Exhibit 10.2
ARBITRON INC.
1999 STOCK INCENTIVE PLAN
(Amended as of May 15, 2007)
1. Purpose of Plan.
     The purpose of the Arbitron Inc. 1999 Stock Incentive Plan (the “Plan”) is
to advance the interests of Arbitron Inc. (the “Company”) and its stockholders
by enabling the Company and its Subsidiaries to attract and retain persons of
ability to perform services for the Company and its Subsidiaries by providing an
incentive to such individuals through equity participation in the Company and by
rewarding such individuals who contribute to the achievement by the Company of
its economic objectives.
2. Definitions.
     The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:
     2.1 “Board” means the Board of Directors of the Company.
     2.2 “Broker Exercise Notice” means a written notice pursuant to which a
Participant, upon exercise of an Option, irrevocably instructs a broker or
dealer to sell a sufficient number of shares or loan a sufficient amount of
money to pay all or a portion of the exercise price of the Option and/or any
related withholding tax obligations and remit such sums to the Company and
directs the Company to deliver stock certificates to be issued upon such
exercise directly to such broker or dealer.
     2.3 “Change of Control” means an event described in Section 13.1 of the
Plan or such other definition as may be adopted by the Committee from time to
time in its sole discretion.
     2.4 “Code” means the Internal Revenue Code of 1986, as amended.
     2.5 “Committee” means the group of individuals administering the Plan, as
provided in Section 3 of the Plan.
     2.6 “Common Stock” means the common stock of the Company, par value $0.50
per share, or the number and kind of shares of stock or other securities into
which such Common Stock may be changed in accordance with Section 4.4 of the
Plan.
     2.7 “Disability” means the disability of the Participant such as would
entitle the Participant to receive disability income benefits pursuant to the
long-term disability plan of the Company or Subsidiary then covering the
Participant or, if no such plan exists or is applicable to the Participant, the
permanent and total disability of the Participant within the meaning of
Section 22(e)(3) of the Code.
     2.8 “Dividend Equivalents” shall have the meaning set forth in
Section 14.3.
     2.9 “Eligible Recipients” means all employees (including, without
limitation, officers and directors who are also employees) of the Company or any
Subsidiary and any non-employee directors, consultants and independent
contractors of the Company or any Subsidiary.
     2.10 “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     2.11 “Fair Market Value” means, with respect to the Common Stock as of any
date, the closing market price per share of the Common Stock at the end of the
regular way trading session, which as of the effective date of this Plan is 4:00
p.m., New York City time, as reported on the New York Stock Exchange Composite
Tape on that date (or, if no shares were traded or quoted on such date, as of
the next preceding date on which there was such a trade or quote).

 

--------------------------------------------------------------------------------

 

     2.12 “Freestanding Stock Appreciation Right” shall have the meaning set
forth in Section 7.1.
     2.13 “Incentive Award” means an Option, Stock Appreciation Right,
Restricted Stock Award, Performance Unit or Dividend Equivalent granted to an
Eligible Recipient pursuant to the Plan.
     2.14 “Incentive Stock Option” means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that
qualifies as an “incentive stock option” within the meaning of Section 422 of
the Code.
     2.15 “Non-Statutory Stock Option” means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that does not
qualify as an Incentive Stock Option.
     2.16 “Option” means an Incentive Stock Option or a Non-Statutory Stock
Option.
     2.17 “Participant” means an Eligible Recipient who receives one or more
Incentive Awards under the Plan.
     2.18 “Performance Goal” means one or more of the following performance
goals, either individually, alternatively or in any combination, applied on a
corporate, subsidiary or business unit basis: cash flow, earnings (including one
or more of gross profit, earnings before interest and taxes, earnings before
interest, taxes, depreciation and amortization and net earnings), earnings per
share, individually, margins (including one or more of gross, operating and net
income margins), returns (including one or more of return on assets, equity,
investment, capital and revenue and total stockholder return), stock price,
economic value added, working capital, market share, cost reductions and
strategic plan development and implementation. Such goals may reflect absolute
entity or business unit performance or a relative comparison to the performance
of a peer group of entities or other external measure of the selected
performance criteria. The Committee may appropriately adjust any evaluation of
performance under such goals to exclude any of the following events: asset
write-downs, litigation or claim judgments or settlements, the effect of changes
in tax law, accounting principles or other such laws or provisions affecting
reported results, accruals for reorganization and restructuring programs,
uninsured catastrophic losses, and any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No. 30 or in management’s
discussion and analysis of financial performance appearing in the Company’s
annual report to stockholders for the applicable year.
     2.19 “Performance Unit” means a right granted to an Eligible Recipient
pursuant to Section 9 of the Plan to receive a payment from the Company, in the
form of Common Stock, cash, Stock Units or a combination of the foregoing, upon
the achievement of established performance criteria.
     2.20 “Previously Acquired Shares” means shares of Common Stock that are
already owned by the Participant or, with respect to any Incentive Award, that
are to be issued upon the grant, exercise or vesting of such Incentive Award.
     2.21 “Prior Plans” mean the Ceridian Corporation 1993 Long-Term Incentive
Plan and the Ceridian Corporation 1990 Long-Term Incentive Plan.
     2.22 “Restricted Stock Award” means an award of Common Stock or Stock Units
granted to an Eligible Recipient pursuant to Section 8 of the Plan that is
subject to the restrictions on transferability and the risk of forfeiture
imposed by the provisions of such Section 8.
     2.23 “Retirement” means the termination (other than for Cause or by reason
of death or Disability) of a Participant’s employment or other service on or
after the date on which the Participant has attained the age of 55 and has
completed 10 years of continuous service to the Company or any Subsidiary (such
period of service to be determined in accordance with the retirement/pension
plan or practice of the Company or Subsidiary then covering the Participant,
provided that if the Participant is not covered by any such plan or practice,
the Participant will be deemed to be covered by the Company’s plan or practice
for purposes of this determination).

2

--------------------------------------------------------------------------------

 

     2.24 “Section 162(m)” means Section 162(m) of the Code and the applicable
Treasury Regulations promulgated thereunder.
     2.25 “Securities Act” means the Securities Act of 1933, as amended.
     2.26 “Stock Appreciation Right” shall mean the right granted to a
Participant pursuant to Section 7.
     2.27 “Stock Unit” means a bookkeeping entry representing the equivalent of
one share of Common Stock that is payable in the form of Common Stock, cash or
any combination of the foregoing.
     2.28 “Subsidiary” means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a significant
equity interest, as determined by the Committee.
     2.29 “Substitute Awards” shall mean Incentive Awards granted or shares of
Common Stock issued by the Company in assumption of, or in substitution or
exchange for, awards previously granted, or the right or obligation to make
future awards, by a company acquired by the Company or any Subsidiary or with
which the Company or any Subsidiary combines.
     2.30 “Tandem Stock Appreciation Right” shall have the meaning set forth in
Section 7.1.
     2.31 “Tax Date” means the date any withholding tax obligation arises under
the Code for a Participant with respect to an Incentive Award.
3. Plan Administration.
     3.1 The Committee. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, the Plan will be
administered by a committee (the “Committee”) consisting solely of not less than
two members of the Board who are “Non-Employee Directors” within the meaning of
Rule 16b-3 under the Exchange Act, who are “independent directors” for purposes
of the rules and regulations of the New York Stock Exchange, and, if the Board
so determines in its sole discretion, who are “outside directors” within the
meaning of Section 162(m). To the extent consistent with corporate law, the
Committee may delegate to any directors or officers of the Company the duties,
power and authority of the Committee under the Plan pursuant to such conditions
or limitations as the Committee may establish; provided, however, that only the
Committee may exercise such duties, power and authority with respect to Eligible
Recipients who are subject to Section 16 of the Exchange Act and Section 162(m).
Each determination, interpretation or other action made or taken by the
Committee pursuant to the provisions of the Plan will be conclusive and binding
for all purposes and on all persons, and no member of the Committee will be
liable for any action or determination made in good faith with respect to the
Plan or any Incentive Award granted under the Plan.
     3.2 Authority of the Committee.
          (a) In accordance with and subject to the provisions of the Plan, the
Committee will have the authority to determine all provisions of Incentive
Awards as the Committee may deem necessary or desirable and as consistent with
the terms of the Plan, including, without limitation, the following: (i) the
Eligible Recipients to be selected as Participants; (ii) the nature and extent
of the Incentive Awards to be made to each Participant (including the number of
shares of Common Stock to be subject to each Incentive Award, any exercise
price, the manner in which Incentive Awards will vest or become exercisable and
whether Incentive Awards will be granted in tandem with other Incentive Awards)
and the form of written agreement, if any, evidencing such Incentive Award;
(iii) the time or times when Incentive Awards will be granted; (iv) the duration
of each Incentive Award; and (v) the restrictions and other conditions to which
the payment or vesting of Incentive Awards may be subject. In addition, the
Committee will have the authority under the Plan in its sole discretion to pay
the economic value of any Incentive Award in the form of cash, Common Stock,
Stock Units or any combination of the foregoing.
          (b) Except as otherwise provided in the remainder of this
Section 3.2(b), the Committee will have the authority under the Plan to amend or
modify the terms of any outstanding Incentive Award in any manner, including,
without limitation, the authority to modify the number of shares or other terms
and conditions of an

3

--------------------------------------------------------------------------------

 

Incentive Award, extend the term of an Incentive Award or accelerate the
exercisability or vesting or otherwise terminate any restrictions relating to an
Incentive Award; provided, however that the amended or modified terms are
permitted by the Plan as then in effect and that any Participant adversely
affected by such amended or modified terms has consented to such amendment or
modification. Without prior approval of the Company’s stockholders, the
Committee shall not have the authority under the Plan to (i) amend or modify the
terms of any pre-existing Option awards to lower the Option exercise price or
(ii) authorize the grant of replacement Option awards in substitution for
pre-existing Option awards that have been or are to be surrendered and canceled
at any time when the Fair Market Value of the Common Stock is less than the
exercise price applicable to such surrendered and canceled Option awards.
          (c) In the event of (i) any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, extraordinary dividend or divestiture
(including a spin-off) or any other similar change in corporate structure or
shares, (ii) any purchase, acquisition, sale or disposition of a significant
amount of assets or a significant business, (iii) any change in accounting
principles or practices, or (iv) any other similar change, in each case with
respect to the Company (or any Subsidiary or division thereof) or any other
entity whose performance is relevant to the grant or vesting of an Incentive
Award, the Committee (or, if the Company is not the surviving corporation in any
such transaction, the board of directors of the surviving corporation) may,
without the consent of any affected Participant, amend or modify the grant or
vesting criteria of any outstanding Incentive Award that is based in whole or in
part on the financial performance of the Company (or any Subsidiary or division
thereof) or such other entity so as equitably to reflect such event, with the
desired result that the criteria for evaluating such financial performance of
the Company or such other entity will be substantially the same (in the sole
discretion of the Committee or the board of directors of the surviving
corporation) following such event as prior to such event; provided, however,
that the amended or modified terms are permitted by the Plan as then in effect.
          (d) The Committee may permit or require the deferral of any payment,
issuance or other settlement of an Incentive Award subject to such rules and
procedures as the Committee may establish, including the conversion of such
payment, issuance or other settlement into Options or Stock Units and the
payment or crediting of interest, dividends or dividend equivalents.
4. Shares Available for Issuance.
     4.1 Maximum Number of Shares Available. Subject to adjustment as provided
in Section 4.4 of the Plan, the maximum number of shares of Common Stock that
will be available for issuance under the Plan will be 4,204,009 shares. The
Committee may use shares available for issuance under the Plan as the form of
payment for compensation, awards or rights earned or due under deferred or any
other compensation plans or arrangements of the Company or any Subsidiary. The
shares available for issuance under the Plan may, at the election of the
Committee, be either treasury shares or shares authorized but unissued, and, if
treasury shares are used, all references in the Plan to the issuance of shares
will, for corporate law purposes, be deemed to mean the transfer of shares from
treasury.
     4.2 Calculation of Shares Available. Shares of Common Stock that are issued
under the Plan or that are subject to outstanding Incentive Awards will be
applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan. To the extent that any shares of Common
Stock that are subject to an Incentive Award under the Plan or the Prior Plan
(a) are not issued to a Participant due to the fact that such Incentive Award
lapses, expires, is forfeited or for any reason is terminated unexercised or
unvested, or is settled or paid in cash or (b) are used to satisfy any exercise
price or withholding obligations, such shares will automatically again become
available for issuance under the Plan. In addition, to the extent that a
Participant tenders (either by actual delivery or by attestation) shares of
Common Stock already owned by the Participant to the Company in satisfaction of
any exercise price or withholding tax obligations, such shares will
automatically again become available for issuance under the Plan.
     4.3 Additional Limitations. Notwithstanding any other provisions of the
Plan to the contrary and subject, in each case, to adjustment as provided in
Section 4.4 of the Plan, (a) no more than 2,000,000 shares of Common Stock may
be issued under the Plan with respect to Incentive Stock Options, (b) no more
than 700,000 shares of Common Stock may be issued under the Plan with respect to
Restricted Stock Awards that are not granted in lieu of cash compensation that
would otherwise be payable to Participants, and (c) no Participant in the Plan
may be granted Incentive Awards relating to more than 300,000 shares of Common
Stock in the aggregate during any period of three consecutive fiscal years of
the Company.

4

--------------------------------------------------------------------------------

 

     4.4 Adjustments to Shares and Incentive Awards. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other similar change in the corporate structure or shares of the Company, the
Committee (or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) will make
appropriate adjustments (which determination will be conclusive) as to the
number and kind of securities or other property (including cash) available for
issuance or payment under the Plan and, in order to prevent dilution or
enlargement of the rights of Participants, (a) the number and kind of securities
or other property (including cash) subject to outstanding Options and Stock
Appreciation Rights, and (b) the exercise price of outstanding Options and Stock
Appreciation Rights.
5. Participation.
     Participants in the Plan will be those Eligible Recipients who, in the
judgment of the Committee, have contributed, are contributing or are expected to
contribute to the achievement of economic objectives of the Company or its
Subsidiaries. Eligible Recipients may be granted from time to time one or more
Incentive Awards, singly or in combination or in tandem with other Incentive
Awards, as may be determined by the Committee in its sole discretion. Incentive
Awards will be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date will be the date of any related
agreement with the Participant.
6. Options.
     6.1 Grant. An Eligible Recipient may be granted one or more Options under
the Plan, and such Options will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion and reflected in the award agreement evidencing
such Option. The Committee may designate whether an Option is to be considered
an Incentive Stock Option or a Non-Statutory Stock Option. To the extent that
any Incentive Stock Option granted under the Plan ceases for any reason to
qualify as an “incentive stock option” for purposes of Section 422 of the Code,
such Incentive Stock Option will continue to be outstanding for purposes of the
Plan but will thereafter be deemed to be a Non-Statutory Stock Option.
     6.2 Exercise Price. The per share price to be paid by a Participant upon
exercise of an Option will be determined by the Committee in its discretion at
the time of the Option grant; provided, however, that such price will not be
less than 100% of the Fair Market Value of one share of Common Stock on the date
of grant or, with respect to an Incentive Stock Option (110% of the Fair Market
Value if, at the time the Incentive Stock Option is granted, the Participant
owns, directly or indirectly, more than 10% of the total combined voting power
of all classes of stock of the Company or any parent or subsidiary corporation
of the Company).
     6.3 Exercisability and Duration. An Option will become exercisable at such
times and in such installments as may be determined by the Committee in its sole
discretion at the time of grant; provided, however, that no Option may be
exercisable after 10 years from its date of grant (five years from its date of
grant if the Option is an Incentive Stock Option and if, at the time the
Incentive Stock Option is granted, the Participant owns, directly or indirectly,
more than 10% of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary corporation of the Company).
     6.4 Payment of Exercise Price. The total purchase price of the shares to be
purchased upon exercise of an Option will be paid entirely in cash (including
check, bank draft or money order); provided, however, that the Committee, in its
sole discretion and upon terms and conditions established by the Committee, may
allow such payments to be made, in whole or in part, by tender of a Broker
Exercise Notice, Previously Acquired Shares (including through delivery of a
written attestation of ownership of such Previously Acquired Shares if
permitted, and on terms acceptable, to the Committee in its sole discretion) or
by a combination of such methods.
     6.5 Manner of Exercise. An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions contained in the
Plan and in the agreement evidencing such Option, by delivery in person, by
facsimile or electronic transmission or through the mail of written notice of
exercise to the Company, Attention: Corporate Treasury, at its principal
executive office in Minneapolis, Minnesota and by paying in full the total
exercise price for the shares of Common Stock to be purchased in accordance with
Section 6.4 of the Plan.

5

--------------------------------------------------------------------------------

 

     6.6 Aggregate Limitation of Stock Subject to Incentive Stock Options. To
the extent that the aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which incentive stock options (within the meaning of Section 422 of the Code)
are exercisable for the first time by a Participant during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
subsidiary or parent corporation of the Company (within the meaning of the
Code)) exceeds $100,000 (or such other amount as may be prescribed by the Code
from time to time), such excess Options will be treated as Non-Statutory Stock
Options. The determination will be made by taking incentive stock options into
account in the order in which they were granted. If such excess only applies to
a portion of an Incentive Stock Option, the Committee, in its discretion, will
designate which shares will be treated as shares to be acquired upon exercise of
an Incentive Stock Option.
7. Stock Appreciation Rights.
     7.1 Grant and Exercise. The Committee may provide Stock Appreciation Rights
(a) in conjunction with all or part of any Option granted under the Plan or at
any subsequent time during the term of such Option (“Tandem Stock Appreciation
Right”), (b) in conjunction with all or part of any Incentive Award (other than
an Option) granted under the Plan or at any subsequent time during the term of
such Incentive Award, or (c) without regard to any Option or other Incentive
Award (a “Freestanding Stock Appreciation Right”), in each case upon such terms
and conditions as the Committee may establish in its sole discretion.
     7.2 Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:
          (a) Upon the exercise of a Stock Appreciation Right, the holder shall
have the right to receive the excess of (i) the Fair Market Value of one share
of Common Stock on the date of exercise or such other amount as the Committee
shall so determine at any time during a specified period before the date of
exercise over (ii) the grant price of the right on the date of grant, or in the
case of a Tandem Stock Appreciation Right granted on the date of grant of the
related Option, as specified by the Committee in its sole discretion, which
except in the case of Substitute Awards or in connection with an adjustment
provided in Section 4.4, shall not be less than the Fair Market Value of one
share of Common Stock on such date of grant of the right or the related Option,
as the case may be.
          (b) Upon the exercise of a Stock Appreciation Right, the Committee
shall determine in its sole discretion whether payment shall be made in cash, in
whole shares of Common Stock or other property, or any combination thereof.
          (c) Any Tandem Stock Appreciation Right may be granted at the same
time as the related Option is granted or at any time thereafter before exercise
or expiration of such Option.
          (d) Any Tandem Stock Appreciation Right related to an Option may be
exercised only when the related Option would be exercisable and the Fair Market
Value of the shares of Common Stock subject to the related Option exceeds the
option price at which shares of Common Stock can be acquired pursuant to the
Option. In addition, (i) if a Tandem Stock Appreciation Right exists with
respect to less than the full number of shares of Common Stock covered by a
related Option, then an exercise or termination of such Option shall not reduce
the number of shares to which the Tandem Stock Appreciation Right applies until
the number of shares then exercisable under such Option equals the number of
shares of Common Stock to which the Tandem Stock Appreciation Right applies, and
(ii) no Tandem Stock Appreciation Right granted under the Plan to a person then
subject to Section 16 of the Exchange Act shall be exercised during the first
six months of its term for cash.
          (e) Any Option related to a Tandem Stock Appreciation Right shall no
longer be exercisable to the extent the Tandem Stock Appreciation Right has been
exercised.

6

--------------------------------------------------------------------------------

 

          (f) The provisions of Stock Appreciation Rights need not be the same
with respect to each recipient.
          (g) The Committee may impose such other conditions or restrictions on
the terms of exercise and the exercise price of any Stock Appreciation Right, as
it shall deem appropriate, including providing that the exercise price of a
Tandem Stock Appreciation Right may be less than the Fair Market Value on the
date of grant if the Tandem Stock Appreciation Right is added to an Option
following the date of the grant of the Option. In connection with the foregoing,
the Committee shall consider the applicability and effect of Section 162(m) of
the Code. Notwithstanding the foregoing provisions of this Section 7.2(g), but
subject to Section 4.4, a Freestanding Stock Appreciation Right shall not have
(i) an exercise price less than Fair Market Value on the date of grant, or
(ii) a term of greater than ten years. In addition to the foregoing, but subject
to Section 4.4, the base amount of any Stock Appreciation Right shall not be
reduced after the date of grant.
          (h) The Committee may impose such terms and conditions on Stock
Appreciation Rights granted in connection with any Award (other than an Option)
as the Committee shall determine in its sole discretion.
8. Restricted Stock Awards.
     8.1 Grant. An Eligible Recipient may be granted one or more Restricted
Stock Awards under the Plan, and such Restricted Stock Awards will be subject to
such terms and conditions, consistent with the provisions of the Plan, as may be
determined by the Committee in its sole discretion and reflected in the award
agreement evidencing such Restricted Stock Award. The Committee may impose such
restrictions or conditions, not inconsistent with the provisions of the Plan, to
the vesting of such Restricted Stock Awards as it deems appropriate, including,
without limitation, that the Participant remain in the continuous employ or
service of the Company or a Subsidiary for a certain period or that the
Participant or the Company (or any Subsidiary or division thereof) satisfy
certain performance criteria. Notwithstanding the foregoing and except as result
of a Participant’s death or Disability or in connection with a Change of Control
of the Company, Restricted Stock Awards that provide for (a) vesting upon the
satisfaction of certain performance criteria shall vest over a period of not
less than one year from its date of grant and (b) time based vesting shall vest
over a period of not less than three years from its date of grant; provided,
however, that Restricted Stock Awards granted in lieu of some other form of
compensation to an Eligible Recipient would be permitted without such vesting
restrictions.
     8.2 Rights as a Stockholder; Transferability. Except as provided in
Sections 8.1, 8.3 and 14.3 of the Plan, a Participant will have all voting,
dividend, liquidation and other rights with respect to shares of Common Stock
issued to the Participant as a Restricted Stock Award under this Section 8 upon
the Participant becoming the holder of record of such shares as if such
Participant were a holder of record of shares of unrestricted Common Stock.
     8.3 Dividends and Distributions. Unless the Committee determines otherwise
in its sole discretion (either in the agreement evidencing the Restricted Stock
Award at the time of grant or at any time after the grant of the Restricted
Stock Award), any dividends or distributions (including regular quarterly cash
dividends) paid with respect to shares of Common Stock subject to the unvested
portion of a Restricted Stock Award will not be subject to the same restrictions
as the shares to which such dividends or distributions relate and will be paid
currently to the Participant. In the event the Committee determines not to pay
such dividends or distributions currently, the Committee will determine in its
sole discretion whether any interest will be paid on such dividends or
distributions. In addition, the Committee, in its sole discretion, may require
such dividends and distributions to be reinvested (and in such case the
Participants consent to such reinvestment) in shares of Common Stock that will
be subject to the same restrictions as the shares to which such dividends or
distributions relate.
     8.4 Enforcement of Restrictions. To enforce the restrictions referred to in
this Section 8, the Committee may (a) place a legend on the stock certificates
referring to such restrictions and may require Participants, until the
restrictions have lapsed, to keep the stock certificates, together with duly
endorsed stock powers, in the custody of the Company or its transfer agent, or
(b) maintain evidence of stock ownership, together with duly endorsed stock
powers, in a certificateless book-entry stock account with the Company’s
transfer agent for its Common Stock.

7

--------------------------------------------------------------------------------

 

9. Performance Units.
     An Eligible Recipient may be granted one or more Performance Units under
the Plan, and such Performance Units will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion. The Committee may impose
such restrictions or conditions, not inconsistent with the provisions of the
Plan, to the vesting of such Performance Units as it deems appropriate,
including, without limitation, that the Participant remain in the continuous
employ or service of the Company or any Subsidiary for a certain period or that
the Participant or the Company (or any Subsidiary or division thereof) satisfy
certain performance goals or criteria. The Committee will have the sole
discretion to determine the form in which payment of the economic value of
Performance Units will be made to a Participant (i.e., cash, Common Stock, Stock
Units or any combination of the foregoing) or to consent to or disapprove the
election by a Participant of the form of such payment. Notwithstanding the
foregoing, Performance Units that provide for vesting upon the satisfaction of
certain performance criteria shall vest over a period of not less than three
years from its date of grant; provided, however, that Performance Units granted
in lieu of some other form of compensation to an Eligible Recipient would be
permitted without such vesting restrictions.
10. Performance-Based Compensation Provisions.
     The Committee, when it is comprised solely of two or more outside directors
meeting the requirements of Section 162(m), in its sole discretion, may
designate whether any Incentive Awards are intended to be “performance-based
compensation” within the meaning of Section 162(m). Any Incentive Awards so
designated will, to the extent required by Section 162(m), be conditioned on the
achievement of one or more Performance Goals, and such Performance Goals will be
established by the Committee within the time period prescribed by, and will
otherwise comply with the requirements of, Section 162(m) giving due regard to
the disparate treatment under Section 162(m) of the stock options and stock
appreciation rights where compensation is determined based solely on an increase
in the value of the underlying stock after the date of grant or award, as
compared to other forms of compensation, including restricted stock awards. The
maximum dollar value payable to any Participant with respect to Incentive Awards
that are designated as such “performance-based compensation” and that are valued
with reference to property other than shares of Common Stock may not exceed
$5,000,000 in the aggregate during any period of three consecutive fiscal years
of the Company. Such Committee shall also certify in writing that such
performance goals have been met prior to payment of compensation to the extent
required by Section 162(m).
11. Effect of Termination of Employment or Other Service.
     11.1 Rights Upon Termination. The Committee will have the authority, in its
sole discretion, to determine the effect that termination of a Participant’s
employment or other service with the Company and all Subsidiaries, whether due
to death, Disability, Retirement or any other reason, will have on outstanding
Incentive Awards then held by such Participant.
     11.2 Modification of Rights Upon Termination. Notwithstanding the other
provisions of this Section 11, upon a Participant’s termination of employment or
other service with the Company and all Subsidiaries, the Committee may, in its
sole discretion (which may be exercised at any time on or after the date of
grant, including following such termination), cause Options (or any part
thereof) or Stock Appreciation Rights then held by such Participant to become or
continue to become exercisable and/or remain exercisable following such
termination of employment or service and Restricted Stock Awards and Performance
Units then held by such Participant to vest and/or continue to vest or become
free of restrictions following such termination of employment or service, in
each case in the manner determined by the Committee; provided, however, that no
Option, Stock Appreciation Right or Restricted Stock Award may continue to vest
beyond its expiration date.
     11.3 Date of Termination of Employment or Other Service. Unless the
Committee otherwise determines in its sole discretion, a Participant’s
employment or other service will, for purposes of the Plan, be deemed to have
terminated on the date recorded on the personnel or other records of the Company
or the Subsidiary for which the Participant provides employment or other
service, as determined by the Committee in its sole discretion based upon such
records.

8

--------------------------------------------------------------------------------

 

12. Payment of Withholding Taxes.
     12.1 General Rules. The Company is entitled to (a) withhold and deduct from
future wages of the Participant (or from other amounts which may be due and
owing to the Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any and all federal, state and local withholding and employment-related
tax requirements attributable to an Incentive Award, including, without
limitation, the grant, exercise or vesting of, or payment of dividends with
respect to, an Incentive Award or a disqualifying disposition of stock received
upon exercise of an Incentive Stock Option, or (b) require the Participant
promptly to remit the amount of such withholding to the Company before taking
any action with respect to an Incentive Award.
     12.2 Special Rules. The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 12.1 of the Plan (up to
the minimum statutory rate) by electing to tender Previously Acquired Shares, a
Broker Exercise Notice or a promissory note (on terms acceptable to the
Committee in its sole discretion), or by a combination of such methods.
13. Change of Control.
     13.1 Definitions. For purposes of this Section 13, the following
definitions will apply:
          (a) “Benefit Plan” means any formal or informal plan, program or other
arrangement heretofore or hereafter adopted by the Company or any Subsidiary for
the direct or indirect provision of compensation to the Participant (including
groups or classes of participants or beneficiaries of which the Participant is a
member), whether or not such compensation is deferred, is in the form of cash or
other property or rights, or is in the form of a benefit to or for the
Participant.
          (b) “Change of Control” means any of the following events:
               (1) a merger or consolidation to which the Company is a party if
the individuals and entities who were stockholders of the Company immediately
prior to the effective date of such merger or consolidation have beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of less than 50% of
the total combined voting power for election of directors of the surviving
corporation immediately following the effective date of such merger or
consolidation;
               (2) the direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) in the aggregate of securities of the Company
representing 25% or more of the total combined voting power of the Company’s
then issued and outstanding securities by any person or entity, or group of
associated persons or entities acting in concert;
               (3) the sale of the properties and assets of the Company,
substantially as an entirety, to any person or entity which is not a
wholly-owned subsidiary of the Company;
               (4) the stockholders of the Company approve any plan or proposal
for the liquidation of the Company; or
               (5) a change in the composition of the Board at any time during
any consecutive 24 month period such that the “Continuity Directors” cease for
any reason to constitute at least a 70% majority of the Board. For purposes of
this clause, “Continuity Directors” means those members of the Board who either
(1) were directors at the beginning of such consecutive 24 month period, or
(2) were elected by, or on the nomination or recommendation of, at least a
two-thirds majority of the then-existing Board of Directors.
     13.2 Effect of a Change of Control. The Committee will have the authority,
in its sole discretion, to determine the effect that a Change of Control of the
Company will have on outstanding Incentive Awards then held by such Participant.

9

--------------------------------------------------------------------------------

 

     13.3 Authority to Modify Change of Control Provisions. Prior to a Change of
Control of the Company, unless otherwise provided in the agreement evidencing
the Incentive Award, the Participant will have no rights under this Section 13,
and the Committee will have the authority, in its sole discretion, to rescind,
modify or amend the provisions of this Section 13 without the consent of any
Participant.
14. Rights of Eligible Recipients and Participants; Transferability.
     14.1 Employment or Service. Nothing in the Plan will interfere with or
limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of any Eligible Recipient or Participant at any time, nor
confer upon any Eligible Recipient or Participant any right to continue in the
employ or service of the Company or any Subsidiary.
     14.2 Rights as a Stockholder. As a holder of Incentive Awards (other than
Restricted Stock Awards), a Participant will have no rights as a stockholder
unless and until such Incentive Awards are exercised for, or paid in the form
of, shares of Common Stock and the Participant becomes the holder of record of
such shares. Except as provided in Section 14.3 or as otherwise provided in the
Plan, no adjustment will be made for dividends or distributions with respect to
such Incentive Awards as to which there is a record date preceding the date the
Participant becomes the holder of record of such shares.
     14.3 Dividend Equivalents. Subject to the provisions of the Plan and any
Incentive Award, the recipient of an Incentive Award (including any Incentive
Award deferred in accordance with procedures established pursuant to
Section 3(d)) may, if so determined by the Committee, be entitled to receive,
currently or on a deferred basis, cash, stock or other property dividends, or
cash payments in amounts equivalent to cash, stock or other property dividends
on shares of Common Stock (“Dividend Equivalents”) with respect to the number of
shares of Common Stock covered by the Incentive Award, as determined by the
Committee, in its sole discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional shares or
otherwise reinvested.
     14.4 Restrictions on Transfer.
          (a) Except pursuant to testamentary will or the laws of descent and
distribution and except as expressly permitted by Section 14.4(b) of the Plan,
no right or interest of any Participant in an Incentive Award prior to the
exercise or vesting of such Incentive Award will be assignable or transferable,
or subjected to any lien, during the lifetime of the Participant, either
voluntarily or involuntarily, directly or indirectly, by operation of law or
otherwise. A Participant will, however, be entitled to designate a beneficiary
to receive an Incentive Award upon such Participant’s death. In the event of a
Participant’s death, payment of any amounts due under the Plan will be made to,
and exercise of any Options or Stock Appreciation Rights (to the extent
permitted pursuant to Section 11 of the Plan) will be made by, the Participant’s
designated beneficiary. For purposes of the Plan, a “designated beneficiary”
will be the beneficiary or beneficiaries designated by the Participant in a
writing filed with the Committee in such form and at such time as the Committee
will require in its sole discretion. If a Participant fails to designate a
beneficiary, or if the designated beneficiary does not survive the Participant
or dies before the designated beneficiary’s exercise of all rights under the
Plan, payment of any amounts due under the Plan will be made to, and exercise of
any Options or Stock Appreciation Rights (to the extent permitted pursuant to
Section 11 of the Plan) may be made by, the Participant’s personal
representative.
          (b) The Committee may, in its discretion, authorize all or a portion
of the Options to be granted to a Participant to be on terms which permit
transfer by such Participant to (i) the spouse, ex-spouse, children,
step-children or grandchildren of the Participant (the “Family Members”), (ii) a
trust or trusts for the exclusive benefit of such Family Members, (iii) a
partnership in which such Family Members are the only partners, or (iv) such
other persons or entities as the Committee, in its discretion, may permit,
provided that (1) there may be no consideration for such a transfer (other than
the possible receipt of an ownership interest in an entity to which such a
transfer is made), (2) the award agreement pursuant to which such Options are
granted must be approved by the Committee and must expressly provide for
transferability in a manner consistent with this Section 14.4(b), (3) timely
written notice of the transfer must be provided to the Company by the
Participant, and (4) subsequent transfers of the transferred Options shall be
prohibited except for those in accordance with Section 14.4(a).

10

--------------------------------------------------------------------------------

 

Following transfer, any such Option and the rights of any transferee with
respect thereto will continue to be subject to the same terms and conditions as
were applicable immediately prior to the transfer, including that the events of
termination of employment or other service as provided in the Plan and in any
applicable award agreement will continue to be applied with respect to the
original Participant, with the transferee bound by the consequences of any such
termination of employment or service as specified in the Plan and the applicable
award agreement. The Company will be under no obligation to provide notice of
termination of a Participant’s employment or other service to any transferee of
such Participant’s Options. Notwithstanding any Option transfer pursuant to this
Section 14.4(b), the Participant will remain subject to and liable for any
employment-related taxes in connection with the exercise of such Option.
     14.5 Non-Exclusivity of the Plan. Nothing contained in the Plan is intended
to modify or rescind any previously approved compensation plans or programs of
the Company or create any limitations on the power or authority of the Board to
adopt such additional or other compensation arrangements as the Board may deem
necessary or desirable.
15. Securities Law and Other Restrictions.
     Notwithstanding any other provision of the Plan or any agreements entered
into pursuant to the Plan, the Company will not be required to issue any shares
of Common Stock under this Plan, and a Participant may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Incentive Awards granted under the Plan, unless (a) there is in effect with
respect to such shares a registration statement under the Securities Act and any
applicable state securities laws or an exemption from such registration under
the Securities Act and applicable state securities laws, and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
which the Committee, in its sole discretion, deems necessary or advisable. The
Company may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing shares of Common Stock, as may be
deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.
16. Plan Amendment, Modification and Termination.
     The Board may suspend or terminate the Plan or any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board may
deem advisable in order that Incentive Awards under the Plan will conform to any
change in applicable laws or regulations or in any other respect the Board may
deem to be in the best interests of the Company; provided, however, that no
Material Amendment of the Plan shall be made without approval of the
stockholders of the Company. For the purposes hereof, a “Material Amendment of
the Plan” shall mean any amendment that (a) requires stockholder approval
pursuant to Section 422 of the Code or the rules of the New York Stock Exchange
or (b) increases the authorized shares, the benefits to Participants, or the
class of Participants under the Plan. No termination, suspension or amendment of
the Plan may adversely affect any outstanding Incentive Award without the
consent of the affected Participant; provided, however, that this sentence will
not impair the right of the Committee to take whatever action it deems
appropriate under Section 4.4 and Section 13 of the Plan.
17. Effective Date and Duration of the Plan.
     The Plan is effective as of February 3, 1999, the date it was adopted by
the Board. The Plan will terminate at midnight on February 2, 2009, and may be
terminated prior thereto by Board action, and no Incentive Award will be granted
after such termination. Incentive Awards outstanding upon termination of the
Plan may continue to vest, or become free of restrictions, in accordance with
their terms.
18. Miscellaneous.
     18.1 Governing Law. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of Delaware.
     18.2 Successors and Assigns. The Plan will be binding upon and inure to the
benefit of the successors and permitted assigns of the Company and the
Participants.
As Amended: May 15, 2007

11