<PAGE>
No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
______________________
THE SUMMIT BANCORPORATION
_________________________
(Exact name of registrant as specified in its charter)
New Jersey 22-2007124
_____________________________ ____________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Main Street
Chatham, New Jersey 07928
________________________________________
(Address of principal executive offices)
______________________
THE SUMMIT BANCORPORATION
1995 STOCK INCENTIVE PLAN
_______________________
(Full title of the plan)
JOHN F. KUNTZ
General Counsel and Corporate Secretary
The Summit Bancorporation
One Main Street
Chatham, New Jersey 07928
_______________________________________
(Name and address of agent for service)
(201) 701-2665
__________________________________________
(Telephone number, including area code, of
agent for service)
______________________
Copy of all communications to:
MARTIN RUBASHKIN, ESQ.
Bourne, Noll & Kenyon
382 Springfield Avenue
Summit, New Jersey 07901
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1
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(Cover Page Continued)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Offering Aggregate Amount of
Securities to Amount to be Price Per Offering Registration
be Registered Registered (1) Share (1) Price (1) Fee (1)
------------- -------------- --------- -------- ------------
Common stock 1,500,000 $ 29.00 $43,500,000 $15,000.00
No Par Value
(and
associated
stock purchase
rights) (2)
(1) The registration fee is calculated by using $ 29.00 per share as the
average of the high and low prices per share as reported on the NASDAQ
National Market System on October 12, 1995, solely for the purpose of
determining the registration fee for the 1,500,000 additional shares
registered hereby. See SEC Rule 457(c) and (h).
(2) Prior to the occurrence of certain events, the stock purchase rights
will not be evidenced separately from the common stock.
_____________________________________________________
1
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The registrant hereby incorporates by reference the following
documents:
(a) The registrant's Annual Report on Form 10-K for its fiscal year
ended December 31, 1994;
(b) The registrant's Quarterly Reports on Form 10-Q for the quarters
ended March 31 and June 30, 1995;
(c) The registrant's Current Reports on Form 8-K dated
May 16, 1995, July 7, 1995 and September 27, 1995;
(d) The registrant's Definitive Proxy Statement for its Annual
Meeting of Shareholders held on April 18, 1995.
(e) Description of the registrant's Junior Participating Preferred
stock, contained in the registrant's registration statement on
Form 8-A filed February 3, 1990 and amendment thereto on Form 8
filed January 31, 1992.
All documents subsequently filed by the registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
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securities offered have been sold or which deregisters all securities remaining
unsold, shall be deemed to be incorporated by reference in this registration
statement and to be part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Registration Statement on Form S-8 to the extent that a statement
contained in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement on
Form S-8.
ITEM 4. DESCRIPTION OF SECURITIES
General
The registrant's authorized capital stock consists of 50,000,000
shares of common stock, no par value, and 12,000,000 shares of preferred stock,
no par value, issuable in one or more series and with such terms as the
registrant's board of directors determines. As of June 30, 1995, there were
issued 33,804,009 and outstanding 33,719,524 shares of common stock and 504,481
shares of Cumulative Adjustable Rate Preferred Stock issued and outstanding.
As of June 30, 1995, there were 1,777,404 shares of common stock reserved for
issuance under various stock incentive plans. As of June 30, 1995, 2,579,159
shares of common stock were reserved for issuance under the Dividend
Reinvestment and Stock Purchase Plan (described below) and 250,000 shares of
Series B Junior Participating Preferred Stock were reserved for issuance under
the Shareholder Rights Plan (described below).
3
The following summary does not purport to be complete and is subject
in all respects to the applicable provisions of the New Jersey Business
Corporation Act, the registrant's certificate of incorporation, including
certificates of designation pursuant to which the outstanding series of
preferred stock was issued, and the registrant's Shareholder Rights Plan and
Dividend Reinvestment and Stock Purchase Plan.
Common Stock
Holders of common stock are entitled to receive dividends when and as
declared by the registrant's board of directors out of funds legally available
therefor, provided that, so long as any shares of preferred stock are
outstanding, no dividends (other than dividends payable in common stock) or
other distributions (including redemptions and purchases) may be made with
respect to the common stock unless full dividends on the shares of preferred
stock, including accumulations, have been paid.
In the event of the liquidation of the registrant, holders of common
stock would be entitled to receive pro rata any assets legally available for
distribution to holders of common stock with respect to shares held by them,
subject to any prior rights of any preferred stock then outstanding.
The common stock does not have any preemptive rights, redemption
privileges, sinking fund privileges, or conversion rights. All the outstanding
shares of common stock are validly issued, fully paid and nonassessable.
Subject to the rights of the preferred stock under certain
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circumstances, the holders of outstanding common stock are entitled to one vote
per share with no cumulative voting.
The registrant's certificate of incorporation and bylaws provide for
a classified board of directors by dividing the board into three classes of
approximately equal size. Directors are generally elected for three-year terms
which have been established so that the terms of office of approximately one-
third of the members of the board expire each year.
4
The registrant's certificate of incorporation also provides that no
merger or consolidation or similar transaction involving the registrant may be
effected without the approval of voting securities representing at least two-
thirds of the votes entitled to be cast (excluding shares owned by 5%
shareholders and their affiliates) unless the board of directors has previously
approved the transaction or unless certain fair price tests, meant to ensure
equal price treatment for all shareholders, are met. The effect of this
provision, together with the provisions for the classified board and the
Shareholder Rights Plan (described below), may make it difficult for any person
to acquire control of the registrant and remove management by means of a
hostile takeover.
On May 9, 1995, the registrant announced that its board of directors had
authorized the repurchase of up to 2.3 million shares of its common stock and
that it expected to make such purchases from time to time in the open market or
in privately negotiated transactions, subject to market conditions.
Preferred Stock
The registrant's board of directors is authorized by the registrant's
certificate of incorporation to issue shares of preferred stock in series and
classes and to fix, from time to time, the number of shares to be included in
any class and series and the par value, dividend rights, voting rights,
redemption rights, designation, relative rights, preferences and limitations,
and all other characteristics and rights of the shares of each class and
series.
The registrant's only issued and outstanding series of preferred
stock is the Adjustable Rate Cumulative Preferred Stock, $25.00 stated value.
The holders of adjustable rate cumulative preferred shares are entitled to
receive, when and as declared by the registrant's board of directors,
cumulative preferred dividends payable quarterly in cash at the applicable rate
in effect at the time of declaration. The applicable rate for any dividend
period is 2.75% below the highest of the three-month "Treasury Bill Rate," the
"Ten-Year Constant Maturity Rate" and the "Twenty-Year Constant Maturity Rate"
determined in advance of the dividend period. However, the applicable rate for
any dividend period will not be less than 6% per annum nor greater than 12% per
annum. Shares of the Adjustable Rate Cumulative Preferred Stock are
redeemable, in whole or in part, at $25.00 per share.
No shares of the registrant's Series B Junior Participating Preferred
Stock (described below) are outstanding.
Shareholder Rights Plan
The registrant's Shareholder Rights Plan is intended to protect
shareholders in the event of certain unsolicited offers or attempts to acquire
the registrant. The Plan provides that attached to each share of common stock
<PAGE>
is one right which, when exercisable, entitles the holder of the right to
5
purchase one-hundredth of a share of Series B Junior Participating Preferred
Stock at a purchase price of $70, subject to adjustment. In certain events
(such as a person or group acquiring or announcing an intent to acquire 15% or
more of the common stock or the registrant's board of directors determining
that 10% or more of the common stock has been acquired by an adverse person, as
defined in the Shareholder Rights Plan), exercise of the rights would entitle
the holder to common stock of the registrant or a surviving corporation with a
market value of two times the exercise purchase price. Accordingly, exercise
of the rights may cause substantial dilution to a person that attempts to
acquire the registrant. The rights automatically attach to each outstanding
share of common stock. There is no monetary value presently assigned to the
rights, and they do not trade separately from the shares of common stock unless
and until they become exercisable. The rights expire on January 15, 2000. The
Plan may have certain antitakeover effects, although it is not intended to
preclude any prospective offer for all outstanding shares of common stock at a
fair price and otherwise in the best interests of the registrant and its
shareholders, as determined by the registrant's board of directors. However, a
shareholder could potentially disagree with the board's determination of what
constitutes a fair price or the best interests of the registrant and its
shareholders.
Dividend Reinvestment and Stock Purchase Plan
In September 1991, the registrant amended its Dividend Reinvestment
and Stock Purchase Plan to permit the registrant's shareholders to purchase
newly issued common stock at up to a 5% discount from the current market price
(as defined in the Plan). Effective November 13, 1992, the discount was
reduced to 3.5%. As long as the registrant continues to issue common stock
under the Plan, the registrant anticipates that the proceeds from sales under
the Plan will increase its equity capital and the number of shares of common
stock outstanding on a systematic and continuing basis.
Recent Developments
On September 10, 1995 the registrant entered into an Agreement and
Plan of Merger (the "Merger Agreement") with UJB Financial Corp. ("UJB")
pursuant to which the registrant will be merged with and into UJB in a stock-
for-stock merger. Pursuant to the Merger Agreement, each outstanding share of
the registrant's common stock (other than treasury shares or shares owned by
UJB or a subsidiary of UJB) will be exchanged for .9 shares of UJB common stock
and all shares of the registrant's $25.00 Stated Value Adjustable Rate
Cumulative Preferred Stock (other than treasury shares or shares held by UJB or
one of its subsidiaries) will be converted into one share of $25.00 Stated
Value Adjustable Rate Cumulative Preferred Stock of UJB. Consummation of the
merger is subject to the satisfaction of all terms and conditions set forth in
the Merger Agreement, including the receipt of required regulatory approvals,
approval of the shareholders of both the registrant and UJB and a letter from
KPMG Peat Marwick L.L.P. to the effect that the transaction will qualify for
pooling-of-interests accounting treatment.
6
In connection with the Merger Agreement, the registrant has granted
to UJB an option to acquire 6,730,000 shares of the registrant's common stock
at $26.75 per share exercisable under certain circumstances and UJB has granted
<PAGE>
to the registrant an option to acquire 11,450,000 shares of UJB Common Stock at
$36.625 per share, also exercisable under certain circumstances.
The registrant's Shareholder Rights Plan (the "Rights Plan") was
amended on September 10, 1995 to exclude UJB or any of its affiliates or
associates from the definition of "Acquiring Person". The effect of this
amendment is to not to treat the merger or stock option exercise as a
triggering event permitting the registrant's common stockholders to purchase
shares of Series B Junior Participating Preferred Stock under the Rights Plan.
See "Shareholder Rights Plan", above.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the Common Stock of the registrant (the "Common
Stock") offered pursuant to this Registration Statement on Form S-8 will be
passed upon for the Corporation by Bourne, Noll & Kenyon, P.A. and all
attorneys employed thereby own shares of Common Stock in an amount that does
not exceed .005% of the outstanding Common Stock of the registrant.
The consolidated financial statements of The Summit Bancorporation
and subsidiaries as of December 31, 1994 and 1993 and for each of the years in
the three-year period ended December 31, 1994, included in the registrant's
Annual Report on Form 10-K, have been incorporated by reference herein in
reliance on the report of KPMG Peat Marwick LLP, independent certified public
accountants, included in the registrant's 1994 Annual Report on Form 10-K and
incorporated by reference herein, and upon the authority of such firm as
experts in accounting and auditing.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As provided under New Jersey law, the registrant's certificate of
incorporation provides that a director or officer shall not be personally
liable to the corporation or its shareholders for breach of duty owed to the
corporation, except that such provision shall not relieve a director or officer
from liability for any breach of duty based upon an act or omission (a) in
breach of such person's duty of loyalty to the corporation or its shareholders,
(b) not in good faith or involving a knowing violation of law or (c) resulting
in receipt by such person or any improper personal benefit.
7
Under Article X of its bylaws, the registrant is required, to the
full extent permitted by law, to indemnify its directors, officers, employees
and agents. The New Jersey Business Corporation Act provides that a
corporation may indemnify its directors, officers, and agents against
judgments, fines, penalties, amounts paid in settlement and expenses, including
attorney's fees, resulting from various types of legal actions or proceedings
if the actions of the party being indemnified meet the standards of conduct
specified therein. Determinations concerning whether the applicable standard
of conduct has been met can be made by (a) a disinterested majority of the
board of directors, (b) independent legal counsel, or (c) an affirmative vote
of a majority of shares held by the shareholders. No indemnification shall be
made to or on behalf of a corporate director, officer, employee or agent if a
judgment or other final adjudication adverse to such person establishes that
his acts or omissions (a) were breaches of his duty of loyalty to the
corporation or its shareholders, (b) were not in good faith or involved a
knowing violation of law or (c) resulted in receipt by such person or an
improper personal benefit.
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The registrant's directors and officers are insured against losses
arising from any claim against them as such for wrongful acts or omissions,
subject to certain limitations.
ITEM 8. EXHIBITS
5 Opinion of Bourne, Noll & Kenyon
24(a) Consent of Counsel (included in Exhibit 5)
24(b) Consent of Independent Auditors
25 Power of Attorney
99 Copy of The Summit Bancorporation 1995 Stock Incentive Plan
ITEM 9. UNDERTAKINGS
The registrant hereby undertakes to file, during any period in which
offers or sales are being made, a post-effective amendment to this registration
statement (1) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933; (2) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
8
aggregate, represent a fundamental change in the information set forth in the
registration statement; (3) to include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided, however, that sections (1) and (2) above do not apply if the
registration statement is on Form S-3 or Form S-8 and information required to
be included in a post-effective amendment by those sections is contained in
periodic reports filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
The registrant hereby undertakes (1) that, for the purpose of
determining any liability under the Securities Act of 1933, each such post-
effective amendment to this registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof and (2) to remove from registration by means of a post-
effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
The registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
<PAGE>
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
9
SIGNATURES
The Registrant
- --------------
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Borough of Chatham, State of New Jersey, on October 18,
1995.
THE SUMMIT BANCORPORATION
By: /S/ John F. Kuntz
----------------------------------
John F. Kuntz,
Corporate Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
Signitures Capacity Date
---------- -------- ----
* Chairman of the October 18, 1995
--------------------- Board of Directors
Thomas D. Sayles, Jr.
/S/ Robert G. Cox President, Chief October 18, 1995
-------------------- Executive Officer
Robert G. Cox and Director
(Principal
Executive
Officer)
/S/ John R.Feeney Senior Executive October 18, 1995
------------------ Vice President
John R. Feeney and Chief
Financial Officer
(Principal
Financial
Officer)
<PAGE>
/S/ Alfred J. Soles Senior Vice October 18, 1995
-------------------- President and
Alfred J. Soles Controller
(Principal
Accounting
Officer)
10
Signitures Capacity Date
---------- -------- ----
*
---------------------- Director October 18, 1995
Allan G. Anderson
*
---------------------- Director October 18, 1995
S. Rodgers Benjamin
*
---------------------- Director October 18, 1995
James C. Brady, Jr.
*
---------------------- Director October 18, 1995
Samuel V. Gilman, Jr.
*
---------------------- Director October 18, 1995
S. Griffin McClellan
III
*
---------------------- Director October 18, 1995
William Boyce Lum
*
---------------------- Director October 18, 1995
Robert W. Parsons, Jr.
*
---------------------- Director October 18, 1995
Reeve Schley III
*
---------------------- Director October 18, 1995
Orin R. Smith
*
---------------------- Director October 18, 1995
Douglas G. Watson
*
---------------------- Director October 18, 1995
Kate B. Wood
<PAGE>
* John F. Kuntz, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of
attorney duly executed by such persons and filed as exhibits herewith.
/S/ John F. Kuntz
-------------------------------
John F. Kuntz, Attorney-in-Fact
11
EXHIBITS
Exhibit Number
- --------------
5 Opinion of Bourne, Noll & Kenyon
24(a) Consent of Counsel (included in
Exhibit 5)
24(b) Consent of Independent Auditors
25 Power of Attorney
99 Copy of The Summit Bancorporation
1995 Stock Incentive Plan
12
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EXHIBIT 5
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October 18, 1995
The Summit Bancorporation
One Main Street
Chatham, New Jersey 07928
Attn: John F. Kuntz, Esq.
Corporate Secretary and General Counsel
Re: Form S-8 Registration Statement - The Summit Bancorporation 1995
Stock Incentive Plan
Dear Mr. Kuntz:
We are rendering this opinion as counsel for The Summit Bancorporation
(the "Company") in connection with the registration and issuance of 1,500,000
shares of Common Stock of the Company (the "Securities") pursuant to a
Registration Statement to be filed with the Securities and Exchange Commission
on Form S-8 (the "Registration Statement").
In connection with the foregoing, we have participated in the preparation
of, and have reviewed the Registration Statement. In addition, we have
examined originals or copies identified to our satisfaction as being the true
copies of such documents, corporate records and other instruments as we have
deemed necessary or appropriate for the purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
1. The Company has been duly organized and is validly existing under the
laws of State of New Jersey;
2. The issuance and sale of the Securities have been validly authorized;
and
3. The Securities, when issued and sold, will be legally issued, fully
paid and non-assessable.
We hereby consent to all references to us in the Registration Statement,
including any prospectus relating thereto, and to the inclusion of a duplicate
original of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/S/ Bourne, Noll & Kenyon P.A.
BOURNE, NOLL & KENYON
A Professional Corporation
14
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EXHIBIT 24(a)
15
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EXHIBIT 24(b)
16
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INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
The Summit Bancorporation:
We consent to the incorporation by reference in the registration statement on
Form S-8 relating to The Summit Bancorporation 1995 Directors Stock Option Plan
of our report dated January 17, 1995, relating to the consolidated balance
sheets of The Summit Bancorporation and subsidiaries as of December 31, 1994,
and 1993, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1994, which report is included in the December 31, 1994 Annual
Report on Form 10-K of The Summit Bancorporation, and to the reference to our
Firm under the heading "Interests of Named Experts and Counsel" in the
registration statement.
KPMG Peat Marwick LLP
Short Hills, New Jersey
October 18, 1995
<PAGE>
EXHIBIT 25
18
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, in his or her capacity as a Director or Officer of The Summit
Bancorporation ("Summit"), hereby constitutes and appoints John F. Kuntz his or
her true and lawful attorney-in-fact and agent, with full power of
substitution, for him or her and in his or her name, place and stead, and in
any and all capacities, to execute a registration statement on Form S-8 under
the Securities Act of 1933 concerning the issuance and sale of Summit's Common
Stock pursuant to Summit's 1995 Stock Incentive Plan, which was approved at its
annual meeting of shareholders held on April 18, 1995, and file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and to execute and file any and all
amendments thereto (including post-effective amendments), granting unto said
attorney-in-fact and agent full power and authority to do each and every act
requisite and necessary to be done, as fully and to all intents and purposes as
he or she might do in person, and hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue
thereof.
Dated: October 18,1995 /S/ Thomas D. Sayles
-----------------------------
Thomas D. Sayles, Jr.
/S/ Robert G. Cox
-----------------------------
Robert G. Cox
/S/ John R. Feeney
-----------------------------
John R. Feeney
/S/ Allan G. Anderson
-----------------------------
Allan G. Anderson
/S/ S. Rodgers Benjamin
-----------------------------
S. Rodgers Benjamin
/S/ James C. Brady, Jr.
-----------------------------
James C. Brady, Jr.
/S/ Samuel V. Gilman, Jr.
-----------------------------
Samuel V. Gilman, Jr.
19
/S/ William Boyce Lum
-----------------------------
William Boyce Lum
<PAGE>
/S/ Griffin McClellan III
-----------------------------
S. Griffin McClellan III
/S/ Robert W. Parsons, Jr.
-----------------------------
Robert W. Parsons, Jr.
/S/ Reeve Schley III
-----------------------------
Reeve Schley III
/S/ Orin R. Smith
-----------------------------
Orin R. Smith
/S/ Douglas G. Watson
-----------------------------
Douglas G. Watson
/S/ Kate B. Wood
-----------------------------
Kate B. Wood
20
<PAGE>
EXHIBIT 99
21
<PAGE>
THE SUMMIT BANCORPORATION
1995 STOCK INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
Page
----
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Purpose of the Plan. . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Change of Control. . . . . . . . . . . . . . . . . . . . . . . . 5
II. PLAN ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . 8
1. Administration . . . . . . . . . . . . . . . . . . . . . . . . . 8
2. Participation. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. Maximum Number of Shares Available . . . . . . . . . . . . . . . 8
4. Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
III. STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1. Grant of Stock Options . . . . . . . . . . . . . . . . . . . . . 11
2. Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3. Term and Exercise. . . . . . . . . . . . . . . . . . . . . . . . 11
4. Limitation on Incentive Stock Option Grants. . . . . . . . . . . 12
5. Exercise Procedures. . . . . . . . . . . . . . . . . . . . . . . 12
6. Termination of Employment. . . . . . . . . . . . . . . . . . . . 13
7. Surrender and Repurchase of Options. . . . . . . . . . . . . . . 15
8. Stock Appreciation Rights. . . . . . . . . . . . . . . . . . . . 15
9. Acceleration of Exercise Provisions. . . . . . . . . . . . . . . 16
IV. RESTRICTED STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1. Grant of Restricted Stock. . . . . . . . . . . . . . . . . . . . 17
2. Restriction Period . . . . . . . . . . . . . . . . . . . . . . . 17
3. Other Terms and Conditions . . . . . . . . . . . . . . . . . . . 18
4. Termination of Employment. . . . . . . . . . . . . . . . . . . . 18
5. Acceleration of Payment. . . . . . . . . . . . . . . . . . . . . 19
V. PERFORMANCE SHARE UNITS . . . . . . . . . . . . . . . . . . . . . . . 20
1. Grant of Performance Share Units . . . . . . . . . . . . . . . . 20
2. Establishment of Performance Goals . . . . . . . . . . . . . . . 20
3. Method and Timing of Payments. . . . . . . . . . . . . . . . . . 21
4. Termination of Employment. . . . . . . . . . . . . . . . . . . . 21
5. Acceleration of Payments . . . . . . . . . . . . . . . . . . . . 22
VI. DIVIDEND UNITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1. Grant of Dividend Units. . . . . . . . . . . . . . . . . . . . . 24
2. Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3. Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4. Termination of Employment. . . . . . . . . . . . . . . . . . . . 25
5. Acceleration of Payments . . . . . . . . . . . . . . . . . . . . 25
i
<PAGE>
VII. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 27
1. Amendment and Termination of Plan. . . . . . . . . . . . . . . . 27
2. Government and Other Regulations . . . . . . . . . . . . . . . . 27
3. Other Compensation Plans . . . . . . . . . . . . . . . . . . . . 28
4. No Right to Continued Employment . . . . . . . . . . . . . . . . 28
5. Non-Transferability. . . . . . . . . . . . . . . . . . . . . . . 28
6. Designation of Beneficiary . . . . . . . . . . . . . . . . . . . 28
7. Withholding Taxes. . . . . . . . . . . . . . . . . . . . . . . . 29
8. Plan Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 29
9. Use of Exercise Proceeds . . . . . . . . . . . . . . . . . . . . 30
10. Construction of Plan . . . . . . . . . . . . . . . . . . . . . . 30
11. Unfunded Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 30
12. Benefit Plan Computations. . . . . . . . . . . . . . . . . . . . 30
ii
THE SUMMIT BANCORPORATION
-------------------------
1995 STOCK INCENTIVE PLAN
-------------------------
I. INTRODUCTION
1. Purpose of the Plan
-------------------
The Summit Bancorporation has established this Plan to further its
long-term financial success by offering stock and stock-based incentives to key
employees of the Corporation and its Subsidiaries whereby they can share in
achieving and sustaining such success. The Plan also provides a means to
attract and retain the executive talent needed to achieve the Corporation's
long-term growth and profitability objectives.
2. Definitions
-----------
When used in the Plan, the following terms shall have the meanings
set forth below:
"AWARD" shall mean Performance Share Units, Restricted Stock,
<PAGE>
Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights
or Dividend Units granted under the Plan.
"BOARD" shall mean the Board of Directors of the Corporation.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the Compensation Committee, or such other
Committee of the Board which shall be designated by the Board to administer the
Plan. The Committee shall be composed of three or more persons as from time to
time are appointed to serve by the Board. Each member of the Committee shall
be a "disinterested person" within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934 and an "outside director" within the meaning of Section
162(m) of the Code.
"COMMON STOCK" shall mean the common stock of the Corporation and may
be either stock previously authorized but unissued or stock reacquired by the
Corporation.
"CORPORATION" shall mean The Summit Bancorporation, a New Jersey
corporation.
"DISABILITY" shall mean the inability of a Participant to perform the
services normally rendered due to any physical or mental impairment which can
be expected to be of either permanent or indefinite duration, as determined by
the Committee on the basis of appropriate medical evidence, which results in
the Participant's termination of active employment.
"DIVIDEND UNIT" shall mean a contingent right to receive a payment
equivalent in value to dividends which may accrue and be payable on one share
of Common Stock of the Corporation over a stated period of time.
"FAIR MARKET VALUE" shall mean with respect to a given day the
average of the highest and lowest reported sales prices of Common Stock, as
reported on the NASDAQ National Market System (or such other exchange on which
such stock is then primarily listed) on the relevant date or, if no sales were
<PAGE>
made on such date, on the next preceding date on which sales of the Company's
Common Stock were made. The foregoing notwithstanding, the Committee may
determine the Fair Market Value in such other manner as it may deem more
appropriate for Plan purposes or as is required by applicable laws or
regulations.
-2-
"INCENTIVE STOCK OPTION" shall mean a right to purchase the
Corporation's Common Stock which is intended to comply with the terms and
conditions for an incentive stock option as set forth in Section 422 of the
Code, or such other sections of the Code as may be in effect from time to time.
"NONSTATUTORY STOCK OPTION" shall mean a right to purchase the
Corporation's Common Stock which is not intended to comply with the terms and
conditions for a tax-qualified stock option, as set forth in Section 422 of the
Code, or such other sections of the Code as may be in effect from time to time.
"PARTICIPANT" shall mean a salaried employee of the Corporation or
one of its Subsidiaries, including an officer or member of the Board who is
also an employee, who, in the judgment of the Committee, is in a position to
make a substantial contribution to the management, growth and success of the
Corporation and who is designated by the Committee to receive an Award.
"PERFORMANCE GOAL" shall mean any financial or other measure selected
by the Committee, including the performance of the Corporation and its
Subsidiaries relative to a peer group of banks or other financial institutions,
as applicable to a specific Performance Period.
"PERFORMANCE PERIOD" shall mean a period of not less than 24 nor more
than 60 consecutive calendar months over which Performance Share Units may be
earned. There may be more than one Performance Period in existence at any one
time, and the duration of Performance Periods may differ from each other.
-3-
<PAGE>
"PERFORMANCE SHARE UNIT" shall mean a contingent right granted to a
Participant with respect to a Performance Period under Article V of the Plan.
The payment value of a Performance Share Unit shall be based on the Fair Market
Value of a share of Common Stock on the day on which the Performance Share
Units are earned.
"PLAN" shall mean The Summit Bancorporation 1995 Stock Incentive
Plan.
"RESIGNATION WITH CONSENT" shall mean a Participant's resignation
from employment with the Company or Subsidiary with the written consent of the
employer.
"RESTRICTED STOCK" shall mean shares of Common Stock granted to a
Participant under Article IV of the Plan. An Award of Restricted Stock
entitles the Participant to receive shares of Common Stock which have certain
restrictions that lapse upon satisfaction of conditions imposed by the
Committee at the time of grant.
"RETIREMENT" shall mean a cessation of the employee-employer
relationship between a Participant and the Corporation or one of its
Subsidiaries if, at the time of such cessation, the Participant has both
attained age 60 and completed 10 years of service with the Corporation or its
Subsidiaries, but shall not include a cessation of the employee - employer
relationship due to discharge, death or Disability.
"STOCK APPRECIATION RIGHT" shall mean a right to receive a payment
under Article III, Paragraph 8 of the Plan.
"STOCK OPTION" or "OPTION" shall mean an Incentive Stock Option or a
Nonstatutory Stock Option.
-4-
"SUBSIDIARY" shall mean any Corporation of which the Corporation owns
50 percent or more of the total combined voting power of all classes of stock.
"TERMINATION OF EMPLOYMENT" shall mean a cessation of the employee-
<PAGE>
employer relationship between a Participant and the Corporation or one of its
Subsidiaries for any reason, including Retirement, resignation, Resignation
With Consent of the Corporation or the Subsidiary (which consent must be
evidenced in writing by the Corporation or the Subsidiary), discharge, death or
Disability.
3. Change of Control
-----------------
a. For purposes of this Plan, a Change of Control shall occur on
(i) the date that any one person (as defined herein), or more than one person
acting as a group, acquired ownership of capital stock of the Corporation that,
together with stock held by such person or group, possesses more than 50
percent of the total fair market value or total voting power of the capital
stock of the Corporation, provided that such person or group was not considered
to own more than 50 percent of the total fair market value or total voting
power of the Corporation's capital stock prior to such acquisition, or (ii) the
date that any one person, or more than one person acting as a group, acquired
or has acquired during the 12 month period ending on the date of the most
recent acquisition by such person or persons, ownership of capital stock of the
Corporation possessing 20 percent or more of the total voting power of the
Corporation's capital stock, provided that such person or group was not
considered to have achieved a Change of Control pursuant to items (i) or (ii)
of this section prior to such acquisition, or (iii) the date that a majority of
the members of the Corporation's Board is replaced during any 12 month period
by directors whose appointment or election is not endorsed by a majority of the
-5-
members of the Board prior to the date of appointment or election. No sale to
underwriters or private placement of capital stock by the Corporation, and no
acquisition by the Corporation, through merger, purchase of assets or
otherwise, effected in whole or in part by the issuance or reissuance of shares
of its capital stock, shall constitute a Change of Control.
<PAGE>
b. For purposes of this Plan, the following definitions and
provisions shall be applicable:
i. The term "person" shall mean any individual, corporation or
other entity.
ii. Any person shall be deemed to be the beneficial owner of
any shares of capital stock of the Corporation:
A. which that person owns directly, whether or not of
record, or
B. which are attributed to that person pursuant to the
rules of Section 318(a) of the Code, or
C. which that person has the right to acquire pursuant to
any agreement or understanding or upon the exercise of
conversion rights, warrants or options, or otherwise,
or
-6-
D. which are beneficially owned, directly or indirectly
(including shares deemed owned through application of
clause C above), by an "affiliate" or "associate" (as
defined in the rules of the Securities and Exchange
Commission) of that person, or
E. which are beneficially owned, directly or indirectly
(including shares deemed owned through application of
clause C above), by any other person with which that
person or the person's "affiliate" or "associate" has
any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of
capital stock of the Corporation.
iii. The outstanding shares of capital stock of the Corporation
shall include shares deemed owned through application of clauses iiB, C, D and
E above, but shall not include any other shares which may be issuable pursuant
<PAGE>
to any agreement or upon the exercise of conversion rights, warrants or
options, or otherwise, but which are not actually outstanding.
-7-
II. PLAN ADMINISTRATION
1. Administration
--------------
The Plan shall be administered by the Committee. Subject to the
express provisions of the Plan, the Committee shall have full and exclusive
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan and to make all other determinations deemed
necessary or advisable in the implementation and administration of the Plan.
The Committee's interpretation and construction of the Plan shall be conclusive
and binding on all persons, including the Corporation and all Participants.
2. Participation
-------------
The Committee shall make all determinations with respect to the
selection of Participants, from time to time, and the Award or Awards to be
granted to each Participant. In making such determinations, the Committee
shall take into account the nature of the services rendered or expected to be
rendered by the respective Participants, their present and potential contribu
tions to the Corporation's success and such other factors as the Committee in
its discretion shall deem relevant. During any calendar year no Participant
shall be granted any Award to acquire more than 150,000 Share of Common Stock.
3. Maximum Number of Shares Available
----------------------------------
The maximum number of shares of Common Stock available for Awards
under the Plan is 1,500,000 shares, subject to adjustment as provided under
Paragraph 4 of this Article II. At the Committee's discretion, these shares
may be awarded as Restricted Stock, Stock Options, Performance Share Units, or
<PAGE>
any combination of these, provided that the combined total number of shares of
Common Stock awarded as Restricted Stock, Stock Options and Performance Share
-8-
Units does not exceed the overall share authorization described above.
Performance Share Units which are forfeited in accordance with Article V,
Paragraph 4, Restricted Stock which is forfeited in accordance with Article IV,
Paragraph 4, and Stock Options and Stock Appreciation Rights which expire or
are forfeited in accordance with Article III, Paragraphs 6 or 8, shall again be
available for award under the Plan. Stock Options surrendered under Article
III, Paragraph 7, and Stock Options and Stock Appreciation Rights cancelled
under Article III, Paragraph 8, shall not be available for award under the
Plan. No Incentive Stock Options shall be granted after April 17, 2005.
4. Adjustments
-----------
In the event of stock dividends, stock splits, recapitalizations,
mergers, consolidations, combinations, exchanges of shares, spin-offs,
liquidations, reclassifications or other similar changes in the capitalization
of the Corporation, the number of shares of Common Stock and the number of
Performance Share Units available for grant under this Plan shall be adjusted
proportionately or otherwise by the Board, and, where deemed appropriate, the
number of shares covered by outstanding Stock Options, the number of
Performance Share Units, Dividend Units and Stock Appreciation Rights
-9-
outstanding and the number of Shares of Restricted Stock outstanding, and the
option price of outstanding Stock Options, shall be similarly adjusted. Also,
in instances where another corporation or other business entity is acquired by
the Corporation, and the Corporation has assumed outstanding employee option
grants under a prior existing plan of the acquired entity, similar adjustments
are permitted at the discretion of the Committee. In the event of any other
<PAGE>
change affecting the shares of Common Stock available for Awards under the
Plan, such adjustment, if any, as may be deemed equitable by the Board, shall
be made to give proper effect to such event.
-10-
III. STOCK OPTIONS
1. Grant of Stock Options
----------------------
The Committee may grant Stock Options to Participants and, in each
such case, shall inform the Participant of the number of Stock Options granted
and the terms and applicable conditions of the Award. All Awards shall be
subject to the provisions of the Plan, as well as such terms and conditions as
the Committee shall prescribe, and shall be evidenced by written agreements
between the Corporation and the Participant. All Stock Options granted under
the Plan shall be Nonstatutory Stock Options, unless designated as Incentive
Stock Options in the agreements between the Corporation and the Participants.
No Incentive Stock Options shall be granted to an owner of stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Corporation or any parent or Subsidiary corporation.
2. Price
-----
The Option price per share shall not be less than 100 percent of the
Fair Market Value of a share of Common Stock on the date of grant.
3. Term and Exercise
-----------------
The Committee, in its discretion, may provide that a Stock Option may
not be exercised for a period of time determined by the Committee and specified
in the Stock Option Agreement. The Committee may accelerate the time at which
a Stock Option becomes exercisable, provided that no such acceleration shall
result in a violation of Paragraph 4 of this Article III. Except as otherwise
provided in Paragraphs 6c and 6d of this Article III, no Stock Option may be
<PAGE>
exercised after the expiration of 10 years from the date of grant, or such
shorter period as shall be determined by the Committee and specified in the
Stock Option agreement.
-11-
4. Limitation on Incentive Stock Option Grants
-------------------------------------------
The aggregate Fair Market Value of the shares of Common Stock,
determined as of the time the Stock Option is granted, for which a Participant
may first exercise Incentive Stock Options granted after December 31, 1986
under the Plan or any other plan of the Corporation or any parent or Subsidiary
corporation in any calendar year shall not exceed $100,000, or such other
individual employee grant limitation as may be in effect under the Code at the
time of grant.
5. Exercise Procedures
-------------------
Stock Options shall be exercised, in whole or in part, by delivery of
a written notice of exercise to the Corporation, payment of the full price of
the shares being purchased and compliance with such other exercise requirements
as shall be contained in the Stock Option Agreement. Payment may be made (a)
in cash, (b) by delivery of shares of Common Stock owned by the Participant
having a Fair Market Value as of the date of exercise equal to the Option price
or (c) by a combination of cash and shares of Common Stock. The Committee may
impose such limitations and prohibitions on the use of shares of Common Stock
to exercise a Stock Option as it deems appropriate.
-12-
6. Termination of Employment
-------------------------
a. Resignation or Discharge. All Stock Options granted to a
------------------------
participant shall terminate upon resignation or discharge of the Participant.
<PAGE>
b. Retirement. Except as otherwise provided in Subparagraph f of
----------
this Paragraph 6, all Stock Options which are exercisable under Paragraph 3 of
this Article III shall be exercisable for a period of three months following
Retirement or, in the case of Nonstatutory Stock Options, three years from such
event; provided, however, that in no event shall a Stock Option be exercisable
beyond the remaining term of the Option.
c. Resignation with Consent. Except as otherwise provided in
------------------------
Subparagraph f of this paragraph 6, all Stock Options which are exercisable
under Paragraph 3 of this Article III shall be exercisable for a period of
three months following Resignation with Consent or, in the case of Nonstatutory
Stock Options, one year from such event; provided, however, that in no event
shall a Stock Option be exercisable beyond the remaining term of the Option.
d. Death. Upon the death of a Participant while an employee or
-----
following Termination of Employment due to Retirement, Resignation with Consent
or Disability, all Stock Options which are exercisable under Paragraph 3 of
this Article III and, where applicable, Subparagraph c or e of this Paragraph
6, shall be exercisable by the Participant's estate or beneficiary for a period
of three months following the date of death or, in the case of Nonstatutory
-13-
Stock Options, one year following the date of death; provided, however, that in
no event shall an Incentive Stock Option be exercisable beyond the remaining
term of the Option.
e. Disability. Except as otherwise provided in Subparagraph f of
----------
this Paragraph 6, all Stock Options which are exercisable under Paragraph 3 of
this Article III shall be exercisable for a period of one year following
Disability; provided, however, that in no event shall an Incentive Stock Option
<PAGE>
be exercisable beyond the remaining term of the Option.
f. Termination of Stock Options. All of a Participant's Stock
----------------------------
Options shall terminate if, following Retirement, Resignation with Consent or
Disability, the Participant has been found by the Committee to be directly or
indirectly engaged in any activity which is in competition with the Corporation
or otherwise inimical to or not in the best interest of the Corporation.
g. Leaves of Absence. It shall not be considered a Termination of
-----------------
Employment when a Participant is placed by the Corporation on military leave,
sick leave or other bona fide leave of absence. In case of such leave of
absence, the employment relationship for purposes of determining whether an
Incentive Stock Option is exercisable shall be deemed to continue until the
later of the date when such leave of absence equals 90 days or when the
Participant's right to reemployment with the Corporation shall no longer be
guaranteed either by statute or by contract.
-14-
7. Surrender and Repurchase of Options
-----------------------------------
The Committee, in its discretion and on such terms and conditions as
it deems appropriate, may accept the surrender of all or any portion of any
Option granted under the Plan and, in consideration of such surrender, may
authorize the payment of an amount no greater than the excess of the Fair
Market Value of the shares covered by the surrendered portion of the Option
over the option price of such shares. Any such amount shall be paid in cash
and the shares of Common Stock covered by any such surrender shall not be
available for future Awards under the Plan.
8. Stock Appreciation Rights
-------------------------
<PAGE>
a. The Committee may grant Stock Appreciation Rights to
Participants and, in each such case, shall inform the Participant of the number
of Stock Appreciation Rights granted and the terms and applicable conditions of
the Award. Stock Appreciation Rights may only be granted, on a one-to-one
basis, in connection with Stock Options and shall be subject to all terms and
conditions of the related Stock Options. Stock Appreciation Rights may be
exercised at such times, and only at such times, as the related Stock Options
may be exercised.
b. The value of a Stock Appreciation Right is equal to the amount
by which the Fair Market Value of a share of Common Stock exceeds the option
price of the attached Stock Option on the date of exercise. At the time of
exercise, the Corporation shall make a cash payment to the Participant for the
-15-
total value of the Stock Appreciation Rights exercised, less applicable tax
withholding.
c. Stock Appreciation Rights will be subject to all applicable
provisions of the Plan, as well as any other provisions the Committee may
adopt. The exercise of a Stock Appreciation Right will result in the
cancellation of the related Stock Option, and Options so cancelled shall not be
available for future awards under the Plan. The exercise, expiration,
forfeiture or other termination of a Stock Option will result in the
termination of the attached Stock Appreciation Right.
9. Acceleration of Exercise Provisions
-----------------------------------
Unless the Committee determines otherwise, all Stock Options granted
under the Plan shall be exercisable in the event of a Change of Control;
provided, however, that, (a) with respect to Incentive Stock Options, no
acceleration shall take place which would result in a violation of Paragraph 4
<PAGE>
of this Article III; or (b) no such acceleration shall result in the receipt by
a Participant of an excess parachute payment under Section 280G of the Code.
-16-
IV. RESTRICTED STOCK
1. Grant of Restricted Stock
-------------------------
The Committee may grant Awards of Restricted Stock to Participants
and, in each such case, shall inform the Participant of the number of shares of
Restricted Stock granted and the terms and applicable conditions of the Award.
Each certificate for Restricted Stock shall be registered in the name of the
Participant and deposited, together with a stock power endorsed in blank, with
the Corporation.
IV Restriction Period
------------------
At the time of making an Award of Restricted Stock, the Committee
shall establish a restriction period applicable to such Award. The Committee
may establish different restriction periods from time to time and each Award of
Restricted Stock may have a different restriction period, in the discretion of
the Committee. Restriction periods, when established for each Award of
Restricted Stock, shall not be changed except as permitted under Paragraph 5 of
this Article IV. At the end of the restriction period, the share certificates
will have the restriction removed and be delivered to the Participant following
payment by the Participant of necessary withholding taxes including federal and
state income and employment taxes. If the Participant does not make such tax
payment when requested, the Corporation may refuse to deliver the shares of
stock and exercise any of its rights pursuant to Restricted Stock Agreements
with the Participant.
-17-
<PAGE>
3. Other Terms and Conditions
--------------------------
a. Each Participant who has been granted Restricted Stock shall
receive payments in the amount of dividends declared with respect to such stock
during the restriction period and shall have all shareholders rights with
respect to such stock, with the exception that (i) the Participant may not
transfer ownership of the shares during the restriction period except by will
or the laws of descent and distribution, (ii) the Participant will not be
entitled to delivery of the stock certificate during the restriction period,
(iii) the Corporation will retain custody of the stock during the restriction
period, and (iv) in the discretion of the Committee, a breach of a restriction
or a breach of the terms and conditions established by the Committee at the
time of the Award will cause a forfeiture of the Restricted Stock.
b. The Committee may establish terms and conditions under which a
Participant may defer receipt of Restricted Stock beyond the expiration of the
restriction period.
4. Termination of Employment
-------------------------
a. In the event of a Participant's Termination of Employment during
the restriction period due to Retirement, Resignation with Consent, death or
Disability, the Participant or the Participant's estate or beneficiary, in the
sole discretion of the Committee, shall be entitled to receive, at or prior to
the end of the restriction period, a pro rata number of shares of Restricted
Stock held by the Corporation, or such larger portion of the said shares as the
-18-
Committee shall determine. Upon such receipt, all restrictions on the said
shares shall lapse. In the event of Termination of Employment due to
resignation or discharge, all shares of Restricted Stock held by the
Corporation shall be forfeited, and the Participant shall not be entitled to
any further consideration with respect to the forfeited shares.
<PAGE>
b. Any Participant's right to receive shares of Restricted Stock
following Retirement, Resignation with Consent or Disability may be rescinded
by the Committee if the Participant has been found by the Committee to be
directly or indirectly engaged in any activity which is in competition with the
Corporation or otherwise inimical to or not in the best interest of the
Corporation.
5. Acceleration of Payment
-----------------------
Unless the Committee determines otherwise, all restrictions on shares
of Restricted Stock held by the Corporation shall lapse in the event of a
Change of Control; provided, however, that restrictions shall not lapse with
regard to some or all of such shares to the extent that the lapse of
restrictions would result in the receipt by a Participant of an excess
parachute payment under Section 280G of the Code.
-19-
V. PERFORMANCE SHARE UNITS
1. Grant of Performance Share Units
--------------------------------
The Committee may grant Performance Share Units to a Participant for
a given Performance Period and, in each such case, the Committee shall inform
the Participant of the number of Performance Share Units granted and the
applicable terms and conditions of the Award.
2. Establishment of Performance Goals
----------------------------------
a. The Committee shall establish the Performance Goals for each
Performance Period. The Committee shall also establish a schedule for such
Performance Period, setting forth the percentage of the Performance Share Units
awarded which will be earned based on the extent to which the Performance Goals
for such Performance Period are actually achieved.
<PAGE>
b. If, during the course of a Performance Period, there should
occur, in the opinion of the Committee, significant changes in economic
conditions or in the nature of the operations of the Corporation, or any other
pertinent changes which the Committee did not foresee in establishing the
Performance Goals for such Performance Period and which, in the Committee's
sole judgment, have, or are expected to have, a substantial effect on the
performance of the Corporation during such Performance Period, the Committee
may make such adjustment to the Performance Goals or measurement of such
Performance Goals as the Committee, in its sole judgment, may deem appropriate.
-20-
c. The schedule established by the Committee for any Performance
Period may provide that in excess of 100 percent of the Performance Share Units
granted for such Performance Period may be earned based on the extent to which
there is achievement greater than the applicable Performance Goals. The
maximum number of Performance Share Units that may be earned for any
Performance Period shall be 170 percent of the number of Performance Share
Units granted for such Performance Period.
3. Method and Timing of Payments
-----------------------------
a. As soon as feasible following the end of a Performance Period,
earned Performance Share Unit amounts, less tax withholding, shall be paid in
cash, stock or a combination of cash and stock, at the discretion of the
Committee, to the Participant or, if the Participant has died, to the
Participant's estate or beneficiary.
b. The Committee may establish terms and conditions under which a
Participant may defer receipt of the payment of earned Performance Share Unit
amounts.
<PAGE>
4. Termination of Employment
-------------------------
a. In the event of a Participant's Termination of Employment during
a Performance Period due to Retirement, Resignation with Consent, death or
Disability, the Participant or the Participant's estate or beneficiary, in the
sole discretion of the Committee, shall be entitled to receive, at the end of
the applicable Performance Period, a payment for a pro rata number of the
-21-
Performance Share Units earned with respect to that Performance Period, or such
larger portion of the Performance Share Units as the Committee shall determine,
subject to the maximum limitation set forth in Paragraph 2c of this Article V.
In the event of Termination of Employment due to resignation or discharge, all
outstanding Performance Share Units shall be cancelled, and the Participant
shall not be entitled to any further payment with respect to the cancelled
Performance Share Units.
b. Any Participant's right to a payment for Performance Share Units
for which the applicable Performance Period has not ended may be rescinded by
the Committee if the Participant has been found by the Committee to be directly
or indirectly engaged in any activity which is in competition with the
Corporation or otherwise inimical to or not in the best interest of the Cor
poration.
5. Acceleration of Payments
------------------------
Unless the Committee determines otherwise, all outstanding
Performance Share Units (or, if greater, the number of Performance Share Units
determined under Paragraph 2c of this Article V) shall be deemed earned forth
with and paid to each Participant in accordance with Paragraph 3 of this
Article V in the event of a Change of Control; provided, that in determining
whether and to what extent Performance Goals have been exceeded, the applicable
<PAGE>
Performance Period shall be deemed to have ended on the last day of the
previous calendar year; and, provided further, that the amount of any such
-22-
payment shall be reduced, to the extent necessary, to prevent the payment to a
Participant from being deemed an excess parachute payment to a Participant
under Section 280G of the Code.
-23-
VI. DIVIDEND UNITS
1. Grant of Dividend Units
-----------------------
The Committee may grant Dividend Units to Participants and, in each
such case, shall inform the Participant of the number of Dividend Units granted
and the terms and conditions of the Award. Dividend Units may be attached to
Performance Share Units or Stock Options or may be granted separately.
2. Valuation
---------
a. The value of a Dividend Unit shall be determined by accruing an
amount equal to the dividends paid on one share of the Common Stock of the
Corporation over the term of the Dividend Unit.
b. The term of a Dividend Unit shall be established by the
Committee at the time of grant. However, a Dividend Unit granted in tandem
with either a Performance Share Unit or a Stock Option may not have a term
longer than that of the Performance Share Unit to which it is attached or 4
years for the Stock Option to which it is attached. If the Performance Share
Unit is paid, or the Stock Option is exercised, the Dividend Unit shall cease
to accrue dividend equivalents.
<PAGE>
3. Payment
-------
a. Dividend Units will be paid as soon as possible, following the
end of the term established at grant.
b. The Committee may establish terms and conditions under which a
Participant may defer receipt of the payment of accrued Dividend Units.
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4. Termination of Employment
-------------------------
a. In the event of a Participant's Termination of Employment during
the term of a Dividend Unit due to Retirement, Resignation with Consent, death
or Disability, the Participant or the Participant's estate or beneficiary, in
the sole discretion of the Committee, shall be entitled to receive, at or prior
to the end of the term of the Dividend Unit, a payment based on the value of
the Dividend Unit at the time the Participant's employment terminated, or such
larger amount not to exceed the value of the Dividend Unit at the end of the
term of the Dividend Unit as the Committee shall determine. In the event of
Termination of Employment due to resignation or discharge, all outstanding
Dividend Units shall be cancelled, and the Participant shall not be entitled to
any payment with respect to the cancelled Dividend Units.
b. Any Participant's right to a payment for Dividend Units for
which the applicable term has not ended may be rescinded by the Committee if
the Participant has been found by the Committee to be directly or indirectly
engaged in any activity which is in competition with the Corporation or
otherwise inimical to or not in the best interest of the Corporation.
5. Acceleration of Payments
------------------------
Unless the Committee determines otherwise, all outstanding Dividend
Units shall be deemed earned forthwith and paid to each Participant in
accordance with Paragraph 3 of this Article VI in the event of a Change of
<PAGE>
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Control; provided, however, that the amount of any such payment shall be
reduced, to the extent necessary, to prevent the payment to a Participant from
being deemed an excess parachute payment under Section 280G of the Code.
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VII. GENERAL PROVISIONS
1. Amendment and Termination of Plan
---------------------------------
a. The Board, without further approval of the shareholders, may, at
any time and from time to time, suspend or terminate the Plan in whole or amend
it from time to time in such respects as the Board may deem appropriate;
provided, however, that no such amendment shall be made which would, without
approval of the shareholders:
i. materially modify the eligibility requirements for
Participants;
ii. increase the total number of shares of Common Stock which
may be issued upon a grant of Restricted Stock or the exercise of a Stock
Option, or the total number of Performance Share Units which may be earned,
except as provided in Article II, Paragraph 4 of the Plan;
iii. reduce the minimum option price per share; or
iv. materially increase in any other way the benefits accruing
to Participants under the Plan.
b. The termination of the Plan shall not, without a Participant's
consent, alter or impair any of the rights or obligations of a Participant
under any Award previously granted to the Participant under the Plan.
2. Government and Other Regulations
--------------------------------
The obligations of the Corporation under the Plan shall be subject to
<PAGE>
all applicable laws, rules and regulations, and to such approvals by any
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government agencies as may be required, including, but not limited to, the
effectiveness of a registration statement under the Securities Act of 1933, as
amended, if deemed necessary or appropriate by counsel for the Corporation.
3. Other Compensation Plans
------------------------
The Plan shall not be deemed to preclude the implementation by the
Corporation or its Subsidiaries of other compensation plans which may be in
effect from time to time, nor adversely affect any rights of Participants under
any other compensation plans of the Corporation or its Subsidiaries.
4. No Right to Continued Employment
--------------------------------
Nothing in the Plan or in any Award confers upon any Participant the
right to continue in the employ of the Corporation or its Subsidiaries or
interferes with or restricts in any way the rights of the Corporation or its
Subsidiaries to discharge any Participant at any time for any reason
whatsoever, with or without cause.
5. Non-Transferability
-------------------
No right or interest in any Award granted under the Plan shall be
assignable or transferable, except as set forth in the Plan and required by
law, and no right or interest of any Participant in any Award shall be liable
for, or subject to, any lien, obligation or liability except as set forth in
the Plan or as required by law.
6. Designation of Beneficiary
--------------------------
A Participant, with the consent of the Committee, may designate a
person or persons to receive, in the event of death, any payments with respect
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<PAGE>
to awards earned under the Plan to which the Participant would then be
entitled. Such designation shall be made upon forms supplied by and delivered
to the Corporation and may be revoked in writing.
7. Withholding Taxes
-----------------
The Corporation shall require a payment from a Participant to cover
applicable withholding for income and employment taxes in the event of the
exercise of a Nonstatutory Stock Option, upon payment of an earned Performance
Share Unit, upon payment of Dividend Units, upon the lapse of restrictions on
Restricted Stock, upon the exercise of Stock Appreciation Rights or upon
payment under Article III, Paragraph 7, or upon the occurrence of any event
pursuant to the Plan which requires the withholding of tax. The Corporation
reserves the right to offset such tax payment from any funds which may be due
the Participant from the Corporation or, in its discretion, to the extent
permitted by applicable law, to accept such tax payment through the delivery of
shares of Common Stock owned by the Participant or by utilizing shares of the
Corporation's Common Stock which were to be delivered to the Participant
pursuant to the Plan, having an aggregate Fair Market Value, determined as of
the date of payment, equal to the amount of the payment due.
8. Plan Expenses
-------------
Any expenses of administering the Plan shall be borne by the
Corporation and its Subsidiaries.
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9. Use of Exercise Proceeds
------------------------
Payment received from Participants for the exercise of Stock Options
or the purchase of Restricted Stock under the Plan shall be used for general
corporate purposes.
<PAGE>
10. Construction of Plan
--------------------
The interpretation of the Plan and the application of any rules
implemented under the Plan shall be determined solely in accordance with the
laws of the State of New Jersey.
11. Unfunded Plan
-------------
The Plan shall be unfunded, and the Corporation shall not be required
to segregate any assets which may at any time be represented by Awards. Any
liability of the Corporation to any person with respect to an Award under this
Plan shall be based solely upon any contractual obligations which may be
created by this Plan; no such obligation of the Corporation shall be deemed to
be secured by any pledge or other encumbrance on any property of the
Corporation.
12. Benefit Plan Computations
-------------------------
Any benefits received or amounts paid to a Participant with respect
to any Stock Appreciation Rights, Stock Options, Dividend Units, Performance
Share Units, or Restricted Stock, granted under the Plan shall not have any
effect on the level of benefits provided to or received by any Participant, or
the Participant's estate or beneficiary, as part of any employee benefit plan
of the Corporation or its Subsidiaries.
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