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CENTRAL VERMONT PUBLIC SERVICE
CORPORATION
2002 LONG-TERM INCENTIVE PLAN
1. Purpose. The purpose of the 2002 Long-Term Incentive Plan
(the "2002 Plan") is to further and promote the interests of
Central Vermont Public Service Corporation (the "Company"), its
Subsidiaries and its shareholders by enabling the Company and its
Subsidiaries to attract, retain and motivate executive officers,
employees, and non-employee directors or those who will become
executive officers, employees, or non-employee directors and to
align the interests of those individuals and the Company's
shareholders. To do this, the 2002 Plan offers performance-based
incentive awards and equity-based opportunities providing such
executive officers, employees, and non-employee directors with a
proprietary interest in maximizing the growth, profitability and
overall success of the Company and its Subsidiaries.
2. Definitions . For purposes of the 2002 Plan, the
following terms shall have the meanings set forth below:
2.1. "Award" means an award or grant made to a Participant
under Sections 6, 7, 8 and/or 9 of the 2002 Plan.
2.2. "Award Agreement" means the agreement executed by a
Participant pursuant to Sections 3.2 and 16.7 of the 2002 Plan in
connection with the granting of an Award.
2.3. "Board" means the Board of Directors of the Company, as
constituted from time to time.
2.4. "Code" means the Internal Revenue Code of 1986, as in
effect and as amended from time to time, or any successor statute
thereto, together with any rules, regulations and interpretations
promulgated thereunder or with respect thereto.
2.5. "Committee" means the compensation committee of the
Board.
2.6. "Common Stock" means the common stock, $6 par value, of
the Company or any security of the Company issued by the Company in
substitution or exchange therefor. In the event of a change in the
Common Stock of the Company that is limited to a change in the
designation thereof to "Capital Stock" or other similar
designation, or to a change in the par value thereof, or from par
value to no par value, without increase or decrease in the number
of issued shares, the shares resulting from any such change shall
be deemed to be the Common Stock for purposes of the 2002 Plan.
2.7. "Company" means Central Vermont Public Service
Corporation, a Vermont Corporation, and its wholly-owned
subsidiaries or any successor corporation to Central Vermont Public
Service Corporation.
2.8. "Exchange Act" means the Securities Exchange Act of
1934, as in effect and as amended from time to time, or any
successor statute thereto, together with any rules, regulations and
interpretations promulgated thereunder or with respect thereto.
2.9. "Fair Market Value" of a share of Common Stock means
on, or with respect to, any given date, the average of the high and
low quoted selling prices for a share of Common Stock, as traded on
the New York Stock Exchange ("NYSE") for such date or, if the
Common Stock was not traded on such date, on the next preceding day
on which the Common Stock was traded. If at any time the Common
Stock is not traded on such exchange, the Fair Market Value of a
share of the Common Stock shall be determined in good faith by the
Committee.
2.10. "Participant" means any individual who is selected
from time to time under Section 5 to receive an Award under the
2002 Plan.
2.11. "Performance Units" means the units granted under
Section 9 of the 2002 Plan and the relevant Award Agreement.
2.12. "2002 Plan" means the Central Vermont Public Service
Corporation 2002 Long-Term Incentive Plan, as set forth herein and
as in effect and as amended from time to time (together with any
rules and regulations promulgated by the Committee with respect
thereto).
2.13. "Restricted Shares" means the shares of Common Stock
granted pursuant to the provisions of Section 8 of the 2002 Plan
and the relevant Award Agreement.
2.14. "Retirement" means attaining the retirement age as
defined in the Pension Plan of Central Vermont Public Service
Corporation and its Subsidiaries for employees and attainment of
the age of 70 for members of the Board as defined in the By-Laws of
the Company.
2.15. "Stock Appreciation Right" means an Award described in
Section 7.2 of the 2002 Plan and granted pursuant to the provisions
of Section 7 of the 2002 Plan and the relevant Award Agreement.
2.16. "Stock Option" means any stock option granted pursuant
to the provisions of Section 6 of the 2002 Plan and the relevant
Award Agreement. Stock Options granted under the 2002 Plan are not
intended to qualify as "Incentive Stock Options" under Section 422
of the Code.
2.17. "Subsidiary(ies)" means any corporation (other than
the Company) in an unbroken chain of corporations, including and
beginning with the Company, if each of such corporations, other
than the last corporation in the unbroken chain, owns, directly or
indirectly, more than fifty percent (50%) of the voting stock in
one of the other corporations in such chain.
3. Administration.
3.1. The Committee. The 2002 Plan shall be administered by
the Committee.
3.2. Plan Administration and Plan Rules. The Committee is
authorized to construe and interpret the 2002 Plan and to
promulgate, amend and rescind rules and regulations relating to the
implementation, administration and maintenance of the 2002 Plan.
Subject to the terms and conditions of the 2002 Plan, the Committee
shall make all determinations necessary or advisable for the
implementation, administration and maintenance of the 2002 Plan
including, without limitation, (a) selecting the 2002 Plan's
Participants, (b) making Awards in such amounts and form as the
Committee shall determine, (c) imposing such restrictions, terms,
and conditions upon such Awards as the Committee shall deem
appropriate, and (d) correcting any technical defect(s) or
technical omission(s) or reconciling any technical
inconsistency(ies) in the 2002 Plan and/or any Award Agreement. The
Committee may designate persons other than members of the Committee
to carry out the day-to-day ministerial administration of the 2002
Plan under such conditions and limitations as it may prescribe,
except that the Committee shall not delegate its authority with
regard to selecting Participants and/or granting any Awards to
Participants. The Committee's determinations under the 2002 Plan
need not be uniform and may be made selectively among Participants,
whether or not such Participants are similarly situated. Any
determination, decision or action of the Committee in connection
with the construction, interpretation, administration,
implementation or maintenance of the 2002 Plan shall be final,
conclusive and binding upon all Participants and any person(s)
claiming under or through any Participants. The Company shall
effect the granting of Awards under the 2002 Plan, in accordance
with the determinations made by the Committee, by execution of
written agreements and/or other instruments in such form as is
approved by the Committee.
3.3. Liability Limitation. Neither the Board nor the
Committee, nor any member of either, shall be liable for any act,
omission, interpretation, construction or determination made in
good faith in connection with the 2002 Plan (or any Award
Agreement), and the members of the Board and the Committee shall be
entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including, without
limitation, attorneys' fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under any directors and
officers liability insurance coverage which may be in effect from
time to time.
4. Term of Plan/Common Stock Subject to Plan.
4.1. Term. The 2002 Plan shall terminate on May 8, 2012 and
after such date no further Awards shall be granted under the 2002
Plan but Awards theretofore granted may extend beyond such
date.
4.2. Common Stock. The maximum number of shares of Common
Stock in respect of which Awards may be granted or paid out under
the 2002 Plan, subject to adjustment as provided in Section 13.2 of
the 2002 Plan, shall not exceed 350,000 shares. Common Stock which
may be issued under the 2002 Plan may be either authorized and
unissued shares or issued shares which have been reacquired by the
Company (in the open-market or in private transactions) and which
are being held as treasury shares. No fractional shares of Common
Stock shall be issued under the 2002 Plan.
4.3. Computation of Available Shares. For the purpose of
computing the total number of shares of Common Stock available for
Awards under the 2002 Plan, there shall be counted against the
limitations set forth in Section 4.2 of the 2002 Plan the maximum
number of shares of Common Stock potentially subject to issuance
upon exercise or settlement of Awards granted under Sections 6 and
7 of the 2002 Plan, the number of shares of Common Stock issued
under grants of Restricted Shares pursuant to Section 8 of the 2002
Plan and the maximum number of shares of Common Stock potentially
issuable under grants or payments of Performance Units pursuant to
Section 9 of the 2002 Plan, in each case determined as of the date
on which such Awards are granted. If any Awards expire unexercised
or are forfeited, surrendered, cancelled, terminated or settled in
cash in lieu of Common Stock, the shares of Common Stock which were
theretofore subject (or potentially subject) to such Awards shall
again be available for Awards under the 2002 Plan to the extent of
such expiration, forfeiture, surrender, cancellation, termination
or settlement of such Awards.
For
purposes of determining the maximum number of shares of Common
Stock available for Awards under the 2002 Plan, if the exercise
price of any Stock Option granted under the 2002 Plan is satisfied
by tendering shares of Common Stock to the Company (by either
actual delivery or by attestation), only the number of shares of
Common Stock issued net of the shares of Common Stock tendered
shall be deemed to be delivered for purposes of determining the
maximum number of shares of Common Stock available for Awards under
the 2002 Plan.
To
the extent any shares of Common Stock subject to an Award are
surrendered to the Company in order to satisfy any applicable tax
withholding obligation required pursuant to Section 16.1, such
shares shall again be available for Awards.
5. Eligibility. Individuals eligible for Awards under the
2002 Plan shall consist of non-employee directors, executive
officers, and employees or those who will become non-employee
directors or executive officers or employees of the Company and/or
its Subsidiaries and whose performance or contribution, in the sole
discretion of the Committee, benefits or will benefit the Company
or any Subsidiary. An Award may be granted to an executive officer,
employee, or non-employee director prior to the date the executive
officer or employee is hired or first performs services for the
Company or any Subsidiary, or the non-employee director is elected
or appointed to the Board, provided, however, that such Award shall
not become exercisable and/or vested prior to the date the
executive officer or employee first performs such services or the
non-employee director is elected or appointed.
6. Stock Options.
6.1. Terms and Conditions. Stock options granted under the
2002 Plan shall be in respect of Common Stock and shall not
constitute "Incentive Stock Options" pursuant to Code Section 422.
Such Stock Options shall be subject to the terms and conditions set
forth in this Section 6 and any additional terms and conditions,
not inconsistent with the express terms and provisions of the 2002
Plan, as the Committee shall set forth in the relevant Award
Agreement.
6.2. Grant. Stock Options may be granted under the 2002 Plan
in such form as the Committee may from time to time approve. Stock
Options may be granted alone or in addition to other Awards under
the 2002 Plan or in tandem with Stock Appreciation Rights.
6.3. Exercise Price. The exercise price per share of Common
Stock subject to a Stock Option shall be determined by the
Committee, including, without limitation, a determination based on
a formula determined by the Committee, but may not be less than one
hundred percent (100%) of the Fair Market Value of a share of
Common Stock on the date immediately preceding the date on which
the Stock Option is granted.
No
Stock Option shall provide by its terms for the resetting of its
exercise price or for its cancellation and re-issuance, in whole or
in part; provided that the foregoing shall not limit the authority
of the Committee to grant additional Stock Options hereunder.
6.4. Term. The term of each Stock Option shall be such
period of time as is fixed by the Committee.
6.5. Method of Exercise. A Stock Option may be exercised, in
whole or in part, by giving written notice of exercise to the
Secretary of the Company, or the Secretary's designee, specifying
the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the exercise price (a) in cash,
by certified check, bank draft, or money order payable to the order
of the Company, (b) if permitted by the Committee (in its sole
discretion), by delivery of shares of Common Stock already owned by
the Participant for at least six (6) months, or (c) in some other
form of payment acceptable to the Committee. Payment instruments
shall be received by the Company subject to collection. The
proceeds received by the Company upon exercise of any Stock Option
may be used by the Company for general corporate purposes. Any
portion of a Stock Option that is exercised may not be exercised
again.
6.6. Exercisability. Any Stock Option granted under the 2002
Plan shall become exercisable on such date or dates as determined
by the Committee (in its sole discretion) at any time and from time
to time in respect of such Stock Option.
6.7. Tandem Grants. If Stock Options and Stock Appreciation
Rights are granted in tandem, as designated in the relevant Award
Agreement, the right of any Participant to exercise any such tandem
Stock Option shall terminate to the extent such Participant
exercises the Stock Appreciation Right to which such Stock Option
is related.
7. Stock Appreciation Rights.
7.1. Terms and Conditions. The grant of Stock Appreciation
Rights under the 2002 Plan shall be subject to the terms and
conditions set forth in this Section 7 and any additional terms and
conditions, not inconsistent with the express terms and provisions
of the 2002 Plan, as the Committee shall set forth in the relevant
Award Agreement.
7.2. Stock Appreciation Rights. A Stock Appreciation Right
is an Award granted with respect to a specified number of shares of
Common Stock entitling a Participant to receive an amount equal to
the excess of the Fair Market Value of a share of Common Stock on
the date of exercise over the Fair Market Value of a share of
Common Stock on the date of grant of the Stock Appreciation Right,
multiplied by the number of shares of Common Stock with respect to
which the Stock Appreciation Right shall have been exercised.
7.3. Grant. A Stock Appreciation Right may be granted in
addition to any other Award under the 2002 Plan, in tandem with or
independent of a Stock Option.
7.4. Date of Exercisability. In respect of any Stock
Appreciation Right granted under the 2002 Plan, unless otherwise
(a) determined by the Committee (in its sole discretion) at any
time and from time to time in respect of any such Stock
Appreciation Right, or (b) provided in an Award Agreement, a Stock
Appreciation Right may be exercised by a Participant, in accordance
with and subject to all of the procedures established by the
Committee, in whole or in part at any time and from time to time
during its specified term. Notwithstanding the preceding sentence,
in no event shall a Stock Appreciation Right be exercisable prior
to the exercisability of any Stock Option with which it is granted
in tandem. The Committee may also provide, as set forth in the
relevant Award Agreement and without limitation, that some Stock
Appreciation Rights shall be automatically exercised and settled on
one or more fixed dates specified therein by the Committee.
7.5. Form of Payment. Upon exercise of a Stock Appreciation
Right, payment may be made in cash, in Restricted Shares or in
shares of unrestricted Common Stock, or in any combination thereof,
as the Committee, in its sole discretion, shall determine and
provide in the relevant Award Agreement.
7.6. Tandem Grant. The right of a Participant to exercise a
tandem Stock Appreciation Right shall terminate to the extent such
Participant exercises the Stock Option to which such Stock
Appreciation Right is related.
8. Restricted Shares.
8.1. Terms and Conditions. Grants of Restricted Shares shall
be subject to the terms and conditions set forth in this Section 8
and any additional terms and conditions, not inconsistent with the
express terms and provisions of the 2002 Plan, as the Committee
shall set forth in the relevant Award Agreement.
Nothing
in this 2002 Plan shall require that Restricted Shares be subject
to any conditions and nothing herein shall limit or restrict the
Committee's ability to grant fully vested and nonforfeitable
Restricted Shares. Restricted Shares may be granted alone or in
addition to any other Awards under the 2002 Plan. Subject to the
terms of the 2002 Plan, the Committee shall determine the number of
Restricted Shares to be granted to a Participant and the Committee
may provide or impose different terms and conditions on any
particular Restricted Share grant made to any Participant. With
respect to each Participant receiving an Award of Restricted
Shares, there shall be issued a stock certificate (or certificates)
in respect of such Restricted Shares. Except as otherwise provided
in this Section 8.1, such stock certificate(s) shall be registered
in the name of such Participant, shall be accompanied by a stock
power duly executed by such Participant, and shall bear, among
other required legends, the following legend:
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"THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF
COMMON STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS (INCLUDING, WITHOUT LIMITATION, FORFEITURE EVENTS)
CONTAINED IN THE CENTRAL VERMONT PUBLIC SERVICE CORPORATION 2002
LONG-TERM INCENTIVE PLAN AND AN AWARD AGREEMENT ENTERED INTO
BETWEEN THE REGISTERED OWNER HEREOF AND THE CENTRAL VERMONT PUBLIC
SERVICE CORPORATION."
Such
stock certificate evidencing such shares shall in the sole
discretion of the Committee, be deposited with and held in custody
by the Company until the restrictions thereon shall have lapsed and
all of the terms and conditions applicable to such grant shall have
been satisfied. Restricted Shares that are granted fully vested and
nonforfeitable shall not contain the legend provided above.
8.2. Restricted Share Grants. A grant of Restricted Shares
is an Award of shares of Common Stock granted to a Participant,
subject to such restrictions, terms and conditions, if any, as the
Committee deems appropriate, including, without limitation, (a)
restrictions on the sale, assignment, transfer, hypothecation or
other disposition of such shares, (b) the requirement that the
Participant deposit such shares with the Company while such shares
are subject to such restrictions, and (c) the requirement that such
shares be forfeited upon termination of employment for specified
reasons within a specified period of time or for other reasons
(including, without limitation, the failure to achieve designated
performance goals).
8.3. Restriction Period. In accordance with Sections 8.1 and
8.2 of the 2002 Plan and unless otherwise determined by the
Committee (in its sole discretion) at any time and from time to
time, Restricted Shares shall only become unrestricted and vested
in the Participant in accordance with such vesting schedule
relating to such Restricted Shares, if any, as the Committee may
establish in the relevant Award Agreement (the "Restriction
Period"). During the Restriction Period, if any, such stoc
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