Exhibit 10.1


 


AS ADOPTED


BY THE BOARD OF DIRECTORS OF


PZENA INVESTMENT MANAGEMENT, INC.


ON OCTOBER 24, 2007


(AMENDED AS OF MAY 19, 2009)


 


Pzena Investment Management, Inc.


Equity Incentive Plan


 


1.                                       PURPOSE; TYPES
OF AWARDS; CONSTRUCTION.


 


The purposes of the Pzena Investment Management, Inc.
Equity Incentive Plan are to attract, motivate and retain (a) employees of
the Company and any Subsidiary or Affiliate, (b) independent contractors
who provide significant services to the Company, any Subsidiary or Affiliate
and (c) nonemployee directors of the Company, any Subsidiary or any
Affiliate.  The Plan is also designed to
encourage stock ownership by such persons, thereby aligning their interest with
those of the Company’s stockholders and to permit the payment of compensation
that qualifies as performance-based compensation under Section 162(m) of
the Code.  Pursuant to the provisions
hereof, there may be granted stock options (including “incentive stock options”
and “non-qualified stock options”), and other stock-based awards, including but
not limited to restricted stock, restricted stock units, dividend equivalents,
performance units, Stock Appreciation Rights (payable in cash or shares) and
other long-term stock-based or cash-based Awards.  Notwithstanding any provision of the Plan, to
the extent that any Award would be subject to Section 409A of the Code, no
such Award may be granted if it would fail to comply with the requirements set
forth in Section 409A of the Code and any regulations or guidance promulgated
thereunder.


 


2.                                       DEFINITIONS.  For purposes of the Plan, the following terms
shall be defined as set forth below:


 


(a)           “Affiliate” means an affiliate of the
Company, as defined in Rule 12b-2 promulgated under Section 12 of the
Exchange Act.


 


(b)           “Award” means individually or
collectively, a grant under the Plan of Options, Restricted Stock, Restricted
Stock Units or Other Stock-Based Awards or Other Cash-Based Awards.


 


(c)           “Award Terms” means any written
agreement, contract, or other instrument or document evidencing an Award.


 


(d)           “Beneficial Owner” shall have the
meaning set forth in Rule 13d-3 under the Exchange Act.


 


(e)           “Board” means the Board of Directors
of the Company.


 

















 


(f)            “Cause” shall mean, with respect to
a Grantee, (a) such Grantee being charged or indicted for a felony
involving the Company or any Affiliate’s business, or being convicted of any
other felony (or guilty plea, or nolo contendere plea in connection therewith),
(b) such Grantee’s willfully and materially defrauding the Company or any
Affiliate, or (c) such Grantee’s committing a willful and material breach
of such Grantee’s obligations to protect the Company or any Affiliate’s
confidential information, such Grantee’s obligation of loyalty to the Company
or any Affiliate or such Grantee’s obligation to comply with the Company or any
Affiliate’s Code of Ethics or any other compliance regulations, policies or
procedures, (d) the gross negligence or willful misconduct of such Grantee
in the performance of such Grantee’s duties which gross negligence or willful
misconduct has the purpose, or the reasonable likely effect, of causing
material harm to the Company or any Affiliate, or (e) such Grantee fails
to maintain in good standing any and all licenses, registrations or other
permits necessary for the performance of his duties hereunder.  For purposes of the definition of Cause, “materially,”
and “material” shall mean damages caused to the Company or any Affiliate in
excess of $100,000 or any significant damage to the reputation of the Company
or any Affiliate.


 


(g)           “Change in Control” shall have the
meaning set forth in Section 7(b) hereof.


 


(h)           “Code” means the Internal Revenue
Code of 1986, as amended from time to time.


 


(i)            “Committee” means the Compensation
Committee of the Board.  Unless otherwise
determined by the Board, the Committee shall be comprised solely of directors
who are (a) “nonemployee directors” under Rule 16b-3 of the Exchange
Act, (b) “outside directors” under Section 162(m) of the Code and (c) “independent
directors” pursuant to New York Stock Exchange requirements.


 


(j)            “Company” means Pzena Investment
Management, Inc., a corporation organized under the laws of the State of
Delaware, or any successor corporation.


 


(k)           “Covered Employee” shall have the
meaning set forth in Section 162(m)(3) of the Code.


 


(l)            “Effective Date” means the date that
the Plan was adopted by the Board.


 


(m)          “Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to time, and as now or hereafter
construed, interpreted and applied by regulations, rulings and cases.


 


(n)           “Excise Tax” shall have the meaning
set forth in Section 7(d) hereof.


 


(o)           “Fair Market Value” means, with
respect to Stock or other property, the fair market value of such Stock or
other property determined by such methods or procedures as shall be established
from time to time by the Committee. 
Unless otherwise determined by the Committee in good faith, the per
share Fair Market Value of Stock as of a particular date shall mean (i) if
the Stock is listed for trading on the New York Stock Exchange, the closing
sale price per share of Stock on the New York Stock Exchange on that date (or,
if no closing sale price is reported, the last reported sale price), (ii) if
the Stock is not listed for trading on the New York Stock Exchange, the closing
sale price (or, if no closing sale price is reported, the last reported


 


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sale price) as reported on
that date in composite transactions for the principal national securities
exchange registered pursuant to Section 6(g) of the Exchange Act on
which the Stock is listed, (iii) if the Stock is not so listed on a
national securities exchange, the last quoted bid price for the Stock on that
date in the over-the-counter market as reported by Pink Sheets LLC or a similar
organization, or (iv) if the Stock is not so quoted by Pink Sheets LLC or
a similar organization such value as the Committee, in its sole discretion,
shall determine in good faith.


 


(p)           “Grantee” means a person who, as an
employee of or independent contractor or nonemployee director with respect to
the Company, a Subsidiary or an Affiliate, has been granted an Award under the
Plan.


 


(q)           “IPO” means the initial public
offering of Stock, as contemplated in the Company’s prospectus, dated October 24,
2007.


 


(r)            “ISO” means any Option intended to
be and designated as an incentive stock option within the meaning of Section 422
of the Code.


 


(s)           “NQSO” means any Option that is
designated as a nonqualified stock option.


 


(t)            “Option” means a right, granted to a
Grantee under Section 6(b)(i), to purchase shares of Stock. An Option may
be either an ISO or an NQSO.


 


(u)           “Other Cash-Based Award” means an
Award granted to a Grantee under Section 6(b)(iv) hereof, including cash
awarded as a bonus or upon the attainment of Performance Goals or otherwise as
permitted under the Plan.


 


(v)           “Other Stock-Based Award” means an
Award granted to a Grantee pursuant to Section 6(b)(iv) hereof, that
may be denominated or payable in, valued in whole or in part by reference to,
or otherwise based on, or related to, Stock including but not limited to
performance units, Stock Appreciation Rights (payable in cash or shares) or
dividend equivalents, each of which may be subject to the attainment of
Performance Goals or a period of continued employment or other terms and
conditions as permitted under the Plan.


 


(w)          “Performance Goals” means performance
goals based on one or more of the following criteria: (i) earnings
including operating income, earnings before or after taxes, earnings before or
after interest, depreciation, amortization, or extraordinary or special items
or book value per share (which may exclude nonrecurring items); (ii) pre-tax
income or after-tax income; (iii) earnings per common share (basic or
diluted); (iv) operating profit; (v) revenue, revenue growth or rate
of revenue growth; (vi) return on assets (gross or net), return on
investment, return on capital, or return on equity; (vii) returns on sales
or revenues; (viii) operating expenses; (ix) stock price
appreciation; (x) cash flow, free cash flow, cash flow return on
investment (discounted or otherwise), net cash provided by operations, or cash
flow in excess of cost of capital; (xi) implementation or completion of
critical projects or processes; (xii) economic value created; (xiii) cumulative
earnings per share growth;  (xiv)
operating margin or profit margin; (xv) common stock price or total stockholder
return; (xvi) cost targets, reductions and savings, productivity and efficiencies;
(xvii) strategic business criteria, consisting of one or more objectives based
on meeting specified market penetration, geographic business expansion,
customer satisfaction, employee satisfaction, human resources management,
supervision of


 


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litigation, information
technology, and goals relating to acquisitions, divestitures, joint ventures
and similar transactions, and budget comparisons; (xviii) personal professional
objectives, including any of the foregoing performance goals, the
implementation of policies and plans, the negotiation of transactions, the
development of long-term business goals, formation of joint ventures, research
or development collaborations, and the completion of other corporate
transactions; and (xix) any combination of, or a specified increase in, any of
the foregoing.  Where applicable, the
Performance Goals may be expressed in terms of attaining a specified level of
the particular criteria or the attainment of a percentage increase or decrease
in the particular criteria, and may be applied to one or more of the Company, a
Subsidiary or Affiliate, or a division or strategic business unit of the
Company, or may be applied to the performance of the Company relative to a market
index, a group of other companies or a combination thereof, all as determined
by the Committee.  The Performance Goals
may include a threshold level of performance below which no payment will be
made (or no vesting will occur), levels of performance at which specified
payments will be made (or specified vesting will occur), and a maximum level of
performance above which no additional payment will be made (or at which full
vesting will occur). Each of the foregoing Performance Goals shall be
determined in accordance with generally accepted accounting principles, if
applicable, and shall be subject to certification by the Committee; provided
that, to the extent an Award is intended to satisfy the performance-based
compensation exception to the limits of Section 162(m) of the Code
and then to the extent consistent with such exception, the Committee shall have
the authority to make equitable adjustments to the Performance Goals in
recognition of unusual or non-recurring events affecting the Company or any Subsidiary
or Affiliate or the financial statements of the Company or any Subsidiary or
Affiliate, in response to changes in applicable laws or regulations, or to
account for items of gain, loss or expense determined to be extraordinary or
unusual in nature or infrequent in occurrence or related to the disposal of a
segment of a business or related to a change in accounting principles.


 


(x)            “Person” shall have the meaning set
forth in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof and the rules thereunder,
except that such term shall not include (1) the Company or any Subsidiary
corporation, (2) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary corporation, (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.


 


(y)           “Plan” means this Pzena Investment
Management, Inc. Equity Incentive Plan, as amended from time to time.


 


(z)            “Plan Year” means a calendar year.


 


(aa)         “Restricted Stock” means an Award of
shares of Stock to a Grantee under Section 6(b)(ii) that may be
subject to certain restrictions and to a risk of forfeiture.


 


(bb)         “Restricted Stock Unit” means a right
granted to a Grantee under Section 6(b)(iii) of the Plan to receive
Stock or cash at the end of a specified period, which right may be subject to
the attainment of Performance Goals in a period of continued employment or
other terms and conditions as permitted under the Plan.


 


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(cc)         “Rule 16b-3” means Rule 16b-3,
as from time to time in effect promulgated by the Securities and Exchange
Commission under Section 16 of the Exchange Act, including any successor
to such Rule.


 


(dd)         “Stock” means shares of Class A
common stock, par value $0.01 per share, of the Company.


 


(ee)         “Stock Appreciation Right” means an
Other Stock-Based Award, payable in cash or stock, that entitles a Grantee upon
exercise to the excess of the Fair Market Value of the Stock underlying the
Award over the base price established in respect of such Stock.


 


(ff)           “Subsidiary” means any corporation in
an unbroken chain of corporations beginning with the Company if, at the time of
granting of an Award, each of the corporations (other than the last corporation
in the unbroken chain) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.


 


(gg)         “Total Payments” shall have the meaning
set forth in Section 7(d) hereof.


 


3.                                       ADMINISTRATION.


 


(a)           The Plan shall be administered by the
Committee or, at the discretion of the Board, the Board, provided that any
Award to the Chairman of the Board shall be subject to ratification by the
Board.  In the event the Board is the
administrator of the Plan, references herein to the Committee shall be deemed
to include the Board.  The Board may from
time to time appoint a member or members of the Committee in substitution for
or in addition to the member or members then in office and may fill vacancies
on the Committee however caused.  The
Board or the Committee may delegate the ability to grant Awards to employees
who are not subject to potential liability under Section 16(b) of the
1934 Act with respect to transactions involving equity securities of the
Company at the time any such delegated authority is exercised.


 


(b)           The decision of the Committee as to
all questions of interpretation and application of the Plan shall be final,
binding and conclusive on all persons. 
The Committee shall have the authority in its discretion, subject to and
not inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the power and authority either specifically granted to
it under the Plan or necessary or advisable in the administration of the Plan,
including without limitation, the authority to grant Awards, to determine the
persons to whom and the time or times at which Awards shall be granted, to
determine the type and number of Awards to be granted, the number of shares of
Stock to which an Award may relate and the terms, conditions, restrictions and
Performance Goals relating to any Award; to determine Performance Goals no
later than such time as is required to ensure that an underlying Award which is
intended to comply with the requirements of Section 162(m) of the
Code so complies; to determine whether, to what extent, and under what
circumstances an Award may be settled, canceled, forfeited, accelerated,
exchanged, or surrendered (provided that, unless approved by the Company’s
stockholders, no Award shall be settled, canceled, forfeited, exchanged or
surrendered in exchange or otherwise in consideration for a new Award with a
value in excess of the value of such settled, canceled, forfeited, exchanged or
surrendered Award); to make adjustments in the terms and conditions (including
Performance Goals) applicable to Awards; to construe and interpret the Plan and
any


 


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Award; to prescribe, amend
and rescind rules and regulations relating to the Plan; to determine the
terms and provisions of the Award Terms (which need not be identical for each
Grantee); and to make all other determinations deemed necessary or advisable
for the administration of the Plan.  The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Award Terms granted hereunder in the manner
and to the extent it shall deem expedient to carry the Plan into effect and
shall be the sole and final judge of such expediency.  No Committee member (or member of the
Management Committee) shall be liable for any action or determination made with
respect to the Plan or any Award.


 


4.                                       ELIGIBILITY.


 


(a)           Awards may be granted to officers,
independent contractors, employees and nonemployee directors of the Company or
of any of its Subsidiaries and Affiliates; provided, that ISOs shall be granted
only to employees (including officers and directors who are also employees) of
the Company, its parent or any of its Subsidiaries.


 


(b)           No ISO shall be granted to any
employee of the Company, its parent or any of its Subsidiaries if such employee
owns, immediately prior to the grant of the ISO, stock representing more than
10% of the voting power or more than 10% of the value of all classes of stock
of the Company or a parent or a Subsidiary, unless the purchase price for the
stock under such ISO shall be at least 110% of its Fair Market Value at the
time such ISO is granted and the ISO, by its terms, shall not be exercisable
more than five years from the date it is granted. In determining the stock
ownership under this paragraph, the provisions of Section 424(d) of
the Code shall be controlling.


 


5.                                       STOCK SUBJECT
TO THE PLAN.


 


(a)           The maximum number of shares of Stock
reserved for the grant or settlement of Awards under the Plan (the “Share Limit”)
shall be 7,059,658 shares of Stock, and shall be subject to adjustment as
provided herein.  The aggregate number of
shares of Stock made subject to Awards granted during any fiscal year to any
single individual shall not exceed 0.2% of the Share Limit.  Determinations made in respect of the
limitation set forth in the preceding sentence shall be made in a manner
consistent with Section 162(m) of the Code.  Such shares may, in whole or in part, be
authorized but unissued shares or shares that shall have been or may be reacquired
by the Company in the open market, in private transactions or otherwise.  If any shares subject to an Award are
forfeited, canceled, exchanged or surrendered or if an Award otherwise
terminates or expires without a distribution of shares to the Grantee, the
shares of stock with respect to such Award shall, to the extent of any such
forfeiture, cancellation, exchange, surrender, termination or expiration, again
be available for Awards under the Plan. 
Notwithstanding the foregoing, shares of Stock that are exchanged by a
Grantee or withheld by the Company as full or partial payment in connection
with any Award under the Plan, as well as any shares of Stock exchanged by a
Grantee or withheld by the Company or any Subsidiary to satisfy the tax
withholding obligations related to any Award under the Plan, shall not be
available for subsequent Awards under the Plan. 
Upon the exercise of any Award granted in tandem with any other Awards,
such related Awards shall be canceled to the extent of the number of shares of
Stock as to which the Award is exercised and, notwithstanding the foregoing,
such number of shares shall no longer be available for Awards under the Plan.


 


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(b)           Except as provided in any Award Terms
or as otherwise provided in the Plan, in the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
Stock, or other property), recapitalization, Stock split, reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other similar corporate transaction or event, affects the
Stock such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Grantees under the Plan, then the Committee shall
make such equitable changes or adjustments as it deems necessary or appropriate
to any or all of (i) the number and kind of shares of Stock or other
property (including cash) that may thereafter be issued in connection with
Awards or the total number of Awards issuable under the Plan, (ii) the
number and kind of shares of Stock or other property issued or issuable in
respect of outstanding Awards, (iii) the exercise price, grant price or
purchase price relating to any Award, (iv) the Performance Goals and (v) the
individual limitations applicable to Awards; provided that, with respect to
ISOs, any adjustment shall be made in accordance with the provisions of Section 424(h) of
the Code and any regulations or guidance promulgated thereunder, and provided
further that no such adjustment shall cause any Award hereunder which is or
becomes subject to Section 409A of the Code to fail to comply with the
requirements of such section.


 


6.                                       SPECIFIC TERMS
OF AWARDS.


 


(a)                                  General.  The term of each Award shall be for such
period as may be determined by the Committee. Subject to the terms of the Plan
and any applicable Award Terms, payments to be made by the Company or a
Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may
be made in such forms as the Committee shall determine at the date of grant or
thereafter, including, without limitation, cash, Stock, or other property, and
may be made in a single payment or transfer, in installments, or, subject to
the requirements of Section 409A of the Code, on a deferred basis.


 


(b)                                 Awards.  The Committee is authorized to grant to
Grantees the following Awards, as deemed by the Committee to be consistent with
the purposes of the Plan.  The Committee
shall determine the terms and conditions of such Awards.


 


(i)                                     Options.  The Committee is authorized to grant Options
to Grantees on the following terms and conditions:


 


(A)                              The Award Terms evidencing the grant of an Option under the
Plan shall designate the Option as an ISO or an NQSO.


 


(B)                             The exercise price per share of Stock purchasable under an
Option shall be determined by the Committee, but in no event shall the exercise
price of an Option per share of Stock be less than the Fair Market Value of a
share of Stock as of the date of grant of such Option.  The purchase price of Stock as to which an
Option is exercised shall be paid in full at the time of exercise; payment may
be made in cash, which may be paid by check, or other instrument acceptable to
the Company, or, with the consent of the Committee, in shares of Stock, valued
at the Fair Market Value on the date of


 


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exercise (including shares of Stock that otherwise
would be distributed to the Grantee upon exercise of the Option), or if there
were no sales on such date, on the next preceding day on which there were sales
or (if permitted by the Committee and subject to such terms and conditions as
it may determine) by surrender of outstanding Awards under the Plan, or the
Committee may permit such payment of exercise price by any other method it
deems satisfactory in its discretion. In addition, subject to applicable law
and pursuant to procedures approved by the Committee, payment of the exercise
price may be made through the sale of Stock acquired on exercise of the Option,
valued at Fair Market Value on the date of exercise, sufficient to pay for such
Stock (together with, if requested by the Company, the amount of federal, state
or local withholding taxes payable by Grantee by reason of such exercise). Any
amount necessary to satisfy applicable federal, state or local tax withholding
requirements shall be paid promptly upon notification of the amount due.  The Committee may permit such amount of tax
withholding to be paid in shares of Stock previously owned by the employee, or
a portion of the shares of Stock that otherwise would be distributed to such
employee upon exercise of the Option, or a combination of cash and shares of
such Stock.


 


(C)                                Options shall be exercisable over the exercise period (which
shall not exceed ten years from the date of grant), at such times and upon such
conditions as the Committee may determine, as reflected in the Award Terms;
provided that, the Committee shall have the authority to accelerate the exercisability
of any outstanding Option at such time and under such circumstances as it, in
its sole discretion, deems appropriate. An Option may be exercised to the
extent of any or all full shares of Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the Committee or its
designated agent. No partial exercise may be made for less than one hundred
(100) full shares of Stock.


 


(D)                               Upon the termination of a Grantee’s employment or service
with the Company and its Subsidiaries or Affiliates, the Options granted to
such Grantee, to the extent that they are exercisable at the time of such
termination, shall remain exercisable for such period as may be provided in the
applicable Award Terms, but in no event following the expiration of their term.
The treatment of any Option that is unexercisable as of the date of such
termination shall be as set forth in the applicable Award Terms.


 


(E)                                 Options may be subject to such other conditions including,
but not limited to, restrictions on transferability of, or provisions for
recovery of, the shares acquired upon exercise of such Options (or


 


8

















 


proceeds of sale thereof), as the Committee may
prescribe in its discretion or as may be required by applicable law.


 


(ii)                                  Restricted Stock.


 


(A)                              The Committee may grant Awards of Restricted Stock, alone or
in tandem with other Awards under the Plan, subject to such restrictions, terms
and conditions, as the Committee shall determine in its sole discretion and as
shall be evidenced by the applicable Award Terms (provided that any such Award
is subject to the vesting requirements described herein).  The vesting of a Restricted Stock Award
granted under the Plan may be conditioned upon the completion of a specified
period of employment or service with the Company or any Subsidiary or
Affiliate, upon the attainment of specified Performance Goals, and/or upon such
other criteria as the Committee may determine in its sole discretion.


 


(B)                                The Committee shall determine the price, which, to the extent
required by law, shall not be less than par value of the Stock, to be paid by
the Grantee for each share of Restricted Stock or unrestricted stock or stock
units subject to the Award. Each Award Terms with respect to such stock award
shall set forth the amount (if any) to be paid by the Grantee with respect to
such Award and when and under what circumstances such payment is required to be
made.


 


(C)                                Except as provided in the applicable Award Terms, no shares
of Stock underlying a Restricted Stock Award may be assigned, transferred, or
otherwise encumbered or disposed of by the Grantee until such shares of Stock
have vested in accordance with the terms of such Award.


 


(D)                               If and to the extent that the applicable Award Terms may so
provide, a Grantee shall have the right to vote and receive dividends on
Restricted Stock granted under the Plan. Unless otherwise provided in the
applicable Award Terms, any Stock received as a dividend on or in connection
with a stock split of the shares of Stock underlying a Restricted Stock Award
shall be subject to the same restrictions as the shares of Stock underlying
such Restricted Stock Award.


 


(E)                                 Upon the termination of a Grantee’s employment or service
with the Company and its Subsidiaries or Affiliates, the Restricted Stock
granted to such Grantee shall be subject to the terms and conditions specified
in the applicable Award Terms.


 


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(iii)                               Restricted Stock Units.
The Committee is authorized to grant Restricted Stock Units to Grantees,
subject to the following terms and conditions:


 


(A)                              At the time of the grant of Restricted Stock Units, the
Committee may impose such restrictions or conditions to the vesting of such
Awards as it, in its discretion, deems appropriate, including, but not limited
to, the achievement of Performance Goals. The Committee shall have the
authority to accelerate the settlement of any outstanding award of Restricted
Stock Units at such time and under such circumstances as it, in its sole
discretion, deems appropriate, subject to the requirements of Section 409A
of the Code.


 


(B)                                Unless otherwise provided in Award Terms or except as
otherwise provided in the Plan, upon the vesting of a Restricted Stock Unit there
shall be delivered to the Grantee, as soon as practicable following the date on
which such Award (or any portion thereof) vests (but in any event within such
period as is required to avoid the imposition of a tax under Section 409A
of the Code), that number of shares of Stock equal to the number of Restricted
Stock Units becoming so vested.


 


(C)                                Subject to the requirements of Section 409A of the Code,
an Award of Restricted Stock Units may provide the Grantee with the right to
receive dividend equivalent payments with respect to Stock subject to the Award
(both before and after the Stock subject to the Award is earned or vested),
which payments may be either made currently or credited to an account for the
Participant, and may be settled in cash or Stock, as determined by the
Committee. Any such settlements and any such crediting of dividend equivalents
may be subject to such conditions, restrictions and contingencies as the
Committee shall establish, including the reinvestment of such credited amounts
in Stock equivalents.


 


(D)                               Upon the termination of a Grantee’s employment or service
with the Company and its Subsidiaries or Affiliates, the Restricted Stock Units
granted to such Grantee shall be subject to the terms and conditions specified
in the applicable Award Terms.


 


(iv)                              Other Stock-Based or Cash-Based Awards.


 


(A)                              The Committee is authorized to grant Awards to Grantees in
the form of Other Stock-Based Awards or Other Cash-Based Awards, as deemed by
the Committee to be consistent with the purposes of the Plan. The Committee
shall determine the terms and conditions of such Awards, consistent with the
terms of the Plan, at the date of grant or thereafter, including the
Performance Goals and


 


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performance periods. Stock or other securities or
property delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(b)(iv) shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, Stock, other Awards, notes or other property, as
the Committee shall determine, subject to any required corporate action.


 


(B)           The
maximum value of the aggregate payment that any Grantee may receive with
respect to Other Cash-Based Awards pursuant to this Section 6(b)(iv) in
respect of any annual performance period is $15 million and for any other
performance period in excess of one year, such amount multiplied by a fraction,
the numerator of which is the number of months in the performance period and
the denominator of which is twelve. No payment shall be made to a Covered
Employee prior to the certification by the Committee that the Performance Goals
have been attained. The Committee may establish such other rules applicable
to the Other Stock- or Cash-Based Awards to the extent not inconsistent with Section 162(m) of
the Code.


 


(C)           Payments
earned in respect of any Cash-Based Award may be decreased or, with respect to
any Grantee who is not a Covered Employee, increased in the sole discretion of
the Committee based on such factors as it deems appropriate. Notwithstanding
the foregoing, any Awards may be adjusted in accordance with Section 5(b) hereof.


 


7.                                       CHANGE IN
CONTROL PROVISIONS.


 


(a)                                  Unless otherwise determined by the Committee or evidenced in
an applicable Award Terms or employment or other agreement, in the event of a
Change in Control, the Committee shall have the discretion, exercisable either
in advance of such Change in Control or at the time thereof, to provide for one
or more of the following:


 


(i)            the
continuation of outstanding Awards after the Change in Control without change;


 


(ii)           the
cash-out of outstanding Options as of the time of the transaction as part of
the transaction for an amount equal to the difference between the price that
would have been paid for the shares of Stock subject to such outstanding
Options if such Options were exercised upon the closing of such transaction and
the exercise price of such outstanding Options; provided that if the exercise
price of the Options exceeds the price that would have been paid for the shares
of Stock subject to the outstanding Options if such Options were exercised upon
the closing of the transaction,


 


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then such Options may be cancelled
without making a payment to the Optionees;


 


(iii)          the
expiration of the exercise period for outstanding Options upon the closing of
the transaction;


 


(iv)          the
cancellation of outstanding Restricted Stock, Restricted Stock Units and/or
Other Stock-Based Awards and payment to the Participants holding such Awards
equal to the value of the underlying shares of Stock as of the closing date of
the transaction, in such form and at such time as the Committee shall
determine;


 


(v)           a
requirement that the buyer in the transaction assume outstanding Options and/or
Restricted Stock and/or Restricted Stock Units;


 


(vi)          a
requirement that the buyer in the transaction substitute outstanding Options
with comparable options to purchase the equity interests of the buyer or its
parent and/or substitute outstanding Restricted Stock Units and/or Other
Stock-Based Awards with comparable restricted stock or units of the buyer or
its parent; and


 


(vii)         the
acceleration of outstanding Options, Restricted Stock Units and Other
Stock-Based Awards.


 


Notwithstanding
any other provision of the Plan, in the event of a Change in Control in which
the consideration paid to the holders of shares of Stock is solely cash, the
Committee may, in its discretion, provide that each Award shall, upon the
occurrence of a Change in Control, be canceled in exchange for a payment in an
amount equal to (i) the excess of the consideration paid per share of
Stock in the Change in Control over the exercise or purchase price (if any) per
share of Stock subject to the Award multiplied by (ii) the number of
Shares granted under the Award.


 


(b)                                 A “Change in Control” shall be deemed to have occurred if the
event set forth in any one of the following paragraphs shall have occurred:


 


(i)            any
Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned
by such Person any securities acquired directly from the Company or its
Affiliates) representing 30% or more of the combined voting power of the
Company’s then outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (I) of
paragraph (iii) below; or


 


(ii)           the
following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or


 


12

















 


election by the Board or nomination
for election by the Company’s stockholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors on the date hereof or whose appointment, election or
nomination for election was previously so approved or recommended; or


 


(iii)          there
is consummated a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation or other entity,
other than (I) a merger or consolidation which results in (A) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 60% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation and (B) the
individuals who comprise the Board immediately prior thereto constituting
immediately thereafter at least a majority of the board of directors of the
Company, the entity surviving such merger or consolidation or, if the Company
or the entity surviving such merger is then a subsidiary, the ultimate parent
thereof, or (II) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its Affiliates) representing
30% or more of the combined voting power of the Company’s then outstanding
securities; or


 


(iv)          the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets
(it being conclusively presumed that any sale or disposition is a sale or
disposition by the Company of all or substantially all of its assets if the
consummation of the sale or disposition is contingent upon approval by the
Company’s stockholders unless the Board expressly determines in writing that
such approval is required solely by reason of any relationship between the
Company and any other Person or an Affiliate of the Company and any other
Person), other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity (i) at least 60% of
the combined voting power of the voting securities of which are owned by stockholders
of the Company in substantially the same proportions as their ownership of the
Company immediately prior to such sale or disposition and (ii) the majority of
whose board of directors immediately following such sale or disposition
consists of individuals who comprise the Board immediately prior thereto.


 


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(c)                                  Notwithstanding the foregoing, a “Change in Control” shall
not be deemed to have occurred by virtue of the consummation of any transaction
or series of integrated transactions immediately following which the record
holders of the common stock of the Company immediately prior to such
transaction or series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or substantially all of the
assets of the Company immediately following such transaction or series of
transactions.


 


(d)                                 Unless otherwise provided by the Committee or set forth in a
Grantee’s Award Terms, notwithstanding the provisions of this Plan, in the
event that any payment or benefit received or to be received by the Grantee in
connection with a Change in Control or the termination of the Grantee’s
employment or service (whether pursuant to the terms of this Plan or any other
plan, arrangement or agreement with the Company, any Subsidiary, any Affiliate,
any Person whose actions result in a Change in Control or any Person affiliated
with the Company or such Person) (all such payments and benefits, “Total
Payments”) would be subject (in whole or part), to the excise tax imposed by Section 4999
of the Code (the “Excise Tax”), then, after taking into account any reduction
in the Total Payments provided by reason of Section 280G of the Code in
such other plan, arrangement or agreement, the payment or benefit to be
received by the Grantee upon a Change in Control shall be reduced to the extent
necessary so that no portion of the Total Payments is subject to the Excise Tax
but only if the net amount of such Total Payments, as so reduced (and after
subtracting the net amount of federal, state and local income taxes on such
reduced Total Payments) is greater than or equal to the net amount of such
Total Payments without such reduction (but after subtracting the net amount of
federal, state and local income taxes on such Total Payments and the amount of
Excise Tax to which the Executive would be subject in respect of such unreduced
Total Payments).


 


8.                                       GENERAL
PROVISIONS.


 


(a)                                  Nontransferability, Deferrals and Settlements.  Unless otherwise
determined by the Committee or provided in an Award Terms, Awards shall not be
transferable by a Grantee except by will or the laws of descent and
distribution and shall be exercisable during the lifetime of a Grantee only by
such Grantee or his guardian or legal representative.  Notwithstanding the foregoing, any transfer
of Awards to independent third parties for cash consideration without
stockholder approval is prohibited.  Any
Award shall be null and void and without effect upon any attempted assignment
or transfer, except as herein provided, including without limitation any
purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition, attachment, divorce, trustee process or
similar process, whether legal or equitable, upon such Award.  The Committee may require or permit Grantees
to elect to defer the issuance of shares of Stock (with settlement in cash or
Stock as may be determined by the Committee or elected by the Grantee in
accordance with procedures established by the Committee), or the settlement of
Awards in cash under such rules and procedures as established under the
Plan to the extent that such deferral complies with Section 409A of the
Code and any regulations or guidance promulgated thereunder.  It may also provide that deferred settlements
include the payment or crediting of interest, dividends or dividend equivalents
on the deferral amounts.


 


(b)                                 No Right to Continued Employment, etc.  Nothing in the Plan
or in any Award granted or any Award Terms, promissory note or other agreement
entered into pursuant hereto shall confer upon any Grantee the right to
continue in the employ or service of the Company, any


 


14

















 


Subsidiary or any Affiliate
or to be entitled to any remuneration or benefits not set forth in the Plan or
such Award Terms, promissory note or other agreement or to interfere with or
limit in any way the right of the Company or any such Subsidiary or Affiliate
to terminate such Grantee’s employment or service.


 


(c)           Clawback.  If a Grantee engages in misconduct (as
defined herein), the Grantee: (i) forfeits the right to receive any future
Awards or other equity-based incentive compensation under the Plan; and (ii) the
Company may demand repayment of any Awards or cash payments already received by
a Grantee, including without limitation repayment due to making retroactive
adjustments to any Awards or cash payments already received by a Grantee under
the Plan where such Award or cash payment was predicated upon the achievement
of certain financial results that were subsequently the subject of a
restatement as a result of misconduct by the Grantee.  The Grantee shall be required to provide
repayment within ten (10) days following such written demand.  For the purposes of the Plan, “misconduct”
means (i) Grantee’s employment or service is terminated for Cause, or (ii) the
breach of a noncompete or confidentiality covenant set out in the employment
agreement between the Grantee and the Company or an Affiliate, or (iii) the
Company has been required to prepare an accounting restatement due to material
noncompliance, as a result of fraud or misconduct, with any financial reporting
requirement under the securities laws, and the Committee has determined in its
sole discretion that the Grantee: (A) had knowledge of the material
noncompliance or the circumstances that gave rise to such noncompliance and
failed to take reasonable steps to bring it to the attention of appropriate
individuals within the Company; or (B) personally and knowingly engaged in
practices which materially contributed to the circumstances that enabled a
material noncompliance to occur.


 


(d)           Taxes.  The Company or any Subsidiary or Affiliate is
authorized to withhold from any Award granted, any payment relating to an Award
under the Plan, including from a distribution of Stock, or any other payment to
a Grantee, amounts of withholding and other taxes due in connection with any
transaction involving an Award, and to take such other action as the Committee
may deem advisable to enable the Company and Grantees to satisfy obligations
for the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Stock or
other property with a Fair Market Value not in excess of the minimum amount
required to be withheld and to make cash payments in respect thereof in
satisfaction of a Grantee’s tax obligations.


 


(e)           Stockholder Approval; Amendment
and Termination.  The Plan shall take
effect on the Effective Date but the Plan (and any grants of Awards made prior
to the stockholder approval mentioned herein) shall be subject to the requisite
approval of the stockholders of the Company, which approval must occur within
twelve (12) months of the date that the Plan is adopted by the Board. In the
event that the stockholders of the Company do not ratify the Plan at a meeting
of the stockholders at which such issue is considered and voted upon, then upon
such event the Plan and all rights hereunder shall immediately terminate and no
Grantee (or any permitted transferee thereof) shall have any remaining rights
under the Plan or any Award Terms entered into in connection herewith.  The Board may amend, alter or discontinue the
Plan, but no amendment, alteration, or discontinuation shall be made that would
impair the rights of a Grantee under any Award theretofore granted without such
Grantee’s consent, or that without the approval of the stockholders (as
described below) would, except as provided in Section 5, increase the
total number of shares of Stock reserved for the purpose of the Plan.  In addition,


 


15

















 


stockholder approval shall
be required with respect to any amendment that materially increases benefits
provided under the Plan or materially alters the eligibility provisions of the
Plan or with respect to which stockholder approval is required under the rules of
any stock exchange on which Stock is then listed.  Unless earlier terminated by the Board
pursuant to the provisions of the Plan, the Plan shall terminate on the tenth
anniversary of its Effective Date.  No
Awards shall be granted under the Plan after such termination date.


 


(f)                                    No Rights to Awards; No Stockholder Rights.  No individual shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Grantees.  No individual shall have any right to an
Award or to payment or settlement under any Award unless and until the
Committee or its designee shall have determined that an Award or payment or
settlement is to be made.  Except as
provided specifically herein, a Grantee or a transferee of an Award shall have
no rights as a stockholder with respect to any shares covered by the Award
until the date of the issuance of such shares.


 


(g)                                 Unfunded Status of Awards.  The Plan is intended to constitute an “unfunded”
plan for incentive and deferred compensation. 
With respect to any payments not yet made to a Grantee pursuant to an
Award, nothing contained in the Plan or any Award shall give any such Grantee
any rights that are greater than those of a general creditor of the Company.


 


(h)                                 No Fractional Shares.  No fractional shares of Stock shall be issued
or delivered pursuant to the Plan or any Award. 
The Committee shall determine whether cash, other Awards, or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.


 


(i)                                     Regulations and Other Approvals.


 


(i)            The
obligation of the Company to sell or deliver Stock with respect to any Award
granted under the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.


 


(ii)           Each
Award is subject to the requirement that, if at any time the Committee
determines, in its absolute discretion, that the listing, registration or
qualification of Stock issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Award or the issuance of
Stock, no such Award shall be granted or payment made or Stock issued, in whole
or in part, unless listing, registration, qualification, consent or approval
has been effected or obtained free of any conditions not acceptable to the
Committee.


 


(iii)          In
the event that the disposition of Stock acquired pursuant to the Plan is not
covered by a then current registration statement under the Securities Act of
1933, as amended (the “Securities Act”), and is not otherwise


 


16

















 


exempt from such registration, such
Stock shall be restricted against transfer to the extent required by the
Securities Act or regulations thereunder, and the Committee may require a
Grantee receiving Stock pursuant to the Plan, as a condition precedent to
receipt of such Stock, to represent to the Company in writing that the Stock
acquired by such Grantee is acquired for investment only and not with a view to
distribution.


 


(j)            Section 409A.  This Plan is intended to comply and shall be
administered in a manner that is intended to comply with Section 409A of
the Code and shall be construed and interpreted in accordance with such
intent.  To the extent that an Award,
issuance and/or payment is subject to Section 409A of the Code, it shall
be awarded and/or issued or paid in a manner that will comply with Section 409A
of the Code, including proposed, temporary or final regulations or any other
guidance issued by the Secretary of the Treasury and the Internal Revenue
Service with respect thereto.  Any
provision of this Plan that would cause an Award, issuance and/or payment to
fail to satisfy Section 409A of the Code shall have no force and effect
until amended to comply with Code Section 409A (which amendment may be
retroactive to the extent permitted by applicable law).


 


(k)           Governing Law.  The Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of the State of
Delaware without giving effect to the conflict of laws principles thereof.


 


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