KEY EXECUTIVE SEVERANCE PLAN OF
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Amended effective April 19, 2005
TABLE OF CONTENTS
Page
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ARTICLE I
PURPOSE OF THE PLAN
1.1 Purpose...........................................................1
ARTICLE II
DEFINITIONS
2.1 "Accrued Obligation"..............................................1
2.2 "Affiliate".......................................................1
2.3 "Annual Base Salary"..............................................1
2.4 "Board"...........................................................1
2.5 "Cause"...........................................................1
2.6 "Change in Control"...............................................2
2.7 "Code"............................................................3
2.8 "Committee".......................................................3
2.9 "Company".........................................................3
2.10"Confidential Information"........................................3
2.11"Date of Termination".............................................4
2.12"Disability"......................................................4
2.13"Disability Effective Date".......................................4
2.14"Eligible Employee"...............................................4
2.15"Effective Date"..................................................4
2.16"Employer"........................................................4
2.17"Good Reason".....................................................4
2.18"Other Benefits"..................................................5
2.19"Participant".....................................................5
2.20"Plan"............................................................5
2.21"Prior Equity Awards".............................................5
2.22"Retirement"......................................................5
2.23"Schedule A Participant"..........................................6
2.24"Schedule B Participant"..........................................6
2.25"Target Bonus"....................................................6
2.26"Target Long-Term Incentive"......................................6
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ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligible Employees................................................6
3.2 Participation.....................................................6
3.3 Release of Claims.................................................6
ARTICLE IV
SEVERANCE BENEFITS AFTER A CHANGE IN CONTROL
4.1 Termination By Employer Other Than For Cause or By Participant
For Good Reason Within Two Years After a Change in Control........7
4.2 Termination By Participant For Good Reason as Described in
Section 2.17(d) Within Two years After a Change In Control........9
4.3 Termination By Employer For Cause or By Participant Other Than
For Good Reason .................................................11
4.4 Death............................................................12
4.5 Disability.......................................................12
4.6 Retirement.......................................................12
ARTICLE V
TIMING OF, LIMITATIONS ON AND ADJUSTMENTS TO PLAN PAYMENTS
5.1 Time of Payments.................................................12
5.2 Payment Offsets..................................................12
5.3 Cap on Excess Parachute Payments; Gross-Up Payments..............12
5.4 Code Section 409A Compliance.....................................15
5.5 Tax Withholding..................................................15
ARTICLE VI
RESTRICTIVE COVENANTS
6.1 Confidentiality..................................................16
6.2 Non-Compete......................................................16
6.3 Non-Solicitation.................................................16
6.4 Enforcement......................................................16
ARTICLE VII
AMENDMENT AND TERMINATION
7.1 Amendment........................................................17
7.2 Termination......................................................17
ARTICLE VIII
ADMINISTRATION
8.1 Plan Administrator...............................................17
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8.2 Responsibilities of Committee....................................17
8.3 Allocation or Delegation of Duties and Responsibilities..........18
8.4 Expenses.........................................................18
8.5 Indemnification of Plan Administrator............................18
8.6 Reliance Upon Others.............................................18
8.7 Notification.....................................................19
8.8 Multiple Capacities..............................................19
ARTICLE IX
CLAIMS PROCEDURE
9.1 Submission of Claims.............................................19
9.2 Computation and Review of Claims.................................19
ARTICLE X
GENERAL PROVISIONS
10.1 Construction....................................................20
10.2 Unfunded Plan...................................................20
10.3 No Right to Continued Employment................................20
10.4 Partial Invalidity..............................................21
10.5 Successors and Assigns..........................................21
10.6 Waivers.........................................................21
10.7 Gender and Number...............................................21
10.8 Headings........................................................21
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ARTICLE I
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PURPOSE OF THE PLAN
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1.1 Purpose. This Key Executive Severance Plan was established by the
Company to provide severance benefits to certain key executive-level employees
of the Company and its Affiliates who terminate employment with an Employer
after a Change in Control under the circumstances described herein.
The American Jobs Creation Act of 2004 (the "AJCA"), which became law
on October 22, 2004, added new section 409A to the Code and imposes new
restrictions on deferred compensation, including certain severance arrangements.
It further provides that payments upon a separation from service will meet the
requirements of Code Section 409A only to the extent provided by guidance issued
by the Department of Treasury where such payments are made due to a change in
the ownership or effective control of the Company. The AJCA and any Treasury
guidance issued to implement the AJCA may result in additional restrictions on a
Participant's rights relating to compensation considered to be deferred under
this Plan. This Plan automatically incorporates all applicable restrictions of
the AJCA and such regulations, and the Company will amend the Plan to the extent
necessary to comply with those requirements. The timing under which a
Participant will have a right to receive any payment under this Plan will be
deemed to be automatically modified, and a Participant's rights under the Plan
limited to conform to any requirements under the AJCA and such regulations.
ARTICLE II
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DEFINITIONS
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2.1 "Accrued Obligation" shall have the meaning set forth in Section
4.1(i)(A).
2.2 "Affiliate" means any corporation, trade or business if it or the
Company are members of a controlled group of corporations, are under common
control or are members of an affiliated service group, within the meanings of
Sections 414(b), 414(c) and 414(m), respectively, of the Code. The term
"Affiliate" shall also include any other entity required to be aggregated with
the Company pursuant to regulations under Section 414(o) of the Code.
2.3 "Annual Base Salary" means the annual rate of base salary payable
to a Participant for services performed for an Employer, as in effect
immediately prior to the Participant's Date of Termination.
2.4 "Board" means the board of directors of the Company.
2.5 "Cause" means (a) the willful and continued failure by a
Participant to substantially perform his employment duties, (b) the willful
engaging by the Participant in gross misconduct that is materially and
demonstrably injurious to the Employer, (c) the willful violation of the
Company's Standards of Integrity or other applicable corporate code of conduct,
or (d) the conviction of the Participant of a felony. No act or failure to act
on the part of the Participant shall be considered "willful" unless it is done,
or omitted to be done, by the Participant in bad faith or without reasonable
belief that the Participant's action or omission was in the best interests of
the Employer. Any act or failure to act that is based upon authority given
pursuant to a resolution duly adopted by the Board, or the advice of counsel for
the Employer, shall be conclusively presumed to be done, or omitted to be done,
by the Participant in good faith and in the best interests of the Employer.
Notwithstanding the forgoing, for purposes of the Plan, the termination
of a Participant's employment with an Employer shall not be deemed to be for
Cause unless such termination is effected in accordance with the following
procedures. The Employer shall give the Participant written notice ("Notice of
Termination for Cause") of its intention to terminate the Participant's
employment for Cause, setting forth in reasonable detail the specific conduct of
the Participant that it considers to constitute Cause. Such notice shall be
given no later than 60 days after the act or failure (or the last in a series of
acts or failures) that the Employer alleges to constitute Cause. The Participant
shall have 30 days after receiving the Notice of Termination for Cause in which
to cure such act or failure, to the extent such cure is possible. In the case of
a termination under clause (a), (b) or (c) above, if the Participant fails to
cure such act or failure to the reasonable satisfaction of the Employer, the
Employer shall give the Participant a second written notice stating that in the
good faith opinion of the Employer, the Participant is guilty of the conduct
described in the Notice of Termination for Cause and that such conduct
constitutes Cause under the Plan.
2.6 "Change in Control" means the occurrence of any of the following
events:
(a) any "person" (within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") is or
becomes the beneficial owner within the meaning of Rule 13d-3 under the Exchange
Act (a "Beneficial Owner"), directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such person any
securities acquired directly from the Company or its Affiliates) representing
25% or more of the combined voting power of the Company's then outstanding
securities, excluding any person who becomes such a Beneficial Owner in
connection with a transaction described in clause (i) of paragraph (c) below; or
(b) the following individuals cease for any reason to
constitute a majority of the number of directors of the Company then serving:
individuals who, on the Effective Date, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for election
by the Company's stockholders was approved or recommended by a vote of at least
two-thirds of the directors then still in office who either were directors on
the Effective Date or whose appointment, election or nomination for election was
previously so approved or recommended; or
(c) there is consummated a merger or consolidation of the
Company or any direct or indirect wholly-owned subsidiary of the Company with
any other corporation, other than (i) a merger or consolidation which would
result in the voting securities of the Company
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outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or of its Affiliates, at least 75% of the
combined voting power of the securities of the Company or such surviving entity
or any parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the Company's
then outstanding securities; or
(d) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets, other than a sale or disposition by the Company of all
or substantially all of the Company's assets to an entity, at least 75% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the record holders
of the common stock of the Company immediately prior to such transaction or
series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of the
Company immediately following such transaction or series of transactions.
2.7 "Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
2.8 "Committee" means the Organization and Compensation Committee of
the Board or any successor of such Committee.
2.9 "Company" means Public Service Enterprise Group Incorporated and
any successors thereto.
2.10 "Confidential Information" means all trade secrets, proprietary
and confidential business information belonging to, used by, or in the
possession of the Company or any of its Affiliates, including but not limited to
information, knowledge or data related to business strategies, plans and
financial information, mergers, acquisitions or consolidations, purchase or sale
of property, leasing, pricing, sales programs or tactics, actual or past
sellers, purchasers, lessees, lessors or customers, those with whom the Company
or its Affiliates has begun negotiations for new business, costs, employee
compensation, marketing and development plans, inventions and technology,
whether such confidential information, knowledge or data is oral, written or
electronically recorded or stored, except information in the public domain,
information known by the Participant prior to employment with an Employer, and
information received by the Participant from sources other than the Company or
its Affiliates, without obligation of confidentiality.
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2.11 "Date of Termination" means the date of a Participant's death,
Disability Effective Date, or the date on which the termination of the
Participant's employment by an Employer for Cause or without Cause or by the
Participant for Good Reason or without Good Reason, including Retirement, is
effective, as the case may be.
2.12 "Disability" means that the Participant (a) is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical of mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (b) is,
by reason of any medically determinable physical of mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident or health plan covering
employees of the Employer.
2.13 "Disability Effective Date" means the 30th day after the
Participant's receipt of written notice of the Employer's intention to terminate
the Participant's employment on account of Disability, provided that, within the
30 days after the Participant's receipt of such notice, the Participant shall
not have returned to full-time performance of his employment duties.
2.14 "Eligible Employee" means an individual who is designated as such
in accordance with Section 3.1.
2.15 "Effective Date" means the effective date of the Plan, which is
the date that the Company and Exelon Corporation execute an agreement and plan
of merger (or similar agreement) the consummation of which would constitute a
Change in Control of the Company. In the event that the Merger Agreement is not
executed, the Plan shall be null and void ab initio, all payments authorized by
the Committee under the Plan shall immediately be cancelled, and no Participant
shall have any rights or entitlements under the Plan.
2.16 "Employer" means the Company and each Affiliate, and any
successors thereto.
2.17 "Good Reason" means,
(a) any reduction in the Participant's Annual Base Salary,
Target Bonus or Target Long-Term Incentive, other than reductions
pursuant to a broad-based compensation reduction program or policy
affecting the Participant and all similarly situated employees of the
Employer;
(b) any adverse change in the Participant's title, authority,
duties, or responsibilities or the assignment to the Participant of any
duties or responsibilities inconsistent in any respect with those
customarily associated with the position of the Participant immediately
prior to the Change in Control;
(c) the failure of any successor to the Company to assume this
Plan in accordance with Section 10.5(b);
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(d) where the only comparable position offered to the
Participant within the Employer following the Effective Date would
otherwise meet the requirements of subsections (a) and (b) of this
section 2.17, but require the Participant to increase his or her
one-way commuting distance from his or her principal residence by more
than 50 miles; or
(e) any other material breach of the terms of the Plan by the
Company that either is not taken in good faith or, even if taken in
good faith, is not remedied by the Company promptly after receipt of
notice thereof from the Participant.
Notwithstanding the forgoing, for purposes of the Plan, the termination
of a Participant's employment with an Employer shall not be deemed to be for
Good Reason unless such termination is effected in accordance with the following
procedures. The Participant shall give his Employer a written notice ("Notice of
Termination for Good Reason") of the termination, setting forth in reasonable
detail the specific acts or omissions of the Employer that constitute Good
Reason and the specific provision(s) of the Plan on which the Participant
relies. Unless the Committee determines otherwise, a Notice of Termination for
Good Reason by the Participant must be made within 60 days after the Participant
first has actual knowledge of the act or omission (or the last in a series of
acts or omissions) that the Participant alleges to constitute Good Reason, and
the Employer shall have 30 days from the receipt of such Notice of Termination
for Good Reason to cure the conduct cited therein. A termination of employment
by the Participant for Good Reason shall be effective on the final day of such
30-day cure period unless prior to such time the Employer has cured the specific
conduct asserted by the Participant to constitute Good Reason to the reasonable
satisfaction of the Participant.
For purposes of the Plan, a Participant's determination that an act or
failure to act constitutes Good Reason shall be presumed to be valid unless such
determination is decided to be unreasonable by the Committee or its delegate
pursuant to Article IX.
2.18 "Other Benefits" shall have the meaning set forth in Section
4.1(vii).
2.19 "Participant" means an Eligible Employee who has satisfied the
conditions for participation in the Plan, as set out in Section 3.2, and is
listed on either Schedule A or Schedule B hereto.
2.20 "Plan" means this Key Executive Severance Plan of Public Service
Enterprise Group Incorporated, as set forth herein and as may be amended,
modified or supplemented from time to time.
2.21 "Prior Equity Awards" shall have the meaning set forth in Section
4.1(ii).
2.22 "Retirement" means retirement under the terms of the Retirement
Plan, as defined in Section 4.1(vi)(A); except, however, that the term
"Retirement" for purposes of determining benefit entitlements under the Plan
shall not include forced retirements or any termination by an Employer without
Cause or voluntary termination by the Participant for Good Reason that occurs on
a date on which the Participant is Retirement eligible.
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2.23 "Schedule A Participant" shall mean a Participant listed on
Schedule A hereto.
2.24 "Schedule B Participant" shall mean a Participant listed on
Schedule B hereto.
2.25 "Target Bonus" means the Participant's target annual bonus, if
any, under the applicable annual incentive compensation plan of the Company for
the fiscal year in which the Date of Termination occurs.
2.26 "Target Long-Term Incentive" means the Participant's target
long-term incentive award, if any, under the applicable long-term incentive
compensation plan of the Company.
ARTICLE III
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ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 Eligible Employees. Eligibility to participate in the Plan shall be
limited to certain key executives of an Employer who (a) are not parties to
individual employment or change in control agreements and (b) are designated, by
duly adopted resolution of the Committee, as Eligible Employees.
3.2 Participation. As a condition to becoming a Participant and being
entitled to the benefits and protections provided under the Plan, each Eligible
Employee must execute and deliver to the Company, within 30 days after the later
of the Effective Date and the date such individual is designated by the
Committee as an Eligible Employee, a written agreement in the form attached
hereto as Exhibit I (or in such other form as may be satisfactory to the
Company) to be bound by the restrictive covenants set forth in Sections 6.1, 6.2
and 6.3. Schedules A and B hereto list the Eligible Employees who have satisfied
the conditions for Plan participation and the date as of which each such
Eligible Employee became a Participant. The Committee shall cause Schedules A
and B to be updated from time to time to reflect the Participants who are
currently participating in the Plan.
3.3 Release of Claims. Notwithstanding anything in the Plan to the
contrary, payment of any benefits under the Plan is expressly contingent upon
the Participant's execution and delivery to the Company, within 45 days after
the Participant's Date of Termination, of a written agreement, in the form
attached hereto as Exhibit II (or in such other form as may be satisfactory to
the Company) wherein the Participant releases and discharges the Company and
each of its Affiliates of any and all claims against the Company and its
Affiliates related in any way to the Participant's employment with an Employer
and the termination of such employment.
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ARTICLE IV
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SEVERANCE BENEFITS AFTER A CHANGE IN CONTROL
--------------------------------------------
4.1 Termination By Employer Other Than For Cause or By Participant For
Good Reason (other than Good Reason as described in Subsection 2.17(d)) Within
Two Years After a Change in Control. Subject to Sections 3.3 and Article V, if,
within two years following the occurrence of a Change in Control, either (a) an
Employer shall terminate a Participant's employment other than for Cause, death
or Disability or (b) a Participant shall voluntarily terminate his employment
for Good Reason pursuant to Subsections 2.17 (a), (b), (c) or (e):
(i) the Company shall pay to the Participant, in a lump sum in
cash, the aggregate of the amounts set forth in clauses A and B below:
A The sum of:
(1) the Participant's base salary through the
Date of Termination;
(2) the product of (x) the Participant's Target
Bonus and (y) a fraction, the numerator of
which is the number of days in the current
calendar year through the Date of
Termination, and the denominator of which is
365; and
(3) any accrued vacation pay;
in each case to the extent not theretofore paid (the
sum of the amounts described in clauses (1), (2) and
(3) shall be hereinafter referred to as the "Accrued
Obligations"); and
B. (1) in the case of a Schedule A Participant,
the amount equal to the product of two times
the sum of the Schedule A Participant's
Annual Base Salary and Target Bonus; or
(2) in the case of a Schedule B Participant, the
amount equal to the product of three times
the sum of the Schedule B Participant's
Annual Base Salary and Target Bonus.
(ii) any stock awards, stock options, stock appreciation
rights or other equity-based awards that were outstanding immediately
prior to the Date of Termination ("Prior Equity Awards") shall vest
and/or become exercisable in accordance with the underlying plan for
such Prior Equity Award;
(iii) the Company shall pay the cost of the continued coverage
of the Participant and/or the Participant's family under the Company's
medical and dental
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employee benefit plans for 18 months after the Date of Termination
provided that the Participant makes an election to continue such
coverage in the Company's medical and dental employee benefit plans
under the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA"), as
amended, subject to the requirements and limitations thereof, and
thereafter for an additional period of six months, in the case of a
Schedule A Participant, or 18 months, in the case of a Schedule B
Participant; provided however, that if the Participant becomes
re-employed with another employer and is eligible to receive medical or
dental benefits under another employer provided plan, the medical and
dental benefits provided by the Company under this Plan shall be
secondary to those provided under such other plan during the applicable
period of eligibility;
(iv) for two years after the Date of Termination in the case
of a Schedule A Participant or three years after the Date of
Termination in the case of a Schedule B Participant (or such longer
period as may be provided by the terms of the appropriate plan,
program, practice or policy), the Company shall continue benefits
(other than medical and dental benefits, but including financial
planning assistance) to the Participant and/or the Participant's family
at least equal to those which would have been provided to them in
accordance with the welfare plans, programs, practices and policies
maintained by the Company if the Participant's employment had not been
terminated or, if more favorable to the Participant, as in effect
generally at any time thereafter with respect to other peer executives
of the Employer and their families;
(v) the Participant's eligibility (but not the time of
commencement of such benefits) for retiree benefits pursuant to the
welfare plans, programs, practices and policies maintained by the
Company shall be determined as if the Participant had (A) remained
employed until two years (in the case of a Schedule A Participant) or
three years (in the case of a Schedule B Participant) after the Date of
Termination and (B) retired on the last day of such period;
(vi) the Participant shall be paid, in a lump sum payment in
cash, an amount equal to the excess of:
(A) the actuarial equivalent of the benefit under the
Company's applicable qualified defined benefit retirement plan
in which the Participant is participating immediately prior to
his Date of Termination (the "Retirement Plan") (utilizing the
rate used to determine lump sums and, to the extent
applicable, other actuarial assumptions no less favorable to
the Participant than those in effect under the Retirement Plan
immediately prior to the Effective Date), any supplemental
executive retirement plans ("SERPs") in which the Participant
participates and, to the extent applicable, any other defined
benefit retirement arrangement between the Participant and the
Company ("Other Pension Benefits") which the Participant would
receive if the Participant's employment continued for two or
three additional years (for Schedule A Participants and
Schedule B Participants, respectively) beyond the Date of
Termination and, assuming that the Participant's compensation
for such deemed additional period was the Participant's Annual
Base Salary as in effect immediately prior to the
8
Date of Termination and assuming a bonus in each year during
such deemed additional period equal to the Target Bonus, over
(B) the actuarial equivalent of the Participant's
actual benefit (paid or payable), if any, under the Retirement
Plan, the SERPs and Other Pension Benefits as of the Date of
Termination (utilizing the rate used to determine lump sums
and, to the extent applicable, other actuarial assumptions no
less favorable to the Participant than those in effect under
the Retirement Plan immediately prior to the effective date of
the Change in Control);
(vii) any compensation previously deferred (other than
pursuant to a tax-qualified plan) by or on behalf of the Participant
(together with any accrued interest or earnings thereon), whether or
not then vested, shall become vested on the Date of Termination and
shall be paid in accordance with the terms of the plan, policy or
practice under which it was deferred to the extent permitted by
guidance issued by the U.S. Department of Treasury under Section 409A
of the Code;
(viii) the Company shall, at its sole expense as incurred,
provide the Participant with outplacement services suitable to the
Participant's position for a period not to exceed one year following
the Date of Termination with a nationally recognized outplacement firm;
and,
(ix) to the extent not theretofore paid or provided, the
Company shall pay or provide to the Participant any other amounts or
benefits required to be paid or provided or which the Participant is
entitled to receive under any plan, program, policy, practice, contract
or agreement of the Company (or other Employer), including earned but
unpaid stock and similar compensation, but excluding medical or dental
benefits if the Participant is eligible for such benefits to be
provided by a subsequent employer, and benefits payable under any
severance plan or policy (such other amounts and benefits that are
payable to the Participant shall be hereinafter referred to as the
"Other Benefits").
4.2 Termination By Participant For Good Reason as described in
Subsection 2.17(d) Within Two Years After a Change in Control. Subject to
Sections 3.3 and Article V, if, within two years following the occurrence of a
Change in Control, a Participant shall voluntarily terminate his or her
employment for Good Reason as described in Subsection 2.17(d):
(i) Severance Pay. The Participant shall receive, in bi-weekly payments
concurrent with His or her Employer's normal payroll cycle, an amount of
severance pay from his or her Employer calculated based upon the amount of the
Participant's base salary, the number of Years of Service completed as of the
Participant's Termination Date, and the Participant's job level, as indicated
below:
(A) Less than Thirteen Years of Service: If, as of the
Participant's Termination Date he or she has completed fewer than
thirteen Years of Service, the amount of severance pay shall equal 26
weeks of base salary.
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(B) Thirteen or More Years of Service: If, as of the
Participant's Termination Date, he or she has completed thirteen or
more Years of Service, the amount of severance pay shall equal two
weeks of base salary for each Year of Service, up to a maximum of 52
weeks of base salary.
(ii) Annual Incentive Awards. A Participant shall receive a prorated
annual incentive award pursuant to the performance incentive program, if
applicable, for the calendar year in which the Participant's Termination of
Employment occurs. The award shall be calculated based solely on 100 percent of
the target incentive award and prorated based on the number of days of
employment in the calendar year in which the participant's Termination of
Employment occurs through the employee's Termination Date. Annual incentive
awards with respect to the calendar year in which a Participant's Termination
Date occurs will be paid at the same time as awards for such calendar year are
paid to active employees of the Employer.
(iii) Outplacement Services. Outplacement services approved by the Plan
Administrator, which may include individual or group counseling and
administrative assistance or workshops, shall be available beginning on the
employee's Termination Date or such earlier date designated by the individual's
business unit leadership. Outplacement services shall continue to be available
for the period up to 12 months.
(iv) Educational Assistance. The Employer shall reimburse 90 percent of
the costs (up to a total of $3,000) of tuition, required books and mandatory
fees incurred for classes approved by the Plan Administrator that are
successfully completed within two years after a Participant's Termination Date.
"Successful completion" shall mean the attainment of a final course grade of "C"
or better. Reimbursement will be made only upon the submission of bills or
receipts in such form as the Plan Administrator may require.
(v) Health Care Benefits.
Retiree Health Care Coverage. An Eligible Employee who has not
otherwise satisfied the eligibility criteria for participation prior to
his or her Termination Date, shall be entitled to elect retiree
coverage under the Employer's applicable retiree group health care
plans as though he or she otherwise satisfied such plans' eligibility
requirements if:
(A) the Participant has attained age 50 and completed ten or
more Years of Service as of his or her Termination Date but the sum of
the Participant's age and Years of Service is less than 80; or
(B) the Participant has attained age 49 and completed 20 or
more Years of Service as of his or her Termination Date but the sum of
the Participant's age and Years of Service is less than 80.
Such coverage shall commence no earlier than the Participant's
Termination Date. The Participant shall be charged the full cost of
retiree coverage under these plans.
COBRA Continuation Coverage. Each Participant who is not eligible for,
or does not
10
elect, the retiree health care coverage described in this subsection
(v) shall be entitled, pursuant to any continuation coverage rights
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), to continue individual and dependent coverage under
the Company's group health care plans following the Participant's
Termination Date. If continuation coverage is elected, the Employer
shall pay the same portion of the cost of medical coverage that it paid
immediately prior to the Participant's Termination Date for active
employees during the period that the Participant is receiving severance
pay under Section 4.1, and the Participant shall pay the balance. The
Participant shall be charged the full expense of medical coverage (102
percent of the cost of coverage) during the remainder of the statutory
coverage period, if any, and the full expense of dental and (if
applicable) vision and hearing coverage (102 percent of the cost of
coverage) during the entire statutory coverage period.
(vi) Life Insurance. A Participant who is not eligible for coverage
under the Employer's retiree life insurance plan shall be entitled, during the
period that the Participant is receiving severance pay under this Section 4.2,
to life insurance coverage at the Employer's expense in an amount equal to the
group term life insurance coverage in effect for such Participant under the
Employer's group term life insurance plan for active employees as of his or her
Termination Date.
(vii) Other Benefits. A Participant shall not be entitled to any
severance, separation or early retirement incentive pay or benefits other than
as provided under the Plan or under any qualified or nonqualified retirement
plan or deferred compensation arrangement maintained by the Employer. Except as
provided in the foregoing sentence, a Participant's rights under any other
employee benefit plans maintained by the Company or an Affiliate shall be
determined in accordance with the provisions of such plans, including the
Company's right to amend or terminate such plans at any time.
4.3 Termination By Employer For Cause or By Participant Other Than For
Good Reason. If, at any time after a Change in Control, either (a) an Employer
shall terminate a Participant's employment for Cause or (b) the Participant
shall voluntarily terminate his employment other than for Good Reason, the
Employer shall have no further payment obligations to the Participant other than
for amounts described in Sections 4.1(i)(A)(1) and 4.1(i)(A)(3) and the timely
payment or provision of Other Benefits. In such case, all such amounts shall be
paid to the Participant in a lump sum.
4.4 Death. If a Participant's employment terminates by reason of the
Participant's death after a Change in Control, all Accrued Obligations as of the
time of death shall be paid to the Participant's estate or beneficiary, as
applicable, in a lump sum in cash and the Participant's estate or beneficiary
shall be entitled to any Other Benefits in accordance with their terms. Any
Prior Equity Awards shall vest and/or become exercisable, as the case may be, as
of the Date of Termination and the Participant's estate or beneficiary, as the
case may be, shall have the right to exercise any such Prior Equity Award until
the earlier of (a) one year from the Date of Termination (or such longer period
as may be provided under the terms of any such Prior Equity Award) and (b) the
normal expiration date of such Prior Equity Award.
11
4.5 Disability. If a Participant's employment is terminated by reason
of Disability after a Change in Control, all Accrued Obligations shall be paid
to the Participant in a lump sum in cash and the Participant's estate or
beneficiary shall be entitled to any Other Benefits in accordance with their
terms. Any Prior Equity Awards shall vest immediately and/or become exercisable,
as the case may be, and the Participant shall have the right to exercise any
such Prior Equity Award until the earlier of (a) one year from the Date of
Termination (or such longer period as may be provided under the terms of any
such Prior Equity Award) and (b) the normal expiration date of such Prior Equity
Award.
4.6 Retirement. If a Participant's employment terminates as a result of
Retirement after a Change in Control, the Participant shall be paid the Accrued
Obligations in a lump sum in cash and the Participant shall be entitled to any
Other Benefits in accordance with their terms.
ARTICLE V
---------
TIMING OF, LIMITATIONS ON AND ADJUSTMENTS TO PLAN PAYMENTS
----------------------------------------------------------
5.1 Time of Payments. Payments under the Plan shall be made as soon as
practicable after the Participant's Date of Termination, except, however, that
any payment that is subject to the requirements of Section 409A of the Code
shall be made as soon as practicable after the earlier of (i) the six-month
anniversary of the Participant's Date of Termination (other than by reason of
death) and (ii) the date of the Participant's death.
5.2 Payment Offsets. Notwithstanding anything in the Plan to the
contrary, in the event a Participant is entitled to receive severance payments
both under this Plan and under the terms of either (i) an individual change of
control or employment agreement, (ii) another severance pay plan or policy of an
Employer or (iii) any existing or future law or regulation, the benefits payable
under this Plan shall be reduced by the amount of any severance benefits such
Participant is entitled to receive under such individual agreement, plan,
policy, law or regulation.
5.3 Cap on Excess Parachute Payments; Gross-Up Payments.
Notwithstanding anything in the Plan to the contrary, if (i) a Participant is a
"disqualified individual" (as defined in Section 280G(c) of the Code) and (ii)
the severance benefits provided under Articles IV or V, together with any other
payments the Participant has the right to receive from an Employer, would
constitute a "parachute payment" (as defined in Section 280G(b) of the Code)
("Parachute Payments"), the following provisions shall apply:
(a) Schedule A Participants
(i) In the case of a Schedule A Participant, the
severance benefits under Article IV shall not exceed an amount which,
together with any other Parachute Payments the Participant has a right
to receive from the Employer, would be 2.99 times the Participant's
"base amount" (as defined in Section 280G of the Code) so that no
12
portion of the amounts received by the Participant shall be subject to
the excise tax imposed under Section 4999 of the Code.
(ii) The determination of whether any limitation on
the severance benefits payable under Article IV is necessary shall be
made by the Company's independent auditor or such other certified
public accounting firm as may be jointly designated by the Participant
and the Company (the "Accounting Firm"), which shall provide detailed
supporting calculations to the Participant and the Company. The
determinations of the Accounting Firm shall be conclusive and binding
on the Company and the Participant. All fees and expenses of the
Accounting Firm shall be borne solely by the Company.
(iii) If through error or otherwise a Schedule A
Participant shall receive payments under the Plan, together with other
Parachute Payments the Participant has the right to receive from an
Employer, in excess of 2.99 times his base amount, the Participant
shall immediately repay the excess to the Employer upon notification
from the Employer that an overpayment has been made. If the Participant
fails to repay the excess to the Employer within 10 business days of
the date of the Employer's notification, the Participant will become
liable to the Employer for an amount equal to two (2) times the excess
amount.
(b) Schedule B Participants
(i) In the event it shall be determined that any
severance benefits payable to a Schedule B Participant under Articles
IV (together with any other Parachute Payments the Participant has a
right to receive from the Employer) would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Participant with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the
Participant shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the
Participant of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income
and employment taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Participant retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Parachute Payments.
(ii) Subject to the provisions of Section
5.2(b)(iii), all determinations required to be made under this Section
5.2(b), including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized
in arriving at such determination, shall be made by the Accounting
Firm, which shall provide detailed supporting calculations to the
Participant and the Company. All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 5.2(b), shall be paid by the
Company to the Participant as soon as practicable after the receipt of
the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Participant and the Company.
As a result of the uncertainty in the application of
13
Section 4999 of the Code at the time of the initial determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant
to Section 5.2(b)(iii) and the Participant thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the
benefit of the Participant.
(iii) A Schedule B Participant shall notify the
Company in writing of any claim by the Internal Revenue Service that,
if successful, would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as practicable but no
later than ten business days after the Participant is informed in
writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid.
The Participant shall not pay such claim prior to the expiration of the
30-day period following the date on which he gives such notice to the
Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the
Participant in writing prior to the expiration of such period that it
desires to contest such claim, the Participant shall:
(A) give the Company any information
reasonably requested by the Company relating to such claim,
(B) take such action in connection with
contesting such claim as the Company shall reasonably request
in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(C) cooperate with the Company in good faith
in order effectively to contest such claim, and
(D) permit the Company to participate in any
proceedings relating to such claim;
provided however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Participant harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 5.2(b)(iii), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Participant to pay the tax
claimed and sue for a refund or contest the claim in any permissible
manner, and the Participant agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in
14
one or more appellate courts, as the Company shall determine; provided
however, that if the Company directs the Participant to pay such claim
and sue for a refund, the Company shall advance the amount of such
payment to the Participant, on an interest-free basis and shall
indemnify and hold the Participant harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Participant with respect
to which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Participant shall be
entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(iv) If, after the receipt by a Schedule B
Participant of an amount advanced by the Company pursuant to Section
5.2(b)(iii), the Participant becomes entitled to receive any refund
with respect to such claim, the Participant shall (subject to the
Company's complying with the requirements of Section 5.2(b)(iii))
promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by the Participant of an amount advanced by the
Company pursuant to Section 5.2(b)(iii), a determination is made that
the Participant shall not be entitled to any refund with respect to
such claim and the Company does not notify the Participant in writing
of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
5.4 Code Section 409A Compliance. Notwithstanding anything in the Plan
to the contrary, all Plan benefit obligations and payments are subject to
guidance issued by the U.S. Department of Treasury under Section 409A of the
Code. To the extent required, the Company may modify the severance benefits
payable hereunder to comply with such guidance; provided, however, that the
present value of the aggregate Plan benefits payable to a Participant after such
modification shall not be less than the present value of the Plan benefits
payable to the Participant prior to the modification.
5.5 Tax Withholding. Notwithstanding any other provision of this Plan,
the Company may withhold from any amounts payable under this Plan such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
15
ARTICLE VI
----------
RESTRICTIVE COVENANTS
---------------------
6.1 Confidentiality. As a condition to participation in the Plan, each
Participant agrees to hold in a fiduciary capacity for the benefit of the
Company and its Affiliates all Confidential Information which shall have been
obtained by the Participant during the Participant's employment by the Employer;
except, however, that this Section 6.1 shall not apply to Confidential
Information that is or becomes public knowledge, unless such Confidential
Information became or becomes public knowledge due to acts of the Participant or
representatives of the Participant in violation of this Section 6.1. Upon
termination of the Participant's employment, he shall return to the Company all
Confidential Information in his possession. After termination of the
Participant's employment with the Employer, the Participant shall not, without
the prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such Confidential Information to
anyone other than the Company and those designated by it, except (x) otherwise
publicly available information, (y) as may be necessary to enforce his rights
under the Plan or as necessary to defend himself against a claim asserted
directly or indirectly by the Company or its Affiliates; or (z) as may be
compelled by service of a valid subpoena or other legal process. If the
Participant is served with a valid subpoena or other legal process, he must so
notify the Company within three business days. Unless and until a determination
has been made in accordance with Section 6.4 that the Participant has violated
this Section 6.1, an asserted violation of the provisions of this Section 6.1
shall not constitute a basis for deferring or withholding any amounts otherwise
payable to the Participant under the Plan.
6.2 Non-Compete. As a condition to participation in the Plan, each
Participant agrees, that, in the event the Participant voluntarily terminates
his employment other than for Good Reason, for the period of one year from Date
of Termination he will not, without the written consent of the Company, directly
or indirectly own, manage, operate, join, control, become employed by, consult
to or participate in the ownership, management, or control of any business which
is in direct competition with the Company or its Affiliates.
6.3 Non-Solicitation. As a condition to participation in the Plan, each
Participant agrees that, in the event the Participant voluntarily terminates his
employment other than for Good Reason, for the period of one year following the
Date of Termination, he will not, directly or indirectly, solicit or hire, or
encourage the solicitation or hiring by any employer other than the Company or
its Affiliates, for any position as an employee, independent contractor,
consultant or otherwise, any person who was a managerial or higher level
employee of an Employer at any time during the term of the Participant's
employment by the Employer; provided, however, that this provision shall not
apply with respect to the solicitation of any person after six months from the
date on which such person's employment by an Employer has terminated.
6.4 Enforcement. In the event of a breach by the Participant of any of
the covenants set forth in this Article VI, it is agreed that the Company shall
suffer irreparable harm for which
16
money damages are not an adequate remedy, and that, in the event of such breach,
the Company shall be entitled to obtain an order of a court of competent
jurisdiction for equitable relief from such breach, including, but not limited
to, temporary restraining orders and preliminary and/or permanent injunctions
against the breach of such covenants by the Participant. In the event that the
Company should initiate any legal action for the breach or enforcement of any of
the provisions contained in this Article VI and the Company does not prevail in
such action, the Company shall promptly reimburse the Participant the full
amount of any court costs, filing fees, attorney's fees which the Participant
incurs in defending such action, and any loss of income during the period of
such litigation.
ARTICLE VII
-----------
AMENDMENT AND TERMINATION
-------------------------
7.1 Amendment. The Company may amend this Plan at any time, and from
time to time, by action of the Committee; provided, however, that no amendment
adopted after the effective date of a Change in Control shall have the effect of
either (i) removing an individual from the list of Participants, (ii) adding
conditions for participation or the entitlement to receive benefits hereunder,
(iii) reducing the amount of benefits payable to a Participant or (iv) otherwise
restricting a Participant's right to receive benefits under the Plan, except as
may otherwise be required to conform such payments to the requirements of
Section 409A of the Code, as provided in Section 1.1.
7.2 Termination. The Committee may terminate the Plan at any time prior
to a Change in Control. The Plan may not be terminated after the effective date
of a Change in Control, except that the Plan shall automatically terminate on
the 24-month anniversary of a Change in Control, except with respect to benefits
payable on and after the date of termination.
ARTICLE VIII
------------
ADMINISTRATION
--------------
8.1 Plan Administrator. The Plan shall be administered by the
Committee, which shall have the duties and responsibilities for administering
the Plan as are specifically set forth in this Article VIII.
8.2 Responsibilities of Committee.
(a) The Committee shall have responsibility for the day to day
administration of the Plan. In addition, the Committee shall the specific
powers, duties, responsibilities and obligations specifically provided for
herein.
(b) Subject to the express provisions of the Plan, the
Committee shall have full and exclusive authority to interpret the Plan and to
make all other factual determinations
17
deemed necessary or advisable in the implementation and administration of the
Plan, including but not limited to determinations with respect to the
eligibility of Participants to receive benefits under the Plan and the status
and rights of such Participants and all other persons affected hereunder. The
Committee's interpretation and construction of the Plan shall be conclusive and
binding on all persons.
(c) The Committee shall have sole authority to adopt rules and
regulations, which shall be administered by the Committee. In addition, the
Committee shall have the discretionary authority to issue rulings and
interpretations concerning the Plan and all matters arising thereunder, on a
uniform and nondiscriminatory basis, provided the same shall not be contrary to
or inconsistent with any provision of the Plan.
(d) As a condition of distributing any benefit under the Plan,
the Committee may prescribe the use of such forms and require the furnishing of
such information as the Plan Committee may deem appropriate for administering
the Plan.
8.3 Allocation or Delegation of Duties and Responsibilities. In
furtherance of its duties and responsibilities under the Plan, the Committee
may,
(a) Employ agents to carry out non-fiduciary responsibilities;
(b) Employ agents to carry out fiduciary responsibilities;
(c) Consult with counsel, who may be counsel to the Company;
and
(d) Delegate any of its duties and responsibilities hereunder
to such officer or officers of the Company as the Committee shall designate;
except, however, that the Committee may not delegate to any other person the
designation of Eligible Employees under Section 3.1.
8.4 Expenses. Unless otherwise agreed to by the Company, no person
acting as a fiduciary hereunder (who is an employee of an Employer) shall
receive any compensation for services as such. Expenses incurred by fiduciaries
in connection with the administration of the Plan shall be paid by the Company.
8.5 Indemnification of Plan Administrator. The Company shall indemnify,
to the fullest extent permitted by law, each person made or threatened to be
made a party to any civil or criminal action or proceeding by reason of the fact
that he, or his testator or intestate, was a member of the Committee, or a
delegate of the Committee, acting in the capacity of Plan administrator.
8.6 Reliance Upon Others. The Committee, any person to whom it may
delegate such of its duties and powers as provided herein, and the officers and
directors of the Company shall be entitled to rely conclusively upon and shall
be fully protected in any action taken by them in good faith in reliance upon
any tables, valuations, certificates, opinions, reports or other advice
furnished to them by any duly appointed actuary, accountant, legal counsel (who
may be counsel for the Company) or other specialist.
18
8.7 Notification. All notices, reports and statements in connection
with the Plan that are given, made, delivered or transmitted to a Participant
shall be deemed duly given, made, delivered, or transmitted when mailed, by such
class as the sender may deem appropriate, with postage prepaid and addressed to
the Participant at the address last appearing on the records of the Employer
with respect to this Plan. All notices, direct actions or other communications
given, made, delivered or transmitted by a Participant to an Employer or
Committee shall not be deemed to have been duly given, made, delivered,
transmitted or received unless and until actually received by the Employer or
Committee.
8.8 Multiple Capacities. A person may serve in more than one fiduciary
capacity with respect to the Plan.
ARTICLE IX
----------
CLAIMS PROCEDURE
----------------
9.1 Submission of Claims. The initial claim by any Participant for
benefits under this Plan shall be submitted in writing to the Committee within
60 days after the occurrence of the termination of employment that the
Participant claims to have triggered entitlement to Plan benefits.
9.2 Computation and Review of Claims. All benefits shall be computed by
the Committee or its delegate. All claims shall be approved or denied by the
Committee (or its delegate) as soon as practicable, but in no event later than
90 days after application by the claimant.
(a) Initial Denial of Claim--Any denial of a claim shall
include:
(i) Reason or reasons for the denial;
(ii) Reference to pertinent Plan provisions on which the
denial is based;
(iii) Description of any additional material or information
necessary for the claimant to perfect the claim together with an
explanation of why the material or information is necessary; and
(iv) Explanation of the Plan's claim review procedure,
described below.
(b) Review of a Denied Claim--A claimant shall have a reasonable
opportunity to appeal a denied claim to the Committee (or its delegate) for a
full and fair review. The claimant or a duly authorized representative:
(i) Shall have 60 days, after receipt of written
notification of the denial of claim in which to request a review.
19
(ii) May request a review upon written application to the
Committee.
(iii) Shall submit written comments, documents, records and
other information relating to the claim.
(iv) May review, free of charge, pertinent Plan documents,
records and other information relevant to the claim.
(c) Committee Review--The Committee's (or its delegate's) review
shall take into account all comments, documents, records and other information
submitted by the claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination..
(d) Written Decision--The Committee (or its delegate) shall issue
a decision on the reviewed claim promptly but no later than 60 days after
receipt of the review. The Committee's decision shall be in writing and shall
include:
(i) Reasons for the decision,
(ii) References to the Plan provisions on which the
decision is based, and
(iii) Statement that the claimant is entitled to receive,
upon request, reasonable access to, and copies of, all documents,
records and other information relevant to the claim
(e) Binding Effect--The Committee's (or its delegate's) decision
shall be final and binding on the claimant and the Employer.
ARTICLE X
---------
GENERAL PROVISIONS
------------------
10.1 Construction. This Plan shall be construed and enforced in
accordance with and governed by the internal substantive laws (and not the laws
relating to conflict of laws or choice of laws) of the State of New Jersey,
except to the extent that such laws are preempted by Federal law.
10.2 Unfunded Plan. The obligations of the Company under this Plan are
not required to be funded in advance. Nothing contained in this Plan shall give
an Eligible Employee or Participant any right, title or interest in any property
of the Company or any of its Affiliates.
10.3 No Right to Continued Employment. Nothing contained herein shall
be deemed to give any Eligible Employee or Participant the right to be retained
in the employment of an Employer or to limit the rights of any Employer to
discharge any Eligible Employee or Participant at any time, with or without
notice and with or without Cause.
20
10.4 Partial Invalidity. The invalidity or unenforceability of any term
or provision, or any clause, or portion thereof, of this Plan shall in no way
impair or affect the validity or enforceability of any other provision of this
Plan, which shall remain in full force and effect.
10.5 Successors and Assigns. (a) This Plan shall inure to the benefit
of and be binding upon the Company and its successors and assigns.
(b) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform the Company's obligations under the Plan in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place.
(c) In no event shall a Participant assign his interests
under the Plan to any other person without the prior written consent of the
Committee.
10.6 Waivers. Failure to strictly comply with any term, condition or
requirement set forth in the Plan shall not be deemed a waiver of such term,
condition or requirement, nor shall any waiver of any such term, condition or
requirement at any one time or times be deemed to result in a waiver of such
term, condition or requirement at any other time or times.
10.7 Gender and Number. Masculine pronouns include the feminine as well
as the neuter genders, and the singular shall include the plural, unless
indicated otherwise by the context.
10.8 Headings. The headings of the Plan are for purposes of reference
only and shall not limit or otherwise affect the meaning hereof.
21
SCHEDULE A
PARTICIPANTS
------------
Name Title Participation Date
- ---- ----- ------------------
John E. Anderson VP-Customer Operations 12/20/04
Stuart J. Black VP-Internal Auditor 3/15/05
Richard P. Bonnifield Vice President - Law 12/20/04
Harold W. Borden VP & General Counsel, PSEG Power 12/20/04
Laura L. Brooks VP-Risk Management & Chief Risk Officer 12/20/04
Peter A. Cistaro VP - Gas Delivery 12/20/04
Francis E. Delany VP and Corporate Rate Counsel 12/20/04
Frederick D. DeSanti VP - External Affairs 12/20/04
Derek M. DiRisio VP - PSEG Energy Holdings 12/20/04
Nelson Garcez VP - Generation & Technical Services, PSEG Global 12/20/04
Miriam E. Gilligan VP - Finance and Treasury Holdings 12/20/04
Cecil R. House VP - Supply Chain Management 12/20/04
Christopher P. Kelleher Senior Vice President - PSEG Resources 12/20/04
Stanley LaBruna Vice President - Environment, Health & Safety 12/20/04
Frederick W. Lark VP - Business Analysis 12/20/04
Shawn P. Leyden VP & General Counsel, PSEG ER&T 12/20/04
Alfredo Z. Matos VP- Distribution Operations & EHS 12/20/04
Eileen A. Moran President - PSEG Resources 12/20/04
Matthew J. McGrath VP & General Counsel, PSEG Global 12/20/04
Frederick Pastor, Jr. VP - Construction, PSEG Power 12/20/04
Margaret M. Pego VP - Human Resources 12/20/04
Morton A. Plawner VP & Treasurer 12/20/04
Kevin J. Quinn VP - Corporate Planning 12/20/04
Patricia A. Rado VP & Controller 12/20/04
David G. Seabrook VP - Corporate Development, PSEG Global 12/20/04
Elbert C. Simpson SVP - Information Technology 12/20/04
Edward J. Sondey VP - Finance & Development, PSEG Power 12/20/04
Michael J. Thomson President - PSEG Fossil 12/20/04
1
SCHEDULE B
PARTICIPANTS
------------
Name Title Participation Date
- ---- ----- ------------------
R. Edwin Selover SVP & General Counsel 12/20/04
EXHIBIT I
Form of Restrictive Covenant Agreement
--------------------------------------
AGREEMENT, by and between Public Service Enterprise Group Incorporated,
a New Jersey Corporation (the "Company") and [_________________] ("Executive"),
dated as of [______________].
WHEREAS, the Company maintains the Key Executive Severance Plan of
Public Service Enterprise Group Incorporated (the "Plan"), effective December
20, 2004, and as thereafter amended, modified or supplemented;
WHEREAS, Executive was designated as an Eligible Employee under the
Plan by the Organization and Compensation Committee of the Company's board of
directors on December 19, 2004;
WHEREAS, pursuant to Section 3.2 of the Plan, in order to be a
Participant in and be entitled to benefits and protections under the Plan,
Executive must execute and delivery to the Company within 30 days after
Executive was designated as an Eligible Employee a written agreement to be bound
by the terms and conditions of certain covenants set out in Article VI of the
Plan, which is hereby incorporated herein;
NOW THEREFORE, the parties agree as follows:
1. Executive has received a copy of the Plan and has read and
understands the terms of conditions of Section 6.1, Confidentiality, Section
6.2, Non-Compete, and Section 6.3, Non-Solicitation, therein, as applied to
Executive (the "Covenants").
2. Executive agrees to be bound by and comply with the terms of the
Covenants in consideration for becoming a Participant in the Plan.
3. Executive acknowledges that the Covenants are reasonable in the
scope of the activities restricted, the geographic area covered by the
restrictions, the duration of the restrictions, and that such Covenants are
reasonably necessary to protect the Company's legitimate interests in its
Confidential Information and its relationships with its employees, customers and
suppliers.
4. Executive acknowledges that the Covenants will not deprive Executive
of the ability to earn a livelihood or to support Executive's dependents.
5. Executive shall be a Participant in the Plan and be entitled to all
of the rights and benefits provided thereunder as of the date of this Agreement.
6. This Agreement shall be construed and enforced in accordance with
and governed by the internal substantive laws (and not the laws relating to
conflict of laws or choice of laws) of the State of New Jersey, except to the
extent that such laws are preempted by Federal law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
[This Agreement may be executed in counterparts.]
EXECUTIVE
==========================
PUBLIC SERVICE ENTERPRISE
GROUP INCORPORATED
==========================
By:_______________________
Title:____________________
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EXHIBIT II
Form of Separation Agreement and General Release
------------------------------------------------
SEPARATION AGREEMENT AND GENERAL RELEASE, by and between Public Service
Enterprise Group Incorporated, a New Jersey Corporation, (the "Company") and
[_________________] ("Executive"), dated as of [______________], ("this
Agreement").
WHEREAS, the Company maintains the Key Executive Severance Plan of
Public Service Enterprise Group Incorporated (the "Plan"), effective December
20, 2004, and as thereafter amended, modified or supplemented;
WHEREAS, Executive was designated as an Eligible Employee under the
Plan by the Organization and Compensation Committee of the Company's board of
directors on December 19, 2004 and became a Participant in the Plan as of [date]
;
WHEREAS, the Company or one of its Affiliates terminated Executive's
employment effective [date] (the "Termination Date");
WHEREAS, pursuant to Section 3.3 of the Plan, in order to be a
Participant in and be entitled to benefits and protections under the Plan,
Executive must execute and delivery this Agreement to the Company within
forty-five days after Executive receives this Agreement; and
WHEREAS, Executive and the Company desire to settle fully and finally
any differences, rights and duties arising between them, including, but in no
way limited to, any differences, rights and duties that have arisen or might
arise out of or are in any way related to Executive's employment with the
Company, and the conclusion of that employment;
NOW THEREFORE, Executive and the Company agree as follows:
1. Terms. All capitalized terms in this Agreement shall have the same
meanings and definitions as assigned to such terms in the Plan.
2. Separation Payment. The Company acknowledges that the Executive is
entitled to and that the Company will provide the payments and benefits
described in Article IV of the Plan, all such payments and benefits to be paid
to Executive less all applicable withholdings.
3. Release of Claims. Executive, for himself and for his children,
heirs, administrators, representatives, executors, successors and assigns,
releases and gives up any and all claims and rights which he has, may have or
hereafter may have against the Company, its Affiliates and their respective
subsidiaries, affiliates, predecessors, successors, assigns, officers,
directors, shareholders, employees and agents and all of their predecessors,
successors and assigns (the "Releasees") from the beginning of the world until
the date of the execution of this Agreement, including, but not limited to, any
and all charges, complaints, claims, liabilities, obligations, promises,
agreements, controversies, damages, remedies, actions, causes of action, suits,
rights, demands, costs, losses, debts and expenses (including attorneys' fees
and costs) of
any nature whatsoever, whether known or unknown, whether in law or equity
(collectively, "Claims"), including, but not limited to, any Claims related to
Executive's employment with the Company and the conclusion thereof, any Claims
based on wrongful termination, any Claims based on contract whether express or
implied, written or oral, and any Claims arising under the United States and/or
State Constitutions, federal and/or common law, and/or rights arising out of
alleged violations of any federal, state or other government statutes,
regulations or ordinances including, without limitation, the National Labor
Relations Act, Title VII of the 1964 Civil Rights Act, the Age Discrimination in
Employment Act, the Older Workers' Benefit Protection Act, the Sarbanes-Oxley
Act, the New Jersey Law Against Discrimination, the New Jersey Conscientious
Employee Protection Act, the Americans with Disabilities Act, the Civil Rights
Act of 1866 (42 U.S.C. 'SS' 1981), the Civil Rights Act of 1991, the Equal Pay
Act, the Family and Medical Leave Act, the Fair Labor Standards Act and the
Employees Retirement Income Security Act of 1974, all as amended. This release
specifically includes, but is not limited to, the right to the payment of wages,
vacation, pension benefits or any other employee benefits, and any other rights
arising under federal, state or local laws prohibiting discrimination and/or
harassment on the basis of age, race, color, religion, creed, sex, national
origin, ancestry, mental or physical disability, alienage or citizenship status,
marital status, or any other basis prohibited by law.
4. Covenant Not To Sue. Executive has not filed against the Company or
any of the Releasees, any complaints, charges or lawsuits with any government
agency, arbitral tribunal, self-regulatory body, or any court arising out of
Executive's employment by the Company or any other matter arising on or prior to
the date hereof. Executive will not, directly or indirectly, commence or
prosecute, or assist in the filing, commencement or prosecution in any court,
arbitral tribunal, self-regulatory body or local or state government agency, any
claim or charge against the Company or any of the Releasees arising out of any
of the matters set forth in this Agreement or based upon any common law or
statutory claim against the Company or any of the Releasees that can be brought
under federal, state or local law. Notwithstanding the foregoing, Executive
shall not be limited from commencing a proceeding for the sole purpose of
enforcing his rights under this Agreement or under the Plan, provided Executive
first complies with the Claims Review procedures described in Article X of the
Plan.
5. No Admission of Liability. This Agreement does not constitute or
imply an admission of liability or wrongdoing by Executive, the Company or any
of the Releasees.
6. No Disparagement. Executive and the officers and directors of the
Company and its Affiliates agree that they will not make, or cause to be made,
any statements, observations or opinions, or communicate any information
(whether oral or written) that disparages or is likely in any way to harm the
reputation in the case of the officers and directors of the Company and its
Affiliates, Executive, and in the case of Executive, the Company, its Affiliates
or any of the Releasees.
7. Confidentiality. The terms of this Agreement are CONFIDENTIAL.
Executive agrees not to tell anyone about this Agreement and not to disclose any
information contained in this Agreement to anyone, other than to his lawyer,
financial advisor or immediate family members, to enforce this Agreement, or to
respond to a valid subpoena or other legal process. If Executive does tell his
lawyer, financial advisor or immediate family members about this
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Agreement or its contents, he must immediately tell them that they must keep it
confidential as well. The Company agrees that it will keep the terms of this
Agreement confidential, except as is necessary to administer this Agreement, as
required by law or to respond to a valid subpoena or other legal process.
8. No Reliance. Executive represents that in executing this Agreement
he does not rely and has not relied upon any representation or statement not set
forth in this Agreement that the Company or any of its agents, representatives
or attorneys may have made with regard to the subject matter, basis or effect of
this Agreement.
9. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New Jersey without regard to any state's conflict of
law provisions.
10. Remedy for Breach. In the event of any breach of this Agreement,
the parties may only institute an action for specific enforcement of the terms
of this Agreement and the Plan and seek damages resulting from such breach.
Executive may not institute any proceeding based on any Claims related to his
employment with the Company or the conclusion of his employment because of a
breach of this Agreement or the Plan by the Company. The prevailing party in any
such action shall be entitled to an award of attorneys' fees and costs in
addition to any other legal or equitable relief, except that the Company will
not be entitled to its attorneys' fees or other damages if Executive challenges
the validity or enforceability of this Agreement.
11. Severability. If at any time, after the date of the execution of
this Agreement, any provision of this Agreement shall be held in any court or
agency of competent jurisdiction to be illegal, void or unenforceable, such
provision shall be of no force and effect. In the event that a court or agency
of competent jurisdiction concludes that the release contained in paragraph 3 or
the covenant not to sue contained in paragraph 4 are illegal, void or
unenforceable, Executive agrees to execute a release and covenant not to sue
that are legal, valid and enforceable.
12. Entire Agreement. This Agreement, the Plan and the Restrictive
Covenant Agreement required by Section 3.2 of the Plan set forth the entire
agreement between the parties with respect to the termination of Executive's
employment and supersede any and all prior understandings and agreements between
the parties. Neither party shall have any obligation toward the other except as
set forth herein and therein.
13. Modifications. This Agreement may not be modified except in writing
signed by all parties.
14. Enforceability. The parties are bound by this Agreement. Anyone who
succeeds to the parties' rights and responsibilities, such as their heirs,
executors, successors or assigns, is also bound.
15. Headings. The headings contained in this Agreement are for the
convenience of reference only and are not intended to define, limit, expand or
describe the scope or intent of any provision of this Agreement.
16. Acknowledgements. Executive acknowledges that:
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a. Executive has carefully read and understands this Agreement;
b. Executive has been given forty-five (45) days to consider
his rights and obligations under this Agreement and to
consult with an attorney;
c. The Company advised Executive to consult with an attorney
and/or any other advisors of his choice before signing this
Agreement;
d. Executive understands that this Agreement is LEGALLY BINDING
and by signing it he gives up certain rights;
e. Executive has voluntarily chosen to enter into this
Agreement and has not been forced or pressured in any way to
sign it;
f. Executive KNOWINGLY AND VOLUNTARILY RELEASES the Company and
the Releasees from any and all claims Executive may have,
known or unknown, in exchange for the benefits Executive has
obtained by signing, and that these benefits are in addition
to any benefit Executive would have otherwise received if he
did not sign this Agreement;
g. The General Release in this Agreement includes a WAIVER OF
ALL RIGHTS AND CLAIMS Executive may have under the Age
Discrimination In Employment Act of 1967 (29 U.S.C. 'SS'621
et seq.); and
h. Executive has seven (7) days after he signs this Agreement
to revoke it by notifying the Company in writing. Executive
must deliver the written revocation to the Company's General
Counsel so that it is actually received by the Company
within seven (7) days of the date Executive signs this
Agreement. This Agreement will not become effective or
enforceable until the Company receives a copy of this
Agreement signed by Executive and the seven (7) day
revocation period has expired without Executive revoking
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EXECUTIVE PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED
_____________________________ By: ________________________________
Name:
Title
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