Document:

Exhibit 10.10

 

Gannett Co., Inc.

2015 Omnibus Incentive Compensation Plan

 

 

Contents

 

	
Introduction
    	
1
    
	
 
    	
 
    	
 
    
	
Article 1.
    	
Establishment, Objectives, Duration and Service Credit
    	
1
    
	
 
    	
 
    	
 
    
	
Article 2.
    	
Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
Article 3.
    	
Administration
    	
7
    
	
 
    	
 
    	
 
    
	
Article 4.
    	
Shares Subject to the Plan and Maximum Awards; Adjusted and   Substituted Awards
    	
7
    
	
 
    	
 
    	
 
    
	
Article 5.
    	
Eligibility and Participation
    	
10
    
	
 
    	
 
    	
 
    
	
Article 6.
    	
Stock Options
    	
11
    
	
 
    	
 
    	
 
    
	
Article 7.
    	
Stock Appreciation Rights
    	
13
    
	
 
    	
 
    	
 
    
	
Article 8.
    	
Restricted Stock/Stock Awards
    	
14
    
	
 
    	
 
    	
 
    
	
Article 9.
    	
Restricted Stock Units, Performance Units, Performance   Shares, and Cash-Based Awards
    	
15
    
	
 
    	
 
    	
 
    
	
Article 10.
    	
Performance Measures
    	
17
    
	
 
    	
 
    	
 
    
	
Article 11.
    	
Beneficiary Designation
    	
19
    
	
 
    	
 
    	
 
    
	
Article 12.
    	
Deferrals
    	
19
    
	
 
    	
 
    	
 
    
	
Article 13.
    	
Rights of Employees/Directors
    	
20
    
	
 
    	
 
    	
 
    
	
Article 14.
    	
Termination of   Employment/Directorship
    	
20
    
	
 
    	
 
    	
 
    
	
Article 15.
    	
Change in Control
    	
20
    
	
 
    	
 
    	
 
    
	
Article 16.
    	
Amendment, Modification,   Termination and Tax Compliance.
    	
23
    
	
 
    	
 
    	
 
    
	
Article 17.
    	
Withholding
    	
25
    
	
 
    	
 
    	
 
    
	
Article 18.
    	
Successors
    	
25
    
	
 
    	
 
    	
 
    
	
Article 19.
    	
General Provisions
    	
25
    

 

i

 

Gannett Co., Inc.

2015 Omnibus Incentive Compensation Plan

 

Introduction

 

In 2015, Gannett Co., Inc. separated its digital/broadcast and publishing businesses into two separate publicly traded companies.  The separation occurred when Gannett Co., Inc. contributed its publishing businesses to a newly formed subsidiary, Gannett SpinCo, Inc., and distributed the stock of Gannett SpinCo, Inc. to its shareholders (the “Spin-off”).  In connection with the Spin-off, Gannett SpinCo, Inc. was renamed “Gannett Co., Inc.” (the “Company”).  The entity formerly known as Gannett Co., Inc. was renamed TEGNA Inc. (the “Predecessor Company”) and continues the digital/broadcast businesses.

 

Awards under this Plan include awards granted to employees and directors of the Predecessor Company or its affiliates under the Predecessor Company’s 2001 Omnibus Incentive Compensation Plan that have been converted in connection with the Spin-off to awards under this Plan (the “Adjusted Awards”).  The terms of such conversion are generally specified in that certain Employee Matters Agreement by and between the Company and Predecessor Company dated                       , 2015 (the “Employee Matters Agreement”).  Notwithstanding any other provision of this Plan or the Predecessor Plan (as defined below), no Participant shall be entitled to duplicate benefits under both such Plans with respect to the same period of service or compensation.

 

Article 1.                                            Establishment, Objectives, Duration and Service Credit

 

1.1                               Establishment of the Plan.  The Company, a Delaware corporation, hereby adopts this Gannett Co., Inc. 2015 Omnibus Incentive Compensation Plan (hereinafter referred to as the “Plan”), as set forth in this document.  The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, and Cash-Based Awards.  Subject to approval by the Company’s stockholders, the Plan shall become effective as of                 , 2015 (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.

 

1.2                               Objectives of the Plan.  The objectives of the Plan are to optimize the profitability and growth of the Company through annual and long-term incentives that are consistent with the Company’s goals and that link the personal interests of Participants to those of the Company’s stockholders, to provide Participants with an incentive for excellence in individual performance, and to promote teamwork among Participants.  The Plan is further intended to provide flexibility to the Company and its Affiliates in their ability to motivate, attract, and retain the services of Participants who make significant contributions to the Company’s success and to allow Participants to share in that success.

 

1.3                               Duration of the Plan.  The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Committee to amend or terminate the Plan at any time pursuant to Article 16 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan’s provisions.  However, in no event may an

 

 

Award be granted under the Plan on or after the tenth (10th) anniversary of the Effective Date.

 

1.4                               Service Credit.  For each Employee who is employed immediately following the Effective Date by the Company or an Affiliate and each “Former SpinCo Group Employee” (as defined in the Employee Matters Agreement), service shall be recognized with the Predecessor Company or any of its subsidiaries or predecessor entities at or before the Effective Date, to the same extent that such service was recognized by the Predecessor Company under the Predecessor Plan prior to the Effective Date as if such service had been performed for the Company for purposes of eligibility, vesting and determination of level of benefits under this Plan.

 

Article 2.                                            Definitions

 

Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:

 

2.1                               “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act.

 

2.2                               “Adjusted Award” means Awards granted under the Predecessor Plan that are converted into Awards in respect of Shares pursuant to the Employee Matters Agreement.

 

2.3                               “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, or Cash-Based Awards, and including Adjusted Awards and Substitute Awards.

 

2.4                               “Award Agreement” means a written or electronic agreement entered into by the Company and each Participant or a written or electronic statement issued by the Company to a Participant, which in either case sets forth the terms and provisions applicable to Awards granted under this Plan.

 

2.5                               “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

 

2.6                               “Board” or “Board of Directors” means the Board of Directors of the Company.

 

2.7                               “Cash-Based Award” means an Award granted to a Participant whose value is denominated in cash as described in Article 9 hereof.

 

2.8                               “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

 

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

 

(b)                                 individuals who, as of the Effective Date, 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 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

 

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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.

 

Notwithstanding the foregoing, with respect to a Section 409A Award, the Committee may specify that the definition of Change in Control must also constitute an event that is 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.

 

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

 

2.10                        “Committee” means any committee appointed by the Board to administer Awards to Employees or Directors, as specified in Article 3 hereof.

 

2.11                        “Company” means Gannett Co., Inc., a Delaware corporation and any successor thereto as provided in Article 18 hereof.

 

2.12                        “Covered Employee” means a Participant who, as of the date of vesting and/or payout of an Award, as applicable, is one of the group of “covered employees,” as defined in the regulations promulgated under Code Section 162(m), or any successor statute, or a Participant who is designated by the Committee to be treated as a “covered employee”.

 

2.13                        “Director” means any individual who is a member of the Board of Directors of the Company; provided, however, that any Director who is employed by the Company shall be considered an Employee under the Plan.

 

2.14                        “Disability” shall have the meaning ascribed to such term in the Award Agreement.  If no such definition is provided in the Award Agreement, “Disability” shall mean a medically determinable physical or mental impairment which can be expected to result in death or has lasted or can be expected to last for a continuous period of not less than six months if such disabling condition renders the person unable to perform the material and substantial duties of his or her occupation.  With respect to Section 409A Awards that become payable upon a disability, such disability must also qualify as a disability within the meaning of Treasury Regulation 1.409A-3(i)(4).

 

2.15                        “Effective Date” shall have the meaning ascribed to such term in Section 1.1 hereof.

 

2.16                        “Employee” means any employee of the Company or its Subsidiaries or Affiliates.

 

2.17                        “Employee Matters Agreement” means the Employee Matters Agreement by and between the Company and Predecessor Company dated                       .

 

2.18                        “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

 

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2.19                        “Fair Market Value” as of any date and in respect of any Share means the then most recent closing price of a Share, provided that, if Shares shall not have been traded on the New York Stock Exchange for more than 10 days immediately preceding such date or if deemed appropriate by the Committee for any other reason, the fair market value of Shares shall be as determined by the Committee in such other manner as it may deem appropriate, provided that such valuation is consistent with the requirements of Section 409A.  In no event shall the fair market value of any Share be less than its par value.

 

2.20                        “Freestanding SAR” means an SAR that is granted independently of any Options, as described in Article 7 hereof.

 

2.21                        “Incentive Stock Option” or “ISO” means an option to purchase Shares granted under Article 6 hereof and that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422.  To the extent that an option is granted that is intended to meet the requirements of Code Section 422, but fails to meet such requirements, the option will be treated as a NQSO.

 

2.22                        “Insider” shall mean an individual who is, on the relevant date, an executive officer, director or ten percent (10%) beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act.

 

2.23                        “Nonqualified Stock Option” or “NQSO” means an option to purchase Shares granted under Article 6 hereof and that is not intended to be treated as an Incentive Stock Option, or that otherwise does not meet such requirements.

 

2.24                        “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6 hereof.

 

2.25                        “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

 

2.26                        “Participant” means an Employee or Director who has been selected to receive an Award or who has outstanding an Award granted under the Plan.

 

2.27                        “Performance-Based Exception” means the performance-based exception from the tax deductibility limitations of Code Section 162(m).

 

2.28                        “Performance Share” means an Award granted to a Participant whose value is denominated in Shares and is earned by satisfaction of specified performance goals and such other terms and conditions that the Committee may specify, as described in Article 9 hereof.

 

2.29                        “Performance Unit” means an Award granted to a Participant whose value is specified by the Committee and is earned by satisfaction of specified performance goals and such other terms and conditions that the Committee may specify, as described in Article 9 hereof.

 

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2.30                        “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock is not permitted (e.g., based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, at its discretion), and the Shares are subject to a substantial risk of forfeiture, pursuant to the Restricted Stock Award Agreement, as provided in Article 8 hereof.

 

2.31                        “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

 

2.32                        “Predecessor Company” means TEGNA Inc., formerly named Gannett Co. Inc. prior to the Effective Date.

 

2.33                        “Predecessor Plan” means the Gannett Co., Inc. 2001 Omnibus Incentive Compensation Plan, as maintained by the Predecessor Company prior to the Effective Date of this Plan.

 

2.34                        “Restricted Stock” means an Award granted to a Participant pursuant to Article 8 hereof.

 

2.35                        “Restricted Stock Units” means an Award granted to a Participant whose value is denominated in Shares and is earned by satisfaction of specified service requirements and such other terms and conditions that the Committee may specify, as described in Article 9 hereof.

 

2.36                        “Retirement” means a termination of employment after attaining age 55 and completing 5 years of service or such other definition set forth in an Award Agreement.

 

2.37                        “Section 409A” means Code Section 409A and the regulations and other guidance issued thereunder.

 

2.38                        “Section 409A Award” means an Award that is subject to the requirements of Section 409A.

 

2.39                        “Shares” means the Company’s common stock, par value $1.00 per share.

 

2.40                        “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with a related Option, designated as an SAR, pursuant to the terms of Article 7 hereof.

 

2.41                        “Stock Award” means an Award of Shares granted to a Participant pursuant to Section 8.7 hereof.

 

2.42                        “Subsidiary” means any corporation, partnership, joint venture, or other entity in which the Company directly or indirectly has a majority voting interest.

 

2.43                        “Substitute Awards” means Awards granted upon assumption of, or in substitution for, outstanding awards previously granted by a company or other entity (i) all or a portion

 

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of the assets or equity of which is acquired by the Company or (ii) with which the Company merges or otherwise combines.

 

2.44                        “Tandem SAR” means an SAR that is granted in connection with a related Option pursuant to Article 7 hereof, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be canceled).

 

Article 3.                                            Administration

 

3.1                               General.  Subject to the terms and conditions of the Plan, the Plan shall be administered by the Committee.  The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors.  The Committee shall have the authority to delegate administrative duties to officers of the Company.

 

3.2                               Authority of the Committee.  Except as limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions herein (including, with respect to Section 409A Awards, the requirements of Section 409A), the Committee shall have full power to select Employees and Directors who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement or instrument entered into under the Plan; establish, amend, or waive rules and regulations for the Plan’s administration; and amend the terms and conditions of any outstanding Award as provided in the Plan.  Further, the Committee shall make all other determinations that it deems necessary or advisable for the administration of the Plan.  As permitted by law and the terms of the Plan, the Committee may delegate its authority herein.  No member of the Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any Award granted hereunder.

 

3.3                               Decisions Binding.  All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders and resolutions of the Committee shall be final, conclusive, and binding on all persons, including the Company, its stockholders, Directors, Employees, Participants, and their estates and beneficiaries, unless changed by the Board.

 

Article 4.                                            Shares Subject to the Plan and Maximum Awards; Adjusted and Substituted Awards

 

4.1                               Number of Shares Available for Grants; Share Counting and Reacquired Shares.  Subject to Sections 4.2 and 4.4, the number of Shares reserved for issuance to Participants under this Plan is                                      (              ).  Shares issued under the Plan may be authorized but unissued shares or treasury shares.

 

For purposes of counting the number of Shares available for Awards under the Plan, the full number of shares of the Company’s common stock covered by Freestanding SARs shall be counted against the number of Shares available for Awards (i.e., not the net Shares issued in satisfaction of a Freestanding SAR Award); provided, however, that Freestanding SARs that may be settled in cash only shall not be so counted.  Additionally, if an Option

 

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may be settled by issuing net Shares (i.e., withholding a number of Shares equal to the exercise price), the full number of shares of the Company’s common stock covered by the Option shall be counted against the number of Shares available for Awards, not the net Shares issued in satisfaction of an Option.  If any Award (a) expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part, or (b) results in any Shares not being issued (including as a result of any Award that was settleable either in cash or in stock actually being settled in cash), the unissued Shares covered by such Award shall again be available for the grant of Awards; provided, however, in the case of Incentive Stock Options, the foregoing shall be subject to any limitations under the Code.  The following Shares shall not be added back to the number of Shares available for the future grant of Awards: (i) shares of the Company’s common stock tendered to the Company by a Participant to (A) purchase shares of the Company’s common stock upon the exercise of an Award, or (B) satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation); and (ii) shares of the Company’s common stock repurchased by the Company on the open market using the proceeds from the exercise of an Award.  Subject to the foregoing, the Committee shall determine the appropriate methodology for calculating the number of Shares issued pursuant to the Plan.

 

The maximum number of Shares which may be issued under Incentive Stock Options granted under the Plan is                                      (          ).

 

The maximum number of Shares for which Awards may be granted under this Plan to any non-employee Director in any calendar year shall be                  Shares.  For the avoidance of doubt, the foregoing limitation shall not apply to cash-based director fees that the non-employee Director elects to receive in the form of Shares or Share equivalents equal in value to such cash-based Director fees pursuant to another plan or policy of the Company.

 

The following rules shall apply to grants of Awards under the Plan:

 

(a)                                 Stock Options: The maximum aggregate number of Shares that may be granted in the form of Stock Options, pursuant to any Award granted in any one fiscal year to any one Participant shall be                            (                    ).

 

(b)                                 SARs: The maximum aggregate number of Shares that may be granted in the form of Stock Appreciation Rights, pursuant to any Award granted in any one fiscal year to any one Participant shall be                            (                    ).

 

(c)                                  Restricted Stock/Stock Awards: The maximum aggregate grant of Shares with respect to Awards of Restricted Stock or Stock Awards granted in any one fiscal year to any one Participant shall be                            (                    ).

 

(d)                                 Restricted Stock Units, Performance Shares, Performance Units and Cash-Based Awards:  The maximum aggregate grant with respect to Awards of Performance Shares or Restricted Stock Units made in any one fiscal year to any one Participant shall be equal to                            (                    ) Shares; and the maximum aggregate amount awarded with respect to Cash-Based Awards or

 

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Performance Units to any one Participant in any one fiscal year may not exceed                dollars ($                        ).

 

4.2                               Adjustments in Authorized Shares.  Upon a change in corporate capitalization, such as a stock split, stock dividend or a corporate transaction, such as any merger, consolidation, combination, exchange of shares or the like, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, the Committee shall make an appropriate adjustment in the number and class of Shares that may be delivered under Section 4.1, in the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan, and in the Award limits set forth in Section 4.1, as may be determined to be equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights.

 

4.3                               Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.  The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.2 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan; provided that, with respect to Awards that are intended to comply with the requirements of the Performance-Based Exception, no such adjustment shall be authorized to the extent that such adjustment would be inconsistent with the Award’s satisfaction of the Performance-Based Exception.

 

4.4                               Adjusted and Substitute Awards.

 

(a)                                 Notwithstanding any terms or conditions of the Plan to the contrary, (i) Substitute Awards may have substantially the same terms and conditions, including without limitation provisions relating to vesting, exercise periods, expiration, payment, forfeiture, and the consequences of termination of service, as the awards that they replace, as determined by the Committee in its sole discretion, and (ii) Adjusted Awards shall have terms consistent with those set forth in the Employee Matters Agreement, which generally provide the Adjusted Awards will have substantially the same terms and conditions, including without limitation provisions relating to vesting, exercise periods, expiration, payment, forfeiture, and the consequences of termination of Service, as the awards that they replace which were granted under the Predecessor Plan.

 

(b)                                 The recipient or holder of a Substitute Award or an Adjusted Award shall be an eligible Participant hereunder even if not an Employee or Director with respect to the Company or an Affiliate.

 

(c)                                  In the case of a Substitute Award, the date of grant may be treated as the effective date of the grant of such Award under the original plan under which the award

 

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was authorized, and in the case of an Adjusted Award, the date of grant shall be the effective date of the grant under the Predecessor Plan.

 

(d)                                 The per share exercise price of an Option that is a Substitute Award or Adjusted Award may be less than 100% of the Fair Market Value of a Share on the date of grant, provided that such substitution or adjustment complies with applicable laws and regulations, including the listing requirements of the New York Stock Exchange and Section 409A or Section 424 of the Code, as applicable.  The per share exercise price of a Freestanding SAR that is a Substitute Award or an Adjusted Award may be less than 100% of the Fair Market Value of a Share on the date of grant, provided that such substitution or adjustment complies with applicable laws and regulations, including the listing requirements of the New York Stock Exchange and Section 409A, as applicable.

 

(e)                                  Anything to the contrary in this Plan notwithstanding, any Shares underlying Substitute Awards or Adjusted Awards shall not be counted against the limits set forth in Section 4.1(a)-(d).  Anything to the contrary in this Plan notwithstanding, any Shares underlying Substitute Awards shall not be counted against the number of Shares authorized for issuance or the maximum number of Shares which may be issued under Incentive Stock Options, and the lapse, expiration, termination, forfeiture or cancellation of any Substitute Award without the issuance of Shares or payment of cash thereunder shall not result in an increase the number of Shares available for issuance under the Plan. For the avoidance of doubt, Adjusted Awards shall be treated as Awards generally (and not as Substitute Awards) for purposes of the preceding sentence.

 

Article 5.                                            Eligibility and Participation

 

5.1                               Eligibility.  Persons eligible to participate in this Plan include all Employees and Directors.

 

5.2                               Actual Participation.  Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees and Directors, those to whom Awards shall be granted and shall determine the nature and amount of each Award.

 

5.3                               Newly Eligible Employees.  The Committee shall be entitled to make such rules, regulations, determinations and awards as it deems appropriate in respect of any Employee who becomes eligible to participate in the Plan after the commencement of an award or incentive period.

 

5.4                               Leaves of Absence.  The Committee shall be entitled to make such rules, regulations, and determinations as it deems appropriate under the Plan in respect of any leave of absence taken by the recipient of any award.  Without limiting the generality of the foregoing, the Committee shall be entitled to determine: (a) whether or not any such leave of absence shall constitute a termination of employment within the meaning of the Plan; and (b) the impact, if any, of such leave of absence on awards under the Plan theretofore made to any recipient who takes such leave of absence.  Notwithstanding the foregoing,

 

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with respect to any Section 409A Award, all leaves of absences and determinations of terminations of employment must be construed and interpreted consistent with the requirements of Section 409A and the definition of “separation from service” thereunder.

 

Article 6.                                            Stock Options

 

6.1                               Grant of Options.  Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee.  Notwithstanding the foregoing, Incentive Stock Options may only be granted to Employees of Gannett Co., Inc. or its Affiliates or Subsidiaries; provided that the Affiliate or Subsidiary is a type of entity whose employees can receive such options under Code Sections 422 and 424.

 

6.2                               Award Agreement.  Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine which are not inconsistent with the terms of the Plan.

 

6.3                               Option Price.  The Option Price for each grant of an Option under this Plan shall be as determined by the Committee; provided, however, the per-share exercise price shall not be less than 100 percent of the Fair Market Value of the Shares on the date the Option is granted.

 

6.4                               Duration of Options.  Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided that the Option must expire on or before the date that is the tenth anniversary of the date of grant.

 

6.5                               Exercise of Options.  Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant.

 

6.6                               Payment.  Options granted under this Article 6 shall be exercised by the delivery of a written, electronic or telephonic notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

 

The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; or (b) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price; or (c) by a combination of (a) and (b); or (d) any other method approved by the Committee in its sole discretion.  The tendering of previously acquired shares may be done through attestation.  No fractional shares may be tendered or accepted in payment of the Option Price.

 

Cashless exercises are permitted pursuant to Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with the Plan’s purpose and applicable law.

 

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Subject to any governing rules or regulations, as soon as practicable after receipt of notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant’s name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).

 

Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.

 

6.7                               Restrictions on Share Transferability.  The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.

 

6.8                               Nontransferability of Options.

 

(a)                                 Incentive Stock Options.  No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.  Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant.

 

(b)                                 Nonqualified Stock Options.  Except as otherwise provided in a Participant’s Award Agreement, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.  Further, except as otherwise provided in a Participant’s Award Agreement, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant or such Participant’s legal representative.

 

6.9                           Restriction on Cash Buyouts of Underwater Options.  The Company may not purchase, cancel or buy out an underwater Option in exchange for cash without first obtaining Shareholder approval.

 

6.10                                Service Requirement for Options that Vest Solely Based on Service.  Options granted to Employees that vest solely based on service will be subject to a minimum vesting period requiring at least one year of service; provided that the Committee may adopt shorter vesting periods or provide for accelerated vesting after less than one year: (i) in connection with terminations of employment due to death, disability, retirement or other circumstances that the Committee determines to be appropriate; (ii) in connection with a Change in Control in which the Option is not continued or assumed (e.g., the Option is not equitably converted or substituted for an option of the successor company); (iii) for grants made in connection with an acquisition by the Company or its Subsidiaries or Affiliates in substitution for pre-existing awards; (iv) for new hire inducement awards or off-cycle awards; or (v) to comply with contractual rights in effect on the Effective Date.

 

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Article 7.                                            Stock Appreciation Rights

 

7.1                               Grant of SARs.  Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee.  The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SARs.

 

Subject to the terms and conditions of the Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.

 

The grant price of a Freestanding SAR shall not be less than the Fair Market Value of a Share on the date of grant of the SAR.  The grant price of Tandem SARs shall equal the Option Price of the related Option.

 

7.2                               SAR Agreement.  Each SAR grant shall be evidenced by an Award Agreement that shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine.

 

7.3                               Term of SARs.  The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion; provided that the SAR must expire on or before the date that is the tenth anniversary of the date of grant.

 

7.4                               Exercise of Freestanding SARs.  Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them.

 

7.5                               Exercise of Tandem SARs.  Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option.  A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable.

 

7.6                               Payment of SAR Amount.  Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

 

(a)                                 The excess of the Fair Market Value of a Share on the date of exercise over the grant price; by

 

(b)                                 The number of Shares with respect to which the SAR is exercised.

 

In the sole discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, in some combination thereof, or in any other manner approved by the Committee.  The Committee’s determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.

 

7.7                               Nontransferability of SARs.  Except as otherwise provided in a Participant’s Award Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of

 

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descent and distribution.  Further, except as otherwise provided in a Participant’s Award Agreement, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant or such Participant’s legal representative.

 

7.8                           Restriction on Cash Buyouts of Underwater SARs.  The Company may not purchase, cancel or buy out an underwater SAR in exchange for cash without first obtaining Shareholder approval.

 

7.9                           Service Requirement for SARs that Vest Solely Based on Service.  SARs granted to Employees that vest solely based on service will be subject to a minimum vesting period requiring at least one year of service; provided that the Committee may adopt shorter vesting periods or provide for accelerated vesting after less than one year: (i) in connection with terminations of employment due to death, disability, retirement or other circumstances that the Committee determines to be appropriate; (ii) in connection with a Change in Control in which the SAR is not continued or assumed (e.g., the SAR is not equitably converted or substituted for a stock appreciation right of the successor company); (iii) for grants made in connection with an acquisition by the Company or its Subsidiaries or Affiliates in substitution for pre-existing awards; (iv) for new hire inducement awards or off-cycle awards; or (v) to comply with contractual rights in effect on the Effective Date.

 

Article 8.                                            Restricted Stock/Stock Awards

 

8.1                               Grant of Restricted Stock.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to Participants in such amounts, as the Committee shall determine.

 

8.2                               Restricted Stock Agreement.  Each Restricted Stock grant shall be evidenced by a Restricted Stock Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock granted, and such other provisions as the Committee shall determine.

 

8.3                               Transferability. The Shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Award Agreement, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Award Agreement.  All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant or such Participant’s legal representative.

 

8.4                               Other Restrictions.  The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment

 

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of the performance goals, time-based restrictions, and/or restrictions under applicable federal or state securities laws.

 

To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied.

 

Except as otherwise provided in the Award Agreement, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the applicable Period of Restriction.

 

8.5                               Voting Rights.  If the Committee so determines, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction.

 

8.6                               Dividends and Other Distributions.  During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may, if the Committee so determines, be credited with dividends paid with respect to the underlying Shares while they are so held.  The Committee may apply any restrictions to the dividends that the Committee deems appropriate.  Without limiting the generality of the preceding sentence, if the grant or vesting of Restricted Shares granted to a Covered Employee is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Restricted Shares, such that the dividends and/or the Restricted Shares maintain eligibility for the Performance-Based Exception.

 

8.7                               Stock Award.  The Committee may grant and award Shares to a Participant that are not subject to Periods of Restrictions and which may be subject to such conditions or provisions as the Committee determines.

 

8.8                               Service Requirement for Restricted Stock that Vests Solely Based on Service.  Restricted Stock granted to Employees that vests and is paid solely based on service will be subject to a minimum vesting period requiring at least one year of service; provided that the Committee may adopt shorter vesting periods or provide for accelerated vesting after less than one year: (i) in connection with terminations of employment due to death, disability, retirement or other circumstances that the Committee determines to be appropriate; (ii) in connection with a Change in Control in which the Restricted Stock is not continued or assumed (e.g., the Restricted Stock is not equitably converted or substituted for restricted stock of the successor company); (iii) for grants made in connection with an acquisition by the Company or its Subsidiaries or Affiliates in substitution for pre-existing awards; (iv) for new hire inducement awards or off-cycle awards; or (v) to comply with contractual rights in effect on the Effective Date.

 

Article 9.                                            Restricted Stock Units, Performance Units, Performance Shares, and Cash-Based Awards

 

9.1                               Grant of Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards.  Subject to the terms of the Plan, Restricted Stock Units,

 

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Performance Shares, Performance Units, and/or Cash-Based Awards may be granted to Participants in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.

 

9.2                               Award Agreement.  At the Committee’s discretion, each grant of Restricted Stock Units, Performance Shares, Performance Units and Cash-Based Awards may be evidenced by an Award Agreement that shall specify the initial value, the duration of the Award, the performance measures and/or service requirements, if any, applicable to the Award, and such other provisions as the Committee shall determine which are not inconsistent with the terms of the Plan.

 

9.3                               Value of Performance Units/Shares and Cash-Based Awards.  Each Performance Unit shall have an initial value that is established by the Committee at the time of grant.  Each Restricted Stock Unit and Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant.  Each Cash-Based Award shall have a value as may be determined by the Committee.  The Committee shall set performance goals and/or service requirements in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards that will be paid out to the Participant.  Generally, a Participant’s right to receive amounts under a Restricted Stock Unit award shall be based on the Participant’s satisfaction of a service requirement and such other terms and conditions that the Committee may specify.  Generally, a Participant’s right to receive amounts under a Performance Unit, Performance Share or Cash-Based Award shall be based on the satisfaction of a performance requirement and such other terms and conditions that the Committee may specify.  The Committee has full discretionary authority to establish performance goals and/or service requirements, and a performance goal may include a service requirement.  For purposes of this Article 9, the time period during which the performance goals and/or service requirements must be met shall be called a “Performance Period.”

 

9.4                               Earning of Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards.  Subject to the terms of this Plan and the Award Agreement (if any), after the applicable Performance Period has ended, the holder of Restricted Stock Units, Performance Units, Performance Shares or Cash-Based Awards shall be entitled to receive payout on the number and value of Restricted Stock Units, Performance Units, Performance Shares or Cash-Based Awards earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals and/or service requirements have been achieved.  Unless otherwise determined by the Committee, notwithstanding any other provision of the Plan, payment of Cash-Based Awards shall only be made for those Participants who are Directors or in the employ of the Company at the end of the Performance Period or, if none has been specified, the end of the applicable award year.

 

9.5                               Form and Timing of Payment of Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards.  Payment of earned Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards shall be as determined by the Committee and, if applicable, as evidenced in the related Award

 

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Agreement.  Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards in the form of cash or in Shares (or in a combination thereof) that have an aggregate Fair Market Value equal to the value of the earned Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards at the close of the applicable Performance Period.  Such Shares may be granted subject to any restrictions deemed appropriate by the Committee.  No fractional shares will be issued.  The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.

 

Unless otherwise provided by the Committee, Participants holding Restricted Stock Units, Performance Units, or Performance Shares may be entitled to receive dividend units with respect to dividends declared with respect to the Shares underlying such Awards; provided that no dividend units may be paid on Performance Units or Performance Shares that are not earned.  Such dividends may be subject to the same accrual, forfeiture, and payout restrictions as apply to dividends earned with respect to Shares of Restricted Stock, as set forth in Section 8.6 hereof, as determined by the Committee.

 

9.6                               Nontransferability.  Except as otherwise provided in a Participant’s Award Agreement, Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.  Further, except as otherwise provided in a Participant’s Award Agreement, a Participant’s rights under the such Awards shall be exercisable during the Participant’s lifetime only by such Participant or such Participant’s legal representative.

 

9.7                               Service Requirement for Restricted Stock Units that Vest Solely Based on Service.  Restricted Stock Units granted to Employees that vest and are paid solely based on service will be subject to a minimum vesting period requiring at least one year of service; provided that the Committee may adopt shorter or accelerated vesting periods: (i) in connection with terminations of employment due to death, disability, retirement or other circumstances that the Committee determines to be appropriate; (ii) in connection with a Change in Control in which the Restricted Stock Unit is not continued or assumed (e.g., the Restricted Stock Unit is not equitably converted or substituted for a restricted stock unit of the successor company); (iii) for grants made in connection with an acquisition by the Company or its Subsidiaries or Affiliates in substitution for pre-existing awards; (iv) for new hire inducement awards or off-cycle awards; or (v) to comply with contractual rights in effect on the Effective Date.

 

Article 10.                                     Performance Measures

 

Unless and until the Committee proposes for shareholder vote and shareholders approve a change in the general performance measures set forth in this Article 10, the attainment of which may determine the degree of payout and/or vesting with respect to Awards to Covered Employees that are designed to qualify for the Performance-Based Exception, the performance measure(s) to be used for purposes of such grants shall be chosen from among:

 

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(a)                                 Earnings per share (basic or diluted);

 

(b)                                 Income before income taxes;

 

(c)                                  Income from continuing operations;

 

(d)                                 Net income or net income attributable to Gannett Co., Inc.;

 

(e)                                  Operating income;

 

(f)                                   Cash flow from operating activities, operating cash flow (defined as operating income plus non-cash charges for depreciation, amortization and impairment of operating assets) or free cash flow;

 

(g)                                  EBITDA, or net income attributable to Gannett Co., Inc., before interest, taxes, depreciation/amortization;

 

(h)                                 Return measures (including, but not limited to, return on assets, equity, capital or investment);

 

(i)                                     Cash flow return on investments, which equals net cash flows divided by owner’s equity;

 

(j)                                    Internal rate of return or increase in net present value;

 

(k)                                 Dividend payments;

 

(l)                                     Gross revenues;

 

(m)                             Gross margins;

 

(n)                                 Operating measures such as trends in digital metrics, circulation, television ratings and advertising measures;

 

(o)                                 Internal measures such as achieving a diverse workforce;

 

(p)                                 Share price (including, but not limited to, growth measures and total shareholder return) and market value;

 

(q)                                 Debt (including, but not limited to, measures such as debt (book value or face value) outstanding and debt to earnings before interest, taxes, depreciation and amortization); and

 

(r)                                    Any of the above measures compared to peer or other companies.

 

Performance measures may be set either at the consolidated level, segment level, division level, group level, or the business unit level.  Additionally, performance measures may be measured either annually or cumulatively over a period of years, on an absolute basis or relative to pre-

 

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established targets, to a previous year’s results or to a designated comparison group, in each case as specified by the Committee.

 

Unless the Committee specifies otherwise at the time the performance goals are established (and the Committee may at such time decide to limit the “Extraordinary Items” for which it will make adjustments, or decide to not make adjustments for any “Extraordinary Items”), the Committee shall adjust a performance goal established under a performance measure set forth above to take into account the effects of “Extraordinary Items.”  “Extraordinary Items” means (1) items presented as such (or other comparable terms) on the Company’s audited financial statements, (2) unusual, special or nonrecurring charges, costs, credits or items of gain or loss (including, without limitation, an unbudgeted material expense incurred by or at the direction of the Board of Directors or a committee of the Board or a material litigation judgment or settlement), (3) changes in tax or accounting laws or rules, and/or (4) the effects of mergers, acquisitions, divestitures, spin-offs or significant transactions (including, without limitation, a corporate merger, consolidation, acquisition of property or stock, reorganization, restructuring charge, or joint venture), each of which are identified in the quarterly and/or annual audited financial statements and notes thereto or in the “management’s discussion and analysis” of the financial statements in a period report filed with the Securities and Exchange Commission under the Exchange Act.  The Committee shall make such adjustments to the performance goals as shall be equitable and appropriate in order to make the goal, as nearly as practicable, equivalent to the goal immediately prior to such transaction or event.

 

Article 11.                                     Beneficiary Designation

 

The Committee may permit Participants under the Plan to name, from time to time, any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit.  Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime.  If a beneficiary designation has not been made, or the beneficiary was not properly designated (in the sole discretion of the Committee), has died or cannot be found, all payments after death shall be paid to the Participant’s estate.  In case of disputes over the proper beneficiary, the Company reserves the right to make any or all payments to the Participant’s estate.

 

Article 12.                                     Deferrals

 

Subject to the requirements of Section 409A, the Committee may permit or require a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the lapse or waiver of restrictions with respect to Restricted Stock, payment of a Stock Award or the satisfaction of any requirements or goals with respect to Restricted Stock Units, Performance Units/Shares and Cash-Based Awards.  If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals provided that such rules must comply with the requirements of Section 409A.

 

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Article 13.                                     Rights of Employees/Directors

 

13.1                        Employment.  Nothing in the Plan shall confer upon any Participant any right to continue in the Company’s employ, or as a Director, or interfere with or limit in any way the right of the Company to terminate any Participant’s employment or directorship at any time.

 

13.2                        Participation.  No Employee or Director shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

 

13.3                        Rights as a Stockholder.  Except as provided in Sections 8.5, 8.6 and 9.5, a Participant shall have none of the rights of a shareholder with respect to shares of Common Stock covered by any Award until the Participant becomes the record holder of such shares.

 

Article 14.                                     Termination of Employment/Directorship

 

Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have the right to such Participant’s outstanding Award(s) following termination of the Participant’s employment or directorship with the Company.  Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreements entered into with each Participant, need not be uniform among all Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

 

Article 15.                                     Change in Control

 

15.1                        Treatment of Outstanding Awards Other than Cash-Based Awards.  In the event of a Change in Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges, or unless the Committee specifies otherwise in the Award Agreement:

 

(a)                                 Awards to Employees will fully vest if: (i) the Awards are not continued or assumed (e.g., the Awards are not equitably converted or substituted for awards of a successor entity) in connection with the Change in Control; or (ii) the Employee has a qualifying termination of employment (as defined in the Award Agreement) within two years following the date of the Change in Control.  Additionally, in the event that the Awards are not so continued or assumed in connection with the Change in Control or in the event of a qualifying termination of employment (as defined in the Award Agreement) within two years following the date of the Change in Control, then upon such Change in Control or such qualifying termination (as the case may be):

 

(i)                                     Any and all Options and SARs granted hereunder shall become fully exercisable during their remaining term; and

 

(ii)                                  Any restriction periods and restrictions imposed on Restricted Stock that are not performance-based shall lapse; and

 

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(iii)                               The target payout opportunities attainable under all outstanding Awards of performance-based Restricted Stock, Performance Units and Performance Shares shall be deemed to have been fully earned for the entire Performance Period (s) as of the effective date of the Change in Control or such qualifying termination.  The vesting of all such Awards denominated in Shares shall be accelerated as of the effective date of the Change in Control or such qualifying termination and shall be paid out to Participants within thirty (30) days following the effective date of the Change in Control or such qualifying termination based upon an assumed achievement of all relevant target performance goals (such payment shall be in full satisfaction of the Award).  Such Awards denominated in cash shall be paid to Participants in cash within thirty (30) days following the effective date of the Change in Control or such qualifying termination based on an assumed achievement of all relevant target performance goals (such payment shall be in full satisfaction of the Award).  Restricted Stock Units shall be fully vested as of the effective date of the Change in Control or such qualifying termination, and the full value of such an Award shall be paid out to Participants within thirty (30) days following the effective date of the Change in Control or such qualifying termination.  Notwithstanding the foregoing, in the event that the Award is not so continued or assumed in connection with a Change in Control, the payment of a Section 409A Award will only be accelerated if the Change in Control also constitutes 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 and will not result in additional taxes under Section 409A.

 

15.2                        Treatment of Cash-Based Awards.  In the event of a Change in Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges, or unless the Committee shall provide otherwise in the Award Agreement or resolutions adopted by the Committee, Cash-Based Awards to Employees will fully vest if: (i) the Awards are not continued or assumed (e.g., the Awards are not equitably converted or substituted for awards of a successor entity) in connection with the Change in Control; or (ii) the Employee has a qualifying termination of employment (as defined in the Award Agreement) within two years following the date of the Change in Control.  In the event that the Cash-Based Awards are not so continued or assumed or in the event of a qualifying termination of employment (as defined in the Award Agreement) within two years following the date of the Change in Control, the vesting of all outstanding Cash-Based Awards shall be accelerated as of the date of such event (and, in the case of performance-based Cash-Based Awards, based on an assumed achievement of all relevant target performance goals), and all Cash-Based Awards shall be paid to Participants in cash within thirty (30) days following the effective date of such event (such payment shall be in full satisfaction of the Award).  Notwithstanding the foregoing, in the event that the Cash-Based Awards is not so continued or assumed in connection with a Change in Control, the payment of a Cash-Based Section 409A Award will only be accelerated if the Change in Control also constitutes a change in ownership or effective control of the Company or a

 

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change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A and will not result in additional taxes under Section 409A.

 

15.3                        Limitation.

 

(a)                                 Intention of Section 15.3: The acceleration or payment of Awards could, in certain circumstances, subject the Participant to the excise tax provided under Section 4999 of the Code.  It is the object of this Section 15.3 to enable each Participant to retain in full the benefits of the Plan and to provide for the maximum after-tax income to each Participant.  Accordingly, the Company will determine, before any payments are made on Awards governed by Section 15.1, which of two alternative forms of acceleration will maximize the Participant’s after-tax proceeds, and must notify the Participant in writing of its determination.  The first alternative is the payment in full of all Awards governed by Section 15.1 and any other payments or benefits potentially subject to the excise tax under Section 4999.  The second alternative is the payment of only a part of the Participant’s Awards (but taking into account any other payments or benefits potentially subject to the excise tax under Section 4999) so that the Participant receives the largest payment and benefits possible without causing an excise tax to be payable by the Participant under Section 4999 of the Code.  This second alternative is referred to in this Section as “Limited Vesting”.

 

(b)                                 Limitation on Participant’s Rights: The Participant’s Awards shall be paid only to the extent permitted under the alternative determined by the Company to maximize the Participant’s after-tax proceeds, and the Participant shall have no rights to any greater payments on his or her Awards.  For purposes of this determination, the Company shall take into account any rights or benefits the Participant has under another plan or agreement.

 

(c)                                  Determination to be Conclusive: The determination of whether Limited Vesting is required and the application of the rules in Section 15.4 shall initially be made by the Company in its sole discretion and any such determination shall be conclusive and binding on the Participant unless the Participant proves that it is clearly erroneous.  In the latter event, such determination shall be made by the Company in its sole discretion.

 

(d)                                 Section 409A Awards:  This Section 15.3 and Section 15.4 shall not apply to or affect a Section 409A Award, including without limitation the payment, vesting or timing of payment of a Section 409A Award.  Notwithstanding the foregoing, if the only remaining Awards that are subject to the excise tax under Section 4999 that could be reduced to accomplish Limited Vesting are Section 409A Awards, then performance-based Section 409A Awards may be reduced followed by non-performance, service-based Section 409A Awards.

 

15.4                        Limitation on Payment.  Notwithstanding Section 15.1, if Limited Vesting applies then the amount paid on exercise or payment of an Award shall not exceed the largest amount that can be paid without causing an excise tax to be payable by the Participant under Section 4999 of the Code.  If payments are so limited, awards shall be deemed paid in the following order:

 

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(a)                                 all Options or SARs that were accelerated pursuant to Section 15.1(a) shall be deemed paid first;

 

(b)                                 all awards of Restricted Stock and Restricted Stock Units that are not performance-based shall be deemed paid; and

 

(c)                                  finally, all awards of Performance Units, Performance Shares and performance-based Restricted Stock and Cash Awards shall then be deemed paid.

 

As among awards or portions of awards of the same type, those vesting at the most distant time in the future (absent a Change in Control) shall be deemed paid last.

 

15.5                        Expenses.  The Company shall pay all legal fees, court costs, fees of experts and other costs and expenses when incurred by a Participant in connection with any actual, threatened or contemplated litigation or legal, administrative or other proceeding involving the provisions of Section 15.4, whether or not initiated by the Participant.

 

The reimbursements of such expenses and costs shall comply with the requirements of Section 409A, which generally require (i) that the amount of expenses and costs eligible for reimbursement during a calendar year may not affect the expenses and costs eligible for reimbursement in any other taxable year; (ii) the reimbursement of an eligible expense or cost is made on or before the last day of the calendar year following the calendar year in which the expense or cost was incurred; and (iii) the right to reimbursement is not subject to liquidation or exchange for another benefit.

 

15.6                        Termination, Amendment, and Modifications of Change-in-Control Provisions.  Notwithstanding any other provision of this Plan or any Award Agreement provision, the provisions of this Article 15 may not be terminated, amended, or modified on or after the date of a Change in Control to affect adversely any Award theretofore granted under the Plan and any rights or benefits provided to a Participant this Article 15 without the prior written consent of the Participant with respect to said Participant’s outstanding Awards; provided, however, the Committee may terminate, amend, or modify this Article 15 at any time and from time to time prior to the date of a Change in Control.

 

Article 16.                                     Amendment, Modification, Termination and Tax Compliance.

 

16.1                        Amendment, Modification, and Termination.  Subject to the terms of the Plan, the Committee or the Board may at any time and from time to time, alter, amend, suspend, or terminate the Plan in whole or in part.

 

16.2                        Awards Previously Granted.  Notwithstanding any other provision of the Plan to the contrary, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award; provided that no consent is required for any amendment the Committee deems necessary or appropriate to comply with applicable legal or tax requirements.

 

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16.3                        Shareholder Approval Required for Certain Amendments.  Shareholder approval will be required for any amendment of the Plan that does any of the following: (a) permits the grant of any Option with an Option Price less than the Fair Market Value of the Shares on the date of grant; (b) reduces the Option Price of an outstanding Option, either by lowering the Option Price or by canceling an outstanding Option and granting a replacement Option with a lower exercise price; (c) permits the grant of any SAR with a grant price that is less than the Fair Market Value of the Shares on the date of grant; or (d) reduces the grant price of an outstanding SAR, either by lowering the grant price or by canceling an outstanding SAR and granting a replacement SAR with a lower exercise price.

 

16.4                        Compliance with Code Section 162(m).  At all times when Code Section 162(m) is applicable, if and to the extent the Committee so determines, Awards granted under this Plan to Employees who are or could reasonably become Covered Employees as determined by the Committee shall comply with the requirements of the Performance-Based Exception.  Generally, this requires that the amount paid under such an Award be determined based on the attainment of written, objective performance goals approved by the Committee for a performance period established by the Committee (i) while the outcome for that performance period is substantially uncertain and (ii) no more than 90 days after the commencement of the performance period to which the performance goal relates or, if less, the number of days which is equal to 25 percent of the relevant performance period.  The Committee shall determine whether, with respect to a performance period, the applicable performance goals have been met with respect to a given Participant and, if they have, shall so certify and ascertain the amount of the applicable Award.  No amount will be paid for such performance period until such certification is made by the Committee.  The amount actually paid to a given Participant may be less than (but not more than) the amount determined under the applicable performance formula, at the discretion of the Committee.

 

16.5                        Compliance with Section 409A.  It is intended that Awards under this Plan are either exempt from Section 409A or are structured to comply with the requirements of Section 409A.  The Plan shall be administered and interpreted in accordance with that intent.  By way of example, the following rules shall apply:

 

·                  Any provision of the Plan that would conflict with the requirements of a Section 409A Award shall not apply to a Section 409A Award.

 

·                  Any adjustment or modification to an Award shall be made in compliance with Section 409A (e.g., any adjustment to an Option or SAR under Section 4.2 shall be made in accordance with the requirements of Section 409A).

 

·                  For Section 409A Awards, all rights to amend, terminate or modify the Plan or any Award are subject to the requirements and limitations of Section 409A.

 

·                  For Section 409A Awards, any payment or distribution that is triggered upon termination or cessation of employment or a comparable event shall be interpreted consistent with the definition of “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h).

 

24

 

·                  With respect to amounts payable under a Section 409A Award, in the event that a Participant is a “specified employee” as defined in Section 409A, any amount that is payable in connection with the Participant’s separation from service shall not be paid prior to the date which is six months after the date the Participant separates from service (or, if earlier, the date the Participant dies).  A Participant who is subject to the restriction described in the previous sentence shall be paid on the first day of the seventh month after the Participant’s separation from service an amount equal to the benefit that the Participant would have received during such six month period absent the restriction.

 

While the Company intends for Awards to either be exempt from or in compliance with Section 409A, neither the Company nor the Committee shall be liable to any person for the tax consequences of any failure to comply with the requirements of Section 409A or any other tax consequences relating to Awards under this Plan.

 

Article 17.                                     Withholding

 

The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy the Federal statutory minimum, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.  The Participant may satisfy, totally or in part, his obligations pursuant to this Article by electing to have Shares withheld, to redeliver Shares acquired under an Award, or to deliver previously owned Shares, provided that the election is made in writing on or prior to (i) the date of exercise, in the case of Options and SAR’s (ii) the date of payment, in respect of Stock Awards, Restricted Stock Units, Performance Units, Performance Shares, or Cash-Based Awards, and (iii) the expiration of the Period of Restriction, in respect of Restricted Stock.  Any election made under this Article shall be irrevocable by the Participant and may be disapproved by the Committee at any time in its sole discretion.  If an election is disapproved by the Committee, the Participant must satisfy his obligations pursuant to this paragraph in cash.

 

Article 18.                                     Successors

 

All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business, stock and/or assets of the Company.

 

Article 19.                                     General Provisions

 

19.1                        Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

 

19.2                        Severability.  If any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the

 

25

 

Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

 

19.3                        Requirements of Law.  The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

19.4                        Securities Law Compliance.  With respect to Insiders, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act, unless determined otherwise by the Board.  To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Board.

 

19.5                        Listing.  The Company may use reasonable endeavors to register Shares allotted pursuant to the exercise of an Option with the United States Securities and Exchange Commission or to effect compliance with the registration, qualification, and listing requirements of any national securities laws, stock exchange, or automated quotation system.

 

19.6                        Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

19.7                        No Additional Rights.  Neither the Award nor any benefits arising under this Plan shall constitute part of an employment contract between the Participant and the Company or any Subsidiary or Affiliate, and accordingly, subject to Section 16.2, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to liability on the part of the Company or any Affiliate for severance payments.

 

19.8                        Employees Based Outside of the United States.  Notwithstanding any provision of the Plan to the contrary, to comply with provisions of laws in other countries in which the Company, its Affiliates, and its Subsidiaries operate or have Employees, the Committee, in its sole discretion, shall have the power and authority to:

 

(a)                                 Determine which Affiliates and Subsidiaries will be covered by the Plan or relevant subplans;

 

(b)                                 Determine which Employees employed outside the United States are eligible to become Participants in the Plan;

 

(c)                                  Modify the terms and conditions of any Award granted to Participants who are employed outside the United States;

 

(d)                                 Establish subplans, modified exercise procedures, and other terms and procedures to the extent such actions may be necessary, advisable or convenient, or to the

 

26

 

extent appropriate to provide maximum flexibility for the Participant’s financial planning.  Any subplans and modifications to the Plan terms or procedures established under this Section 19.8 by the Committee shall be filed with the Plan document as Appendices; and

 

(e)                                  Take any action, before or after an Award is made, which the Committee deems advisable to obtain, comply with, or otherwise reflect any necessary governmental regulatory procedures, exemptions or approvals, as they may affect this Plan, any subplan, or any Participant.

 

19.9                        Uncertificated Shares.  To the extent that the Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

 

19.10                 Governing Law.  The Plan and each Award Agreement shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction.  Unless otherwise provided in the Award Agreement, recipients of an Award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts located in the Commonwealth of Virginia, County of Fairfax, to resolve any and all issues that may arise out of or relate to the Plan or any related Award Agreement.

 

27Exhibit 10.11

GANNETT CO., INC.

 

2015 TRANSITIONAL COMPENSATION PLAN

 

 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
INTRODUCTION
    	
 
    
	
 
    	
 
    	
 
    
	
1.
    	
PURPOSE OF THE PLAN
    	
2
    
	
 
    	
 
    	
 
    
	
2.
    	
EFFECTIVE DATE
    	
3
    
	
 
    	
 
    	
 
    
	
3.
    	
ADMINISTRATION OF THE PLAN
    	
3
    
	
 
    	
 
    	
 
    
	
 
    	
(a)                                 The Committee
    	
3
    
	
 
    	
(b)                                 Determinations by the Committee
    	
3
    
	
 
    	
(c)                                  Delegation of Authority
    	
5
    
	
 
    	
 
    	
 
    
	
4.
    	
PARTICIPATION IN THE PLAN
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
(a)                                 Designation of Participants
    	
5
    
	
 
    	
(b)                                 Terminating Status as a Participant
    	
5
    
	
 
    	
 
    	
 
    
	
5.
    	
CHANGE IN CONTROL
    	
6
    
	
 
    	
 
    	
 
    
	
6.
    	
ELIGIBILITY FOR BENEFITS   UNDER THE PLAN
    	
8
    
	
 
    	
 
    	
 
    
	
 
    	
(a)                                 General
    	
8
    
	
 
    	
(b)                                 Cause
    	
9
    
	
 
    	
(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
    
	
 
    	
(b)                                 Termination Without Cause; Good Reason Terminations
    	
14
    
	
 
    	
(c)                                  Timing of Payments
    	
20
    
	
 
    	
 
    	
 
    
	
8.
    	
MITIGATION
    	
21
    
	
 
    	
 
    	
 
    
	
9.
    	
RESOLUTION OF DISPUTES
    	
21
    
	
 
    	
 
    	
 
    
	
10.
    	
LEGAL EXPENSES AND INTEREST
    	
22
    
	
 
    	
 
    	
 
    
	
11.
    	
FUNDING
    	
23
    
	
 
    	
 
    	
 
    
	
12.
    	
NO CONTRACT OF EMPLOYMENT
    	
24
    
	
 
    	
 
    	
 
    
	
13.
    	
NON-EXCLUSIVITY OF RIGHTS
    	
24
    
	
 
    	
 
    	
 
    
	
 
    	
(a)                                 Future Benefits under Company Plans
    	
24
    
	
 
    	
(b)                                 Benefits of Other Plans and Agreements
    	
24
    
	
 
    	
 
    	
 
    
	
14.
    	
SUCCESSORS; BINDING   AGREEMENT
    	
25
    
	
 
    	
 
    	
 
    
	
15.
    	
TRANSFERABILITY AND ENFORCEMENT
    	
25
    
	
 
    	
 
    	
 
    
	
16.
    	
NOTICES
    	
26
    

 

i

 

Table of Contents (continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
17.
    	
AMENDMENT OR TERMINATION OF   THE PLAN
    	
26
    
	
 
    	
 
    	
 
    
	
18.
    	
WAIVERS
    	
27
    
	
 
    	
 
    	
 
    
	
19.
    	
VALIDITY
    	
27
    
	
 
    	
 
    	
 
    
	
20.
    	
GOVERNING LAW
    	
28
    
	
 
    	
 
    	
 
    
	
21.
    	
SECTION 409A
    	
28
    
	
 
    	
 
    	
 
    
	
22.
    	
HEADINGS
    	
28
    

 

ii

 

GANNETT CO., INC.

 

2015 TRANSITIONAL COMPENSATION PLAN

 

Introduction

 

In 2015, Gannett Co., Inc. separated its digital/broadcast and publishing businesses into two separate publicly traded companies.  The separation occurred when Gannett Co., Inc. contributed its publishing businesses to a newly formed subsidiary, Gannett SpinCo, Inc., and distributed the stock of Gannett SpinCo, Inc. to its shareholders (the “Spin-off”).  In connection with the Spin-off, Gannett SpinCo, Inc. was renamed “Gannett Co., Inc.” (the “Company”).  The entity formerly known as Gannett Co., Inc. was renamed “TEGNA Inc.” (the “Predecessor Company”) and continues the digital/broadcast businesses.

 

This document establishes the Gannett Co., Inc. 2015 Transitional Compensation Plan (the “Plan”).  Certain participants hereunder were previously employed by the Predecessor Company and were participants under the Predecessor Company’s Transitional Compensation Plan as in effect immediately prior to the Effective Date hereof (the “Predecessor Plan”).  The benefits under this Plan of such participants are the subject of an Employee Matters Agreement by and between the Company and the Predecessor Company dated                       , 2015 (the “Employee Matters Agreement”).  The Employee Matters Agreement may be used as an aid in interpreting the terms of the benefits hereunder.  No benefits are payable under the Plan or the Predecessor Plan as a consequence of the Spin-Off, and participants in this Plan are not entitled to any benefits under the Predecessor Plan.

 

For a SpinCo Group Employee (as defined in the Employee Matters Agreement) who is employed immediately following the Effective Date by the SpinCo Group (as defined in the

 

 

Employee Matters Agreement), service and compensation shall be recognized with the Predecessor Company or any of its subsidiaries or predecessor entities at or before the Effective Date, to the same extent that such service and compensation was recognized by the Predecessor Company under the Predecessor Plan prior to the Effective Date as if such service had been performed for, and compensation paid by, the Company for purposes of eligibility, vesting and determination of level of benefits under this Plan.

 

1.                                      Purpose of the Plan.  The Board of Directors of 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

 

2

 

advice, if requested, without concern that those individuals might be distracted by the personal uncertainties and risks created by such a proposal.

 

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 2015 Transitional Compensation Plan, as amended and restated (the “Plan”), shall become effective on               , 2015.

 

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 VI (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

 

3

 

designate persons to be covered by the Plan; to revoke such 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 affiliates, beneficially owns at least a plurality of the then-outstanding voting securities of the Company (including any successor to the Company by

 

4

 

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 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

 

5

 

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 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 Effective 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

 

6

 

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 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-

 

7

 

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 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

 

8

 

(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 for Good Reason.

 

(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 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

 

9

 

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), 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

 

10

 

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 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

 

11

 

(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.

 

(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 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

 

12

 

Plan relied upon, and (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances 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, 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. In all instances, the Date of Termination shall mean the date of the Participant’s separation from service within the meaning of Section 409A.

 

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, 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 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 2015 Omnibus Incentive Compensation Plan) or other 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 Predecessor Company’s 1978 Executive Long Term Incentive Plan, the Predecessor Company’s 2001 Omnibus Incentive Compensation Plan, the Company’s 2015 Omnibus Incentive Compensation Plan or any comparable or successor plans (collectively, the “Incentive Compensation Plan”), the 2015 Deferred Compensation Plan or any comparable or successor plan, the Company’s retirement and 401(k) Plans, or any deferred compensation arrangement (or

 

14

 

portion thereof) that is subject to 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), 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

 

15

 

year during the period between the Change in Control and the Date of Termination under the Company’s annual Executive Incentive Compensation Plan;

 

(iii)                               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 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;

 

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(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) the monthly annuity payable under the Company’s Retirement Plan and the Company’s Supplemental Retirement Plan (or if applicable, the Predecessor Company’s Retirement Plan and 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

 

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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 said 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 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)                              It is the object of this subsection to provide for the maximum after-tax income to each Participant with respect to any payment or distribution 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, that would be subject to the

 

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excise tax imposed by Section 4999 of the Code or any similar federal, state or local tax that may hereafter be imposed (a “Payment”) (Section 4999 of the Code or any similar federal, state or local tax are collectively referred to as the “Excise Tax”).  Accordingly, before any Payments are made under this Plan, a determination will be made as to which of two alternatives will maximize such Participant’s after-tax proceeds, and the Company must notify the Participant in writing of such determination.  The first alternative is the payment in full of all Payments potentially subject to the Excise Tax.  The second alternative is the payment of only a part of the Participant’s Payments so that the Participant receives the largest payment and benefits possible without causing the Excise Tax to be payable by the Participant.  This second alternative is referred to in this subsection as “Limited Payment”.  The Participant’s Payments shall be paid only to the extent permitted under the alternative determined to maximize the Participant’s after-tax proceeds, and the Participant shall have no rights to any greater payments on his or her Payments.  If Limited Payment applies, Payments shall be reduced in a manner that would not result in the Participant incurring an additional tax under Section 409A of the Code. Accordingly, Payments not constituting nonqualified deferred compensation under Section 409A shall be reduced first, in this order:

 

·      Performance-based awards in accordance with Sections 15.3 and 15.4 of the Company’s 2015 Omnibus Incentive Compensation Plan (or any predecessor or successor plan) (the “Omnibus Plan”), but excluding Section 409A Awards (as defined in such Plan).

 

·      Non-performance, service-based awards in accordance with Sections 15.3 and 15.4 of the Omnibus Plan, but excluding Section 409A Awards (as defined in such Plan).

 

·      Awards of Options and SARs under the Omnibus Plan in accordance with Sections 15.3 and 15.4 of the Omnibus Plan.

 

Then, if the foregoing reductions are insufficient, Payments constituting deferred compensation under Section 409A shall be reduced, in this order:

 

·      Performance-based Section 409A Awards in accordance with Sections 15.3 and 15.4 of the Omnibus Plan.

 

·      Payment of the severance amount under Section 7(b)(ii) hereof.

 

·      Payment of the pro rata bonus under Section 7(b)(i)(B) hereof.

 

·      Payment of the severance amount under Section 7(b)(v) hereof.

 

·      Non-performance, service-based Section 409A awards in accordance with Sections 15.3 and 15.4 of the Omnibus Plan.

 

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In the event of conflict between the order of reduction under this Plan and the order provided by any other Company document governing a Payment, then the order under this Plan shall control.

 

All determinations required to be made under this Section 7(b)(vi) 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 Control, such other nationally recognized accounting firm serving as the Company’s independent accounting firm (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Participant within ten (10) business days of the termination of employment giving rise to benefits under the Plan, or such earlier time as is requested by the Company.  All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne by the Company.  In the event the Accounting Firm determines that the Payments shall be reduced, it shall furnish the Participant with a written opinion to such effect.  The determination by the Accounting Firm shall be binding upon the Company and the Participant.

 

(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

 

20

 

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 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

 

21

 

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 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

 

22

 

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 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.

 

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

 

24

 

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.

 

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

 

25

 

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 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

 

26

 

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 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.

 

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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.  For purposes of this Plan, any reference to “termination of employment” or similar term shall mean a “separation from service” within the meaning of Section 409A, and all in-kind benefits and reimbursements provided under the Plan shall be paid in accordance with the requirements of Treasury Regulation Section 1.409A-3(i)(iv).

 

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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