Exhibit 10.4
DEX ONE CORPORATION
EQUITY INCENTIVE PLAN
I INTRODUCTION
     1.1 Purposes. The purposes of the Dex One Corporation Equity Incentive Plan
(this “Plan”) are (i) to align the interests of the Company’s stockholders and
the recipients of awards under this Plan by increasing the proprietary interest
of such recipients in the Company’s growth and success, (ii) to advance the
interests of the Company by attracting and retaining directors, officers, other
employees and other service providers and (iii) to motivate such persons to act
in the long-term best interests of the Company and its stockholders.
     1.2 Certain Definitions.
     “Agreement” shall mean the written agreement evidencing an award hereunder
between the Company and the recipient of such award.
     “Bankruptcy Court” shall have the meaning set forth in Section 5.1.
     “Bankruptcy Proceedings” shall mean the bankruptcy proceedings in the
United States Bankruptcy Court for the District of Delaware with respect to In
re: R.H. Donnelley Corp., et. al., Case No. 09-11833 (KG).
     “Board” shall mean the Board of Directors of the Company.
     “Change in Control” shall have the meaning set forth in Section 5.8(b).
     “Code” shall mean the Internal Revenue Code of 1986, as amended.
     “Committee” shall mean the Compensation and Benefits Committee designated
by the Board, consisting of two or more members of the Board, each of whom may
be (i) a “Non-Employee Director” within the meaning of Rule 16b-3 under the
Exchange Act, (ii) an “outside director” within the meaning of Section 162(m) of
the Code and (iii) “independent” within the meaning of the rules of The New York
Stock Exchange or, if the Common Stock is not listed on The New York Stock
Exchange, within the meaning of the rules of the principal national stock
exchange on which the Common Stock is then traded.
     “Common Stock” shall mean the common stock, par value $0.001 per share, of
the Company, and all rights appurtenant thereto.
     “Company” shall mean Dex One Corporation, a Delaware corporation, or any
successor thereto.
     “Disability” means an individual’s long-term disability as defined under
the long-term disability plan of the Company that covers that individual; or if
the individual is not covered by

 

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such a long-term disability plan, an individual’s disability as defined for
purposes of eligibility for a disability award under the Social Security Act.
     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
     “Fair Market Value” shall mean the closing transaction price of a share of
Common Stock as reported on The New York Stock Exchange on the date as of which
such value is being determined or, if the Common Stock is not listed on The New
York Stock Exchange, the closing transaction price of a share of Common Stock on
the principal national stock exchange on which the Common Stock is traded on the
date as of which such value is being determined or, if there shall be no
reported transactions for such date, on the next preceding date for which
transactions were reported; provided, however, that if the Common Stock is not
listed on a national stock exchange or if Fair Market Value for any date cannot
be so determined, Fair Market Value shall be determined by the Committee by
whatever means or method as the Committee, in the good faith exercise of its
discretion, shall at such time deem appropriate and in compliance with
Section 409A of the Code; provided further that for purposes of determining the
base price of SARs granted pursuant to the Plan of Reorganization, the Fair
Market Value shall be determined in accordance with the Plan of Reorganization.
     “Free-Standing SAR” shall mean an SAR which is not granted in tandem with,
or by reference to, an option, which entitles the holder thereof to receive,
upon exercise, shares of Common Stock (which may be Restricted Stock) with an
aggregate value equal to the excess of the Fair Market Value of one share of
Common Stock on the date of exercise over the base price of such SAR, multiplied
by the number of such SARs which are exercised.
     “Incentive Stock Option” shall mean an option to purchase shares of Common
Stock that meets the requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an Incentive Stock
Option.
     “Non-Employee Director” shall mean any director of the Company who is not
an officer or employee of the Company or any Subsidiary.
     “Nonqualified Stock Option” shall mean an option to purchase shares of
Common Stock which is not an Incentive Stock Option.
     “Performance Measures” shall mean the criteria and objectives, established
by the Committee, which shall be satisfied or met (i) as a condition to the
grant or exercisability of all or a portion of an option or SAR or (ii) during
the applicable Restriction Period or Performance Period as a condition to the
vesting of the holder’s interest, in the case of a Restricted Stock Award, of
the shares of Common Stock subject to such award, or, in the case of a
Restricted Stock Unit Award, to the holder’s receipt of the shares of Common
Stock subject to such award or of payment with respect to such award. To the
extent necessary for an award to be qualified performance-based compensation
under Section 162(m) of the Code and the regulations thereunder, such criteria
and objectives shall include one or more of the following corporate-wide or
subsidiary, division, operating unit or individual measures, stated in either
absolute terms or relative terms, such as rates of growth or improvement: the
attainment by a share of Common Stock of a specified Fair Market Value for a
specified period of time, earnings per share, return

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to stockholders (including dividends), return on assets, return on equity,
earnings of the Company before or after taxes and/or interest, revenues, market
share, cash flow or cost reduction goals, interest expense after taxes, return
on investment, return on investment capital, economic value created, operating
margin, net income before or after taxes, pretax earnings before interest,
depreciation and/or amortization, pretax operating earnings after interest
expense and before incentives, and/or extraordinary or special items, operating
earnings, net cash provided by operations, and strategic business criteria,
consisting of one or more objectives based on meeting specified market
penetration, geographic business expansion goals, cost targets, customer
satisfaction, reductions in errors and omissions, reductions in lost business,
management of employment practices and employee benefits, supervision of
litigation and information technology, quality and quality audit scores,
productivity, efficiency, and goals relating to acquisitions or divestitures, or
any combination of the foregoing. In the sole discretion of the Committee, but
subject to Section 162(m) of the Code, the Committee may amend or adjust the
Performance Measures or other terms and conditions of an outstanding award in
recognition of unusual or nonrecurring events affecting the Company or its
financial statements or changes in law or accounting principles.
     “Performance Option” shall mean an Incentive Stock Option or Nonqualified
Stock Option, the grant of which or the exercisability of all or a portion of
which is contingent upon the attainment of specified Performance Measures within
a specified Performance Period.
     “Performance Period” shall mean any period designated by the Committee
during which (i) the Performance Measures applicable to an award shall be
measured and (ii) the conditions to vesting applicable to an award shall remain
in effect.
     “Performance Unit” shall mean a right to receive, contingent upon the
attainment of specified Performance Measures within a specified Performance
Period, a specified cash amount or, in lieu thereof, shares of Common Stock
having a Fair Market Value equal to such cash amount.
     “Performance Unit Award” shall mean an award of Performance Units under
this Plan.
     “Plan of Reorganization” shall mean the Plan of Reorganization approved
pursuant to the Bankruptcy Proceedings.
     “Restricted Stock” shall mean shares of Common Stock which are subject to a
Restriction Period and which may, in addition thereto, be subject to the
attainment of specified Performance Measures within a specified Performance
Period.
     “Restricted Stock Award” shall mean an award of Restricted Stock under this
Plan.
     “Restricted Stock Unit” shall mean a right to receive one share of Common
Stock or, in lieu thereof, the Fair Market Value of such share of Common Stock
in cash, which shall be contingent upon the expiration of a specified
Restriction Period and which may, in addition thereto, be contingent upon the
attainment of specified Performance Measures within a specified Performance
Period.

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     “Restricted Stock Unit Award” shall mean an award of Restricted Stock Units
under this Plan.
     “Restriction Period” shall mean any period designated by the Committee
during which (i) the Common Stock subject to a Restricted Stock Award may not be
sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award, or (ii) the conditions to vesting applicable to a Restricted Stock Unit
Award shall remain in effect.
     “SAR” shall mean a stock appreciation right which may be a Free-Standing
SAR or a Tandem SAR.
     “Stock Award” shall mean a Restricted Stock Award or a Restricted Stock
Unit Award.
     “Subsidiary” shall mean any corporation, limited liability company,
partnership, joint venture or similar entity in which the Company owns, directly
or indirectly, an equity interest possessing more than 50% of the combined
voting power of the total outstanding equity interests of such entity.
     “Tandem SAR” shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Nonqualified Stock Option granted prior to
the date of grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or a portion of
such option, shares of Common Stock (which may be Restricted Stock) with an
aggregate value equal to the excess of the Fair Market Value of one share of
Common Stock on the date of exercise over the base price of such SAR, multiplied
by the number of shares of Common Stock subject to such option, or portion
thereof, which is surrendered.
     “Tax Date” shall have the meaning set forth in Section 5.5.
     “Ten Percent Holder” shall have the meaning set forth in Section 2.1(a).
     1.3 Administration. This Plan shall be administered by the Committee. Any
one or a combination of the following awards may be made under this Plan to
eligible persons: (i) options to purchase shares of Common Stock in the form of
Incentive Stock Options or Nonqualified Stock Options (which may include
Performance Options), (ii) SARs in the form of Tandem SARs or Free-Standing
SARs, (iii) Stock Awards in the form of Restricted Stock or Restricted Stock
Units and (iv) Performance Units. The Committee shall, subject to the terms of
this Plan, select eligible persons for participation in this Plan and determine
the form, amount and timing of each award to such persons and, if applicable,
the number of shares of Common Stock, the number of SARs, the number of
Restricted Stock Units and the number of Performance Units subject to such an
award, the exercise price or base price associated with the award, the time and
conditions of exercise or settlement of the award and all other terms and
conditions of the award, including, without limitation, the form of the
Agreement evidencing the award. The Committee may, in its sole discretion and
for any reason at any time, subject to the requirements of Section 162(m) of the
Code and regulations thereunder in the case of an award intended to be qualified
performance-based compensation, take action such that (i) any or all outstanding
options and SARs shall become exercisable in part or in full, (ii) all or a
portion of the

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Restriction Period applicable to any outstanding Restricted Stock or Restricted
Stock Units shall lapse, (iii) all or a portion of the Performance Period
applicable to any outstanding Restricted Stock, Restricted Stock Units or
Performance Units shall lapse and (iv) the Performance Measures (if any)
applicable to any outstanding award shall be deemed to be satisfied at the
target or any other level. The Committee shall, subject to the terms of this
Plan, interpret this Plan and the application thereof, establish rules and
regulations it deems necessary or desirable for the administration of this Plan
and may impose, incidental to the grant of an award, conditions with respect to
the award, such as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be conclusive and
binding on all parties.
     The Committee may delegate some or all of its power and authority hereunder
to the Board or, subject to applicable law, to the Chief Executive Officer or
other executive officer of the Company as the Committee deems appropriate;
provided, however, that (i) the Committee may not delegate its power and
authority to the Board or the Chief Executive Officer or other executive officer
of the Company with regard to the grant of an award to any person who is a
“covered employee” within the meaning of Section 162(m) of the Code or who, in
the Committee’s judgment, is likely to be a covered employee at any time during
the period an award hereunder to such employee would be outstanding and (ii) the
Committee may not delegate its power and authority to the Chief Executive
Officer or other executive officer of the Company with regard to the selection
for participation in this Plan of an officer, director or other person subject
to Section 16 of the Exchange Act or decisions concerning the timing, pricing or
amount of an award to such an officer, director or other person.
     No member of the Board or Committee, and neither the Chief Executive
Officer nor any other executive officer to whom the Committee delegates any of
its power and authority hereunder, shall be liable for any act, omission,
interpretation, construction or determination made in connection with this Plan
in good faith, and the members of the Board and the Committee and the Chief
Executive Officer or other executive officer shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including attorneys’ fees) arising therefrom to the full
extent permitted by law (except as otherwise may be provided in the Company’s
Certificate of Incorporation and/or By-laws) and under any directors’ and
officers’ liability insurance that may be in effect from time to time.
     1.4 Eligibility. Participants in this Plan shall consist of such officers,
employees, independent contractors and nonemployee directors, and persons
expected to become officers, employees, independent contractors and nonemployee
directors, of the Company and its Subsidiaries as the Committee in its sole
discretion may select from time to time or as specified in the Plan of
Reorganization. The Committee’s selection of a person to participate in this
Plan at any time shall not require the Committee to select such person to
participate in this Plan at any other time. For purposes of this Plan,
references to employment by the Company shall also mean employment by a
Subsidiary and any affiliate of the Company designated by the Committee;
provided, however, that an employee of an affiliate shall be designated by the
Committee as a recipient of an option only if the Shares qualify, with respect
to such recipient, as “service recipient stock” within the meaning set forth in
Section 409A of the Code.

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     1.5 Shares Available. Subject to adjustment as provided in Section 5.7 and
to all other limits set forth in this Section 1.5, 5,555,556 shares of Common
Stock shall be available for all awards under this Plan, reduced by the sum of
the aggregate number of shares of Common Stock which become subject to
outstanding options, outstanding Free-Standing SARs and outstanding Stock Awards
and delivered upon the settlement of Performance Units. To the extent that
shares of Common Stock subject to an outstanding option, SAR or Stock Award
granted under the Plan are not issued or delivered by reason of (i) the
expiration, termination, cancellation or forfeiture of such award (excluding
shares subject to an option cancelled upon settlement in shares of a related
tandem SAR or shares subject to a tandem SAR cancelled upon exercise of a
related option) or (ii) the settlement of such award in cash, then such shares
of Common Stock shall again be available under this Plan.
     Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or authorized and
issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.
     To the extent necessary for an award to be qualified performance-based
compensation under Section 162(m) of the Code and the regulations thereunder
(i) the maximum number of shares of Common Stock with respect to which options
or SARs or a combination thereof may be granted during any fiscal year of the
Company to any person shall be 2,000,000, subject to adjustment as provided in
Section 5.7; (ii) the maximum number of shares of Common Stock with respect to
which Stock Awards subject to Performance Measures may be granted during any
fiscal year of the Company to any person shall be 1,500,000, subject to
adjustment as provided in Section 5.7, and (iii) the maximum amount that may be
payable with respect to Performance Units granted during any fiscal year of the
Company to any person shall be $15,000,000.
II STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
     2.1 Stock Options. The Committee may, in its discretion, grant options to
purchase shares of Common Stock to such eligible persons as may be selected by
the Committee. Each option, or portion thereof, that is not an Incentive Stock
Option, shall be a Nonqualified Stock Option. To the extent that the aggregate
Fair Market Value (determined as of the date of grant) of shares of Common Stock
with respect to which options designated as Incentive Stock Options are
exercisable for the first time by a participant during any calendar year (under
this Plan or any other plan of the Company, or any parent or Subsidiary) exceeds
the amount (currently $100,000) established by the Code, such options shall
constitute Nonqualified Stock Options.
     Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
     (a) Number of Shares and Purchase Price. The number of shares of Common
Stock subject to an option and the purchase price per share of Common Stock
purchasable upon exercise of the option shall be determined by the Committee;
provided, however, that the purchase price per share of Common Stock purchasable
upon exercise of a Nonqualified Stock Option or an Incentive Stock Option shall
not be less than 100% of the Fair Market Value of a share of Common Stock on the
date of grant of such option; provided further, that if an Incentive

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Stock Option shall be granted to any person who, at the time such option is
granted, owns capital stock possessing more than 10 percent of the total
combined voting power of all classes of capital stock of the Company (or of any
parent or Subsidiary) (a “Ten Percent Holder”), the purchase price per share of
Common Stock shall not be less than the price (currently 110% of Fair Market
Value) required by the Code in order to constitute an Incentive Stock Option.
     (b) Option Period and Exercisability. The period during which an option may
be exercised shall be determined by the Committee; provided, however, that no
Incentive Stock Option or Nonqualified Stock Option shall be exercised later
than ten years after its date of grant; provided further, that if an Incentive
Stock Option shall be granted to a Ten Percent Holder, such option shall not be
exercised later than five years after its date of grant. The Committee may, in
its discretion, determine that an option is to be granted as a Performance
Option and may establish an applicable Performance Period and Performance
Measures which shall be satisfied or met as a condition to the grant of such
option or to the exercisability of all or a portion of such option. The
Committee shall determine whether an option shall become exercisable in
cumulative or non-cumulative installments and in part or in full at any time. An
exercisable option, or portion thereof, may be exercised only with respect to
whole shares of Common Stock.
     (c) Method of Exercise. An option may be exercised (i) by giving written
notice to the Company specifying the number of whole shares of Common Stock to
be purchased and accompanying such notice with payment therefor in full (or
arrangement made for such payment to the Company’s satisfaction) in cash or by
certified check, or to the extent permitted in an Award Agreement or otherwise
by the Committee, (A) by delivery (either actual delivery or by attestation
procedures established by the Company) of shares of Common Stock having a Fair
Market Value, determined as of the date of exercise, equal to the aggregate
purchase price payable by reason of such exercise, (B) authorizing the Company
to withhold whole shares of Common Stock which would otherwise be delivered
having an aggregate Fair Market Value, determined as of the date of exercise,
equal to the amount necessary to satisfy such obligation, (C) in cash by a
broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (D) a combination of (A), (B) and (C), (ii) if
applicable, by surrendering to the Company any Tandem SARs which are cancelled
by reason of the exercise of the option and (iii) by executing such documents as
the Company may reasonably request. Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the optionee. No shares of Common
Stock shall be issued and no certificate representing Common Stock shall be
delivered until the full purchase price therefor and any withholding taxes
thereon, as described in Section 5.5, have been paid (or arrangement made for
such payment to the Company’s satisfaction).
     2.2 Stock Appreciation Rights. The Committee may, in its discretion, grant
SARs to such eligible persons as may be selected by the Committee. The Agreement
relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.
     SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:

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     (a) Number of SARs and Base Price. The number of SARs subject to an award
shall be determined by the Committee. Any Tandem SAR related to an Incentive
Stock Option shall be granted at the same time that such Incentive Stock Option
is granted. The base price of a Tandem SAR shall be the purchase price per share
of Common Stock of the related option. The base price of a Free-Standing SAR
shall be determined by the Committee; provided, however, that such base price
shall not be less than 100% of the Fair Market Value of a share of Common Stock
on the date of grant of such SAR.
     (b) Exercise Period and Exercisability. The period for the exercise of an
SAR shall be determined by the Committee; provided, however, that no Tandem SAR
shall be exercised later than the expiration, cancellation, forfeiture or other
termination of the related option and no Free-Standing SAR shall be exercised
later than ten years after its date of grant. The Committee may, in its
discretion, establish Performance Measures which shall be satisfied or met as a
condition to the grant of an SAR or to the exercisability of all or a portion of
an SAR. The Committee shall determine whether an SAR may be exercised in
cumulative or non-cumulative installments and in part or in full at any time. An
exercisable SAR, or portion thereof, may be exercised, in the case of a Tandem
SAR, only with respect to whole shares of Common Stock and, in the case of a
Free-Standing SAR, only with respect to a whole number of SARs. If an SAR is
exercised for shares of Restricted Stock, a certificate or certificates
representing such Restricted Stock shall be issued in accordance with
Section 3.2(c), or such shares shall be transferred to the holder in book entry
form with restrictions on the Shares duly noted, and the holder of such
Restricted Stock shall have such rights of a stockholder of the Company as
determined pursuant to Section 3.2(d). Prior to the exercise of an SAR, the
holder of such SAR shall have no rights as a stockholder of the Company with
respect to the shares of Common Stock subject to such SAR.
     (c) Method of Exercise. A Tandem SAR may be exercised (i) by giving written
notice to the Company specifying the number of whole SARs which are being
exercised, (ii) by surrendering to the Company any options which are cancelled
by reason of the exercise of the Tandem SAR and (iii) by executing such
documents as the Company may reasonably request. A Free-Standing SAR may be
exercised (A) by giving written notice to the Company specifying the whole
number of SARs which are being exercised and (B) by executing such documents as
the Company may reasonably request.
     2.3 Termination of Employment or Service. All of the terms relating to the
exercise, cancellation or other disposition of an option or SAR upon a
termination of employment or service with the Company of the holder of such
option or SAR, as the case may be, whether by reason of Disability, retirement,
death or any other reason, shall be determined by the Committee.
     2.4 No Repricing. Notwithstanding anything in this Plan to the contrary and
subject to Section 5.7, without the approval of the stockholders of the Company
the Committee will not amend or replace any previously granted option or SAR in
a transaction that constitutes a “repricing,” as such term is used in
Section 303A.08 of the Listed Company Manual of the New York Stock Exchange.

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III STOCK AWARDS
     3.1 Stock Awards. The Committee may, in its discretion, grant Stock Awards
to such eligible persons as may be selected by the Committee. The Agreement
relating to a Stock Award shall specify whether the Stock Award is a Restricted
Stock Award or a Restricted Stock Unit Award.
     3.2 Terms of Restricted Stock Awards. Restricted Stock Awards shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.
     (a) Number of Shares and Other Terms. The number of shares of Common Stock
subject to a Restricted Stock Award and the Restriction Period, Performance
Period (if any) and Performance Measures (if any) applicable to a Restricted
Stock Award shall be determined by the Committee.
     (b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock
Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of the
shares of Common Stock subject to such award (i) if the holder of such award
remains continuously in the employment of the Company during the specified
Restriction Period and (ii) if specified Performance Measures (if any) are
satisfied or met during a specified Performance Period, and for the forfeiture
of the shares of Common Stock subject to such award (x) if the holder of such
award does not remain continuously in the employment of the Company during the
specified Restriction Period or (y) if specified Performance Measures (if any)
are not satisfied or met during a specified Performance Period. The Committee
may, in its sole discretion, grant Restricted Stock Awards pursuant to the Plan
that are not subject to any vesting or performance conditions.
     (c) Stock Issuance. During the Restriction Period, the shares of Restricted
Stock shall be held by a custodian in book entry form with restrictions on such
shares duly noted or, alternatively, a certificate or certificates representing
a Restricted Stock Award shall be registered in the holder’s name and may bear a
legend, in addition to any legend which may be required pursuant to Section 5.6,
indicating that the ownership of the shares of Common Stock represented by such
certificate is subject to the restrictions, terms and conditions of this Plan
and the Agreement relating to the Restricted Stock Award. All such certificates
shall be deposited with the Company, together with stock powers or other
instruments of assignment (including a power of attorney), each endorsed in
blank with a guarantee of signature if deemed necessary or appropriate, which
would permit transfer to the Company of all or a portion of the shares of Common
Stock subject to the Restricted Stock Award in the event such award is forfeited
in whole or in part. Upon termination of any applicable Restriction Period (and
the satisfaction or attainment of applicable Performance Measures), subject to
the Company’s right to require payment of any taxes in accordance with
Section 5.5, the restrictions shall be removed from the requisite number of any
shares of Common Stock that are held in book entry form, and all certificates
evidencing ownership of the requisite number of shares of Common Stock shall be
delivered to the holder of such award.
     (d) Rights with Respect to Restricted Stock Awards. Unless otherwise set
forth in the Agreement relating to a Restricted Stock Award, and subject to the
terms and conditions of a Restricted Stock Award, the holder of such award shall
have all rights as a stockholder of the

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Company, including, but not limited to, voting rights, the right to receive
dividends and the right to participate in any capital adjustment applicable to
all holders of Common Stock; provided, however, that a distribution with respect
to shares of Common Stock, other than a regular cash dividend, shall be
deposited with the Company and shall be subject to the same restrictions as the
shares of Common Stock with respect to which such distribution was made.
     3.3 Terms of Restricted Stock Unit Awards. Restricted Stock Unit Awards
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem advisable.
     (a) Number of Shares and Other Terms. The number of shares of Common Stock
subject to a Restricted Stock Unit Award and the Restriction Period, Performance
Period (if any) and Performance Measures (if any) applicable to a Restricted
Stock Unit Award shall be determined by the Committee.
     (b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock
Unit Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of such
Restricted Stock Unit Award (i) if the holder of such award remains continuously
in the employment of the Company during the specified Restriction Period and
(ii) if specified Performance Measures (if any) are satisfied or met during a
specified Performance Period, and for the forfeiture of the shares of Common
Stock subject to such award (x) if the holder of such award does not remain
continuously in the employment of the Company during the specified Restriction
Period or (y) if specified Performance Measures (if any) are not satisfied or
met during a specified Performance Period. The Committee may, in its sole
discretion, grant Restricted Stock Unit Awards under the Plan that are not
subject to any vesting or performance conditions.
     (c) Settlement of Vested Restricted Stock Unit Awards. The Agreement
relating to a Restricted Stock Unit Award shall specify (i) whether such award
may be settled in shares of Common Stock or cash or a combination thereof and
(ii) whether the holder thereof shall be entitled to receive, on a current or
deferred basis, dividend equivalents, and, if determined by the Committee,
interest on, or the deemed reinvestment of, any deferred dividend equivalents,
with respect to the number of shares of Common Stock subject to such award.
Prior to the settlement of a Restricted Stock Unit Award, the holder of such
award shall have no rights as a stockholder of the Company with respect to the
shares of Common Stock subject to such award.
     3.4 Termination of Employment or Service. All of the terms relating to the
satisfaction of Performance Measures and the termination of the Restriction
Period or Performance Period relating to a Stock Award, or any forfeiture and
cancellation of such award upon a termination of employment or service with the
Company of the holder of such award, whether by reason of Disability,
retirement, death or any other reason, shall be determined by the Committee.
IV PERFORMANCE UNIT AWARDS
     4.1 Performance Unit Awards. The Committee may, in its discretion, grant
Performance Unit Awards to such eligible persons as may be selected by the
Committee.

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     4.2 Terms of Performance Unit Awards. Performance Unit Awards shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.
     (a) Number of Performance Units and Performance Measures. The number of
Performance Units subject to a Performance Unit Award and the Performance
Measures and Performance Period applicable to a Performance Unit Award shall be
determined by the Committee.
     (b) Vesting and Forfeiture. The Agreement relating to a Performance Unit
Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of such
Performance Unit Award if the specified Performance Measures are satisfied or
met during the specified Performance Period and for the forfeiture of such award
if the specified Performance Measures are not satisfied or met during the
specified Performance Period.
     (c) Settlement of Vested Performance Unit Awards. The Agreement relating to
a Performance Unit Award shall specify whether such award may be settled in
shares of Common Stock (including shares of Restricted Stock) or cash or a
combination thereof. If a Performance Unit Award is settled in shares of
Restricted Stock, such shares of Restricted Stock shall be issued to the holder
in book entry form or a certificate or certificates representing such Restricted
Stock shall be issued in accordance with Section 3.2(c) and the holder of such
Restricted Stock shall have such rights as a stockholder of the Company as
determined pursuant to Section 3.2(d). Prior to the settlement of a Performance
Unit Award in shares of Common Stock, including Restricted Stock, the holder of
such award shall have no rights as a stockholder of the Company.
     4.3 Termination of Employment or Service. All of the terms relating to the
satisfaction of Performance Measures and the termination of the Performance
Period relating to a Performance Unit Award, or any forfeiture and cancellation
of such award upon a termination of employment or service with the Company of
the holder of such award, whether by reason of Disability, retirement, death or
any other reason, shall be determined by the Committee.
V GENERAL
     5.1 Effective Date and Term of Plan. This Plan shall be submitted to the
United States Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”) for approval in connection with the Plan of Reorganization and, if
approved, shall become effective as of the effective date of the Plan of
Reorganization. This Plan shall terminate as of the tenth anniversary of its
effective date, unless terminated earlier by the Board. Termination of this Plan
shall not affect the terms or conditions of any award granted prior to
termination.
     Awards hereunder may be made at any time prior to the termination of this
Plan, provided that no award may be made later than ten years after the
effective date of this Plan. In the event that this Plan is not approved by the
Bankruptcy Court, this Plan and any awards hereunder shall be void and of no
force or effect.

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     5.2 Amendments. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation, including Section 162(m) of the Code and any rule of The New
York Stock Exchange, or, if the Common Stock is not listed on The New York Stock
Exchange, any rule of the principal national stock exchange on which the Common
Stock is then traded; provided, however, that no amendment may impair the rights
of a holder of an outstanding award without the consent of such holder.
     5.3 Agreement. Each award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions applicable to such award. No
award shall be valid until approved by the Company. Such award shall be
effective as of the effective date set forth in the Agreement.
     5.4 Non-Transferability. No award shall be transferable other than by will,
the laws of descent and distribution or pursuant to beneficiary designation
procedures approved by the Company or, to the extent expressly permitted in the
Agreement relating to such award, to the holder’s family members, a trust or
entity established by the holder for estate planning purposes or a charitable
organization designated by the holder. Except to the extent permitted by the
foregoing sentence or the Agreement relating to an award, each award may be
exercised or settled during the holder’s lifetime only by the holder or the
holder’s legal representative or similar person. Except as permitted by the
second preceding sentence, no award may be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any award, such award and all rights thereunder shall
immediately become null and void.
     5.5 Tax Withholding. The Company shall have the right to require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash pursuant to an award made hereunder, payment by the holder of such award of
any federal, state, local or other taxes which may be required to be withheld or
paid in connection with such award. An Agreement may provide that (i) the
Company shall withhold whole shares of Common Stock which would otherwise be
delivered to a holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in connection with an
award (the “Tax Date”), or withhold an amount of cash which would otherwise be
payable to a holder, in the amount necessary to satisfy any such obligation or
(ii) the holder may satisfy any such obligation by any of the following means:
(A) a cash payment to the Company, (B) delivery (either actual delivery or by
attestation procedures established by the Company) to the Company of previously
owned whole shares of Common Stock having an aggregate Fair Market Value,
determined as of the Tax Date, equal to the amount necessary to satisfy any such
obligation, (C) authorizing the Company to withhold whole shares of Common Stock
which would otherwise be delivered having an aggregate Fair Market Value,
determined as of the Tax Date, or withhold an amount of cash which would
otherwise be payable to a holder, equal to the amount necessary to satisfy any
such obligation, (D) in the case of the exercise of an option, a cash payment by
a broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in
each case to the extent set forth in the Agreement relating to the award. Shares
of Common Stock to be delivered or withheld may not have an aggregate Fair
Market Value in excess of the amount determined by

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applying the minimum statutory withholding rate. Any fraction of a share of
Common Stock which would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by the holder.
     5.6 Restrictions on Shares. Each award made hereunder shall be subject to
the requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of shares
thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
     5.7 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding option and the
purchase price per security, the terms of each outstanding SAR, the terms of
each outstanding Restricted Stock Award and Restricted Stock Unit Award,
including the number and class of securities subject thereto, the terms of each
outstanding Performance Unit, the maximum number of securities with respect to
which options or SARs may be granted during any fiscal year of the Company to
any one grantee and the maximum number of shares of Common Stock that may be
awarded during any fiscal year of the Company to any one grantee pursuant to a
Stock Award that is subject to Performance Measures shall be equitably adjusted
by the Committee, such adjustments to be made in the case of outstanding options
and SARs in accordance with Section 409A of the Code. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
If any such adjustment would result in a fractional security being (a) available
under this Plan, such fractional security shall be disregarded, or (b) subject
to an award under this Plan, the Company shall pay the holder of such award, in
connection with the first vesting, exercise or settlement of such award, in
whole or in part, occurring after such adjustment, an amount in cash determined
by multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the
vesting, exercise or settlement date over (B) the exercise or base price, if
any, of such award.
     5.8 Change in Control.
     (a) Except as provided in the applicable Agreement, in the event of a
Change in Control, the Board (as constituted prior to such Change in Control)
may, in its discretion:
     (1) provide that (A) some or all outstanding options and SARs shall
immediately become exercisable in full or in part, (B) the Restriction Period
applicable to some or all outstanding Restricted Stock Awards and Restricted
Stock Unit Awards shall

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lapse in full or in part, (C) the Performance Period applicable to some or all
outstanding awards shall lapse in full or in part, and (D) the Performance
Measures applicable to some or all outstanding awards shall be deemed to be
satisfied at the target or any other level;
     (2) require that shares of stock of the corporation resulting from such
Change in Control, or a parent corporation thereof, be substituted for some or
all of the shares of Common Stock subject to an outstanding award, with an
appropriate and equitable adjustment to such award as shall be determined by the
Board in accordance with Section 5.7; and/or
     (3) require outstanding awards, in whole or in part, to be surrendered to
the Company by the holder, and to be immediately cancelled by the Company, and
to provide for the holder to receive (A) a cash payment in an amount equal to
(i) in the case of an option or an SAR, the number of shares of Common Stock
then subject to the portion of such option or SAR surrendered multiplied by the
excess, if any, of the Fair Market Value of a share of Common Stock as of the
date of the Change in Control, over the purchase price or base price per share
of Common Stock subject to such option or SAR, (ii) in the case of a Stock
Award, the number of shares of Common Stock then subject to the portion of such
award surrendered multiplied by the Fair Market Value of a share of Common Stock
as of the date of the Change in Control, and (iii) in the case of a Performance
Unit Award, the value of the Performance Units then subject to the portion of
such award surrendered; (B) shares of capital stock of the corporation resulting
from such Change in Control, or a parent corporation thereof, having a fair
market value not less than the amount determined under clause (A) above; or
(C) a combination of the payment of cash pursuant to clause (A) above and the
issuance of shares pursuant to clause (B) above.
(b) For purposes of this Plan, a “Change in Control” shall be deemed to have
occurred if, after the effective date of the Plan of Reorganization, there shall
have occurred any of the following:
     (i) Any “person,” as such term is used in Section 13(d) and 14(d) of the
Exchange Act (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareholders of the Company in substantially the
same proportions as their ownership of stock of the Company), acquires voting
securities of the Company and immediately thereafter is a “50% Beneficial
Owner.” For purposes of this provision, a “50% Beneficial Owner” shall mean a
person who is the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company’s then-outstanding
voting securities; provided that the term “50% Beneficial Owner” shall not
include any person who, at all times following such an acquisition of
securities, remains eligible to file a Schedule 13G pursuant to Rule 13d-1(b)
under the Exchange Act, or remains exempt from filing a Schedule 13D under
Section

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13(d)(6)(b) of the Exchange Act, with respect to all classes of Company voting
securities;
     (ii) During any one-year period commencing on or after the Effective Date,
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person (as defined above)
who has entered into an agreement with the Company to effect a transaction
described in subsections (i), (iii) or (iv) of this definition) whose election
by the Board or nomination for election by the Company’s shareholders was
approved by a vote of at least a majority of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof;
     (iii) The consummation of a merger, consolidation, recapitalization, or
reorganization of the Company, or a reverse stock split of any class of voting
securities of the Company, other than any such transaction which would result in
at least 50% of the combined voting power of the voting securities of the
Company or the surviving entity outstanding immediately after such transaction
being beneficially owned by persons who together beneficially owned at least 50%
of the combined voting power of the voting securities of the Company outstanding
immediately prior to such transaction, with the relative voting power of each
such continuing holder compared to the voting power of each other continuing
holder not substantially altered as a result of the transaction; provided that,
for purposes of this paragraph (iii), such continuity of ownership (and
preservation of relative voting power) shall be deemed to be satisfied if the
failure to meet such 50% threshold (or to substantially preserve such relative
voting power) is due solely to the acquisition of voting securities by an
employee benefit plan of the Company, such surviving entity or a subsidiary
thereof;
     (iv) The consummation of a plan of complete liquidation of the Company or
the sale or disposition by the Company of all or substantially all of the
Company’s assets (or any transaction having a similar effect); and
     (v) Any other event which the Board determines shall constitute a Change in
Control for purposes of this Plan.
     5.9 Deferrals. The Committee may determine that the delivery of shares of
Common Stock or the payment of cash, or a combination thereof, upon the exercise
or settlement of all or a portion of any award (other than awards of Incentive
Stock Options, Nonqualified Stock Options and SARs) made hereunder shall be
deferred, or the Committee may, in its sole discretion, approve deferral
elections made by holders of awards. Deferrals shall be for such periods and
upon such terms as the Committee may determine in its sole discretion, subject
to the requirements of Section 409A of the Code.
     5.10 No Right of Participation, Employment or Service. Unless otherwise set
forth in an employment agreement, no person shall have any right to participate
in this Plan. Neither

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this Plan nor any award made hereunder shall confer upon any person any right to
continued employment by or service with the Company, any Subsidiary or any
affiliate of the Company or affect in any manner the right of the Company, any
Subsidiary or any affiliate of the Company to terminate the employment of any
person at any time without liability hereunder.
     5.11 Rights as Stockholder. No person shall have any right as a stockholder
of the Company with respect to any shares of Common Stock or other equity
security of the Company which is subject to an award hereunder unless and until
such person becomes a stockholder of record with respect to such shares of
Common Stock or equity security.
     5.12 Designation of Beneficiary. A holder of an award may file with the
Committee a written designation of one or more persons as such holder’s
beneficiary or beneficiaries (both primary and contingent) in the event of the
holder’s death or incapacity. To the extent an outstanding option or SAR granted
hereunder is exercisable, such beneficiary or beneficiaries shall be entitled to
exercise such option or SAR pursuant to procedures prescribed by the Committee.
     Each beneficiary designation shall become effective only when filed in
writing with the Committee during the holder’s lifetime on a form prescribed by
the Committee. The spouse of a married holder domiciled in a community property
jurisdiction shall join in any designation of a beneficiary other than such
spouse. The filing with the Committee of a new beneficiary designation shall
cancel all previously filed beneficiary designations.
     If a holder fails to designate a beneficiary, or if all designated
beneficiaries of a holder predecease the holder, then each outstanding option
and SAR hereunder held by such holder, to the extent exercisable, may be
exercised by such holder’s executor, administrator, legal representative or
similar person.
     5.13 Governing Law. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.
     5.14 Foreign Employees. Without amending this Plan, the Committee may grant
awards to eligible persons who are foreign nationals on such terms and
conditions different from those specified in this Plan as may in the judgment of
the Committee be necessary or desirable to foster and promote achievement of the
purposes of this Plan and, in furtherance of such purposes the Committee may
make such modifications, amendments, procedures, subplans and the like as may be
necessary or advisable to comply with provisions of laws in other countries or
jurisdictions in which the Company or its Subsidiaries operates or has
employees.

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