EXHIBIT 10.1

GANNETT CO., INC.

TRANSITIONAL COMPENSATION PLAN

As Amended and Restated August 7, 2007

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GANNETT CO., INC.

TRANSITIONAL COMPENSATION PLAN

As Amended and Restated August 7, 2007

Table of Contents

 

          Page 1.    Purpose of the Plan    1 2.    Effective Date    2 3.   
Administration of the Plan    2    (a)   The Committee    2    (b)  
Determinations by the Committee    2    (c)   Delegation of Authority    4 4.   
Participation in the Plan    4    (a)   Designation of Participants    4    (b)
  Terminating Status as a Participant    4 5.    Change in Control    5 6.   
Eligibility for Benefits under the Plan    8    (a)   General    8    (b)  
Cause    8    (c)   Good Reason    9    (d)   Certain Terminations Prior to a
Change in Control    12    (e)   No Waiver    12    (f)   Notice of Termination
After a Change in Control    12    (g)   Date of Termination    13 7.   
Obligations of the Company upon Termination    13    (a)   Cause; Other than for
Good Reason    13

 

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   (b)   Termination Without Cause; Good Reason or Window Period Terminations   
14    (c)   Timing of Payments    21 8.    Mitigation    22 9.    Resolution of
Disputes    22 10.    Legal Expenses and Interest    23 11.    Funding    24 12.
   No Contract of Employment    24 13.    Non-exclusivity of Rights    25    (a)
  Future Benefits under Company Plans    25    (b)   Benefits of Other Plans and
Agreements    25 14.    Successors; Binding Agreement    26 15.   
Transferability and Enforcement    27 16.    Notices    27 17.    Amendment or
Termination of the Plan    27 18.    Waivers    28 19.    Validity    29 20.   
Governing Law    29 21.    Section 409A    29 22.    Headings    29

 

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GANNETT CO., INC.

TRANSITIONAL COMPENSATION PLAN

As Amended and Restated August 7, 2007

1. Purpose of the Plan. The Board of Directors (the “Board”) of Gannett Co.,
Inc. (the “Company”) considers the establishment and maintenance of a strong and
vital management to be essential to protecting and enhancing the best interests
of the Company and its stockholders.

As is the case with most publicly held corporations, the possibility of a Change
in Control (as defined below) of the Company exists, and that possibility, and
the uncertainty and questions which it may raise among key executives concerning
future employment, may result in the departure or distraction of key executives,
to the detriment of the Company and its stockholders.

The purpose of the Plan (as defined below) is to assure the Company that it will
have the continued dedication of, and the availability of objective advice and
counsel from, key executives of the Company and its affiliates (as defined
below) notwithstanding the possibility, threat or occurrence of a Change in
Control.

In the event that the Company or its stockholders receive any proposal from a
third party concerning a possible business combination with the Company or an
acquisition of the Company’s equity securities, the Board believes it imperative
that the Company and the Board be able to rely upon key executives to continue
in their positions and be available for advice, if requested, without concern
that those individuals might be distracted by the personal uncertainties and
risks created by such a proposal.

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Should the Company receive any such proposal, in addition to their regular
duties, such key executives may be called upon to assist in the assessment of
such proposal, advise management and the Board as to whether such proposal would
be in the best interest of the Company and its stockholders, and to take such
other actions as the Board might determine to be appropriate.

Therefore, in order to accomplish these objectives, the Board has adopted the
Plan.

2. Effective Date. The Transitional Compensation Plan, as amended and restated
(the “Plan”), shall become effective on August 7, 2007.

3. Administration of the Plan.

(a) The Committee. The Plan shall be administered (i) by such committee of
non-employee directors as the Board shall appoint (the “Committee”), or (ii) in
the absence of such Committee or if the Committee is unable to act, by the
Board. The members of the Committee shall be entitled to all of the rights to
indemnification and payment of expenses and costs set forth in Article II,
Section 17 (or its successor provision) of the Bylaws of the Company. In no
event may the protection afforded the Committee members in this Section 3(a) be
reduced in anticipation of or following a Change in Control.

(b) Determinations by the Committee. Subject to the express provisions of the
Plan and to the rights of the Participants (as defined below) pursuant to such
provisions, the Committee shall have the authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable; to designate persons to be covered by
the Plan; to revoke such

 

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designations; to interpret the terms and provisions of the Plan (and any notices
or agreements relating thereto); and otherwise to supervise the administration
of the Plan in accordance with the terms hereof. Prior to a Change in Control,
all decisions made by the Committee pursuant to the Plan shall be made in its
sole discretion and shall be final and binding on all persons, including the
Company and Participants. The Committee’s determinations need not be uniform,
and may be made selectively among eligible employees and among Participants,
whether or not they are similarly situated. Notwithstanding any provision in the
Plan to the contrary, however, following a Change in Control, any act,
determination or decision of the Company or the Committee, as applicable, with
regard to the administration, interpretation and application of the Plan must be
reasonable, as viewed from the perspective of an unrelated party and with no
deference paid to the actual act, determination or decision of the Company or
the Committee, as applicable. Furthermore, following a Change in Control, any
decision by the Company or the Committee, as applicable, shall not be final and
binding on a Participant. Instead, following a Change in Control, if a
Participant disputes a decision of the Company or the Committee relating to the
Plan and pursues legal action, the court shall review the decision under a “de
novo” standard of review. In addition, following a Change in Control, in the
event that (i) the Company’s common stock is no longer publicly traded and
(ii) any securities of the Company’s Ultimate Parent (as defined below) are
publicly traded, then any decisions by the Board with respect to whether a
Participant was terminated for “Cause” shall be made by the board of directors
of the Ultimate Parent. For purposes of the Plan, “Ultimate Parent” means a
publicly traded corporation or entity which, directly or indirectly through one
or more

 

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affiliates, beneficially owns at least a plurality of the then-outstanding
voting securities of the Company (including any successor to the Company by
reason of merger, consolidation, the purchase of all or substantially all of the
Company’s assets or otherwise).

(c) Delegation of Authority. The Committee may delegate to one or more officers
or employees of the Company such duties in connection with the administration of
the Plan as it deems necessary, advisable or appropriate.

4. Participation in the Plan.

(a) Designation of Participants. The Committee shall from time to time select
the employees who are to participate in the Plan (the “Participants”) from among
those management or highly compensated employees of the Company and its
affiliates it determines to be appropriate to include as Participants, given the
purposes of the Plan and the potential effects on the employee of a Change in
Control. The Company shall notify each Participant in writing of his or her
participation in the Plan. For purposes of the Plan, the term “affiliate” has
the meaning set forth in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
includes any partnership or joint venture of which the Company or any of its
affiliates are general partners or co-venturers.

(b) Terminating Status as a Participant. A person shall cease to be a
Participant upon (i) the termination of his or her employment by the Company and
any affiliate for any reason prior to a Change in Control, or (ii) the date that
the Company notifies the Participant in writing that such individual’s status as
a Participant has been revoked. Except as specifically provided herein, the
Committee shall have absolute

 

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discretion in the selection of Participants and in revoking their status as
Participants. Notwithstanding the foregoing, no revocation by the Committee of
any person’s designation as a Participant shall be effective if made (i) on the
day of, or within 24 months after, a Change in Control, (ii) prior to a Change
in Control, but at the request of any third party participating in or causing
the Change in Control or (iii) otherwise in connection with, in relation to, or
in anticipation of a Change in Control. In any litigation related to this issue,
whether it is the plaintiff or the defendant, the Company shall have the burden
of proof that the revocation of status as a Participant was not at the request
of any third party participating in or causing the Change in Control or
otherwise in connection with, in relation to, or in anticipation of a Change in
Control.

5. Change in Control. For purposes of the Plan, “Change in Control” means the
first to occur of the following:

(a) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d 3 promulgated under the Exchange Act)
of 20% or more of either (i) the then-outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (ii) the combined voting
power of the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that, for purposes of this Section, the
following acquisitions shall not constitute a Change in Control: (A) any
acquisition directly from the Company, (B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or related trust) sponsored

 

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or maintained by the Company or one of its affiliates or (D) any acquisition
pursuant to a transaction that complies with Sections 5(c)(i), 5(c)(ii) and
5(c)(iii);

(b) individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election or nomination for election by the Company’s
stockholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board;

(c) consummation of a reorganization, merger, statutory share exchange or
consolidation or similar corporate transaction involving the Company or any of
its subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (each, a “Business Combination”), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the

 

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case may be, of the corporation or entity resulting from such Business
Combination (including, without limitation, a corporation or entity that, as a
result of such transaction, owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or any corporation or
entity resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding shares of common
stock of the corporation or entity resulting from such Business Combination or
the combined voting power of the then-outstanding voting securities of such
corporation or entity, except to the extent that such ownership existed prior to
the Business Combination, and (iii) at least a majority of the members of the
board of directors of the corporation or entity resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or

(d) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

No Participant in this Plan who participates in any group conducting a
management buyout of the Company under the terms of which the Company ceases to
be a public company may claim that such buyout is a Change in Control under this
Plan and no such Participant shall be entitled to any payments or other benefits
under this Plan as a result of such buyout. For purposes of the Plan, no
Participant in this Plan shall be

 

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deemed to have participated in a group conducting a management buyout of the
Company unless, following the consummation of the transaction, such Participant
was the beneficial owner of more than 10% of the then-outstanding voting
securities of the Company or any successor corporation or entity resulting from
such transaction.

6. Eligibility for Benefits under the Plan.

(a) General. If a Change in Control shall have occurred, each person who is a
Participant on the date of the Change in Control shall be entitled to the
compensation and benefits provided in Section 7(b) upon the subsequent
termination of the Participant’s employment, provided that such termination
occurs prior to the second anniversary of the Change in Control, unless such
termination is (i) because of the Participant’s death or disability (as
determined under the Company’s Long Term Disability Plan in effect immediately
prior to the Change in Control), (ii) by the Company or its affiliate for Cause,
or (iii) by the Participant other than (A) for Good Reason or (B) during the
Window Period. For purposes of the Plan, “Window Period” means the 30-day period
immediately following the first anniversary of the Change in Control.

(b) Cause. For purposes of the Plan, “Cause” means:

(i) any material misappropriation of funds or property of the Company or its
affiliate by the Participant;

(ii) unreasonable and persistent neglect or refusal by the Participant to
perform his or her duties which is demonstrably willful and deliberate on the
Participant’s part, which is committed in bad faith or without reasonable belief
that such breach is in the best interests of the Company and which is not

 

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remedied in a reasonable period of time after receipt of written notice from the
Company specifying such breach; or

(iii) conviction of the Participant of a felony involving moral turpitude.

Notwithstanding the foregoing provisions of this Section 6(b), the Participant
shall not be deemed to have been terminated for Cause after a Change in Control
unless and until there shall have been delivered to the Participant a copy of a
resolution duly adopted by the affirmative vote of not less than three quarters
of the entire membership of the Board at a meeting of the Board (after
reasonable notice to the Participant and an opportunity for Participant,
together with his or her counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, the Participant was guilty of conduct
set forth above in this Section 6(b) and specifying the particulars thereof in
detail.

(c) Good Reason. For purposes of the Plan, “Good Reason” means the occurrence
after a Change in Control of any of the following circumstances without the
Participant’s express written consent, unless such circumstances are fully
corrected prior to the Date of Termination (as defined below) specified in the
Notice of Termination (as defined below) given in respect thereof:

(i) the assignment to the Participant of any duties inconsistent in any respect
with his or her position (including status, offices, titles and reporting
requirements), authority or responsibilities immediately prior to the Change in
Control, or any other diminution in such position, authority or
responsibilities, (whether or not occurring solely as a result of the Company
becoming a subsidiary or a division of another entity or ceasing to be a
publicly traded entity),

 

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excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and that is remedied by the Company or its affiliate promptly
after receipt of notice thereof given by the Participant;

(ii) a reduction by the Company or its affiliate in the Participant’s
compensation and/or other benefits or perquisites as in effect on the date
immediately prior to the Change in Control;

(iii) the relocation of the Participant’s office from the location at which the
Participant is principally employed immediately prior to the date of the Change
in Control to a location 20 or more miles farther from the Participant’s
residence immediately prior to the Change in Control, or the Company’s requiring
the Participant to be based anywhere other than the Company’s offices at such
location, except for required travel on the Company’s business to an extent
substantially consistent with the Participant’s business travel obligations
prior to the Change in Control;

(iv) the failure by the Company or its affiliate to pay to the Participant any
portion of the Participant’s compensation or to pay to the Participant any
deferred compensation due under any deferred compensation or similar program of
the Company or its affiliate within seven days of the date such payment is due;

(v) the failure by the Company or its affiliate to continue in effect any
compensation, benefit or perquisite plan or policy in which the Participant
participated immediately prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan or policy)
has been made with respect to such plan or policy, or the failure by the Company
or

 

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its affiliate to continue the Participant’s participation therein (or in such
substitute or alternative plan or policy), in each case, on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of the Participant’s participation relative to other participants, as
existed at the time of the Change in Control;

(vi) (A) the failure of the Company to obtain a satisfactory agreement from any
successor to assume and agree to perform the Plan, as contemplated in
Section 14, or, (B) if the business of the Company for which the Participant’s
services are principally performed is sold at any time within 24 months after a
Change in Control, the purchaser shall fail to provide the Participant with the
same or a comparable position, duties, salary, bonus, benefits and perquisites
as provided to the Participant by the Company immediately prior to the Change in
Control;

(vii) any refusal by the Company (or its affiliate) to continue to allow the
Participant to attend to matters or engage in activities not directly related to
the business of the Company that, prior to the Change in Control, the
Participant was permitted to attend to or engage in; or

(viii) any purported termination of the Participant’s employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of the
Plan. For purposes of this Section 6(c), and notwithstanding the provisions of
Section 3(b), any good faith determination of “Good Reason” made by the
Participant shall be conclusive.

 

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(d) Certain Terminations Prior to a Change in Control. Anything in the Plan to
the contrary notwithstanding, if a Change in Control occurs and if the
Participant’s employment with the Company terminated prior to the date on which
the Change in Control occurs, and if it is reasonably demonstrated by the
Participant that such termination of employment (i) was at the request of any
third party participating in or causing the Change in Control or (ii) otherwise
arose in connection with, in relation to, or in anticipation of a Change in
Control, then the Participant shall be entitled to all payments and benefits
under the Plan as though the Participant had terminated his or her employment
for Good Reason on the day after the Change in Control. For purposes of this
Section 6(d), a Change in Control means a Change in Control that is also a
change in ownership or effective control of the Company or a change in the
ownership of a substantial portion of the assets of the Company within the
meaning of Section 409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as
amended, (the “Code”) and the Treasury regulations and guidance issued
thereunder (“Section 409A”).

(e) No Waiver. The Participant’s continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder.

(f) Notice of Termination After a Change in Control. Any termination by the
Company, or by the Participant without any reason during the Window Period or
for Good Reason, shall be communicated by Notice of Termination given in
accordance with the Plan. For purposes of the Plan, a “Notice of Termination”
means a written notice that (i) indicates the specific termination provision in
the Plan relied upon, and (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances

 

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claimed to provide a basis for termination of the Participant’s employment under
the provision so indicated. The failure by the Participant or the Company to set
forth in the Notice of Termination any fact or circumstance that contributes to
a showing of Good Reason or Cause shall not waive any right of the Participant
or the Company hereunder or preclude the Participant or the Company from
asserting such fact or circumstance in enforcing the Participant’s or the
Company’s rights hereunder.

(g) Date of Termination. For purposes of the Plan, “Date of Termination” means
(i) if the Participant’s employment is terminated by the Company for Cause, or
by the Participant during the Window Period, the date on which the Notice of
Termination is given or any later date specified therein (which, however, shall
not be more than 15 days later), (ii) if the Participant’s employment is
terminated by the Participant for Good Reason, the date specified therein
(which, however, shall not be less than seven days or more than 15 days later),
or (iii) if the Participant’s employment is terminated by the Company other than
for Cause, the date on which the Company notifies the Participant of such
termination.

7. Obligations of the Company upon Termination.

(a) Cause; Other than for Good Reason. If the Participant’s employment shall be
terminated for Cause, or if the Participant terminates his or her employment
other than for Good Reason and other than during the Window Period, the Company
shall pay the Participant his or her annual salary through the Date of
Termination, to the extent not already paid, at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which the Participant
is entitled under any compensation,

 

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benefit or other plan or policy of the Company at the time such amounts are due,
and the Company shall have no further obligations to the Participant under the
Plan.

(b) Termination Without Cause; Good Reason or Window Period Terminations. Any
Participant who becomes eligible for compensation and benefits pursuant to
Section 6(a) shall be paid or provided the following:

(i) to the extent not already paid, the sum of (A) the Participant’s annual
salary through the Date of Termination at the higher of the rate in effect
immediately prior to the Change in Control or on the Date of Termination,
(B) the pro rata annual bonus (based upon the portion of the fiscal year elapsed
prior to the Date of Termination) under the Company’s annual Executive Incentive
Compensation Plan (as established under the 2001 Omnibus Incentive Compensation
Plan) or successor annual bonus plan (the “Executive Incentive Compensation
Plan”), assuming that the bonus amount with respect to the full fiscal year
would be equal to the highest bonus he or she earned with respect to the three
fiscal years immediately prior to such fiscal year, and (C) all compensation
previously deferred by the Participant, accrued and unpaid vacation pay and all
other amounts to which the Participant is entitled through the Date of
Termination under any compensation or benefit plan (other than amounts under the
1978 Executive Long Term Incentive Plan, the 2001 Omnibus Incentive Compensation
Plan or any comparable or successor plan (collectively, the “Incentive
Compensation Plan”), the Deferred Compensation Plan or any comparable or
successor plan, the Company’s retirement and 401(k) Plans, or any deferred
compensation arrangement (or portion thereof) that is subject to

 

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Section 409A, payment under which plans or arrangements shall continue to be
made in accordance with their terms) of the Company;

(ii) as severance pay and in lieu of any further salary or bonus for the period
following the Date of Termination, the Participant shall receive a lump sum
payment equal to his or her “Monthly Compensation” (as defined below) multiplied
by the number of months in the Participant’s “Severance Period” (as defined
below).

For purposes of the Plan, “Severance Period” means a number of whole months
equal to the Participant’s months of continuous service with the Company or its
affiliates divided by 3.33, provided, however, that in no event shall the
Participant’s Severance Period be less than 24 months or more than 36 months,
regardless of the Participant’s actual length of service.

For purposes of the Plan, “Monthly Compensation” means one twelfth of the sum of
(A) the Participant’s annual salary at the highest rate of salary during the
12-month period immediately prior to the Date of Termination or, if higher,
during the 12-month period immediately prior to the Change in Control (in each
case, as determined without regard for any reduction for deferred compensation,
401(k) Plan contributions and similar items but by adding the amount of the
Company’s contribution under the 401(k) Plan, or comparable plan, for the 12
months preceding the Date of Termination and other amounts included in the
Participant’s income for income tax purposes for the 12 months preceding the
Date of Termination, but excluding income attributable to awards made under the
Incentive Compensation Plan and income attributable to payments received under
any Company deferred compensation plan or arrangement),

 

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and (B) the higher of (1) the highest annual bonus the Participant earned with
respect to the three fiscal years immediately prior to the fiscal year in which
the Change in Control occurs and (2) the highest annual bonus the Participant
earned with respect to any fiscal year during the period between the Change in
Control and the Date of Termination under the Company’s annual Executive
Incentive Compensation Plan;

(iii) for the remainder of the Severance Period the Company shall continue to
provide the Participant and/or the Participant’s dependents with life insurance
and medical benefits that are at least equal to, and at no greater cost to the
Participant and the Participant’s dependents than, those that would have been
provided to them in accordance with those employee benefit programs if the
Participant’s employment had not been terminated, in accordance with the most
favorable programs of the Company and its affiliates as in effect and applicable
generally to other peer executives and their dependents during the 90-day period
immediately preceding the Change in Control or, if more favorable to the
Participant, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliates and their dependents,
provided, however, that if the Participant becomes reemployed with another
employer and is eligible to receive life insurance or medical benefits under
another employer provided plan, the life insurance and medical benefits provided
for herein shall be offset by those provided under such other plan. With regard
to the continuation of medical benefits during the Severance Period, a
Participant shall become entitled to COBRA rights at the end of the Severance
Period. If, at the end of the Severance Period, the Participant is not receiving
equivalent benefits from a new

 

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employer, the Company shall arrange to enable the Participant to convert the
Participant’s and/or his or her dependents coverage under such programs to
individual policies or programs upon the same terms as peer executives of the
Company may apply for such conversions;

(iv) for purposes of determining eligibility of the Participant for retiree
benefits pursuant to the life insurance and medical benefit programs, the
Participant shall be considered to have attained the age and service credit that
the Participant would have attained had the Participant remained employed until
the end of the Severance Period and to have retired on the last day of such
period. Such retiree benefits shall continue to be available to Participants and
the Participant’s dependents on a basis at least equal to, and at no greater
cost to the Participant and the Participant’s dependents than, those retiree
benefits provided to peer executives of the Company and its affiliates and their
dependents upon such peer executive’s retirement in accordance with the most
favorable programs of the Company and its affiliates as in effect during the
90-day period immediately preceding the Change in Control or, if more favorable
to the Participant, as in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliates and their dependents.
For the avoidance of doubt, a termination of employment by the Participant for
Good Reason shall not provide a basis for denying such Participant any retiree
benefits, provided that such Participant otherwise qualifies for such benefits.

(v) payment by the Company to Participant of the value of a monthly amount
(calculated as a single life annuity) equal to the difference between (A)

 

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the monthly annuity payable under the Company’s Retirement Plan and the
Company’s Supplemental Retirement Plan as of (1) the date of the Change in
Control, or (2) the Date of Termination, whichever monthly annuity amount may be
higher, and (B) that which would have been paid under such plan(s) had the
Participant remained in the employ of the Company through the end of the
Severance Period. For purposes of calculating this benefit, the Participant
shall be credited with the service that the Participant would have performed if
the Participant had remained employed during Severance Period, the Participant
will be treated as having the age he would have attained on the last day of the
Severance Period, and the Participant will be credited with the compensation
that the Participant would have received if the Participant continued to receive
the same level of salary and annual bonus which the Participant received with
respect to the fiscal year of the Company immediately preceding (1) the date of
the Change in Control, or (2) the Date of Termination, whichever level may be
higher (assuming that such compensation was paid to the Participant over the
Severance Period in equal monthly installments). The Company shall pay such
benefit in the form of a lump sum distribution within 15 days after the Date of
Termination. Such amount shall be calculated using the same assumptions and
methodology used for calculating lump sum distributions to participants who
terminate employment after a Change in Control under the Supplemental Retirement
Plan. If the Participant is not fully vested under one or more of the Company’s
qualified retirement plans on the date of Termination and the Participant’s
benefit thereunder would therefore be forfeited, then the accrued but

 

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unvested benefit shall be paid pursuant to this Plan in the form of a lump sum
distribution within 15 days after the Date of Termination; and

(vi) in addition to the amounts or benefits specified elsewhere in the Plan, if
any payment or distribution by the Company to or for the benefit of the
Participant (whether paid or payable or distributed or distributable pursuant to
the Plan or any other plan, arrangement or agreement of the Company, any person
whose actions result in a Change in Control, or any person affiliated with the
Company or such person, but determined without regard to any payments under this
Section 7(b)(vi)) (a “Payment”) would be subject to the excise tax imposed by
Section 4999 of the Code or any similar federal, state or local tax that may
hereafter be imposed, or any interest or penalties are incurred by the
Participant with respect to any such excise tax (such excise tax, together with
any such interest or penalties, collectively, the “Excise Tax”) the Company
shall pay to the Participant an amount (the “Gross-Up Payment”) such that the
net amount retained by the Participant out of the Gross-Up Payment, after
payment of all taxes on the Gross-Up Payment (including federal, state and local
income taxes, employment taxes, Excise Tax, and interest and penalties imposed
on any such taxes), will equal the Excise Tax imposed on the Payment. All
determinations required to be made under this Section 7(b)(vi), including
whether and when a Gross-Up Payment is required, the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by Ernst & Young LLP, or, if Ernst & Young LLP is not the
Company’s nationally recognized independent accounting firm immediately prior to
the Change in

 

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Control, such other nationally recognized accounting firm serving as the
Company’s independent accounting firm (the “Accounting Firm”). The Accounting
Firm shall provide detailed supporting calculations both to the Company and the
Participant within 10 business days of the Company’s receipt of notice from the
Participant that there has been a Payment or at such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control, the Participant may appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 7(b)(vi), shall be paid by the Company to
the Participant within 5 days of the receipt of the Accounting Firm’s
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Participant. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments that
will not have been made by the Company should have been made (the
“Underpayment”), consistent with the calculations required to be made hereunder.
In the event the Participant thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Participant. The Company may

 

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withhold from any payments due to the Participant under the Plan such amounts as
its independent public accountants may determine are required to be withheld
under applicable federal, state and local tax laws. Notwithstanding the
foregoing, payments due to the Participant under this subparagraph shall be made
no later than the end of the calendar year following the calendar year in which
the Participant remits the Excise Tax or such earlier date as required to comply
with Section 409A.

(c) Timing of Payments. All payments under Sections 7(b)(i) and 7(b)(ii) shall
be due and payable in a lump sum within 15 days after the Date of Termination.
Payment under Sections 7(b)(v) and 7(b)(vi) shall be made as provided therein.
If the amount of any payment due under the Plan cannot be finally determined on
or before its due date, the Company shall pay to the Participant on such due
date an estimate, as determined in good faith by the Company (or, in the case of
a payment due under Section 7(b)(vi), as determined pursuant to that Section),
of the minimum amount of such payment and shall pay the remainder of such
payment (together with interest from the due date to the date of actual payment
at the rate provided in Section 10(b)) as soon as the amount thereof can be
determined (but, in the case of payments due under Sections 7(b)(i) and
7(b)(ii), in no event later than the 30th day after the Date of Termination). If
the amount of any payment, whether estimated or not, exceeds the amount
subsequently determined to have been due, such excess shall be paid by the
Participant on the fifth day after demand by the Company; if the amount of any
payment, whether estimated or not, is less than the amount subsequently
determined to have been due, the Company shall pay the deficiency (together with
interest from the

 

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due date to the date of actual payment at the rate provided in Section 10(b)
within five days after demand by the Participant. The timing of all payments and
benefits under this Plan shall be made consistent with the requirements of
Section 409A, and notwithstanding any provision of the Plan to the contrary, any
amount or benefit that is payable to a Participant who is a “specified employee”
(as defined in Section 409A) shall be delayed until the date which is first day
of the seventh month after the date of such Participant’s termination of
employment (or, if earlier, the date of such Participant’s death), if paying
such amount or benefit prior to that date would violate Section 409A.

8. Mitigation. Except as provided in Sections 7(b)(iii) and 13(b), the
Participant shall not be required to mitigate the amount of any payment provided
for in the Plan by seeking other employment or otherwise, nor shall the amount
of any payment or benefit provided for in the Plan be reduced by any
compensation earned by the Participant as a result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Participant to the Company, or otherwise.

9. Resolution of Disputes. If there shall be any dispute between the Company and
the Participant (a) in the event of any termination of the Participant’s
employment by the Company, as to whether such termination was for Cause, or
(b) in the event of any termination of employment by the Participant, as to
whether Good Reason existed, then, unless and until there is a final,
nonappealable judgment by a court of competent jurisdiction declaring that such
termination by the Company was for Cause or that the determination by the
Participant of the existence of Good Reason was not made in good faith, the
Company shall pay all amounts, and provide all benefits, to

 

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the Participant and/or the Participant’s family or other beneficiaries, as the
case may be, that the Company would be required to pay or provide pursuant to
the Plan as though such termination were by the Company without Cause or by the
Participant with Good Reason; provided, however, that the Company shall not be
required to pay any disputed amount pursuant to this Section except upon receipt
of a written undertaking by or on behalf of the Participant to repay all such
amounts to which the Participant is ultimately adjudged by such court not to be
entitled. Notwithstanding the foregoing, the payment of any amount in settlement
of a dispute described in this Section shall be made in accordance with the
requirements of Section 409A.

10. Legal Expenses and Interest.

(a) If, with respect to any alleged failure by the Company to comply with any of
the terms of the Plan or any dispute between the Company and the Participant
with respect to the Participant’s rights under the Plan, a Participant in good
faith hires legal counsel with respect thereto or institutes any negotiations or
institutes or responds to legal action to assert or defend the validity of, to
interpret, enforce his or her rights under, or recover damages for violation of
the terms of the Plan, then (regardless of the outcome) the Company shall pay,
as they are incurred, the Participant’s actual expenses for attorneys’ fees and
disbursements, together with such additional payments, if any, as may be
necessary so that the net after tax payments to the Participant equal such fees
and disbursements. The Company agrees to pay such amounts within 10 days
following the Company’s receipt of an invoice from the Executive, provided that
the Executive shall have submitted an invoice for such

 

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amounts at least 30 days before the end of the calendar year next following the
calendar year in which such fees and disbursements were incurred.

(b) To the extent permitted by law, the Company shall pay to the Participant on
demand a late charge on any amount not paid in full when due after a Change in
Control under the terms of the Plan. Except as otherwise specifically provided
in the Plan, the late charge shall be computed by applying to the sum of all
delinquent amounts a late charge rate. The late charge rate shall be a fixed
rate per year that shall equal the sum of 3% plus the “prime rate” of Morgan
Guaranty Trust Company of New York or successor institution (“Morgan”) publicly
announced by Morgan to be in effect on the Date of Termination, or if Morgan no
longer publicly announces a prime rate on such date, any substantially
equivalent rate announced by Morgan to be in effect on such date (provided,
however, that such rate shall not exceed any applicable legally permissible
rate).

11. Funding. The Company may, in its discretion, establish a trust to fund any
of the payments which are or may become payable to Participant under the Plan,
but nothing included in the Plan shall require that the Company establish such a
trust or other funding arrangement. Whether or not the Company sets any assets
aside for the purposes of the Plan, such assets shall at all times prior to
payment to Participants remain the assets of the Company subject to the claims
of its creditors. Neither the Company nor the Board nor the Committee shall be
deemed to be a trustee or fiduciary with respect to any amount to be paid under
the Plan.

12. No Contract of Employment. The Participant and the Company acknowledge that,
except as may otherwise be provided under any written agreement

 

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between the Participant and the Company, the employment of the Participant by
the Company is “at will” and, subject to such payments as may become due under
the Plan, such employment may be terminated by either the Participant or the
Company at any time and for any reason.

13. Non-exclusivity of Rights.

(a) Future Benefits under Company Plans. Nothing in the Plan shall prevent or
limit the Participant’s continuing or future participation in any plan, program,
policy or practice of the Company or any of its affiliates, nor shall anything
herein limit any rights or reduce any benefits the Participant may have under
any agreement or arrangement with the Company or any of its affiliates. Amounts
that are vested benefits or that the Participant is otherwise entitled to
receive under any plan, policy, practice or program of or any agreement or
arrangement with the Company or any of its affiliates at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or agreement or arrangement except as explicitly modified by
the Plan.

(b) Benefits of Other Plans and Agreements. If the Participant becomes entitled
to receive compensation or benefits under the terms of the Plan, such
compensation or benefits will be reduced by other severance benefits payable
under any plan, program, policy or practice of or agreement or other arrangement
between the Participant and the Company (not including payments or distributions
under the Incentive Compensation Plan). It is intended that the Plan provide
compensation or benefits that are supplemental to severance benefits and that
are actually received by the Participant pursuant to any plan, program, policy
or practice of or agreement or

 

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arrangement between the Participant and the Company, such that the net effect to
the Participant of entitlement to any similar benefits that are contained both
in the Plan and in any other existing plan, program, policy or practice of or
agreement or arrangement between the Participant and the Company will be to
provide the Participant with the greater of the benefits under the Plan or under
such other plan, program, policy, practice, or agreement or arrangement. This
Plan is not intended to modify, amend, terminate or otherwise affect the
Incentive Compensation Plan, which shall remain a fully independent and separate
plan.

14. Successors; Binding Agreement. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform the Plan in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such express
assumption and agreement at or prior to the effectiveness of any such succession
shall be a breach of the Plan and shall entitle the Participant to compensation
from the Company in the same amount and on the same terms to which the
Participant would be entitled hereunder if the Participant terminated his or her
employment for Good Reason following a Change in Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in the Plan,
“Company” means the Company as herein defined and any successor to its business
and/or assets which assumes and agrees to perform the Plan, by operation of law
or otherwise.

 

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15. Transferability and Enforcement.

(a) The rights and benefits of the Company under the Plan shall be transferable,
but only to a successor of the Company, and all covenants and agreements
hereunder shall inure to the benefit of and be enforceable by or against its
successors and assigns. The rights and benefits of Participant under the Plan
shall not be transferable other than by the laws of descent and distribution.

(b) The Company intends the Plan to be enforceable by Participants. The rights
and benefits under the Plan shall inure to the benefit of and be enforceable by
any Participant and the Participant’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Participant should die while any amount would still be payable
to the Participant hereunder had the Participant continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of the Plan to the Participant’s devisee, legatee or other designee or, if
there is no such designee, to the Participant’s estate.

16. Notices. Any notices referred to herein shall be in writing and shall be
deemed given if delivered in person or by facsimile transmission, telexed or
sent by U.S. registered or certified mail to the Participant at his or her
address on file with the Company (or to such other address as the Participant
shall specify by notice), or to the Company at its principal executive office,
Attn: Secretary.

17. Amendment or Termination of the Plan. The Board reserves the right to amend,
modify, suspend or terminate the Plan at any time; provided that:

(a) without the written consent of the Participant, no such amendment,
modification, suspension or termination shall adversely affect the benefits or

 

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compensation due under the Plan to any Participant whose employment has
terminated prior to such amendment, modification, suspension or termination and
is entitled to benefits and compensation under Section 7(b);

(b) no such amendment, modification, suspension or termination that has the
effect of reducing or diminishing the right of any Participant to receive any
payment or benefit under the Plan will become effective prior to the first
anniversary of the date on which written notice of such amendment, modification,
suspension or termination was provided to the Participant, and if such
amendment, modification, suspension or termination was effected (i) on the day
of or subsequent to the Change in Control, (ii) prior to the Change in Control,
but at the request of any third party participating in or causing a Change in
Control or (iii) otherwise in connection with, in relation to, or in
anticipation of a Change in Control, such amendment, modification, suspension or
termination will not become effective until the second anniversary of the Change
in Control. In any litigation related to this issue, whether it is the plaintiff
or the defendant, the Company shall have the burden of proof that such
amendment, modification, suspension or termination was not at the request of any
third party participating in or causing the Change in Control or otherwise in
connection with, in relation to, or in anticipation of a Change in Control; and

(c) the Board’s right to amend, modify, suspend or terminate the Plan is subject
to the requirements of Section 409A to the extent such requirements apply to the
Plan.

18. Waivers. The Participant’s or the Company’s failure to insist upon strict
compliance with any provision of the Plan or the failure to assert any right the

 

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Participant or the Company may have hereunder, including, without limitation,
the right of the Participant to terminate employment for Good Reason, shall not
be deemed to be a waiver of such provision or right or any other provision or
right under the Plan.

19. Validity. The invalidity or unenforceability of any provision of the Plan
shall not affect the validity or enforceability of any other provision of the
Plan, and such other provisions shall remain in full force and effect to the
extent permitted by law.

20. Governing Law. To the extent not preempted by federal law, all questions
pertaining to the construction, regulation, validity and effect of the
provisions of the Plan shall be determined in accordance with the laws of the
State of Delaware without regard to the conflict of laws principles thereof.

21. Section 409A. This Plan is intended to comply with the requirements of
Section 409A and shall be interpreted and administered in accordance with that
intent. If any provision of the Plan would otherwise conflict with or frustrate
this intent, that provision will be interpreted and deemed amended so as to
avoid the conflict.

22. Headings. The headings and paragraph designations of the Plan are included
solely for convenience of reference and shall in no event be construed to affect
or modify any provisions of the Plan.

 

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