Grantee and held by the Escrow Agent and the
Agreement, as it relates to such shares, shall remain in effect.
9. Adjustment Upon Changes in Capitalization.
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(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to the
maximum number and class of shares of stock with respect to which
Options or Awards may be granted under the Plan, the number and
class of shares as to which Options or Awards have been granted
under the Plan, and the purchase price therefore, if applicable.
(b) Any such adjustment in the Shares or other securities subject to
outstanding Incentive Stock Options (including any adjustments in
the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 425(h)(3) of the
Code and only to the extent otherwise permitted by Sections 422 and
425 of the Code.
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(c) If, by reason of a Change in Capitalization, a Grantee of an Award
shall be entitled to new, additional or different shares of stock or
securities (other than rights or warrants to purchase securities),
such new additional or different shares shall thereupon be subject
to all of the conditions, restrictions and performance criteria
which were applicable to the Shares or units pursuant to the Award
prior to such Change in Capitalization.
10. Effect of Certain Transactions. In the event of (i) the liquidation or
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dissolution of the Company, (ii) a merger or consolidation in which the
Company is not the surviving corporation or (iii) the sale or disposition
of all or substantially all of the Company's assets, provision shall be
made in connection with such transaction for the assumption of the Plan
and the Options or Awards theretofore granted under the Plan, or the
substitution for such Options or Awards of new options or awards of the
Successor Corporation, with appropriate adjustment as to the number and
kind of shares and the purchase price for shares thereunder.
11. Release of Financial Information. A copy of the Company's annual report to
--------------------------------
shareholders shall be delivered to each Optionee and Grantee at the time
such report is distributed to the Company's shareholders. Upon request the
Company shall furnish to each Optionee and Grantee a copy of its most
recent annual report and each quarterly report and current report filed
under the Exchange Act, since the end of the Company's prior fiscal year.
12. Termination and Amendment of the Plan. The Plan shall terminate on the day
-------------------------------------
preceding the tenth anniversary of its effective date and no Option or
Award may be granted thereafter. The Board may sooner terminate or amend
the Plan at any time, and from time to time; provided, however, that,
except as provided in Sections 9 and 10 hereof, no amendment shall be
effective unless approved by the shareholders of the Company in accordance
with applicable law and regulations at an annual or special meeting held
within twelve months before or after the date of adoption of such
amendment, where such amendment will:
(a) increase the number of Shares as to which Options or Awards may be
granted under the Plan; or
(b) change the class of persons eligible to participate in the Plan.
Except as otherwise provided herein, rights and obligations under any
Option or Award granted before any amendment of the Plan shall not be
altered or impaired by such amendment, except with the consent of the
Optionee or Grantee, as the case may be. In addition, no amendment shall
be effective with respect to any Option or SAR to the extent that such
amendment would be treated as a material modification under Section 409A
of the Code.
13. Non-Exclusivity of the Plan. The adoption of the Plan by the Board shall
----------------------------
not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power
of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.
14. Limitation of Liability. As illustrative of the limitations of liability
-----------------------
of the Company, but not intended to be exhaustive thereof, nothing in the
Plan shall be construed to:
(a) give any person any right to be granted an Option or Award other
than at the sole discretion of the Committee or the Board;
(b) give any person any rights whatsoever with respect to Shares except
as specifically provided in the Plan;
(c) limit in any way the right of the Company to terminate the
employment or service of any person at any time; or
(d) be evidence of any agreement or understanding, expressed or implied,
that the Company will employ any person in any particular position
at any particular rate of compensation or for any particular period
of time.
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15. Regulations and Other Approvals; Governing Law.
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(a) This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of
New Jersey without giving effect to the choice of law principles
thereof, except to the extent that such law is preempted by federal
law.
(b) The obligation of the Company to sell or deliver Shares with respect
to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such
approvals by governmental agencies as may be deemed necessary or
appropriate by the Committee.
(c) The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and Section 162(m) of the Code (each as amended from
time to time) and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent
therewith to the extent necessary. Any provisions inconsistent with
such Rule or Section shall be inoperative but shall not affect the
validity of the Plan or any grants thereunder.
(d) Except as otherwise provided in Section 12, the Board may make such
changes as may be necessary or appropriate to comply with the rules
and regulations of any government authority or to obtain for
Eligible Employees granted Incentive Stock Options the tax benefits
under the applicable provisions of the Code and regulations
promulgated thereunder.
(e) Each Option and Award is subject to the requirement that, if at any
time the Committee determines, in its absolute discretion, that the
listing, registration or qualification of Shares issuable pursuant
to the Plan is required by any securities exchange or under any
state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, the grant of an Option or the issuance of Shares,
no Options shall be granted or payment made or Shares issued, in
whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any
conditions unacceptable to the Committee.
(f) In the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under
the Securities Act of 1933, as amended, and is not otherwise exempt
from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act of 1933, as
amended, or regulations thereunder, and the Committee may require
any individual receiving Shares pursuant to the Plan, as a condition
precedent to receipt of such Shares (including upon exercise of an
Option), to represent to the Company in writing that the Shares
acquired by such individual are acquired for investment only and not
with a view to distribution.
16. Miscellaneous.
--------------
(a) Multiple Agreements. The terms of each Option or Award may differ
from other Options or Awards granted under the Plan at the same
time, or at some other time. The Committee may also grant more than
one Option or Award to a given Eligible Employee during the term of
the Plan, either in addition to, or in substitution for, one or more
Options or Awards previously granted to that Eligible Employee. The
grant of multiple Options and/or Awards may be evidenced by a single
Agreement or multiple Agreements, as determined by the Committee.
(b) Withholding of Taxes. The Company shall have the right to deduct
from any distribution of cash to any Optionee or Grantee an amount
equal to the federal, state and local income taxes and other amounts
required by law to be withheld with respect to any Option or Award.
Notwithstanding anything to the contrary contained herein, if an
Optionee or Grantee is entitled to receive Shares upon exercise of
an Option or pursuant to an Award, the Company shall have the right
to require such Optionee or Grantee, prior to the delivery of such
Shares, to pay to the Company the amount of any federal, state or
local income taxes and other amounts which the Company is required
by law to withhold. The Agreement evidencing any Incentive Stock
Options granted under this Plan shall provide that if the Optionee
makes a disposition, within the meaning of Section 425(c) of the
Code and regulations promulgated thereunder, of any Share or Shares
issued to him or her pursuant to his or
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her exercise of the Incentive Stock Option within the two-year
period commencing on the day after the date of grant of such Option
or within the one-year period commencing on the day after the date
of transfer of the Share or Shares to the Optionee pursuant to the
exercise of such Option, he or she shall, within ten (10) days of
such disposition, notify the Company thereof and immediately deliver
to the Company any amount of federal income tax withholding required
by law.
(c) Designation of Beneficiary. Each Optionee and Grantee may, with the
consent of the Committee, designate a person or persons to receive
in the event of his/her death, any Option or Award or any amount
payable pursuant thereto, to which he/she would then be entitled.
Such designation will be made upon forms supplied by and delivered
to the Company and may be revoked in writing. If an Optionee fails
effectively to designate a beneficiary, then his/her estate will be
deemed to be the beneficiary.
17. Effective Date. The effective date of the Plan shall be the date of its
---------------
adoption by the Board, subject only to the approval by the affirmative
vote of a majority of the votes cast at a meeting of shareholders at which
a quorum is present to be held within twelve (12) months of such adoption.
No Options or Awards shall vest hereunder unless such Shareholder approval
is obtained.
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