SOUTH JERSEY INDUSTRIES INC (Form: 8-K, Received: 01/06/2012 14:56:02)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 1, 2012

South Jersey Industries, Inc.

(Exact name of registrant as specified in its charter)

New Jersey	1-6364	22-1901645
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

One South Jersey Plaza, Folsom, NJ 08037

(Address of principal executive offices) (Zip Code)

(609) 561-9000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act.

Soliciting material pursuant to Rule 14a-12 under the Exchange Act.

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.

Pre-commencement communications pursuant to Rule 13(3)-4(c) under the Exchange Act.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Employment Agreements

As previously disclosed, South Jersey Industries, Inc. (“SJI”), was a party to three-year employment agreements, dated as of January 1, 2009, with certain officers of SJI, including each of Edward J. Graham, President and Chief Executive Officer, David A. Kindlick, Vice President and Chief Financial Officer, Michael Renna, Vice President, Jeffrey E. DuBois, Vice President, and Kevin D. Patrick, Vice President (the “Named Executive Officers”). Each of the prior employment agreements expired by its terms on December 31, 2011.

Effective January 1, 2012, SJI has entered into new employment agreements with each of the Named Executive Officers, which replace the expired agreements. Each of the new employment agreements is for a one-year period ending on December 31, 2012. The other terms of the new employment agreements are substantially similar to the terms of the expired agreements and are described below.

The new employment agreements provide the Named Executive Officers with a minimum annual base salary during the agreement term, as well as a targeted performance-based annual cash award and a targeted long-term incentive plan award. Under the employment agreements, the performance-based annual cash award and the long-term incentive plan award actually paid to the Named Executive Officer in any year are based on the level of attainment of applicable performance criteria for such awards and in accordance with applicable plan documents. The amounts of base salary, as well as the targeted performance-based cash award and long-term incentive award for each Named Executive Officer, as of January 1, 2012, are set forth on Exhibit 10.2 attached hereto.

Each of the new employment agreements provides for certain severance benefits which are substantially similar to the severance benefits included in the prior employment agreements. In the event a Named Executive Officer’s employment is terminated other than for cause or the Officer terminates employment for specified uncured events of good reason (relating to an adverse change in the Officer’s employment arrangement), in each case following a change in control of SJI, the Officer will be entitled to receive a lump-sum severance payment equal to 300% of average aggregate annual during the five years preceding the date of termination. In the event that the Named Executive Officer’s employment is terminated other than for cause in the absence of a change in control, the Officer will be entitled to receive a severance payment equal to 150% of the Officer’s then current base salary paid in twelve equal monthly installments. The Agreements provide for the reduction of any change in control payments to the extent necessary to ensure that the Named Executive Officers will not receive “excess parachute payments” under Section 280G of the Internal Revenue Code, which otherwise would result in the imposition of a 20% excise tax under Section 4999 of the Code.

The foregoing description is qualified by reference to the form of Officer Employment Agreement attached hereto as Exhibit 10.1 and the related Schedule of Officer Employment Agreements attached hereto as Exhibit 10.2.

Amendment to Stock-Based Compensation Plan

Effective January 1, 2012, SJI amended its existing Stock-Based Compensation Plan (the “Plan”) to provide that, in the event of a “Qualifying Termination” with respect to the holder of an outstanding restricted stock award under the Plan, all of the holder’s restricted stock awards will become nonforfeitable and immediately payable in cash to the extent then still outstanding.

Under the Plan as amended, a “Qualifying Termination” means (i) termination by the holder of his or her employment for “Good Reason” following a “Change in Control” or (ii) termination of the holder’s employment by SJI or any subsidiary, other than for cause, following a Change in Control. For purposes of the amended Plan, “Change in Control” means the occurrence of any of the following events: SJI or any of its subsidiaries is merged into or consolidated with or otherwise combined with or acquired by another person or entity, or there is a divisive reorganization or a liquidation or partial liquidation of SJI.

Under the Plan as amended, “Good Reason” is defined to encompass certain specified adverse changes in the holder’s employment arrangement, including the assignment of duties inconsistent with the holder’s duties, responsibilities, titles, offices or status immediately prior to the Change in Control, material reductions in base salary or benefits in which the holder participated prior to the Change in Control, a relocation of SJI’s headquarters to a location more than 50 miles from Folsom, New Jersey, a relocation of holder’s place of employment more than 50 miles from the location at which holder performed his or her duties immediately prior to the Change in Control, a material breach of any employment agreement to which holder is a party, or a purported termination of holder’s employment which is not effected by the procedures set forth in any employment agreement to which holder is a party. For any event to constitute Good Reason under the amended Plan, the holder must object in writing within 90 days following notification to the holder of the event, and the act or failure to act must remain uncured more than 30 days after the holder’s written notice of Good Reason.

Except as amended as described herein, the Plan remains unchanged. The foregoing description is qualified by reference to the Plan as amended and restated effective January 1, 2012, a copy of which is attached hereto as Exhibit 10.3.

Item 9.01

Financial Statements and Exhibits

Exhibit No.

Description

10.1	Form of Officer Employment Agreement, dated as of January 1, 2012, between certain officers and either South Jersey Industries, Inc. or its subsidiaries.

10.2	Schedule of Officer Employment Agreements.

10.3	South Jersey Industries, Inc. 1997 Stock-Based Compensation Plan (As Amended and Restated Effective January 1, 2012).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	SOUTH JERSEY INDUSTRIES

Date: January 6, 2012	By: /s/ David A. Kindlick
	David A. Kindlick
	Senior Vice President & Chief Financial Officer

Exhibit 10.1

SOUTH JERSEY INDUSTRIES

SOUTH JERSEY GAS COMPANY

SOUTH JERSEY ENERGY COMPANY

Officer Employment Agreement

THIS AGREEMENT made as of the first day of January, 2012, by and between South Jersey Industries, Inc. (“SJI”) and/or one or more of its subsidiaries South Jersey Gas Company, South Jersey Energy Solutions, LLC and SJI Services, LLC, all corporations or limited liability companies, having their principal offices at Number One South Jersey Plaza, Route 54, Folsom, New Jersey (the “Companies”), and ___________ (the “Officer”).

WITNESSETH:

WHEREAS, the Companies desire to assure themselves of the continued employment of the Officer by the Companies and to encourage his or her continued attention and dedication to the Companies in the best interests of the Companies and SJI shareholders; and

WHEREAS, the Officer is presently employed by the Companies as follows: _____________.

WHEREAS, the Officer desires to remain and continue in the employ of the Companies on the terms hereinafter provided;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:

Section 1. Employment .

The Companies hereby agree to continue to employ the Officer in the positions in which he or she presently serves, and the Officer hereby agrees to continue to serve in those positions, on the terms and conditions set forth herein.

Section 2. Term .

The term of this Agreement shall be for a period of one (1) year beginning January 1, 2012 and ending on December 31, 2012 subject to earlier termination under sections 7 and 8.

Section 3. Duties and Responsibilities .

The Officer shall serve in the positions in which he or she presently serves and shall report to the President and Chief Executive Officer of SJI. The Officer shall perform such duties and services as are customarily performed by him or her and as are assigned to him or her by the appropriate officer to whom he or she reports.

Exhibit 10.1

Section 4. Outside Services .

The Officer agrees to devote substantially all of his or her working time and efforts to the business and affairs of the Companies and shall not, directly or indirectly, without the written consent of the Chief Executive Officer of SJI, render any services to any other person, firm or entity, or own, manage, operate, control or participate in the management of any other person, firm or entity during the term of this Agreement. However, the Officer is not prohibited or prevented from acquiring or holding investments and securities listed on a national or regional securities exchange or sold in an over-the-counter public market, provided that the Officer is not part of any control group of such corporation or entity. So long as it does not interfere with his or her duties under this Agreement, the Officer shall have the right to serve as a director of any other corporation upon the approval of the Chief Executive Officer of SJI.

Section 5. Place of Performance .

The Officer’s services during the term of this Agreement shall be performed primarily in the corporate headquarters building of the Companies at Number One South Jersey Plaza, Route 54, Folsom, New Jersey or at a designated location approved by the Chief Executive Officer of SJI. Without his or her prior consent, the Officer shall not be required to move his or her place of permanent employment from this corporate headquarters building, although the Officer may be required to undertake reasonable domestic and international travel from time to time consistent with his or her business travel obligations.

Section 6. Compensation and Expenses .

6.1 Total Direct Compensation .

During the period of the Officer’s employment under this Agreement, the Companies shall pay to the Officer a base salary of not less than $________ per annum; a performance based annual cash award targeted at $_________ and a long-term incentive plan award targeted at $________; provided that the performance based annual cash award and long-term incentive plan award actually paid to the Officer shall be based on the level of attainment of the applicable performance criteria for such awards and in accordance with the plan documents. The actual amount paid to the Officer pursuant to the foregoing three components is referred to in this Agreement as “Total Direct Compensation.” Base Salary shall be paid in either twenty-four (24) or twenty-six (26) equal installments. The amount of Total Direct Compensation shall be reviewed annually in accordance with the normal business practices of the Companies. On or after a Change of Control, any reduction in the targeted amount of the Officer’s performance based annual cash award or targeted long-term incentive plan award shall constitute a material breach of this Agreement by the Companies.

Exhibit 10.1

6.2 Additional Benefits .

In addition to Total Direct Compensation, the Companies shall pay for and the Officer shall be entitled without limitation to participate in employee benefit plans presently in effect or hereafter adopted by the Companies which are applicable to employees generally. To the extent said benefits have been modified or additional benefits provided, they are detailed in Exhibit A , which is attached hereto and made a part hereof. If employer contributions to any such plan (other than a defined benefit plan) for the benefit of the Officer or his or her dependents or beneficiaries are reduced in amount by any statute or regulation from the payments that would otherwise be so made but for such statute or regulation, the amount that is prohibited from being paid to such plan because of such statute or regulation, increased if necessary as provided in the next sentence, shall be paid, at the time it would have been paid to such plan except for such prohibition to the Officer in a lump sum cash payment. Such amount shall be increased if necessary so that, after federal and state income taxes on the amount as so increased are taken into account, the net amount after such taxes, shall be paid to the Officer. In no event shall such amount, together with any additional tax gross-up amount, be paid later than March 15 of the fiscal year following the fiscal year for which such amount would have been paid to the applicable plan.

6.3 Expenses .

In addition to Total Direct Compensation and Additional Benefits, the Companies shall pay for and the Officer shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Officer in performing services under this Agreement, including all expenses of travel and living expenses while away from home on business or at the request of and in the service of the Companies, provided that such expenses are incurred and accounted for in accordance with the policies and procedures presently or hereafter established by the Companies.

6.4 Services Furnished .

The Companies shall furnish the Officer with office space, administrative/clerical assistance and such other facilities and services as shall be suitable to the Officer’s position and adequate for the performance of his or her duties.

Section 7. Reasons for Termination .

7.1 Death .

This Agreement shall terminate upon the Officer’s death, and he or she shall be entitled to such death benefits to which he or she is otherwise entitled presently or which may be hereafter established by the Companies.

Exhibit 10.1

7.2 Disability .

If the Officer shall be determined to be disabled in accordance with the disability policy or plan of the Companies, the Company may remove the Officer from positions within the Companies in which he or she then may be serving, subject to the requirements of applicable law. However, the Officer shall not be terminated as an employee of the Companies. The Officer shall be retained in such positions and given such duties and responsibilities as are commensurate with his or her abilities at the time. The Officer shall be entitled to such disability benefits, including short term and long term, to which he or she is otherwise entitled presently or which may be hereafter established by the Companies. Until the Officer becomes entitled to such disability benefits, he or she shall continue to be paid his or her Total Direct Compensation earned in accordance with this Agreement or other applicable plan or program pursuant to which such Total Direct Compensation is paid. The determination of the disability of the Officer shall be made by the Chief Executive Officer of the Companies in the exercise of his discretion in accordance with procedures set forth in the disability policies or plan.

7.3 Retirement .

If the Officer shall retire, he or she shall be entitled to such pension and other benefits applicable to executive employees generally and him or her specifically including, without limitation, those presently existing or hereafter established by the Companies.

7.4 For Cause by the Companies .

The Companies may terminate the Officer’s employment for Cause. For purposes of this Agreement, the Companies shall have “Cause” to terminate the Officer’s employment hereunder only for the following reasons: (1) the willful and continued failure by the Officer to substantially perform his or her duties hereunder other than any such failure resulting from the Officer’s incapacity due to physical or mental illness or injury; (2) the conviction of the Officer of a crime under state or federal law and the Companies’ Board of Directors or one of its committees is unable to conclude in good faith (and in its sole discretion) that the Officer had no reasonable cause to believe that the activities of which he or she was convicted were unlawful and that such conviction will not materially impair his or her ability to discharge his or her duties; (3) the willful engaging by the Officer in misconduct which is materially injurious to the Companies, monetarily or otherwise; or (4) the continued inability of the Officer to perform his or her duties by reason of alcoholism or drug abuse even after appropriate rehabilitation services have been made available to him or her.

7.5 For Good Reason by the Officer .

The Officer may terminate the Officer’s employment for Good Reason following a Change of Control at any time during the term of this Agreement. For purposes of this Agreement, “Good Reason” shall mean any of the following: (1) the assignment to the Officer by the Companies, without the Officer’s express written approval, of duties inconsistent with the Officer’s position, duties, responsibilities, titles, offices or status with the Companies immediately prior to a Change of Control of the Companies, or any removal of the Officer from or any failure to re-elect the Officer to any such positions; (2) a material reduction in the Officer’s base salary as in effect on the date hereof or as the same is increased from time to time during the term of this Agreement; (3) the failure to continue in effect any benefit plan or arrangement in which the Officer is participating immediately prior to a Change of Control, or the taking of any action by the Companies which would adversely affect the Officer’s participation in and/or materially reduce the Officer’s benefits under any such benefit plan or arrangement or which would deprive the Officer of any material fringe benefit enjoyed by the Officer immediately prior to a Change of Control; (4) a relocation of the Companies’ corporate headquarters to a location more than 50 miles outside of Folsom, New Jersey, or the Officer’s relocation to any place more than 50 miles from the location at which the Officer performed the Officer’s duties except for required travel by the Officer on the Companies’ business to an extent substantially consistent with the Officer’s business travel obligations immediately prior to a Change of Control; (5) a material breach of this Agreement by the Companies, or (6) any purported termination of the Officer’s employment which is not effected pursuant to a Notice of Termination.

Exhibit 10.1

Notwithstanding the foregoing, for any of the foregoing acts (or failure to act) to constitute “Good Reason,” the Officer must object in writing to the Companies within 90 days following initial notification of the occurrence or proposed occurrence of the act (or failure to act), and which act (or failure to act) is not then rescinded or otherwise remedied by the Board within 30 days after delivery of such notice and the Officer actually resigns from employment within 30 days after the expiration of the foregoing 30-day cure period. If the Officer’s resignation occurs after such time, the resignation shall be treated as a voluntary resignation other than for Good Reason and the Officer will not be entitled to severance benefits under this Agreement.

For purposes of this Agreement a “Change of Control” of the Companies shall mean any of the following: (1) consummation of any plan or proposal for the merger, liquidation, dissolution or acquisition of SJI or all or substantially all of its assets; (2) election to the Board of Directors of SJI a new majority different from the individuals who at the beginning of the term of this Agreement constituted the entire Board of Directors of SJI, unless each such new director stands for election as a management nominee and is elected by shareholders immediately prior to the election of any such new majority; or (3) the acquisition by any person of 20% or more of the stock of SJI having general voting rights in the election of directors (for purposes of this clause (3), the term “person” shall include two or more persons acting as a group for the purpose of acquiring, holding or disposing of stock of SJI).

Section 8. Benefits upon Termination .

8.1 Termination by the Companies for Cause .

If the Officer’s employment by the Companies shall be terminated for Cause (as defined in Section 7.4), the Companies shall pay the Officer his or her Total Base Salary earned through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Companies shall have no further salary obligations to the Officer under this Agreement. The Officer shall be entitled to such retirement benefits as he or she may otherwise be entitled to on the Date of Termination. Effective as of the Date of Termination, the Officer shall no longer be an employee of the Companies and shall no longer be entitled to the privileges and benefits thereof.

Exhibit 10.1

8.2 Termination by the Officer for Good Reason .

If the Officer’s employment shall be terminated by the Officer for Good Reason following a Change of Control (as defined in Section 7.5), the Companies shall pay the Officer as severance pay an amount equal to 300% of a base amount determined to be the average of the aggregate annual compensation paid to the Officer during the five (5) calendar years preceding the Date of Termination and subject to federal income taxes; provided that, if any severance payment under this Agreement, either alone or together with any other payment which the Officer has received or the right to receive from the Companies, would constitute a “parachute payment” as defined in section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), such severance payment shall be reduced to the largest amount as will result in no portion of the severance payment being subject to the excise tax imposed by section 4999 of the Code. The Companies shall pay this severance payment, in cash, on the Date of Termination, provided that the Officer has executed a general release and waiver of claims in a form of agreement prepared by the Companies.

Notwithstanding any provision of this Section 8.2 to the contrary, the Companies shall pay the Officer the severance pay described above in a lump sum only if the transaction constituting a Change of Control meets the definition of a “change in control event” within the meaning of such term under section 409A of the Code and the Officer’s employment is terminated under this Section 8.2 or Section 8.3, as applicable, within two (2) years following such Change of Control. If, however, the transaction constituting the Change of Control does not meet the definition of a “change in control event” within the meaning of such term under section 409A of the Code, or the Officer’s employment is terminated under this Section 8.2 or Section 8.3, as applicable, after the two (2)–year period following such Change of Control, then the severance pay shall be paid in installments as described in Section 8.3 below.

8.3 Termination by the Companies for Other than Cause .

If the Companies terminate the Officer’s employment for other than Cause following a Change of Control, the Officer shall be entitled to those benefits set forth in Section 8.2 above. If the Companies terminate the Officer’s employment for other than Cause prior to the occurrence of a Change of Control, which the Companies may do at any time in its sole discretion, the Companies shall pay the Officer as severance pay an amount equal to 150% of the Officer’s then current base salary, to be paid out in twelve (12) equal monthly installments, beginning on the first payroll date after the expiration of the thirty (30)-day period following the date of the Officer’s termination of employment and each payroll date thereafter until fully paid, in accordance with the Companies’ regular payroll practices. However, for purposes of the Supplemental Executive Retirement Plan (“SERP”) formula, the twelve (12)-month severance period shall be included as service credit and the severance amount considered in the Final Average Compensation (“FAC”) calculation. In no case will the inclusion of this severance period produce a SERP benefit in excess of the maximum percentage of FAC provided for in the SERP plan in effect on the Date of Termination. The continuation of such payments and benefits shall be the Officer’s sole and exclusive remedy and the Companies shall have no further obligations or liability to the Officer or his survivors (except as otherwise provided by this Section) under this Agreement, and shall only be provided in exchange for a fully executed general release and waiver of claims by the Officer in a form of agreement prepared by the Companies.

Exhibit 10.1

Section 9. Procedure for Termination .

9.1 Notice of Termination .

For the purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Officer’s employment.

9.2 Date of Termination .

For the purposes of this Agreement, the “Date of Termination” shall mean the date of the Officer’s death; or thirty (30) days after Notice of Termination is given; provided that if within ten (10) days after any Notice of Termination is given the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the date of termination shall be extended for an additional period not to exceed ten (10) days. During the period between Notice of Termination and the Date of Termination the Officer may request and shall be granted a hearing before the Board of Directors of the Companies or such committee thereof as it may designate, at which time the Board of Directors shall decide whether in its reasonable good faith opinion the Officer was either disabled or discharged for Cause and specifying the particulars thereof in detail.

Section 10. No Obligation to Mitigate Damages; No Effect on Other Contractual Rights .

10.1 The Officer shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise.

10.2 The amount of any payment provided to the Officer under this Agreement shall not be reduced by any compensation earned by the Officer as the result of employment by another employer after the Date of Termination.

10.3 The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish the Officer’s existing rights, or rights which would accrue solely as a result of the passage of time under any plan of benefits provided to officers and managers of the Companies.

Exhibit 10.1

Section 11. Confidential Information .

The Officer will not, during or after the term of this Agreement, use for himself or herself or others or disclose to others, any Confidential Information (as defined in the following sentence) unless authorized in writing to do so by the Companies. “Confidential Information” means all information (including, without limitation, all business records and plans, financial statements, customer lists and records, trade secrets, technical information, products, product design information, pricing structure, costs, software, files, books, logs, charts, studies, reports, surveys, schedules, maps, statistical information and other proprietary information) which may be furnished, disclosed, or developed to or by the Officer, or which the Officer may discover during the course of the Officer’s employment, which is not generally known outside of SJI, or that the Officer should reasonably believe to be proprietary or non-public information.

Section 12. Papers .

All correspondence, memoranda, notes, records, reports, plans and other papers and items received or made by the Officer in connection with his or her duties hereunder shall be the property of the Companies, and the Officer shall not have any property rights to such items when he or she is no longer an employee of the Companies.

Section 13. Noncompetition .

13.1 The Officer acknowledges that, during the course of his employment hereunder, he will have access to the Companies’ customer and business prospects, knowledge of and experience in the techniques and methods the Companies used to do business in its industries and other information and know-how which, even if not directly disclosed to a competitor of the Companies, would give a competitor significant and unfair advantages over the Companies if made available to it through the Officer’s employment.

13.2 The Officer acknowledges that SJI is engaged in the business of providing services for the acquisition, sale and transportation of natural gas, electricity and related products, for wholesale and retail users, and marketing total energy management services and other energy related services, throughout New Jersey, Pennsylvania, New York and other geographic areas within the United States.

13.3 Accordingly, unless the Officer requests in writing and is thereafter authorized in writing to do so by the Companies, the Officer will not, during the term of this Agreement, or for a period of one (1) year thereafter (collectively, “the Noncompetition Period”), directly or indirectly own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be employed by, any business corporation, proprietorship, partnership or other entity which competes with or is engaged in any alliance or joint venture with either of the Companies.

Exhibit 10.1

13.4 The Officer further agrees that, unless he/she requests in writing and is thereafter authorized in writing to do so by the Companies, the Officer will not, during the Noncompetition Period, directly or indirectly on behalf of any entity other than the Companies (i) induce or attempt to induce any employee or independent contractor of the Companies to leave the employ of, or terminate or adversely affect the contractual relationship with, the Companies, (ii) hire or affirmatively seek any business affiliation with any person who was an employee of the Companies within six months after such person ceased to be an employee of the Companies, or (iii) induce or attempt to induce any customer, supplier, licensee, franchisee or other business relation of the Companies to cease or reduce doing business with the Companies or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and the Companies (including making any negative statements or communications about the Companies).

13.5 The undertakings in this Section 13: shall apply only to those areas where the Companies engage or propose to engage in business or which the Companies, at the termination of the Officer’s employment hereunder have defined as their market territory, but shall not apply if the Company is or the Companies are, and after thirty days’ written notice to the Companies thereof continue to be, in default of its or their obligation to make any of the payments they are then required to make to the Officer and the Officer is not in default in the performance of his obligations.

13.6 If the provisions of this Section 13 should be adjudicated to exceed the time, geographic or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic or other limitations permitted by the law applicable in that jurisdiction. In addition, the Officer hereby authorizes the Company to bring the Officer’s obligations hereunder to the attention of, and to provide a copy or description of pertinent Sections of this Agreement to, any entity which the Company believes may offer or has offered employment to the Officer.

Section 14. Renewal and Extension of Agreement .

The term of this Agreement shall be automatically renewed and extended for a period of one (1) year from the date of any Change of Control in order that the Officer obtains the full benefit of all severance benefits in the event of termination of employment after any Change of Control. This Agreement, either under its normal one (1) year term or under the term resulting from a Change of Control, shall be considered for renewal and extension by the Board of Directors of the Companies or such committee thereof.

Section 15. Enforcement .

Exhibit 10.1

The Officer acknowledges that in the event of his or her breach or threat of breach of Sections 11, 12 or 13 of this Agreement, the Companies’ remedies at law will be inadequate and, in such event, the Companies will be entitled to appropriate injunctive and other equitable relief in addition to its legal remedies.

Section 16. Notices .

All notices and other communications provided for herein that one party intends to give to the other party shall be in writing and shall be considered given when mailed by certified mail, return receipt requested, or personally delivered, either to the party or at the address set forth below (or to such other address as a party shall designate by notice hereunder):

South Jersey Industries, Inc.

Attn: Chief Executive Officer

Number One South Jersey Plaza

Folsom, New Jersey 08037

[Employee]

[Address]

Section 17. Amendments .

This Agreement may be amended, modified, superseded, canceled, renewed or extended only by a written instrument executed by both parties hereto.

Section 18. Binding Effect and Non-Assignability .

This Agreement shall inure to the benefit of the Officer’s heirs and personal representatives and shall be binding upon the successor of the Companies, including any entity with which the Companies may be merged or consolidated or which may acquire all or substantially all of the assets of the Companies. This Agreement shall not be assignable, in whole or in part, by either party, without the written consent of the other party.

Section 19. Legal Expenses .

In the event of a dispute in connection with this Agreement, the parties shall each pay their own costs, except that in the event of such a dispute after a Change of Control involving termination of employment other than for cause, or involving entitlement to compensation or benefits in the event of termination of employment other than for cause, the Companies shall pay the legal expenses of the Officer.

Exhibit 10.1

Section 20. Arbitration .

Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in the County of Atlantic, State of New Jersey, in accordance with the rules then in effect of the American Arbitration Association (“AAA”), and judgment upon the award rendered may be entered in any court having jurisdiction thereof. In any such arbitration each party will choose one arbitrator and those two arbitrators will choose a third. Each party will pay the costs associated with its arbitrator and will divide equally the cost associated with the third arbitrator. The parties will divide equally the cost and fees associated with AAA. Notwithstanding anything to the contrary in this Section 20, either party may commence in any court having jurisdiction over the parties hereto any action to obtain injunctive relief.

Section 21. Equitable Relief .

The Companies and the Officer confirm that the restrictions contained in Section 11, 12 and 13 are, in view of the nature of the business of the Companies, reasonable and necessary to protect the legitimate interests of the Companies, and that any violation of any provision of those Sections will result in irreparable injury to the Companies. The Officer hereby agrees that, in the event of any breach or threatened breach of the terms or conditions of the Agreement by the Officer, the Companies’ remedies at law will be inadequate and, in any such event, any of them shall be entitled to commence an action for preliminary and permanent injunctive relief and other equitable relief in any court of competent jurisdiction, notwithstanding any provision hereof relating to arbitration. The Officer further irrevocably consents to the jurisdiction of any state or federal court located in the State of New Jersey over any suit, action or proceeding arising out of or relating to this Section and hereby waives, to the fullest extent permitted by law, any objection that he may now or hereafter have to such jurisdiction or to the laying of venue of any such suit, action or proceeding brought in such a court and any claim that such suit, action or proceeding has been brought in an inconvenient forum. The Officer agrees that effective service of process may be made upon him by mail under the notice provisions contained in Section 16. No party hereto shall be required to post a bond prior to the commencement of any suit, action or proceeding relating to this Section.

Section 22. Governing Law .

This Agreement shall be governed by the laws of the State of New Jersey.

Section 23. Entire Agreement .

Exhibit 10.1

This Agreement contains the entire agreement between the parties relative to its subject matter, superseding all prior agreements or understandings of the parties relating thereto.

Section 24. Waiver .

Any term or provision of this Agreement may be waived in writing at any time by the party entitled to the benefit thereof. The failure of either party at any time to require performance of any provision of this Agreement which has not been waived in writing shall not affect such party’s rights at a later time to enforce such provision. No consent or wavier by either party to any default or to any breach of a condition or term of this Agreement shall be deemed or construed to be a consent or waiver to any other breach or default.

Exhibit 10.1

Section 25. Invalidity of Portion of Agreement .

If any provision of this Agreement or the application thereof to either party shall be valid or unenforceable to any extent, the remainder of this Agreement shall not be affected thereby an shall be enforceable to the fullest extent of the law.

Section 26. Benefits of the Agreement

This Agreement is for the benefit of each of the Companies, and each of them as well as the Companies shall have standing to enforce it as though it is a party hereto. Each reference in this Agreement to an obligation by either of the Companies shall be a reference to the obligation of the Company to cause the Companies to perform such obligation. Each undertaking by either of the Companies in this Agreement shall be the undertaking of the Company to cause the Companies to perform such undertaking.

Section 27. Compliance with Section 409A of the Internal Revenue Code .

This Agreement shall be interpreted to avoid any penalty sanctions under section 409A of the Code. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under section 409A, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of section 409A of the Code, all payments to be made upon the Officer’s termination of employment under this Agreement may only be made upon the Officer’s “separation from service” within the meaning of such term under section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

All reimbursements and in kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Officer’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement, or in kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit. If expenses are incurred in connection with litigation, any reimbursements under the Agreement shall be paid not later than the end of the calendar year following the year in which the litigation is resolved.

Notwithstanding any provision in this Agreement to the contrary, if at the time of the Officer’s termination of employment with the Companies, SJI has securities which are publicly-traded on an established securities market and the Officer is a “specified employee” (as such terms is defined in section 409A of the Code) and it is necessary to postpone the commencement of any payments upon the Officer’s termination of employment to prevent any accelerated or additional tax under section 409A of the Code, then the Companies shall postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Officer) that are not otherwise paid within the short-term deferral and separation pay plan exceptions under Treas. Reg. section 1.409A-1(b)(4) and (7), respectively, until the first payroll date that occurs after the date that is six (6) months following the Officer’s “separation from service” with the Companies. If any payments are postponed due to such requirements, such amounts shall be paid in a lump sum to the Officer, and any installment payments due to the Officer shall recommence, on the first payroll date that occurs after the date that is six (6) months following the Officer’s “separation from service” with the Companies. If the Officer dies during the postponement period prior to the payment of the postponed amount, the amounts withheld on account of section 409A of the Code shall be paid to the personal representative of the Officer’s estate within sixty (60) days after the date of the Officer’s death.

Exhibit 10.1

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement effective as of the date first above written.

	FOR THE COMPANIES:

Date	By:
		Edward J. Graham
		President and Chief Executive Officer
		South Jersey Industries, Inc.

	By:
		[Employee]
		[Title]

Exhibit 10.1

EXHIBIT A

ADDITIONAL OR MODIFIED OFFICER BENEFITS

The following benefits are provided to the Officer who is party to this Officer Employment Agreement.

1. Disability Plan

(a) temporary disability (sick pay), commences on the eighth (8 th ) consecutive day of absence. Temporary disability shall be paid at a rate of one hundred percent (100%) of the Officer’s Base Salary, and extends at full pay for up to 120 calendar days for Officers with less than five (5) years of service, and up to 365 calendar days for Officers with service of five (5) or more years.

(b) long term disability (LTD), begins upon the expiration of the temporary disability benefit as described above. LTD is paid at a rate of fifty percent (50%) of the Officer’s Base Salary, reduced by Social Security Disability payments, if any. LTD continues until the Officer’s status changes as a result of retirement, rehabilitation, death, voluntary resignation or reassignment as provided for in Section 7.2. For the first two years of LTD, medical certification of the ongoing disability against the Officer’s “own position(s)” is required. Thereafter, medical certification shall consider “any position”.

2. Group Life Insurance – at a principle equivalent to two times (2x) the Officer’s Base Salary, rounded to the next highest $5,000 increment. The insurance premium shall be paid by the Companies; the Officer shall be responsible for resultant federal, state or local income taxes.

3. 24-Hour Accident Protection Coverage – while in the employ of the Company in an amount of $250,000. The insurance premium shall be paid by the Companies; the Officer shall be responsible for resultant federal, state or local income taxes.

4. Supplemental Survivor’s Benefit – upon the death of the Officer while he/she is in the employ of the Company, his/her surviving beneficiary shall receive a lump sum payment of $1,000 to be paid within ninety (90) days following the Officer’s death. The surviving beneficiary shall also receive a lump sum death benefit based upon years of service with the Company in the amounts of six (6) months base salary (10-15 service years); nine (9) months base salary (15-25 service years); twelve (12) months base salary (25+ service years) such amount to be paid in a lump sum within ninety (90) days following the Officer’s death. Subject to the requirements of section 409A of the Code, such payment shall be offset by proceeds from the Officer’s qualified pension plan and SERP in the year of death.

Exhibit 10.1

5. Supplemental Executive Retirement Plan (SERP) – the Officer achieving eligibility under the SERP plan, shall be entitled to the pension benefits of that plan in place on the effective date of the Officer Employment Agreement or, in effect on the earlier of his/her termination or retirement date, whichever provides the greater benefit in the opinion of the Officer.

6. Company Automobile – the Officer shall be provided a company automobile to be used for business and at the Officer’s discretion, for commuting and other non-business purposes. The Companies shall provide for vehicle registration, insurance coverage, repair, preventative maintenance and fuel. The Officer shall be responsible for any federal and/or state income taxes which result from non-business usage.

7. Time Off – the Officer shall take such time off for vacation or personal needs as may be accommodated while ensuring the duties and responsibilities of his/her position are accommodated to the satisfaction of SJI’s CEO. It is anticipated that such time off would not normally exceed twenty (20) days per calendar year, exclusive of scheduled corporate holidays. Time off shall not accrue, nor shall it be carried from one year to the next, resultantly, there shall be no payment for “unused time off” at the time of the Officer’s death, retirement or other such termination.

8. Annual Physical Examination – the Companies shall provide the Officer with an annual physical examination at its expense. The Officer shall be responsible to schedule and undergo a reasonably comprehensive annual physical examination by a physician of his/her choosing, between the months of June and October. The attending physician shall provide to the Officer a reasonably detailed oral or written report of his/her findings and recommendations. Said report and recommendations shall neither be requested nor provided to the Company, its other officer, employees or agents. However, should the Officer be diagnosed with a condition which in his or her judgment will (a) substantially effect his/her performance, or (b) render him or her unable to continue as an Officer, or (c) likely result in his or her death within a twelve month period of such diagnosis, the Companies request that the Officer advise the CEO accordingly, so that proper succession planning can be initiated.

9. Severance Benefits – in the event the Officer terminates subject to Section 8.2 or 8.3, the Companies shall provide reasonable outplacement services to the Officer in an amount not to exceed $15,000 or at the discretion of the CEO, up to $20,000. The Officer shall provide the Companies with a proposal from the consultant of the Officer’s choosing. Consultant invoices shall be rendered directly to the Companies and payment shall be made up to the approved amount, directly to the outplacement firm. In the event the Officer terminates by virtue of retirement, disability, for Good Reason by the Officer or, by the Companies for other than Cause, the CEO of SJI may at his/her discretion, transfer title to the companies car to the Officer (if the SJI CEO, at the discretion of the SJI Board of Director’s Compensation & Pension Committee). Subject to governing law and/or regulation, the Officer may elect COBRA healthcare continuation coverage under section 4980B of the Code, at the Officer’s sole expense and at the applicable COBRA premium/rates. All payments for outplacement services under this Section 9 shall be made in accordance with the requirements of section 409A of the Code, including the requirement that the expenses for such services must be incurred by the end of the second year following the year in which the Officer’s Date of Termination occurs and that all payments with respect thereto must be made by the end of the third year following the year in which the Officer’s Date of Termination occurs.

Exhibit 10.1

10. Retiree Health Care – in the event the Officer retires from the Companies pursuant to Section 7.3 during the Agreement’s term as defined in Section 2, he/she shall continue to receive the same or substantially similar medical, hospitalization, prescription, dental and major medical coverage as is provided, from time to time to the senior officers of the Companies. The COBRA health care continuation coverage period under section 4980B of the Code shall run concurrently with the foregoing period of continued coverage. Upon reaching age 65, the Officer shall continue to receive such coverage as is provided to Medicare-eligible retirees. However, during retirement, the Officer shall continue to pay the same monthly/annual contribution toward medical/hospitalization coverage as was in effect on the effective date of his/her retirement. He/she will be subject to any and all future changes to plan deductibles, co-payments, etc.

Exhibit 10.2

SOUTH JERSEY INDUSTRIES, INC.

SCHEDULE OF OFFICER AGREEMENTS

Pursuant to Rule 12b-31, the following sets forth the material details which differ in the Officer Employment Agreements, the form of which is filed herewith as Exhibit 10.1.

Name	Capacities in Which Served	Date of Agreement	Minimum Base Salary		Targeted Performance Based Annual Cash Award*		Targeted Long- Term Incentive Plan Award*

Edward J. Graham	Chairman, President and Chief Executive Officer, South Jersey Industries, Inc.; President and Chief Executive Officer, South Jersey Gas Company	1/1/12	$	670,000	$	495,00	$	660,000

David A. Kindlick	Vice President and Chief Financial Officer, South Jersey Industries, Inc.; Senior Vice President and Chief Financial Officer, South Jersey Gas Company	1/1/12	$	300,000	$	141,750	$	190,000

Michael Renna	Vice President, South Jersey Industries, Inc.; President, South Jersey Energy Solutions; President, South Jersey Energy Company	1/1/12	$	300,000	$	160,000	$	190,000

Jeffrey E. DuBois	Vice President, South Jersey Industries, Inc.; Senior Vice President, Chief Operating Officer, South Jersey Gas Company	1/1/12	$	280,000	$	140,000	$	170,000

Kevin D. Patrick	Vice President, Research & Corporate Development, South Jersey Industries, Inc.	1/1/12	$	244,000	$	106,313	$	133,000

* Payable only if performance criteria are attained.

Exhibit 10.3

SOUTH JERSEY INDUSTRIES, INC.

1997 STOCK-BASED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2012)

1. Purpose Of Plan

The purpose of the Plan is to enable the Company to recognize the contributions made to the Company by employees (including employees who are members of the Board of Directors) and non-employee directors of the Company by providing such persons with additional incentive to devote themselves to the future success of the Company and to improve the ability of the Company to attract, retain and motivate persons upon whom the Company’s sustained growth and financial success depend, by: (i) providing incentive compensation opportunities competitive with those of other major companies; (ii) providing performance-related incentives that motivate superior performance; and (iii) providing such persons with the opportunity to acquire or increase their ownership interest in the Company and to thereby acquire a greater stake in the Company and a closer identity with it.

2. Definitions

(a) “Award” means an award of Options, SARs, or Restricted Stock.

(b) “Board” means the board of directors of the Parent Company.

(d) “Committee” means the committee described in Paragraph 5.

(e) “Company” means South Jersey Industries, Inc. and each of its Subsidiary Companies.

(f) “Date of Grant” means the date on which an Option, SAR or Restricted Stock Award is granted.

(g) “Dividend Equivalent” means the right to receive the equivalent value (in Shares) of dividends that are paid on Restricted Stock and reinvested in Shares.

(h) “Eligible Participant” means an employee of the Company or a director of the Parent Company as determined in accordance with Paragraph 7.

(i) “Fair Market Value” means on any given date the mean between the highest and lowest prices of actual sales of Shares on the principal national securities exchange on which the Shares are listed on such date or, if there are no such sales on such date, the mean between the closing bid and asked prices of the Shares on such exchange on such date.

(j) “Holder” means a person to whom (i) an SAR has been granted under the Plan, which SAR has not been exercised and has not expired or terminated, or (ii) a Restricted Stock Award has been granted, which Award has not become vested or been forfeited.

(k) “Incentive Stock Option” means an Option granted under the Plan, designated by the Committee at the time of such grant as an Incentive Stock Option and containing the terms specified herein for Incentive Stock Options.

(l) “Non-Qualified Option” means an Option granted under the Plan, designated by the Committee at the time of such grant as a Non-Qualified Option and containing the terms specified herein for Non-Qualified Options.

(m) “Option” means any stock option granted under the Plan and described either in Paragraph 3(a) or 3(b).

(n) “Optionee” means a person to whom an Option has been granted under the Plan, which Option has not been exercised and has not expired or terminated.

(o) “Parent Company” means South Jersey Industries, Inc.

(p) “Performance Goal” means the annual consolidated earnings per share from the Company’s continuing operations, or any other goal that is established at the discretion of the Committee including, among other things: (i) the price of Shares, (ii) the market share of the Company (or any business unit thereof), (iii) sales by the Company (or any business unit thereof), (iv) return on equity of the Company, (v) costs of the Company (or any business unit thereof), or (vi) the Company’s total shareholder return and earnings per share growth as measured against comparable returns/earnings of peer companies. The Committee shall have sole discretion to determine specific targets within each category of Performance Goals.

(q) “Qualifying Termination” means with respect to a Holder of a Restricted Stock Award either the (i) termination by the Holder of his or her employment with the Company for Good Reason following a Change of Control, or (ii) termination of the Holder’s employment by the Company for other than Cause following a Change of Control. For this purpose “Good Reason” shall mean any of the following: (1) the assignment to the Holder by the Company, without the Holder’s express written approval, of duties inconsistent with the Holder’s position, duties, responsibilities, titles, offices or status with the Company immediately prior to a Change of Control of the Company, or any removal of the Holder from or any failure to re-elect the Holder to any such positions; (2) a material reduction in the Holder’s base salary as in effect on the Date of Grant or as the same is increased from time to time during the Restriction Period of any Restricted Stock Award; (3) the failure to continue in effect any benefit plan or arrangement in which the Holder is participating immediately prior to a Change of Control, or the taking of any action by the Company which would adversely affect the Holder’s participation in and/or materially reduce the Holder’s benefits under any such benefit plan or arrangement or which would deprive the Holder of any material fringe benefit enjoyed by the Holder immediately prior to a Change of Control; (4) a relocation of the Parent Company’s corporate headquarters to a location more than 50 miles outside of Folsom, New Jersey, or the Holder’s relocation to any place more than 50 miles from the location at which the Holder performed the Holder’s duties except for required travel by the Holder on the Company’s business to an extent substantially consistent with the Holder’s business travel obligations immediately prior to a Change of Control; (5) a material breach of the Holder’s then current Employment Agreement with the Company (if any) by the Company; or (6) any purported termination of the Holder’s employment which is not effected pursuant to a Notice of Termination, as specified under the Holder’s then current Employment Agreement with the Company (if any). Notwithstanding the foregoing, for any of the foregoing acts (or failure to act) to constitute “Good Reason,” the Holder must object in writing to the Company within 90 days following initial notification of the occurrence or proposed occurrence of the act (or failure to act), and which act (or failure to act) is not then rescinded or otherwise remedied by the Board within 30 days after delivery of such notice and the Holder actually resigns from employment within 30 days after the expiration of the foregoing 30-day cure period. If the Holder’s resignation occurs after such time, the resignation shall not be treated as a Qualifying Termination. For this purpose “Cause” shall mean any of the following reasons: (1) the willful and continued failure by the Holder to substantially perform his or her duties hereunder other than any such failure resulting from the Holder’s incapacity due to physical or mental illness or injury; (2) the conviction of the Holder of a crime under state or federal law and the Board or one of its committees is unable to conclude in good faith (and in its sole discretion) that the Holder had no reasonable cause to believe that the activities of which he or she was convicted were unlawful and that such conviction will not materially impair his or her ability to discharge his or her duties; (3) the willful engaging by the Holder in misconduct which is materially injurious to the Company, monetarily or otherwise; or (4) the continued inability of the Holder to perform his or her duties by reason of alcoholism or drug abuse even after appropriate rehabilitation services have been made available to him or her. For this purpose “Change of Control” shall mean any of the events described in the first sentence of Paragraph 13 of the Plan.

(r) “Restriction Period” means the period during which Restricted Stock awarded under the Plan is subject to forfeiture.

(s) “Restricted Stock” means Shares awarded by the Company under Paragraph 11 of the Plan and described in Paragraph 3(d).

(t) “SAR” means a stock appreciation right granted under the Plan and described in Paragraph 3(c).

(u) “Share” or “Shares” means a share or shares of Common Stock of the Parent Company.

(v) “Subsidiary Companies” means all corporations that, at the time in question, are subsidiary corporations of the Parent Company within the meaning of section 425(f) of the Code.

(w) “Ten Percent Shareholder” means a person who on the Date of Grant owns, either directly or within the meaning of the attribution rules contained in section 425(d) of the Code, stock possessing more than ten percent of the total combined voting power of all classes of stock of his or her employer corporation or of its parent or subsidiary corporations, as defined respectively in sections 425(e) and (f) of the Code.

(x) “Value” of a SAR means the excess of the Fair Market Value of a Share on the date of exercise of such SAR over the Fair Market Value of a Share on the Date of Grant of such SAR.

3. Rights To Be Granted

Rights that may be granted under the Plan are:

(a) Incentive Stock Options, which give the Optionee the right for a specified time period to purchase a specified number of Shares for a price not less than their Fair Market Value on the Date of Grant;

(b) Non-Qualified Options, which give the Optionee the right for a specified time period to purchase a specified number of Shares for a price determined by the Committee on the Date of Grant;

(c) SARs, which give the Holder the right for a specified time period, without payment to the Company, to receive the Value of such SARs, to be paid in cash or Shares or a combination of cash and Shares, the number and amount of which shall be determined pursuant to Paragraph 8(e) below.

(d) Restricted Stock Awards, which give the Holder a specific number of Shares which are either (i) awarded upon the Company’s achievement of Performance Goals established by the Committee, or (ii) awarded, subject to forfeiture if the Company fails to achieve Performance Goals established by the Committee.

4. Stock Subject To Plan

Not more than 1,000,000 Shares in the aggregate may be delivered pursuant to the Plan upon exercise of Options or SARs or pursuant to Restricted Stock Awards. The Shares so delivered may, at the option of the Company, be either treasury Shares or Shares originally issued for such purpose. If an Option or an SAR covering Shares terminates or expires without having been exercised in whole or in part, other Options or SARs may be granted covering the Shares as to which the Option or SAR was not exercised. If a Restricted Stock Award is forfeited, other Restricted Stock Awards may be granted covering the Shares which were forfeited.

5. Administration Of Plan

The Plan shall be administered by the Compensation/Pension Committee of the Board or such other committee, consisting of two or more directors who, unless the Board determines otherwise, are “outside directors” (within the meaning of Section 162(m) of the Code) and “non-employee directors” (within the meaning of Rule 16b-3(b)(3)(i) under the Securities Exchange Act of 1934) as may be determined by the Board.

6. Grant of Rights

The Committee may grant Options, SARs, Restricted Stock Awards or all of the foregoing to Eligible Participants.

7. Eligibility

(a) An Option may be granted to those Eligible Participants who are designated by the Committee as eligible to receive an Option.

(b) An Incentive Stock Option shall not be granted to a Ten Percent Shareholder except on such terms concerning the option price and period of exercise as are provided in Paragraphs 8(a) and 8(f) with respect to such a person. A Non-Qualified Option shall not be granted to a Ten Percent Shareholder.

(c) A Restricted Stock Award may be granted to those Eligible Participants who are designated by the Committee as eligible to receive a Restricted Stock Award.

(d) No Eligible Participant may be granted in any calendar year Awards covering more than 300,000 Shares.

8. Option and SAR Agreements and Terms

All Options and SARs shall be granted within ten years from January 26, 2005 and be evidenced by Option agreements or SARs agreements which shall be executed on behalf of the Parent Company and by the respective Optionees or Holders. The terms of each such agreement shall be determined from time to time by the Committee, consistent, however, with the following:

(a) Option Price. The option price per Share shall be determined by the Committee but, in the case of Incentive Stock Option, shall not be less than 100% of the Fair Market Value of such Share on the Date of Grant. With respect to any Incentive Stock Option granted to a Ten Percent Shareholder, the option price per Share shall not be less than 110% of the Fair Market Value of such Share on the Date of Grant.

(b) Restrictions on Transferability. No Option or SAR shall be transferable otherwise than by will or the laws of descent and distribution and, during the lifetime of the Optionee or Holder, shall be exercisable only by him or her. Upon the death of an Optionee or Holder, the person to whom the rights shall have passed by will or by the laws of descent and distribution may exercise any Options or SARs only in accordance with the provisions of Paragraph 8(f).

(c) Payment Upon Exercise of Options. Full payment for Shares purchased upon the exercise of an Option shall be made in cash or, at the election of the Optionee and as the Committee may, in its sole discretion, approve, either (i) by surrendering Shares with an aggregate Fair Market Value equal to the aggregate option price, (ii) by delivering such combination of Shares and cash as the Committee may, in its sole discretion, approve or (iii) at the election of the Optionee, and if the Committee, in its sole discretion approves, by surrendering the Option in exchange for issuance of a number of shares equal to the difference between the exercise price of the Option and the Fair Market Value of the Shares subject to the Option.

(d) Issuance of Certificates Upon Exercise of Options; Payment of Cash. Only whole Shares shall be issuable upon exercise of Options. Any right to a fractional Share shall be satisfied in cash. Upon payment of the option price, a certificate for the number of whole Shares and a check for the Fair Market Value on the date of exercise of any fractional Share to which the Optionee is entitled shall be delivered to such Optionee by the Parent Company; provided, however, that in the case of the exercise of a Non-Qualified Option, the Optionee has remitted to his employer an amount, determined by such employer, necessary to satisfy applicable federal, state or local tax-withholding requirements, or made other arrangements with his or her employer for the satisfaction of such tax-withholding requirements. The Parent Company shall not be obligated to deliver any certificates for Shares until such Shares have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange upon which outstanding Shares of such class at the time are listed nor until there has been compliance with such laws or regulations as the Parent Company may deem applicable. The Parent Company shall use its best efforts to effect such listing and compliance.

(e) Issuance of Certificates Upon Exercise of SARs; Payment of Cash. Upon exercise of an SAR, its Value shall be payable in cash, or in Shares or such combination of cash and Shares as is selected by the Holder and approved by the Committee in its sole discretion. Any Shares that may be due upon exercise of an SAR shall be delivered to the Holder by the Parent Company and any payment of cash shall be made by the employer of the Holder. The employer of the Holder shall deduct from the amount of any cash so payable an amount necessary to satisfy applicable federal, state, or local tax-withholding requirements. If no cash is payable (or if the amount of cash payable is insufficient to satisfy applicable tax-withholding requirements), no Shares shall be delivered by the Parent Company to the Holder until the Holder remits to his or her employer an amount, determined by such employer, necessary to satisfy applicable federal, state, or local tax-withholding requirements or makes other arrangements for the satisfaction of such tax-withholding requirements. The Parent Company shall not be obligated to deliver any certificates for Shares until such Shares have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange upon which outstanding Shares of such class at the time are listed nor until there has been compliance with such laws or regulations as the Parent Company may deem applicable. The Parent Company shall use its best efforts to effect such listing and compliance.

(f) Periods of Exercise of Options and SARs. An Option or SAR shall be exercisable in whole or in part at such time as may be determined by the Committee and stated in the Option or SAR agreement; provided, however, that, unless otherwise determined by the Committee, no Option or SAR shall be exercisable before one year or after five years from the Date of Grant in the case of an Option or SAR granted to a Ten Percent Shareholder, or before one year or after ten years from the Date of Grant in all other cases, except as provided below:

(i) In the event that an Optionee or Holder ceases to be employed by the Company for any reason other than retirement, disability (as determined by the Committee) or death, any Option or SAR held by such Optionee or Holder shall not be exercisable after the date the Optionee or Holder ceases to be employed by the Company unless otherwise determined by the Committee and set forth in the Option or SAR agreement or a written amendment thereto; provided, however, that in no event shall an Option or SAR be exercisable after five years from the Date of Grant in the case of a Ten Percent Shareholder or after ten years from the Date of Grant in all other cases;

(ii) If an Optionee or Holder ceases to be employed by the Company, and if such cessation of employment is due to the disability (as determined by the Committee) or the retirement of the Optionee or Holder, he or she shall have the right to exercise his or her Options or SARs until the last day of the sixth month following cessation of employment, or such longer period as the Committee may determine and set out in writing, even if the date of exercise is within any time period prescribed by the Plan prior to which such Option or SAR shall not be exercisable; provided, however, that in no event shall an Option or SAR be exercisable after five years from the Date of Grant in the case of a Ten Percent Shareholder or after ten years from the Date of Grant in all other cases;

(iii) In the event that an Optionee or Holder ceases to be employed by the Company by reason of his or her death, any Incentive Stock Option, Non-Qualified Option or SAR held by such Optionee or Holder shall be exercisable, the person to whom the rights of the Optionee shall be passed by will or by the laws of descent and distribution, until the last day of the twelfth month following the date of the Optionee’s or Holder’s death, or such longer period as the Committee may determine and set out in writing, even if the date of exercise is within any time period prescribed by the Plan prior to which such Option or SAR shall not be exercisable; provided, however, that in no event shall an Option or SAR be exercisable after five years from the Date of Grant in the case of a Ten Percent Shareholder or after ten years from the Date of Grant in all other cases.

(g) Date of Exercise. The date of exercise of an Option or SAR shall be the date on which written notice of exercise, addressed to the Parent Company at its main office to the attention of its Secretary, is hand delivered, telecopied or mailed, first class postage prepaid; provided, however, that the Parent Company shall not be obligated to deliver any certificates for Shares pursuant to the exercise of an Option or SAR until the Optionee shall have made payment in full of the option price for such Shares. Each such exercise shall be irrevocable when given. Each notice of exercise must (i) specify the Incentive Stock Option, Non-Qualified Option, SAR, or combination thereof, being exercised; (ii) must, in the case of the exercise of an Option, include a statement of preference (which shall not be binding on the Committee) as to the manner in which payment to the Parent Company shall be made (Shares or cash or a combination of Shares and cash); and (iii) must, in the case of the exercise of an SAR, include a statement of preference (which shall not be binding on the Committee) as to the manner in which payment to the Holder shall be made other than only in cash (Shares or cash or a combination of Shares and cash).

(h) Termination of Employment. For purposes of the Plan, a transfer of an employee between two employers, each of which is a Company, shall not be deemed a termination of employment.

(i) Multiple Grants of Incentive Stock Options, Non-Qualified Options and SARs. The grant, exercise, termination or expiration of any Incentive Stock Option, Non-Qualified Option or SAR shall have no effect upon any other Incentive Stock Option, Non-Qualified Option or SAR held by the same Optionee or Holder; provided, however, that the Committee may, in its sole discretion, provide in the Option agreement or SARs agreement that the exercise of a certain number of SARs is conditioned upon the exercise of a certain number of Options or provide that an SAR shall otherwise be attached to Options granted under the Plan. All SARs which are attached to Options shall be subject to the following terms:

(A) such SAR shall expire no later than the Option to which it is attached;

(B) such SAR shall be for an amount no more than the excess of the Fair Market Value of the Shares subject to the attached Option on the date such SAR is exercised over the option price of such Option;

(D) such SAR shall be exercisable only when the Option to which it attached is eligible to be exercised;

(E) such SAR shall be exercisable only when the Fair Market Value of the Shares subject to the attached Option exceeds the option price of such Option; and

(F) such SAR shall expire upon the exercise of the Option to which it is attached. Upon exercise of an SAR which is attached to an Option, the Option to which the SAR is attached shall expire.

9. Limitation on Grant of Incentive Stock Options

The aggregate Fair Market Value (determined as of the time options are granted) of the Shares for which any employee may be granted Incentive Stock Options that first become exercisable in any one calendar year under the Plan and any other plan of his or her employer corporation and its parent and subsidiary corporations, as defined respectively in Sections 425(e) and (f) of the Code, shall not exceed $100,000.

10. Rights As Shareholders With Respect to Options and SARs

Neither an Optionee nor a Holder shall have any right as a shareholder with respect to any Shares subject to his or her Options or SARs until the date of the issuance of a stock certificate to him or her for such Shares.

11. Restricted Stock Awards

The grant of a Restricted Stock Award shall be subject to the following terms and conditions:

(a) Grant of Restricted Stock Award. Any Restricted Stock granted under the Plan shall be evidenced by an agreement executed by the Company and the Holder, which agreement shall conform to the requirements of the Plan, and shall specify (i) the number of Shares subject to the Award, (ii) the Restriction Period applicable to each Award, (iii) the events that will give rise to a forfeiture of the Award, (iv) the Performance Goals that must be achieved in order for the restriction to be removed from the Award, (v) the extent to which the Holder’s right to receive the Shares under the Award will be forfeited if the Performance Goals are not met, and (vi) whether the Restricted Stock is subject to a vesting schedule. The agreement may contain such other provisions not inconsistent with the terms of the Plan as the Committee shall deem advisable.

(b) Delivery of Restricted Stock. Upon determination of the number of shares of Restricted Stock that are to be granted to the Holder, the Committee shall direct that a certificate or certificates representing the number of Shares be issued to the Holder with the Holder designated as the registered owner. The certificate(s) representing such shares shall be legended as to restrictions on the sale, transfer, assignment, or pledge of the Restricted Stock during the Restriction Period and deposited by the Holder, together with a stock power endorsed in blank, with the Company.

(c) Dividend Equivalents. Notwithstanding any provision of the Plan to the contrary, a Holder who has been granted a Restricted Stock Award pursuant to this Paragraph 11 may, at the discretion of the Committee, be credited as of dividend payment dates during the Restriction Period with Dividend Equivalents with respect to the Shares underlying the Restricted Stock Award. Such Dividend Equivalents shall be credited to an account established on behalf of the Holder by the Company. The Dividend Equivalents credited under this Paragraph (c) shall be notionally reinvested in Shares and shall be converted into additional Shares under such formula, at such time, and subject to such limitations as may be determined by the Committee.

(d) Receipt of Common Stock. At the end of the Restriction Period, the Committee shall determine, in light of the terms and conditions set forth in the Restricted Stock agreement, the number of shares of Restricted Stock with respect to which the restrictions imposed hereunder shall lapse. The Restricted Stock with respect to which the restrictions shall lapse shall be converted to unrestricted Shares by the removal of the restrictive legends from the Restricted Stock. Thereafter, Shares equal to the number of shares of the Restricted Stock with respect to which the restrictions hereunder shall lapse shall be delivered to the Holder. The Committee may, in its sole discretion, modify or accelerate the vesting and delivery of shares of Restricted Stock.

(e) Termination By Reason of Death, Disability or Retirement. Unless otherwise determined by the Committee, if a Holder ceases to be employed by the Company and such cessation of employment is due to the Holder’s death, disability (as determined by the Committee) or retirement, the vested portion of the Restricted Stock, if any, shall become nonforfeitable. The non-vested portion of the Restricted Stock shall be forfeited as of the date of such termination of employment.

(f) Other Termination. Unless otherwise determined by the Committee at the time of grant, if a Holder ceases to be employed by the Company and such cessation of employment is due to any reason other than for death, disability (as determined by the Committee), retirement, or Qualifying Termination, any Restricted Stock with respect to which the Restriction Period has not expired shall be forfeited.

12. Changes in Capitalization

In the event of a stock dividend, stock split, recapitalization, combination, subdivision, issuance of rights, or other similar corporate change, the Board shall make appropriate adjustments in the aggregate number of Shares that may be covered by Options, SARs or Restricted Stock Awards under the Plan, the number of Shares subject to, and the option price of, each then-outstanding Option, the number of then-outstanding SARs and the Fair Market Value of Shares upon which the Value of such SARs is based, and the number of Shares subject to each then-outstanding Restricted Stock Award.

13. Mergers, Dispositions and Certain Other Transactions

Effective January 1, 2012, notwithstanding any provision of this Plan to the contrary, if, during the Restriction Period of any Restricted Stock Award, the Parent Company or any of the Subsidiary Companies shall be merged into or consolidated with or otherwise combined with or acquired by another person or entity, or there is a divisive reorganization or a liquidation or partial liquidation of the Parent Company, then all Restricted Stock Awards shall become nonforfeitable and immediately payable in cash upon the Qualifying Termination of the Holder, to the extent then still outstanding. Except as otherwise provided in the foregoing sentence of this Paragraph 13, if, during the term of any Option or SAR, or during the Restriction Period of any Restricted Stock Award, the Parent Company or any of the Subsidiary Companies shall be merged into or consolidated with or otherwise combined with or acquired by another person or entity, or there is a divisive reorganization or a liquidation or partial liquidation of the Parent Company, the Parent Company may choose to take no action with regard to the Options, SARs or Restricted Stock Awards outstanding or, notwithstanding any other provision of the Plan, to take any of the following courses of action:

(a) Not less than 15 days or more than 60 days prior to any such transaction, all Optionees and Holders shall be notified that their Options and SARs shall expire on the 15th day after the date of such notice, in which event all Optionees and Holders shall have the right to exercise all of their Options and SARs prior to such new expiration date; or

(b) The Parent Company shall provide in any agreement with respect to any such merger, consolidation, combination or acquisition that the surviving, new or acquiring corporation shall grant options and stock appreciation rights to the Optionees and Holders to acquire shares, or stock appreciation rights in shares in such corporation with respect to which the excess of the fair market value of the shares of such corporation immediately after the consummation of such merger, consolidation, combination or acquisition over the option price, or the value of such stock appreciation rights, shall not be greater than the excess of the Fair Market Value of the Shares over the option price of Options (or, in the case of an SAR, the Value of such SAR) , immediately prior to the consummation of such merger, consolidation, combination or acquisition; or

(c) The Parent Company shall provide that all Restricted Stock Awards that are outstanding on the date of the merger, consolidation, combination or acquisition shall become nonforfeitable or immediately payable in cash; or

(d) The Parent Company shall take such other action as the Board shall determine to be reasonable under the circumstances in order to permit Optionees and Holders to realize the value of rights granted to them under the Plan.

14. Plan Not To Affect Employment

Neither the Plan nor any Award shall confer upon any employee of the Company any right to continue in the employment of the Company.

15. Interpretation

The Committee shall have the power to interpret the Plan and to make and amend rules for putting it into effect and administering it. It is intended that the Incentive Stock Options granted under the Plan shall constitute incentive stock options within the meaning of section 422A of the Code, that the Non-Qualified Options and Restricted Stock Awards shall constitute property subject to federal income tax pursuant to the provisions of section 83 of the Code and that the Plan shall qualify for the exemption available under Rule 16b-3 (or any similar rule) of the Securities and Exchange Commission. The provisions of the Plan shall be interpreted and applied insofar as possible to carry out such intent.

16. Amendments

(a) The Plan may be amended by the Board, but any amendment that increases the aggregate number of Shares that may be issued pursuant to the Plan upon exercise of Options or SARs or upon the grant of a Restricted Stock Award (otherwise than pursuant to Paragraph 12), that changes the class of Eligible Participants, or that otherwise requires the approval of the shareholders of the Parent Company in order to maintain the exemption available under Rule 16b-3 (or any similar rule) of the Securities Exchange Act of 1934, shall require the approval of the holders of such portion of the shares of the capital stock of the Parent Company present and entitled to vote on such amendment as is required by applicable state law and the terms of the Parent Company’s Articles of Incorporation, as then in effect, to make the amendment effective. No outstanding Option, SAR or Restricted Stock Award shall be affected by any such amendment without the written consent of the Optionee, Holder, or other person then entitled to exercise such Option or SAR or receive Shares pursuant to such Restricted Stock Award.

(b) Subject to the provisions of the Plan, the Committee may amend any Option agreement, SARs agreement or Restricted Stock agreement, subject to the consent of the affected Optionee or Holder if such amendment is not favorable to the Optionee or Holder or if such amendment has the effect of changing an Incentive Stock Option to a Non Qualified Option, except that the consent of the Optionee or Holder shall not be required for any amendment made pursuant to Paragraph 13 hereof.

17. Compliance with Section 162(m) of the Code

This Plan is intended to comply with Section 162(m) of the Code with respect to qualified performance-based Awards that may be awarded by the Committee to Eligible Participants. For this purpose, an Award shall constitute qualified performance-based compensation to the extent that it is granted by the Committee on account of the attainment of one or more preestablished, objective performance goals established by the Committee, the material terms of which are disclosed to the shareholders of the Parent Company and satisfaction of such performance goals are certified by the Committee.

18. Securities Laws

The Committee shall have the power to make each Award under the Plan subject to such conditions as it deems necessary or appropriate to comply with the then-existing requirements of the Securities Act of 1933 or the Securities Exchange Act of 1934, including Rule 16b-3 (or any similar rule), of the Securities and Exchange Commission.

19. Effective Date and Term of Plan

The Plan shall expire no later than January 26, 2015, unless sooner terminated by the Board. Any Incentive Stock Option granted before the approval of the Plan by the Parent Company’s shareholders shall be expressly conditioned upon, and shall not be exercisable until, such shareholder approval.

20. General

Each Option, SAR or Restricted Stock Award shall be evidenced by a written instrument containing such terms and conditions not inconsistent with the Plan as the Committee may determine. The issuance of Shares on the exercise of an Option or SAR, or pursuant to a Restricted Stock Award, shall be subject to all of the applicable requirements of the New Jersey Business Corporation Act and other applicable laws, including federal or state securities laws, and all Shares issued under the Plan shall be subject to the terms and restrictions contained in the Articles of Incorporation of the Parent Company, as amended from time to time. Among other things, the Optionee or Holder may be required to deliver an investment representation to the Company in connection with any exercise of an Option or SAR, or in connection with the receipt of Shares pursuant to a Restricted Stock Award, or to agree to refrain from selling or otherwise disposing of the Shares required for a specified period of time or on specified terms.

21. Indemnification

Service on the Committee shall constitute service as a member of the Board. Each member of the Committee shall be entitled, without further act on his or her part, to indemnity from the Parent Company and limitation of liability to the fullest extent provided by applicable law and by the Parent Company’s Articles of Incorporation and/or By laws in connection with or arising out of any action, suit or proceeding with respect to the administration of the Plan or the granting of Awards hereunder in which he or she may be involved by reason of his or her being or having been a member of the Committee, whether or not he or she continues to be such member of the Committee at the time of the action, suit or proceeding.