Exhibit 10.1

 

 

THE NEW YORK TIMES COMPANY

2010 INCENTIVE COMPENSATION PLAN

 

 

1. Purpose of the Plan

The purpose of this 2010 Incentive Compensation Plan (the “Plan”) is to advance
the interests of the Company and its stockholders by providing a means (a) to
attract, retain, and reward directors, officers, other employees, and persons
who provide services to the Company and its Subsidiaries, (b) to link
compensation to measures of the Company’s performance in order to provide
additional incentives, including stock-based incentives and cash-based
incentives, to such persons for the creation of stockholder value, and (c) to
enable such persons to acquire or increase a proprietary interest in the Company
in order to promote a closer identity of interests between such persons and the
Company’s stockholders. The Plan is intended to replace the Company’s 1991
Executive Stock Incentive Plan and the Company’s 1991 Executive Cash Bonus Plan,
provided that awards outstanding under such plans as of the Effective Date shall
remain outstanding in accordance with their terms.

2. Definitions

Capitalized terms used in the Plan and not defined elsewhere in the Plan shall
have the meaning set forth in this Section.

2.1    “Award” means a Cash-Based Award or a Share-Based Award.

2.2    “Beneficiary” means the person(s) or trust(s) entitled by will or the
laws of descent and distribution to receive any rights with respect to an Award
that survive such Participant’s death, provided that if at the time of a
Participant’s death, the Participant had on file with the Committee a written
designation of a person(s) or trust(s) to receive such rights, then such
person(s) (if still living at the time of the Participant’s death) or trust(s)
shall be the “Beneficiary” for purposes of the Plan.

2.3    “Board” means the Board of Directors of the Company.

2.4    “Cash-Based Award” means a compensatory award made pursuant to the Plan
pursuant to which a Participant receives, or has the opportunity to receive,
cash, other than an award pursuant to which the amount of cash is determined by
reference to the value of a specific number of Shares. For the avoidance of
doubt, Dividend-Equivalent Rights constitute Cash-Based Awards.

2.5    “Change in Control” shall mean, unless otherwise provided by the
Committee with respect to an Award:

(a) a “person” or “group” within the meaning of Section 13(d) of the Exchange
Act (other than any descendant (or any spouse thereof) of Iphigene Ochs
Sulzberger or any beneficiary or trustee (as the same may change from time to
time) of a trust over 50% of the individual beneficiaries of which are
descendants (or any spouses thereof) of Iphigene Ochs Sulzberger) shall have
obtained the right or ability by voting power, contract or otherwise to elect or
designate for election at least a majority of the Board; or

(b) consummation of any share exchange, consolidation or merger of the Company
pursuant to which the Common Stock will be converted into cash, securities or
other property or any sale, lease or other transfer in one transaction or a
series of transactions of the consolidated assets of the Company and its
Subsidiaries substantially as an entirety to any “person” or “group” within the
meaning of Section 13(d) of the Exchange Act, other than one of the
Subsidiaries; provided, however, that any such share exchange, consolidation or
merger will not be a Change in Control if holders of the Common Stock
immediately prior to such transaction collectively own, directly or indirectly,
more than 50% of all classes of common equity of the continuing or surviving
corporation or transferee or the parent thereof immediately after such
transaction in substantially the same proportion as such ownership immediately
prior to such share exchange, consolidation or merger.

2.6    “Code” means the Internal Revenue Code of 1986, as amended, including
regulations thereunder and successor provisions and regulations thereto.

 

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2.7    “Committee” means the Compensation Committee of the Board, or another
committee appointed by the Board to administer the Plan or any part thereof, or
the Board, where the Board is acting as the Committee or performing the
functions of the Committee, as set forth in Section 3.

2.8    “Common Stock” means the Class A and Class B Common Stock of the Company,
or such other class or classes of capital stock of the Company that shall have
the right to vote in the election of Board members.

2.9    “Company” means The New York Times Company, a corporation organized under
the laws of the State of New York.

2.10    “Dividend-Equivalent Right” means the right to receive an amount,
calculated with respect to a Share-Based Award, which is determined by
multiplying the number of Shares subject to the applicable Award by the
per-Share cash dividend, or the per-Share Fair Market Value (as determined by
the Committee) of any dividend in consideration other than cash, paid by the
Company on Shares.

2.11    “Effective Date” means the date the Plan is approved by the Company’s
stockholders.

2.12    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

2.13    “Fair Market Value” means, with respect to the Shares, the average of
the highest and lowest sale price for the Shares as reported by the composite
transaction reporting system for securities listed on the New York Stock
Exchange (or such other national securities exchange on which the Shares may be
listed at the time of determination, and if the Shares are listed on more than
one exchange, then the one located in New York, or if the Shares are listed on
the Nasdaq stock market, then on such exchange) on the date as of which such
determination is being made or on the most recently preceding date on which
there was such a sale.

2.14    “Non-Employee Director” means a member of the Board who is not employed
by the Company or any Subsidiary.

2.15    “Participant” means any employee, director, or other service provider
who has been granted an Award under the Plan.

2.16    “Qualified Member” means a member of the Committee who is a
“non-employee director” of the Company as defined in Rule 16b-3(b)(3) under the
Exchange Act and an “outside director” within the meaning of Regulation §
1.162-27 under Code Section 162(m).

2.17    “Retirement” means retirement as defined by the terms of “The New York
Times Companies Pension Plan” which became effective December 31, 1988, or any
successor retirement plan, whether or not the Participant is a member of such
retirement plan, and, in the case of employees of Affiliated Publications, Inc.,
or any subsidiary thereof, who retire under the terms of the Globe Newspaper
Company Retirement Plan, which became effective January 1, 1994 (the “Globe
Pension Plan”) or any successor retirement plan, “Retirement” shall also mean
retirement as defined by the terms of the Globe Pension Plan or any successor
plan.

2.18    “Share-Based Award” means a compensatory award made pursuant to the Plan
pursuant to which a Participant receives, or has the opportunity to receive,
Shares, or receives, or has the opportunity to receive, cash, where the amount
of cash is determined by reference to the value of a specific number of Shares.
Share-Based Awards shall include, without limitation, stock options, stock
appreciation rights, restricted stock, restricted stock units, stock units, and
bonus shares.

2.19    “Shares” means shares of Class A Common Stock of the Company and such
other securities as may be substituted or resubstituted for Shares pursuant to
Section 7.

2.20    “Subsidiary” means: (a) any entity in which the Company owns at least
50% of the equity interests; and (b) any entity that is, either directly or
through one or more intermediaries, controlled by the Company, as determined by
the Committee.

2.21    “Time-Based Award” means any Share-Based Award, the vesting of which is
conditional solely upon a Participant’s continued employment with the Company or
any Subsidiary.

 

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3. Administration

3.1    Committee. A Committee appointed by the Board, all of whom shall be
Non-Employee Directors, shall administer the Plan. At any time that a member of
the Committee is not a Qualified Member, (a) any action of the Committee
relating to an Award intended by the Committee to qualify as “performance-based
compensation” within the meaning of Code Section 162(m) and regulations
thereunder may be taken by a subcommittee, designated by the Committee or the
Board, composed solely of two or more Qualified Members, and (b) any action
relating to an Award granted or to be granted to a Participant who is then
subject to Section 16 of the Exchange Act in respect of the Company may be taken
either by the Board, a subcommittee of the Committee consisting of two or more
Qualified Members or by the Committee but with each such member who is not a
Qualified Member abstaining or recusing himself or herself from such action,
provided that, upon such abstention or recusal, the Committee remains composed
of two or more Qualified Members. Such action, authorized by such a subcommittee
or by the Committee upon the abstention or recusal of such non-Qualified
Member(s), shall be the action of the Committee for purposes of the Plan. The
Committee shall serve at the pleasure of the Board and shall have such powers as
the Board may from time to time confer upon it. Other provisions of the Plan
notwithstanding, the Board may perform any function of the Committee under the
Plan, and that authority specifically reserved to the Board under the terms of
the Plan, the Company’s Certificate of Incorporation, By-Laws, or applicable law
shall be exercised by the Board and not by the Committee. The Board shall serve
as the Committee in respect of any Awards made to any Non-Employee Director.

3.2    Powers and Duties of Committee. In addition to the powers and duties
specified elsewhere in the Plan, the Committee shall have full authority and
discretion to:

(a) adopt, amend, suspend, and rescind such rules and regulations and appoint
such agents as the Committee may deem necessary or advisable to administer the
Plan;

(b) correct any defect or supply any omission or reconcile any inconsistency in
the Plan, construe and interpret the Plan, any Award, any rules and regulations
hereunder, or other instrument hereunder, and correct any defect or
inconsistency with the terms of the Plan with respect to any Award hereunder;

(c) make determinations relating to eligibility for and entitlements in respect
of Awards, and to make all factual findings related thereto; and

(d) make all other decisions and determinations as may be required under the
terms of the Plan or as the Committee may deem necessary or advisable for the
administration of the Plan.

All determinations and decisions of the Committee shall be final and binding
upon a Participant or any person claiming any rights under the Plan from or
through any Participant, and the Participant or such other person may not
further pursue his or her claim in any court of law or equity or other arbitral
proceeding.

3.3    Delegation by Committee. The Committee may delegate, on such terms and
conditions as it determines in its sole and absolute discretion, to a
sub-committee or to one or more officers of the Company, all or any portion of
its authority, to the extent consistent with applicable law, including
Section 16 of the Exchange Act and Code Section 162(m); the applicable rules of
any stock exchange; and Section 5.2 of the Plan. Any such allocation or
delegation may be revoked by the Committee at any time.

3.4    Limitation of Liability. Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished to
him or her by any officer or other employee of the Company or any Subsidiary,
the Company’s independent registered public accounting firm, or any executive
compensation consultant, legal counsel, or other professional retained by the
Company to assist in the administration of the Plan. No member of the Committee,
nor any officer or employee of the Company acting on behalf of the Committee,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of the
Committee and any officer or employee of the Company acting on behalf of the
Committee shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination, or
interpretation.

4. Awards

4.1    Eligibility. The Committee shall have the discretion to select Award
recipients from among the following categories of eligible recipients:
(a) individuals who are employees (including officers) of the Company or any
Subsidiary, (b) persons who provide services to the Company or any Subsidiary
who are not otherwise employed by the Company, and (c) Non-Employee Directors.
Notwithstanding the foregoing, employees of, or service providers to,
Subsidiaries in which the Company owns, directly or indirectly, less than 50% of
the equity interests are eligible to receive an Award only to the extent that
such Award is based upon legitimate business criteria, consistent with Code
Section 409A.

 

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4.2    Type of Awards. The Committee shall have the discretion to determine the
type of Award to be granted to a Participant. The Committee is authorized to
grant Awards as a bonus, or to grant Awards in lieu of obligations of the
Company or any Subsidiary to pay cash or grant other awards under other plans or
compensatory arrangements, to the extent permitted by such other plans or
arrangements.

4.3    Terms and Conditions of Awards.

(a) Generally. The Committee shall determine the size of each Award to be
granted (including, where applicable, the number of Shares to which an Award
will relate, subject to Section 6.1), and all other terms and conditions of each
such Award (including, but not limited to, any exercise price, grant price, or
purchase price, any restrictions or conditions relating to transferability,
forfeiture, exercisability, or settlement of an Award, any schedule or
performance conditions for the lapse of such restrictions or conditions, and
accelerations or modifications thereof, based in each case on such
considerations as the Committee shall determine, and any expiration date).
Notwithstanding the foregoing but subject to Section 7, (i) the price per Share
at which Shares may be purchased upon the exercise of a stock option shall not
be less than 100% of the Fair Market Value per Share on the date of grant of
such stock option; (ii) with respect to stock appreciation rights, the price per
Share from which stock appreciation is measured shall not be less than one
hundred percent (100%) of the Fair Market Value of such Share on the date of
grant of the stock appreciation right; and (iii) Dividend-Equivalent Rights
shall not be granted with respect to stock options or stock appreciation rights.
The Committee may determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award may be
paid, in cash, Shares, other Awards, or other consideration, or an Award may be
canceled, forfeited, or surrendered. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee. The
Committee may use such business criteria and measures of performance as it may
deem appropriate in establishing performance conditions, and may exercise its
discretion to reduce or increase the amounts payable under any Award subject to
performance conditions, except as limited under Section 5.1 in the case of a
Performance Award intended to qualify under Code Section 162(m). Notwithstanding
the foregoing, Dividend-Equivalent Rights shall not be paid with respect to
unvested performance shares and performance units, and any amounts accruing with
respect to such Awards will only be paid to the extent the performance shares or
performance units become vested.

(b) Vesting in connection with a Change in Control. Notwithstanding
Section 4.3(a), unless otherwise provided with respect to an Award:

(i) if, pursuant to action taken by the Committee pursuant to Section 7, the
unvested portion of a Time-Based Award that is outstanding at the time of a
Change in Control is to be cancelled, forfeited or otherwise expire upon the
Change in Control without the receipt of consideration therefor, then such
Time-Based Award shall become fully vested immediately prior to the Change in
Control; and

(ii) if the unvested portion of the Time-Based Award is to remain outstanding
following the Change in Control or is substituted with a new award, the portion
of the Time-Based Award or substituted award that remains outstanding but
unvested at the time of any termination of the Participant’s employment by his
or her employer within 12 months following the Change in Control shall become
fully vested immediately prior to such termination, unless such termination is
on account of the Participant’s total and permanent disability; Retirement;
death; or willful and gross misconduct or willful failure to perform services
for his or her employer.

4.4    Option Repricing. Notwithstanding anything in the Plan to the contrary,
the Committee may not reprice stock options or stock appreciation rights, nor
may the Board amend the Plan to permit repricing of stock options or stock
appreciation rights, unless the stockholders of the Company provide prior
approval for such repricing. The term “repricing” shall have the meaning given
that term in Section 303A.08 of the New York Stock Exchange Listed Company
Manual, as in effect from time to time, and shall not include adjustments
pursuant to Section 7 of the Plan.

4.5    Stand-Alone, Additional, Tandem, and Substitute Awards. Subject to
Section 4.4, Awards granted under the Plan may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another
plan of the Company, any Subsidiary, or any business entity to be acquired by
the Company or a Subsidiary, or any other right of a Participant to receive
payment from the Company or any Subsidiary, and in granting a new Award, the
Committee may determine that the value of any surrendered Award or award may be
applied to reduce the exercise price of any stock option or stock appreciation
right or purchase price of any other Award.

4.6    Award Notice. The Committee shall cause each Participant to be notified
of each Award hereunder and the terms thereof pursuant to such means as the
Committee may determine. The Committee may, but shall not be obligated to,
require that a Participant enter into an agreement evidencing any Award
hereunder.

 

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5. Performance Awards

5.1    Performance Awards Granted to Designated Covered Employees. If the
Committee determines that an Award to be granted to an eligible person who is
designated by the Committee as likely to be a Covered Employee (as defined
below) should qualify as “performance-based compensation” for purposes of Code
Section 162(m), the grant, exercise, and/or settlement of such Award (a
“Performance Award”) shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 5.1. This
Section 5.1 shall not apply to Awards that otherwise qualify as
“performance-based compensation” by reason of Regulation §1.162-27(e)(2)(vi)
(relating to certain stock options and stock appreciation rights).

(a) Performance Goals Generally. The performance goals for such Performance
Awards shall consist of one or more business criteria and a targeted level or
levels of performance with respect to each such criteria, as specified by the
Committee consistent with this Section 5.1. Performance goals shall be objective
and shall otherwise meet the requirements of Code Section 162(m) and regulations
thereunder (including Regulation §1.162-27 and successor regulations thereto),
including the requirement that the level or levels of performance targeted by
the Committee result in the achievement of performance goals being
“substantially uncertain.” The Committee may determine that such Performance
Awards shall be granted, exercised, and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must be achieved
as a condition to grant, exercise, and/or settlement of such Performance Awards.
Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.

(b) Business Criteria. One or more of the following business criteria for the
Company, on a consolidated basis, and/or for specified Subsidiaries, affiliates,
divisions, or other business units of the Company (where the criteria are
applicable), shall be used by the Committee in establishing performance goals
for Performance Awards:

(i) earnings per share, adjusted earnings per share, or growth in earnings per
share;

(ii) revenues or revenue growth, including revenue growth compared to expense
growth;

(iii) cash flow, free cash flow, operating cash flow, or operating cash flow
margin;

(iv) return on investment, return on assets, return on net assets, return on
capital, return on stockholder’s equity, return on invested capital, or return
on sales;

(v) profitability;

(vi) economic value added, as measured by the amount by which a business unit’s
earnings exceed the cost of the equity and debt capital used by the business
unit during the relevant performance period;

(vii) operating margins, operating cash flow margins or profit margins;

(viii) income or earnings before or after taxes; earnings before or after taxes,
interest, depreciation and amortization; operating profit; operating earnings;
pretax operating earnings, before or after interest expense and before or after
incentives; net income (before or after taxes), adjusted net income, or net
sales;

(ix) total stockholder return, stockholders’ equity, or stock price;

(x) book value per share;

(xi) costs, expense management, operating expenses, or operating expenses as a
percentage of revenue;

(xii) improvements in capital structure; working capital;

(xiii) market share; and

(xiv) any of the above goals as compared to the performance of a published or
special index deemed applicable by the Committee including, but not limited to,
the Standard & Poor’s 500 Stock Index or a group of comparator companies.

(c) Performance Period; Timing for Establishing Performance Award Terms.
Achievement of performance goals in respect of such Performance Awards shall be
measured over a performance period as specified by the Committee. Performance
goals, amounts payable upon achievement of such goals, and other material terms
of Performance Awards shall be established by the Committee (a) while the
performance outcome for that performance period is substantially uncertain; and
(b) no more than 90 days after the commencement of the performance period to
which the performance goal relates or, if less, the number of days which is
equal to 25 percent of the relevant performance period. To the extent consistent
with Code

 

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Section 162(m), the Committee shall specify the circumstances in which such
Performance Awards shall be paid or forfeited in the event of termination of the
Participant’s employment prior to the end of a performance period or settlement
of Performance Awards, including providing any Participant with a pro rata
portion of the amount payable pursuant to any Performance Award in the event of
such termination of employment, based on actual levels of achievement during
such performance period.

(d) Performance Award Pool. The Committee may establish a Performance Award
pool, which shall be an unfunded pool, for purposes of measuring performance of
the Company in connection with Performance Awards. The amount of such
Performance Award pool shall be based upon the achievement of a performance goal
or goals based on one or more of the business criteria set forth in
Section 5.1(b) hereof during the given performance period, as specified by the
Committee in accordance with Section 5.1(c) hereof. The Committee may specify
the amount of the Performance Award pool as a percentage of any of such business
criteria, a percentage thereof in excess of a threshold amount, or as another
amount which need not bear a strictly mathematical relationship to such business
criteria. In such case, Performance Awards may be granted as rights to payment
of a specified portion of the Award pool, and such grants shall be subject to
the requirements of Section 5.1(c).

(e) Settlement of Performance Awards; Other Terms. Settlement of such
Performance Awards shall be in cash, Shares, or other Awards, in the discretion
of the Committee. The Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with such Performance Awards, but
may not exercise discretion to increase any such amount payable to a Covered
Employee in respect of a Performance Award subject to this Section 5.1.

(f) Impact Of Extraordinary Items Or Changes In Accounting. To the extent
applicable, subject to the following sentence, the determination of achievement
of performance goals shall be determined based on the relevant financial
measure, computed in accordance with U.S. generally accepted accounting
principles (“GAAP”), and in a manner consistent with the methods used in the
Company’s audited financial statements. To the extent permitted by Code
Section 162(m), in setting the performance goals within the period prescribed in
Section 5.1(c), the Committee may provide for appropriate adjustment for one or
more of the following items: asset write-downs; litigation or claim judgments or
settlements; changes in accounting principles; changes in tax law or other laws
affecting reported results; changes in commodity prices, including newsprint;
severance, contract termination, and other costs related to exiting, modifying
or reducing any business activities; costs of, and gains and losses from, the
acquisition, disposition, or abandonment of businesses or assets; gains and
losses from the early extinguishment of debt; gains and losses in connection
with the termination or withdrawal from a pension plan; stock compensation costs
and other non-cash expenses; any extraordinary non-recurring items as described
in Accounting Principles Board Opinion No. 30 and/or in management’s discussion
and analysis of financial condition and results of operation appearing in the
Company’s annual report to stockholders for the applicable year; and any other
specified non-operating items as determined by the Committee in setting
performance goals.

5.2    Written Determinations. Determinations by the Committee as to the
establishment of performance goals, the amount potentially payable in respect of
Performance Awards, the achievement of performance goals relating to Performance
Awards, and the amount of any final Performance Award shall be recorded in
writing. Specifically, the Committee shall certify in writing, in a manner
conforming to applicable regulations under Code Section 162(m), prior to
settlement of each Performance Award, that the performance goals and other
material terms of the Performance Award upon which settlement of the Performance
Award was conditioned have been satisfied. The Committee may not delegate any
responsibility relating to such Performance Awards.

5.3    Status of Section 5.1 Awards under Code Section 162(m). It is the intent
of the Company that Performance Awards under Section 5.1 constitute
“performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder. Accordingly, the terms of Sections 5.1, 5.2 and 5.3,
including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
“Covered Employee” as used herein shall mean only a person designated by the
Committee, at the time of grant of a Performance Award, as likely to be a
Covered Employee with respect to a specified fiscal year. If any provision of
the Plan as in effect on the date of adoption of any agreements relating to
Performance Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.

6. Limitations on Awards

6.1    Aggregate Number of Shares Available for Awards. Subject to Section 7,
the number of Shares issued to Participants or their Beneficiaries upon the
grant, exercise or other settlement of all Awards shall not exceed 8,000,000

 

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Shares. Upon stockholder approval of the Plan, no further awards will be made
under the Company’s 1991 Executive Stock Incentive Plan or the Company’s 1991
Executive Cash Bonus Plan. If the exercise price of an option to purchase Shares
granted under the Plan, or the tax withholding requirements with respect to any
Award, is satisfied by tendering Shares to the Company (by either actual
delivery or by attestation) or withholding Shares otherwise to be delivered
pursuant to such Award, or if a stock appreciation right is exercised, only the
number of Shares issued, net of the Shares tendered or withheld, if any, will be
deemed issued for purposes of this Section 6.1. Any Shares underlying any Award
under the Plan that is cancelled, forfeited, lapses or is otherwise terminated
without an issuance of Shares being made thereunder will no longer be counted
against the foregoing maximum share limitation and may again be made subject to
Awards under the Plan. Shares issued under the Plan may be authorized but
unissued Shares or treasury Shares, including Shares purchased by the Company on
the open market for purposes of the Plan or otherwise.

6.2    Per Participant Limitation on Share-Based Awards. In any calendar year,
no Participant may be granted any Share-Based Awards in the form of either stock
options or stock appreciation rights for more than 1,000,000 Shares in the
aggregate. In addition, in any calendar year, a Participant shall not be granted
any other Share-Based Awards that are intended to be Performance Awards that
relate to more than 500,000 Shares. If the number of Shares ultimately payable
in respect of an Award is a function of future achievement of performance
targets, then for purposes of these limitations, the number of Shares to which
such Award relates shall equal the number of Shares that would be payable
assuming maximum performance was achieved.

6.3    Per Participant Limitation on Cash-Based Awards. In any calendar year, no
Participant may be granted (i) Cash-Based Awards that are intended to be
Performance Awards, with respect to which performance will be measured over a
period that cannot exceed one year, that can be settled for more than $5,000,000
in the aggregate; and (ii) Cash-Based Awards that are intended to be Performance
Awards, with respect to which performance will be measured over a period that
may exceed one year, that can be settled for more than $5,000,000 in the
aggregate.

7. Adjustments

If there is any change in the number or kind of Shares outstanding (a) by reason
of a stock dividend, spinoff, recapitalization, stock split, or combination or
exchange of Shares, (b) by reason of a merger, reorganization or consolidation,
(c) by reason of a reclassification or change in par value, or (d) by reason of
any other extraordinary or unusual event affecting the Company’s outstanding
capital stock without the Company’s receipt of consideration, or if the value of
outstanding Shares is substantially reduced as a result of a spinoff or the
Company’s payment of an extraordinary dividend or distribution, the maximum
number of Shares available for issuance under the Plan, the maximum number of
Shares for which any individual may receive Awards in any year, the kind and
number of Shares covered by outstanding Awards, the kind and number of Shares
issued and to be issued under the Plan, and the price per Share or the
applicable market value of such Awards and the exercise price, grant price or
purchase price relating to any Award shall be equitably adjusted by the
Committee to reflect any increase or decrease in the number of, or change in the
kind or value of, the issued shares of Company capital stock to preclude, to the
extent practicable, the enlargement or dilution of rights and benefits under the
Plan and such outstanding Awards; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated. In addition, the Committee
is authorized to make adjustments in the terms and conditions of, and the
criteria included in, Awards (including cancellation of Awards in exchange for
the intrinsic (i.e., in-the-money) value, if any, of the vested portion thereof,
substitution of Awards using securities or other obligations of a successor or
other entity, acceleration of the expiration date for Awards, or adjustment to
performance goals in respect of Awards) in recognition of unusual or
nonrecurring events (including, without limitation, a Change in Control, events
described in the preceding sentence, and acquisitions and dispositions of
businesses and assets) affecting the Company, any Subsidiary or any business
unit, or the financial statements of the Company or any Subsidiary, or in
response to changes in applicable laws, regulations, or accounting principles.
In addition, in the event of a Change in Control of the Company, the provisions
of Section 4.3(b) of the Plan shall apply. Any adjustments determined by the
Committee shall be final, binding and conclusive.

8. General Provisions

8.1    Compliance with Laws and Obligations. The Company shall not be obligated
to issue or deliver Shares in connection with any Award or take any other action
under the Plan in a transaction subject to the registration requirements of any
applicable securities law, any requirement under any listing agreement between
the Company and any securities exchange or automated quotation system, or any
other law, regulation, or contractual obligation of the Company, until the
Company is satisfied that such laws, regulations, and other obligations of the
Company have been complied with in full. Shares issued under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations, and other obligations of the Company, including
any requirement that a legend or legends be placed thereon.

 

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8.2    Limitations on Transferability. Awards and other rights under the Plan
will not be transferable by a Participant except to a Beneficiary in the event
of the Participant’s death (to the extent any such Award, by its terms, survives
the Participant’s death), and, if exercisable, shall be exercisable during the
lifetime of a Participant only by such Participant or his guardian or legal
representative; provided, however, that, if and only to the extent permitted by
the Committee, Awards and other rights hereunder may be transferred during the
lifetime of the Participant, for purposes of the Participant’s estate planning
or other purposes consistent with the purposes of the Plan (as determined by the
Committee), and may be exercised by such transferees in accordance with the
terms of such Award. Awards and other rights under the Plan may not be pledged,
mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to
the claims of creditors. A Beneficiary, transferee, or other person claiming any
rights under the Plan from or through any Participant shall be subject to all
terms and conditions of the Plan and any Award applicable to such Participant,
except as otherwise determined by the Committee, and to any additional terms and
conditions deemed necessary or appropriate by the Committee.

8.3    No Right to Continued Employment; Leaves of Absence. Neither the Plan,
the grant of any Award, nor any other action taken hereunder shall be construed
as giving any employee, consultant, director, or other person the right to be
retained in the employ or service of the Company or any of its Subsidiaries (for
the vesting period or any other period of time), nor shall it interfere in any
way with the right of the Company or any of its Subsidiaries to terminate any
person’s employment or service at any time. Unless otherwise specified with
respect to an applicable Award and to the extent consistent with Code
Section 409A, (a) an approved leave of absence shall not be considered a
termination of employment or service for purposes of an Award under the Plan,
and (b) any Participant who is employed by or performs services for a Subsidiary
shall be considered to have terminated employment or service for purposes of an
Award under the Plan if such Subsidiary is sold or no longer qualifies as a
Subsidiary of the Company, unless such Participant remains employed by the
Company or another Subsidiary.

8.4    Taxes. The Company and any Subsidiary is authorized to withhold from any
delivery of Shares in connection with an Award, any other payment relating to an
Award, or any payroll or other payment to a Participant, amounts of withholding
and other taxes due or potentially payable in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company, its Subsidiaries and Participants to satisfy
obligations for the payment of withholding taxes and other tax obligations
relating to any Award. This authority shall include authority to withhold or
receive Shares or other consideration and to make cash payments in respect
thereof in satisfaction of withholding tax obligations.

8.5    Changes to the Plan and Awards. The Board may amend, suspend,
discontinue, or terminate the Plan, any provision thereof, or the Committee’s
authority to grant Awards under the Plan without the consent of stockholders or
Participants, except that any amendment shall be subject to the approval of the
Company’s stockholders, in accordance with the Company’s Certificate of
Incorporation, at or before the next annual meeting of stockholders for which
the record date is after the date of such Board action if such stockholder
approval is required by the Company’s Certificate of Incorporation or any
applicable law, regulation or stock exchange rule. The Board may otherwise, in
its discretion, determine to submit other such amendments to stockholders for
approval. Without the consent of an affected Participant, no amendment,
suspension, discontinuation, or termination of the Plan may materially impair
the rights of such Participant under any Award theretofore granted. The
Committee may amend, suspend, discontinue, or terminate any Award theretofore
granted; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such Participant
under such Award. Unless the Plan is terminated earlier by the Board, the Plan
shall terminate on the day immediately preceding the tenth anniversary of its
Effective Date. The termination of the Plan shall not impair the power and
authority of the Committee with respect to an outstanding Award. Any action
taken by the Committee pursuant to Section 7 shall not be treated as an action
described in this Section 8.5. Notwithstanding anything in the Plan to the
contrary, the Board may amend the Plan and Awards in such manner as it deems
appropriate in the event of a change in applicable law or regulations.

8.6    No Right to Awards; No Stockholder Rights. No Participant or other person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Participants, employees, directors,
and other service providers. No Award shall confer on any Participant any of the
rights of a stockholder of the Company unless and until Shares are duly issued
or transferred and delivered to the Participant in accordance with the terms of
the Award.

8.7    Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an “unfunded” plan for incentive compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award shall give any such Participant any rights that are
greater than those of a general creditor of the Company; provided, however, that
the Committee may authorize the creation of trusts or make other arrangements to
meet the

 

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Company’s obligations under the Plan to deliver cash, Shares, other Awards, or
other consideration pursuant to any Award, which trusts or other arrangements
shall be consistent with the “unfunded” status of the Plan unless the Committee
otherwise determines.

8.8    Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board
nor the submission of the Plan or of any amendment to stockholders for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other compensatory arrangements as it may deem desirable, including
the granting of awards otherwise than under the Plan, and such arrangements may
be either applicable generally or only in specific cases.

8.9    Successors and Assigns. The Plan and Awards may be assigned by the
Company to any successor to the Company’s business. The Plan and any Awards
shall be binding on all successors and assigns of the Company and a Participant,
including any permitted transferee of a Participant, the Beneficiary or estate
of such Participant and the executor, administrator or trustee of such estate,
or any receiver or trustee in bankruptcy or representative of the Participant’s
creditors.

8.10    Governing Law. The Plan and all Awards shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.

8.11    Severability of Provisions. If any provision of the Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and the Plan shall be construed and enforced as if
such provisions had not been included.

8.12    Section 409A. Notwithstanding the other provisions hereof, the Plan and
the Awards are intended to comply with the requirements of Code Section 409A.
Accordingly, all provisions herein and with respect to any Awards shall be
construed and interpreted to be consistent with the requirements of Code
Section 409A to the maximum extent possible; provided, however, that in no event
shall the Company be obligated to reimburse a Participant or Beneficiary for any
additional tax (or related penalties and interest) incurred by reason of
application of Code Section 409A, and the Company makes no representations that
Awards are exempt from or comply with Code Section 409A and makes no
undertakings to ensure or preclude that Code Section 409A will apply to any
Awards. Notwithstanding anything herein to the contrary, in the event that any
Awards constitute nonqualified deferred compensation under Code Section 409A, if
(a) the Participant is a “specified employee” of the Company as of the specified
employee identification date for purposes of Code Section 409A (as determined in
accordance with the policies and procedures adopted by the Company) and (b) the
delivery of any cash or Shares payable pursuant to an Award is required to be
delayed for a period of six (6) months after separation from service pursuant to
Code Section 409A, such cash or Shares shall be paid within fifteen (15) days
after the end of the six-month period. If the Participant dies during such
six-month period, the amounts withheld on account of Code Section 409A shall be
paid to the Participant’s Beneficiary within thirty (30) days of the
Participant’s death. The Committee shall have the discretion to provide for the
payment of an amount equivalent to interest, at such rate or rates fixed by the
Committee, on any delayed payment.

 

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