PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
STOCK PLAN FOR OUTSIDE DIRECTORS
EFFECTIVE JANUARY 1, 1996
AMENDED JANUARY 21, 2003
I. PURPOSE
The purpose of this Public Service Enterprise Group Incorporated Stock
Plan for Outside Directors is to advance the interests of the Company and its
stockholders by assisting the Company in attracting and retaining individuals of
superior talent, ability and achievement to serve on its Board of Directors.
II. DEFINITIONS
The following words and phrases shall have the meanings set forth below
unless a different meaning is required by the context:
a) Adjustment Shares: New or additional or different shares of Common
Stock or other securities (other than rights or warrants to purchase
securities) received or entitled to be received by an owner of
Restricted Stock as a result of a change in capitalization of the
Company as set forth in Article VIII hereof.
b) Annual Meeting: The Annual Meeting of Stockholders of the Company.
c) Board: The Board of Directors of the Company.
d) Committee: Those persons who are members of the Board but who are
not Outside Directors.
e) Common Stock: The Common Stock without nominal or par value of the
Company.
f) Company: Public Service Enterprise Group Incorporated, a corporation
organized and existing under the laws of the State of New Jersey, or
its successor or successors.
g) Disability: Any physical or mental condition of a permanent nature
which, in sole reasonable judgment of the Committee, renders an
Outside Director incapable of performing the duties of a member of
the Board.
h) Effective Date: January 1, 1996.
i) Eligible Director: An Outside Director who meets the eligibility
requirements for stock awards as set forth in Article IV hereof.
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j) Exchange Act: The Securities and Exchange Act of 1934, as amended,
or as it may be amended from time to time.
k) NYSE: The New York Stock Exchange, Inc.
l) Outside Director: A member of the Board on or after the Effective
Date who never has been employed by the Company or any of its
affiliates.
m) Outside Directors' Pension Plan: The Public Service Enterprise Group
Incorporated Pension Plan for Outside Directors Effective January 1,
1989.
n) Plan: This Public Service Enterprise Group Incorporated Stock Plan
for Outside Directors, as it may be amended from time to time.
o) Restricted Stock: Shares of Common Stock subject to restrictions
awarded pursuant to Article IV hereof.
p) Securities Act: The Securities Act of 1933, as amended, or as it may
be amended from time to time.
q) Service: A Director's service as a member of the Board.
r) Year of Service: The annual period commencing the day of each Annual
Meeting and ending on the day before the next Annual Meeting. For
any person first elected a member of the Board after the date of an
Annual Meeting, his/her first Year of Service shall commence upon
his/her election as a Director and shall end on the day before the
next Annual Meeting.
III. SHARES SUBJECT TO THE PLAN
100,000 shares of Common Stock may be awarded as Restricted Stock pursuant
to the terms of this Plan. Such shares may be acquired directly from the Company
or, at the discretion of the Company, purchased on the open market by the
Company or its agent. In the event that any shares of Restricted Stock shall be
forfeited, the shares so forfeited shall again be available for the awarding of
Restricted Stock under the Plan.
IV. RESTRICTED STOCK AWARDS
A. Upon the commencement of each Year of Service as a member of the
Board, each Outside Director shall be granted an award of of
Restricted Stock in an amount as shall be eastblish from time to
time by the Board of Directors. The date of grant shall be the first
business day of the month following the Annual Meeting or the
Outside Director's first election as a member of the Board.
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B. Upon the Effective Date of this Plan, (i) each Outside Director who
shall have completed five Years of Service as of December 31, 1995
shall be granted an award of shares of Restricted Stock equal to the
present value (assuming commencement of payment at age 70) of what
his/her vested accrued benefit under the Outside Directors' Pension
Plan would have been had he/she terminated Service as of December
31, 1995. The actual number of shares will be determined by dividing
said Outside Directors' Pension Plan assumed vested accrued benefit
by the closing price of the Common Stock on the NYSE on December 29,
1995 and rounding up to the next whole share; (ii) each Outside
Director who shall not have completed five Years of Service as of
December 31, 1995 shall be granted an award of shares of Restricted
Stock equal in number to 300 times the number of years he/she has
been a member of the Board, all as reflected in Schedule A to the
Plan.
C. The award of shares of Restricted Stock, including the restrictions
thereon, shall be evidenced by a written instrument in such form and
upon such terms and conditions as the Committee shall determine and
as are consistent with the following provisions of the Plan:
i) Upon the retirement of an Outside Director as a member of the
Board at the Annual Meeting next following the Outside
Director's 70th birthday, the restrictions on the Restricted
Stock shall lapse and the Company shall issue to the Outside
Director a certificate for the shares which have been awarded
to him/her without any legend or restriction of any kind and
the Company shall return to the Outside Director or destroy
any and all blank stock powers previously provided to it by
such Outside Director.
ii) If the service as a member of the Board of an Outside Director
who is the recipient of the shares of Restricted Stock
terminates for any reason, other than on account of
Disability, before the Annual Meeting next following said
Outside Director's 70th birthday, such Outside Director shall
forfeit any and all rights in and to the shares of Restricted
Stock; provided, however, that, the Committee may, for good
and valid business reasons, waive such restriction as the
Committee deems appropriate. Notwithstanding any other
provision of this Plan, upon the occurrence of a termination
of Service following a Change in Control (as defined below),
all restrictions on the Restricted Stock shall immediately
lapse and be of no effect.
For the purposes of this Plan, "Change in Control" shall mean the
occurrence of any of the following events:
a) any "person" (within the meaning of Section 13(d) of 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
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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 (1)
of paragraph (c) below; or
b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals
who, on December 15, 1998, constitute the Board of Directors
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 of
Directors or nomination for election by the Company's
stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors on December 15, 1998 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 (1) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of
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
any subsidiary of the Company, 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 (2) 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 stockholders 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.
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Notwithstanding the foregoing subparagraphs (a), (b), (c) and (d), 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.
(iii) Shares of Restricted Stock may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of,
except by will or the laws of descent and distribution, for
the period specified in or in accordance with Section IV(c)(i)
and except in accordance with applicable laws and regulations.
Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition in contravention of the
foregoing shall be null and void and without effect.
(iv) Shares of Restricted Stock will be issued in the name of the
Outside Director receiving the award, but will be held by the
Company for the account of such Outside Director (together
with a blank stock power which such Outside Director shall
execute and deliver to the Company), subject to all of the
terms and conditions of the Plan, for the period specified in
or in accordance with Section IV(c)(i).
(v) Except as otherwise provided herein and in the instrument
evidencing the award of shares of Restricted Stock, the
Outside Director receiving same shall have all rights of a
stockholder with respect to shares of Restricted Stock issued
in his/her name, including the right to vote and to receive
dividends and other distributions.
(vi) If an Outside Director dies while serving as a member of the
Board, and more than six months after the date on which the
shares of Restricted Stock were awarded to him have elapsed,
the restriction provided for in Section IV(c)(i) shall be
deemed to have lapsed immediately prior to death.
(vii) If an Outside Director, as owner of shares of Restricted
Stock, receives or shall be entitled to receive Adjustment
Shares, the certificates representing the Adjustment Shares
(together with a blank stock power executed by such Outside
Director) shall be delivered to and held by the Company,
subject to all of the terms and conditions of the Plan, for
the period specified in or in accordance with Section
IV(c)(i). Any Adjustment Shares shall be Restricted Stock for
all purposes of the Plan, subject to the same restrictions as
the shares of Restricted Stock to which they relate. If such
Participant shall receive rights or warrants with respect to
any shares of Restricted Stock or any Adjustment Shares, such
rights or warrants may be held, exercised, sold or otherwise
disposed of by such Outside Director, and any shares or other
securities acquired by such Outside Director as a result of
the exercise of such rights or warrants likewise may be held,
sold, or otherwise disposed of by such Outside Director, free
and clear of any restrictions.
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V. FURTHER CONDITIONS
A. Unless the shares of Restricted Stock to be awarded under the Plan
have been registered with the Securities and Exchange Commission
under the Securities Act prior the issuance of the shares of
Restricted Stock, the Outside Director receiving such Restricted
Stock must represent in writing to the Company that such shares of
Common Stock are being acquired for investment purposes only and not
with a view towards the further resale or distribution thereof and
must supply to the Company such other documentation as may be
required by the Company, unless in the opinion of counsel to the
Company such representation, agreement or documentation is not
necessary to comply with the Securities Act.
B. The Company shall not be obligated to deliver any shares of Common
Stock until they have been listed on each securities exchange on
which the shares of Common Stock may then be listed or until there
has been qualification under or compliance with such state or
federal laws, rules or regulations as the Company may deem
applicable. The Company shall use reasonable efforts to obtain such
listing, qualification and compliance.
C. The Committee may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes that
the Company is required by any law or regulation of any governmental
authority, whether federal, state or local, domestic or foreign, to
withhold in connection with the award of any Restricted Stock,
including, but not limited to (i) the withholding of delivery of
certificates for shares of Common Stock until the Outside Director
reimburses the Company for the amount the Company is required to
withhold with respect to such taxes, (ii) the canceling of any
number of shares of Common Stock issuable in an amount sufficient to
reimburse the Company for the amount it is required to so withhold
or (iii) withholding the amount due from any such Outside Director's
other compensation.
VI. FORFEITURE OF BENEFITS
As long as an Outside Director is receiving or is a recipient of a
Restricted Stock Award under the Plan, such Outside Director will not directly
or indirectly enter into or in any manner take part in any business or other
endeavor, as an employee, agent, independent contractor, owner or otherwise,
which in any manner competes or conflicts with the business of the Company or is
detrimental to the best interests of the Company, unless the Company consents
thereto in writing. The failure of an Outside Director to comply with the
provisions of this Article shall result in the forfeiture all Restricted Stock
grants under the Plan. Before any such forfeiture, the Company shall mail notice
to the Outside Director that consideration is being given to forfeiture pursuant
to this Article. On written request of the Outside Director within sixty days
following the mailing by the Company of the notice, the Committee shall afford
the Outside Director an opportunity to demonstrate to the Committee that
forfeiture would not be justified.
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VII. ADMINISTRATION
The Plan shall be administered by the Committee, which shall have full and
final authority to interpret the provisions of the Plan and to establish rules
and regulations and otherwise make determinations regarding the administration
and operation of the Plan. All decisions and determinations by the Committee
with respect to the Plan or awards payable thereunder shall be final and binding
upon all parties.
VIII. ADJUSTMENT UPON CHANCES IN CAPITALIZATION
In the event that the outstanding shares of Common Stock are hereafter
changed by reason of recapitalization, reclassification, stock split,
combination or exchange of shares of Common Stock or the like, or by the
issuance of dividends payable in shares of Common Stock, an appropriate
adjustment shall be made by the Committee in the number of shares of Restricted
Stock outstanding
IX. TERMINATION, MODIFICATION AND AMENDMENT
A. The Board may, at any time, terminate the Plan or, from time to
time, make such modifications or amendments of the Plan as it may
deem advisable.
B. No termination, modification or amendment of the Plan may adversely
affect the rights under any outstanding shares of Restricted Stock
without the consent of the Outside Director to whom such shares of
Restricted Stock shall have been previously awarded.
X. NOT A CONTRACT FOR CONTINUED SERVICE
Nothing contained in the Plan or in any restricted stock agreement
executed pursuant hereto shall be deemed to confer upon any Outside Director to
whom shares of Restricted Stock are or may be awarded hereunder any right to
remain a member of the Board or in any way limit the right of the Board or the
Stockholders to terminate or fail to renominate or reelect any such Outside
Director as a member of the Board.
XI. MISCELLANEOUS
A. The costs and expenses of administering the Plan shall be borne by
the Company and shall not be charged against any award or to any
Outside Director receiving an award.
B. Any restricted stock agreement may contain, among other things,
provisions prohibiting the Outside Director from competing with the
Company or any affiliate in a form or forms acceptable to the
Committee, in its sole discretion.
C. This Plan and actions taken in connection herewith shall be governed
and construed in accordance with the laws of the State of New
Jersey.
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D. The captions and section numbers appearing in this Plan are inserted
only as a matter of convenience. They do not define, limit or
describe the scope or intent of the provisions of this Plan. In this
Plan, words in the singular number include the plural and in the
plural include the singular; and words of the masculine gender
include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender.
E. Whenever the time for payment or performance hereunder shall fall on
a weekend or public holiday, such payment or performance shall be
deemed to be timely if made on the next succeeding business day.