Document:

Exhibit

RETIREMENT AGREEMENT

THIS RETIREMENT AGREEMENT (the "Agreement"), is being entered into by and between Jay W. Swent III (the "Employee"), and Ensco plc ("Ensco" or the "Company"), on the following terms:

WHEREAS, the parties mutually desire to arrange for Employee's retirement from the Company and its subsidiaries at a future date under certain terms set forth herein;

WHEREAS, the parties desire to set forth the duties and responsibilities of Employee's continued employment with the Company prior to the date of Employee's retirement; 

WHEREAS, the Parties intend that this Agreement shall govern all issues related to Employee's employment with, and retirement, from the Company;

WHEREAS, Employee is being given at least twenty-one (21) days to consider the terms of this Agreement;

WHEREAS, Employee may revoke this Agreement within seven (7) days of his execution;

WHEREAS, Employee has been advised in writing to consult with independent counsel with respect to the terms, meaning and effect of this Agreement before executing this Agreement, and Employee has had an opportunity to do so;

WHEREAS, the Company and Employee desire to resolve any and all matters related to Employee's employment or service with/to the Company, including, without limitation, all outstanding issues and/or disputes between them; and

WHEREAS, Employee understands that the Company regards the above recitals as material and that the Company is relying upon these recitals by Employee in entering into this Agreement. 

NOW, THEREFORE, Employee and the Company, for and in consideration of the foregoing recitals and the terms and conditions set forth in this Agreement, agree as follows:

I. DEFINITIONS

1.1    "Board" means the board of directors of the Company, as duly elected from time to time.

		
	1.2
	"Cause" means (i) gross misconduct or gross neglect by Employee in the discharge of his duties as an Employee, (ii) the breach by Employee of any policy or written agreement with the Company or any of its Subsidiaries, including, without limitation, the Company's Code of Business Conduct and any employment or non-disclosure agreement, (iii) proven dishonesty in the performance of Employee's duties, (iv) Employee's conviction or a plea of guilty or nolo contendere to a felony or crime of moral turpitude, or (v) Employee's alcohol or drug abuse; provided, however, Employee shall not be deemed to have been dismissed for Cause unless and until the following requirements have been satisfied: (x) if Employee is alleged to have committed a breach described in clause (ii) of this definition of Cause that in the judgment of the Board or the Committee is capable of being cured, then the Company 

shall give Employee written notice specifying the nature of the breach and a period of ten (10) days after delivery to Employee of such written notice to cure such breach and (y) after the expiration of the cure period described in clause (x) above, if applicable, there has been delivered to Employee a copy of a resolution duly adopted by the Board or the Committee at a meeting duly called and held for the purpose (after reasonable notice to Employee and an opportunity for Employee, together with his counsel, to be heard before the Board or the Committee), finding that in the good-faith, reasonable opinion of the Board or Committee, Employee was guilty of the conduct set forth in this sentence and specifying the particulars in detail and, if applicable, that any breach described in clause (ii) of this definition of Cause that is capable of being cured has not been cured by Employee. 

		
	1.3
	"Committee" means the Compensation Committee of the Board, the Executive Compensation Subcommittee of the Compensation Committee of the Board or such other Committee or subcommittee as may be appointed by the Board from time to time, which shall be comprised solely of two or more persons who are disinterested directors within the meaning of the 2012 LTIP.

		
	1.4
	"Company" means and includes Ensco plc, and all of its predecessors, successors, parents, subsidiaries, divisions, affiliated companies, owners, members, partners, partnerships, assigns, officers, directors, employees, insurers, shareholders, agents, employee benefit plans and plan fiduciaries, whether in their individual or official capacities.

		
	1.5
	"Competing Business" means any business activities that (i) involve providing offshore drilling services to the international oil and gas industry, (ii) compete with the products or services being provided by the Company and/or under active development by the Company during Employee’s employment that involve or relate to offshore drilling, or (iii) are so similar in nature that they would displace business opportunities or customers of the Company.

		
	1.6
	"Confidential Information" includes, without limitation, all of the Company’s technical and business information, whether patentable or not, which is of a confidential, trade secret or proprietary character, and which has been or is being developed by Employee alone, with others or by others; marketing information; the identity of customers and customer contacts; the identity of prospective customers and prospective customer contacts; any terms, conditions, guidelines or other information pertaining to the Company’s contracts, whether such contracts are expired, current or prospective; bidding information, processes and strategies; pricing methods and cost information; procedures, systems, forms and techniques used in monitoring the business; financial information; information regarding the Company’s claims and contingencies, including the Company’s position and strategy with respect to any disputes; the Company’s investments, programs, plans, manners and methods of operation, negotiating positions and strategies, and other information regarding potential strategic alliances; organizational charts; identities, credentials, contact information or whereabouts of employees and contractors; tax structures; governance structures; information regarding the Company’s joint ventures and other business partners, including, without limitation, its intermediaries and agents; and other information or documents that the Company requires to be maintained in confidence; provided, however, that it does not include information that is in the public domain or becomes part of the public domain through no fault of Employee.

1.7    "Effective Date" means the date on which this Agreement is executed by the parties hereto.

 
		
	1.8
	"Permanent and Total Disability" means that an individual is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.  An individual shall not be considered to suffer from Permanent and Total Disability unless such individual furnishes proof of the existence thereof in such form and manner, and at such times, as the Board or the Committee may reasonably require.

		
	1.9
	"2005 ECIP” means the Company’s 2005 Cash Incentive Plan, as amended from time to time.  

		
	1.10
	"2005 LTIP" means the Company’s 2005 Long-Term Incentive Plan, as amended from time to time.  

		
	1.11
	“2012 LTIP” means the Company’s 2012 Long-Term Incentive Plan, as amended from time to time.  

II. CONTINUED EMPLOYMENT

		
	2.1
	Employee shall have until twenty-one (21) calendar days after the date this Agreement was furnished to him to consider whether to sign this Agreement.  In consideration for Employee's execution of and compliance with this Agreement, including but not limited to the provisions of Article V, the Company shall provide the consideration set forth in this Article II.  The Company's obligation to make any further payments, provide benefits, or continue to employ Employee under this Agreement shall cease in the event that Employee revokes his execution of this Agreement or fails to comply with the terms of this Agreement.  

		
	2.2
	From the Effective Date until 31 December 2015 (the "Employment Period"), Employee shall continue to serve as Executive Vice President and Chief Financial Officer of the Company, subject to the terms of this Agreement.  If the Company and Employee mutually agree that Employee’s employment shall terminate prior to 31 December 2015, Employee shall cease to serve as Executive Vice President and Chief Financial Officer of the Company on the effective date of that termination but the last day of the Employment Period shall still be considered to be 31 December 2015.  If the Company and Employee mutually agree in writing on or prior to 1 December 2015, the parties may extend the Employment Period by such amount of time as is agreed, provided that for as long as Employee shall remain employed after 31 December 2015 Employee shall continue to be paid his base salary on a daily rate computed based on the monthly rate set forth in Section 2.6, and shall continue to be entitled to (i) all payments and benefits described in Section 2.7, (ii) his bonus as provided in Section 3.2(i), and (iii) provided his continued employment is not terminated for “Cause,” receive a pro-rated bonus as provided in Section 3.2(ii). 

		
	2.3
	During the Employment Period, Employee agrees that he will at all times faithfully, industriously and to the best of his ability, experience and talents, perform all of the duties that may be required of and from him by the Company.  Employee shall office in Houston, Texas.

		
	2.4
	During and after the Employment Period, Employee agrees not to make any disparaging comments about the Company, or any current or former officer, director, or employee of the Company, or any affiliate, or to take any action (or assist any person in taking any other action), in each case, that is materially adverse to the interests of the Company or any affiliate or inconsistent with fostering the goodwill of the Company; provided, however, that nothing in this Agreement shall apply to restrict in any way the communication of information by Employee to any state or federal law enforcement agency or require notice to the Company thereof, and Employee will not be in breach of the covenant contained above solely by reason of his testimony which is compelled by process of law.  During and after the Employment Period, the Company and its managing agents authorized to speak on its behalf agree to refrain from making any disparaging comments about Employee; provided, however, that nothing in this Agreement shall apply to restrict in any way the communication of information by the Company to any state or federal law enforcement agency or require notice to Employee thereof, and the Company  will not be in breach of the covenant contained above solely by reason of the testimony of the Company's managing agents which is compelled by process of law.  

		
	2.5
	During the Employment Period, Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Employee in the performance of his duties hereunder in accordance with the policies of the Company.  Notwithstanding anything to the contrary in this Agreement or in any Company policy with respect to such payments, in-kind benefits and reimbursements provided under this Agreement that would result in taxable compensation income to Employee during any tax year of Employee shall not affect in-kind benefits or reimbursements to be provided in any other tax year of Employee and are not subject to liquidation or exchange for another benefit.  Notwithstanding anything to the contrary in this Agreement, reimbursement requests must be timely submitted by Employee and, if timely submitted, reimbursement payments shall be made to Employee as soon as administratively practicable following such submission in accordance with the Company’s policies regarding reimbursements, but in no event later than the last day of Employee's taxable year following the taxable year in which the expense was incurred.  

		
	2.6
	During the Employment Period, the Company shall pay Employee base salary of $47,916.67 per month. 

		
	2.7
	During the Employment Period, Employee shall continue to be eligible for, and to receive, all compensation and benefits available to executive officers, including, but not limited to, all contributions under the 2005 Supplemental Executive Retirement Plan (the “SERP”), the Ensco Savings Plan (including, but not limited to, the profit sharing provisions thereof), and medical, life and disability insurance and other benefits and insurance coverage, on the same basis as other executive officers.  For the avoidance of doubt, the Company confirms that Employee has fully nonforfeitable interests in his accrued benefits earned under the SERP and the Ensco Savings Plan, including in all cases any deferrals or Company contributions thereunder made through the end of the Employment Period.

		
	2.8
	Effective on the last day of the Employment Period, Employee shall be terminated as an employee of the Company, and, upon compliance with the provisions of this Agreement, Employee shall be entitled to the payments and benefits provided in this Agreement.

		
	2.9
	Because Employee is a United States citizen who has been performing services in the United Kingdom, Employee may be subject to personal income taxation in both the United States and the United Kingdom.  In order to protect Employee from double taxation, Employee shall be entitled to a tax equalization payment compensating Employee for any excess of foreign taxes over the amount of U.S. federal and state taxes Employee would have paid if he had remained an employee in the United States such that the after tax amount actually retained by Employee is equal to the after tax amount Employee would have retained if he had been an employee in the United States (“Tax Equalization Payment”).  The Company shall pay for the cost associated with the preparation of Employee’s tax returns and the resolution of any tax issues that may result from payment received as a result of Employee’s employment with the Company in the United Kingdom in the same manner and to the same extent that the Company provides this benefit to other executives of the Company.  It is Employee’s responsibility to file returns and provide any required documentation on a timely basis to comply with U.S. expatriate tax laws as well as the tax laws of the United Kingdom.  The Company shall neither be responsible nor reimburse Employee for any penalties or interest assessed to or incurred by Employee resulting from or attributable to Employee’s failure to timely file any return or timely provide any required information or documentation.  Notwithstanding anything herein to the contrary, the Tax Equalization Payment provided in this Section 2.9 will only apply with respect to payments and other compensation Employee has received and will receive from the Company and will apply as to (i) any tax periods in which Employee has received or will receive any such payments or other compensation from the Company and (ii) any tax periods in which Employee is subject to taxation in the United Kingdom in respect of his employment with the Company.  For the avoidance of doubt, Employee will be entitled to the Tax Equalization Payment under this Section 2.9 without regard to the reason his employment terminates.  Notwithstanding anything in this Section 2.9 or otherwise in this Agreement, all payments under this Section 2.9 shall be paid no later than the end of the second taxable year of Employee beginning after the taxable year of Employee in which Employee's U.S. Federal income tax return is required to be flied (including any extensions) for the year to  which the compensation subject to the Tax Equalization Payment relates, or, if later, the second taxable year of Employee beginning after the latest such taxable year in which Employee's foreign tax return or payment is required to be filed or made for the year to which the compensation subject to the Tax Equalization Payment relates.  This Section 2.9 is intended to comply with the requirements of Treas. Reg. section 1.409A-1(b)(8)(iii) to cause all payments made under this Section 2.9 to not be treated as a deferral of compensation for purposes of I.R.C. §409A, and the terms of this Section 2.9 shall be implemented in a manner to result in such treatment. 

		
	2.10
	If, prior to the last day of the Employment Period, Employee’s employment with the Company is terminated due to death or Permanent and Total Disability, then the Company shall be obligated to pay and provide all of the payments on benefits specified in this Article II and in Article III hereof to Employee (or to Employee’s spouse and eligible dependents in the event of his death) pursuant to the terms of this Agreement.

		
	2.11
	Notwithstanding any provision in this Agreement to the contrary, if, prior to 31 December 2015, Employee voluntarily resigns his employment with the Company or the Company terminates Employee for Cause, then the Company shall not be obligated to pay or provide further any of the payments and benefits specified in this Article II or any of the payments or benefits specified in Article III hereof.

III. RETIREMENT PACKAGE

		
	3.1
	Not later than fifteen (15) business days after the last day of the Employment Period, the Company will pay Employee all regular pay due through his last day of employment, less withholdings required by state and/or federal law.  Employee agrees that this payment includes all accrued employment benefits payable to Employee, including without limitation all salary, wages, compensation, accrued and unpaid vacation leave, and any other paid time off earned and owed through his last day of employment. 

 
		
	3.2
	Provided that Employee executes and does not revoke a release, in the form attached as Exhibit A, effective on the last day of the Employment Period, the Company represents to Employee that the Committee will take all actions pursuant to the provisions of the 2005 ECIP necessary to consider Employee to have retired on or after his “normal retirement age” under the 2005 ECIP and (i) to determine Employee's 2015 target annual performance bonus under the 2005 ECIP without any proration in accordance with Section 7(c) thereof, which amount will be payable at the time specified in the 2005 ECIP, and (ii) if the last day of the Employment Period is after 31 December 2015, Employee will be entitled to payment within thirty (30) days of that date of one hundred percent (100%) of his 2016 target annual performance bonus subject to proration under the 2005 ECIP of $460,000 (which is consistent with the amount of his 2015 target annual performance bonus).  Employee agrees that he shall not be eligible to receive a severance benefit under any Company severance plan, policy, or program.

		
	3.3
	In exchange for the mutual promises contained herein, effective on the last day of the Employment Period, the Company represents to Employee that the Committee will take all actions pursuant to the provisions of the 2012 LTIP necessary to (i) provide for acceleration (full vesting) as of the last day of the Employment Period of all unvested restricted share awards and restricted share unit awards heretofore granted to Employee, and (ii) consider Employee to have retired on or after his “normal retirement age” under the 2012 LTIP and determine the performance unit awards granted after 2012 to Employee under the 2012 LTIP in accordance with Section 15(b) thereof; provided, however, that any restricted share units that vest upon the last day of the Employment Period pursuant to clause (i) shall not be paid or settled until the original vesting date specified in the award agreement under which they were granted and payment under the performance unit awards referred to in clause (ii), and the accrued aggregate dividend equivalents attributable to each such amount, shall be made at the time specified in the applicable performance unit award agreements.  Employee shall not be eligible for the grant of any additional award or awards under the 2012 LTIP. 

		
	3.4
	Employee may exercise, trade or otherwise divest vested NSOs in accordance with the 2005 LTIP and the specific NSO award agreements, provided that each NSO shall remain exercisable by Employee for a period ending on the earlier of (i) the second anniversary of the last day of the Employment Period, or (ii) the last day of the term of the NSO.  

		
	3.5
	The parties acknowledge that the Retirement Package described in this Article III constitutes a reasonable settlement or compromise to any amount which Employee may claim or be entitled to as part of Employee's employment and/or as a result of the termination of Employee's employment with the Company, and the parties acknowledge that the 

consideration set forth in this Agreement constitutes additional consideration above and beyond which Employee is or otherwise would be entitled.

IV. GENERAL TERMS

		
	4.1
	On the last day of the Employment Period or Employee’s termination for Cause, Employee will cease to be employed by the Company, and will end all legal relationships with the Company, however denominated.

		
	4.2
	Employee and the Company agree to report, for income tax purposes, the payment and receipt of the Retirement Package.  Each party shall bear their respective tax liabilities, if any, arising from this Agreement.

		
	4.3
	It is expressly understood and agreed that any liability claimed by Employee is disputed and denied, and that this Agreement is not to be construed as an admission of liability by the Company, as any and all liability, except as stated in this Agreement, is expressly denied.

		
	4.4
	Employee acknowledges and understands that he is waiving any and all rights or claims Employee may have arising out of Employee's employment relationship or service with/to the Company and/or termination thereof which arises on or before the date Employee executes this Agreement.  

		
	4.5
	Any incentive-based compensation paid or payable to Employee under this Agreement, or under any other agreement or compensation plan or arrangement of the Company that is referred to in this Agreement, shall be subject to any recovery, clawback, or recoupment policy applicable to current or former executive officers of the Company that is adopted by the Company in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act or any other law, any governmental regulation, or any stock-exchange listing requirement to which the Company is subject.

		
	4.6
	The Deed of Indemnity signed by Employee on 22 December 2009 shall continue in effect in all respects during the Employment Period and for such periods of time following the end of the Employment Period as are established in section 15 of such Deed of Indemnity.  Further, Employee will be entitled to the benefit of any insurance policies the Company maintains for the benefit of its officers and directors against all liabilities, claims, costs, charges and expenses incurred in connection with any action, suit or proceeding to which he may be made, or threatened to be made, a party, witness or other participant by reason of being an officer or employee of the Company.  Additionally, if the Company fails to administer any provision of this Agreement consistent with its terms and intent, the Company shall indemnify Employee fully for any costs or other liability to Employee, other than legal fees, resulting from such error.

V. COVENANTS OF EMPLOYEE

		
	5.1
	Subject to the provisions of Section 5.5 below, Employee for Employee, Employee's heirs, executors, spouse, guardians, administrators, and successors and assigns, and anyone who has or had rights by or through Employee, hereby fully and forever releases, acquits 

and discharges the Company of and from any and all actual or potential claims, demands, complaints, judgments, charges or grievances, damages, expenses, attorney's fees, actions and causes of action which Employee can, shall or may have arising out of or in any way relating, directly or indirectly, to any act, omission, or conduct whatsoever, by or attributable to the Company or any of its subsidiaries, divisions, or affiliated companies, or any of their respective owners, members, partners, assigns, officers, directors, employees, insurers, shareholders, agents, employee benefit plans or plan fiduciaries, whether in their individual or official capacities, which may have occurred or has been committed in the past or present up to and including the date Employee executes this Agreement, whether such actual or potential claims demands, actions, causes of action, charges, or grievances are known or unknown, whether pending or threatened, whether matured or inchoate, whether accrued or unaccrued, whether now existing or hereafter arising, related in any way to the relationship of Employee with the Company or the termination of such relationship, and as to any matter which could have been asserted in any suit, arbitration, tribunal, quorum, proceeding, committee, agency, department, or body, whether it be state, federal, or local, and whether the nature of it be adjudicatory, legislative, executive, or otherwise.

		
	5.2
	Employee covenants that this Agreement includes, but is not limited to, a release of any claim for monetary damages or relief arising out of or related to the following:  (i) any claim for any wages, salary, compensation, vacation pay, paid leave or other remuneration of any kind; (ii) any claim for additional or different compensation or benefits of any sort; (iii) any claim of retaliation or discrimination on the basis of race, sex, religion, marital status, sexual preference, age, national origin, handicap or disability, veteran status, or special disabled veteran status; (iv) any claim arising under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, the Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act of 1938, the Sarbanes-Oxley Act, the Dodd-Frank Act, the Texas Commission on Human Rights and/or the Equal Employment Opportunity Commission, and any amendments to such statutes; (v) any and all state wage payment and unemployment laws; (vi) any claim arising out of or related to an express or implied employment contract, any other contract affecting terms and conditions of employment, or a covenant of good faith and fair dealing; (vii) any claim for personal injury or property damage; (viii) any claim for defamation, invasion of privacy, negligence, breach of fiduciary duty, fraud or misrepresentation; (ix) any claim arising under any anti-retaliation or whistleblower provisions of any state or federal law; (x) any claim based on any other federal and/or state laws and/or regulations related to and/or addressing employment and separation from employment; and (xi) any claim based on any other statutory prohibition or any other tort.

		
	5.3
	Employee represents that Employee has read and understands this Agreement  and the release of claims agreed to herein and that rights and claims under the Age Discrimination in Employment Act of 1967, as amended, and the Older Workers Benefits Protection Act, as amended, are among the rights and claims against the Company that Employee is releasing.

		
	5.4
	Employee is not releasing any rights or claims arising after the date that Employee executes this Agreement; provided, however, that Employee acknowledges and agrees that the release contained herein includes any claims related to his separation from employment with the Company.  

		
	5.5
	Notwithstanding anything to the contrary provided in this Article V, Employee is not releasing any right to: (i) any vested benefit under any employee benefit plan, as defined by the Employee Retirement Income Security Act of 1974, as amended, (ii) any rights to COBRA continuation coverage, or (iii) any rights provided in this Agreement.  Further, nothing in this Agreement shall affect the Equal Employment Opportunity Commission's ("EEOC") rights and responsibilities to enforce any law under its jurisdiction, nor shall anything in this Agreement be construed as a basis for interfering with Employee's right to file a timely charge with, or participate in an investigation or proceeding conducted by, the EEOC or any other fair employment practices agency; provided, however, if the EEOC or any other agency or person  commences an investigation or pursues any type of claim on Employee's behalf, Employee specifically waives and releases his right, if any, to recover any monetary or other benefits of any sort whatsoever arising from any such investigation or claim, nor will Employee seek or accept reinstatement to his former position with the Company.

		
	5.6
	Employee stipulates and agrees that: (i) Employee has no work‐related physical or mental injury incurred or sustained during Employee's employment with the Company, or any other "injury" as defined in the Texas Labor Code; (ii) Employee is not a "prevailing party" under 42 U.S.C. 2000e‐5(k), 42 U.S.C. 1988, the Texas Labor Code, or any other federal, state or local law; and (iii) Employee has not filed or authorized the filing of any complaints, charges, or lawsuits against the Company with any court or agency, nor has Employee assigned to any third party or member of Employee's family any right of Employee to pursue any complaint, charge, lawsuit or claim against the Company.

		
	5.7
	During the Employment Period, the Company promises to provide Employee, and Employee acknowledges and agrees that during his employment, he acquired Confidential Information and will continue to acquire Confidential Information during the Employment Period. Therefore, Employee agrees that in order to protect the Company's Confidential Information and the Company's legitimate business interests, it is necessary to enter into the restrictive covenants set forth in this Section 5.7 (collectively, the "Restrictive Covenants").  Employee may not circumvent the purpose of any restriction by participating in a Competing Business through remote means like telephone, facsimile, correspondence, or electronic communication.

		
	a.
	Employee agrees that (i) he will not at any time after the end of the Employment Period, directly or indirectly, divulge, disclose or communicate any Confidential Information to any person, firm, corporation or entity in any manner whatsoever, except for such disclosures by Employee that are required by law or any valid order or other process issued by any court or administrative agency or self-regulating organization; and (ii) he shall not fail to return to the Company all records, notes, files, drawings, documents, plans and like items, and all copies thereof, relating to or containing or disclosing Confidential Information that are in Employee’s possession or otherwise in his control, whether or not requested to do so by the Company.

		
	b.
	Employee agrees that for a period of one (1) year following the end of the Employment Period or for a period of one (1) year following termination with Cause, whichever is applicable, Employee will not, either directly or indirectly, hire, call on, solicit, divert, or take away, or attempt to call on, solicit, divert, or take away any of the employees, officers, subcontractors, suppliers or customers  of the Company, or the patronage of any employees, subcontractors, suppliers or customers of the Company, or encourage any employees, officers, subcontractors, suppliers or customers of the Company to terminate their relationship with the Company or otherwise interfere with or disturb the relationship existing between the Company and its employees or customers. Employee recognizes that such solicitation would constitute tortious interference with contract and tortious interference with a business relationship as well as a breach of this Agreement. 

		
	c.
	Employee agrees for a period of one (1) year following the end of the Employment Period or for a period of one (1) year following a termination with Cause, whichever is applicable, Employee will not participate in a Competing Business. For purposes of this Paragraph, "participate in" includes entering into, engaging in, participating in, or assisting a Competing Business, directly or indirectly, whether as an employee, agent, consultant, partner, owner, shareholder (other than through ownership of publicly-traded capital stock of a corporation which represents less than five percent (5%) of the outstanding capital stock of such corporation), lender, manager, officer, director, or in any other business capacity or relationship.  Employee agrees that competition in violation of these terms is intrinsically unfair to the Company because it would involve inevitable disclosure and misappropriation of Confidential Information.  In the event that Employee desires to pursue a business or employment opportunity which potentially violates this Section 5.7, he shall seek a written waiver from the Company by providing written notice to the Chief Executive Officer of the Company.  The Company may, in its sole discretion, refuse to waive its rights hereunder. 

		
	d.
	The Restrictive Covenants shall survive any expiration or termination of this Agreement and the termination of Employee's employment with the Company. If Employee violates any of the Restrictive Covenants, the restrictive period shall be suspended and will not run in favor of Employee from the time of the commencement of any such violation until the time when the Employee cures the violation to the Company's satisfaction. 

		
	e.
	Employee acknowledges that the Restrictive Covenants, in view of the nature of the Company's business, are reasonable and necessary to protect the Company's legitimate business interests and that any violation of the Restrictive Covenants would result in irreparable injury to the Company. In the event of a breach or a threatened breach by Employee of any Restrictive Covenant, the Company shall be entitled (without the necessity of posting bond in excess of $1,000 against such breach or threatened breach) to a temporary restraining order, temporary injunction, and permanent injunction restraining Employee from the commission of any breach, merely by proving (by a preponderance of the evidence) the existence of such breach, or threatened breach and without the necessity of proving either inadequate remedy at law or irreparable harm, and to recover the Company's attorneys' fees, costs and expenses related to the breach or threatened breach. Nothing contained in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available to it for any breach or threatened breach, including, without limitation, the recovery of money damages, specific performance, attorneys' fees, and costs. The Restrictive Covenants shall each be construed as independent of any 

other provisions in this Agreement, and the existence of any claim or cause of action by Employee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the Restrictive Covenants. 
		
	f.
	The Parties agree that if a court should decline to enforce any of the Restrictive Covenants, such affected provisions shall be deemed to be modified to restrict the competitive activity to the maximum extent in time, scope, and geography, which the court shall find enforceable. 

		
	g.
	The Parties agree and stipulate that: (i) the Restrictive Covenants are fair and reasonable in light of all of the facts and circumstances of the relationship between Employee and the Company and do not impose a greater restraint than is necessary to protect the legitimate business interests of the Company; (ii) the consideration and Confidential Information provided by the Company to Employee is not illusory; and (iii) the Company would not have entered into this Agreement but for the agreement of Employee to be bound by the Restrictive Covenants.

		
	h.
	If it is determined by a court of competent jurisdiction in a final, non-appealable order that Employee has willfully and materially engaged in an activity in violation of Section 2.4 and/or 5.7 during or within one year after the end of the Employment Period, then Employee shall repay to the Company, or its designee, within five (5) business days of receipt of written demand therefor, an amount in good funds equal to any cash payments received by Employee pursuant to Sections 3.2 and 3.3.  

		
	5.8
	Should Employee in any manner materially, whether directly or indirectly, fail to perform any covenant of Employee provided herein or otherwise materially breach this Agreement in any respect, the Company shall have no further or continuing obligation to perform any covenants of the Company for which this Agreement provides, including payment of any sums for which this Agreement provides.  If, however, Employee’s Employment Period is extended beyond 31 December 2015 by mutual agreement pursuant to Section 2.2, Employee shall be entitled to payment of his bonus provided in Section 3.2(i) regardless of whether his continued employment is terminated for Cause during 2016.  

VI. MISCELLANEOUS

		
	6.1
	Employee acknowledges that he has carefully read this Agreement and that he has had a reasonable opportunity to review its terms with legal counsel of his choice.  Employee further acknowledges that the Agreement is written in easily understood language and that he understands its terms, and that he freely and voluntarily executes and agrees to the terms and provisions of this Agreement.

		
	6.2
	This Agreement constitutes and contains the entire Agreement and understanding between the Parties and completely supersedes any and all prior agreements or understandings, verbal or written, pertaining to the employment relationship between the Parties, the termination thereof, or the rights, remedies, duties or obligations arising therefrom.  Any waiver, alteration, or modification of any of the provisions of this Agreement shall not be valid unless in writing and signed by the Company and Employee.

		
	6.3
	TO THE EXTENT PERMITTED BY LAW, THIS AGREEMENT SHALL IN ALL RESPECTS BE INTERPRETED, ENFORCED AND GOVERNED BY THE LAWS OF THE STATE OF 

TEXAS, EXCEPT AS PREEMPTED BY FEDERAL LAW, AND EXCLUSIVE VENUE FOR ANY LEGAL PROCEEDINGS BROUGHT TO ENFORCE ITS PROVISIONS SHALL BE IN HARRIS COUNTY, TEXAS WHERE ONE OR MORE OF THE PARTIES' OBLIGATIONS CREATED HEREUNDER ARE PERFORMABLE.

		
	6.4
	Should any provision of this Agreement be held invalid or unenforceable, such provision shall be ineffective to the extent of such invalidity or unenforceability, without invalidating the remainder of such provision or the remaining portions of this Agreement.

		
	6.5
	This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which, together, shall constitute one and the same instrument, but in making proof hereof, it shall never be necessary to exhibit more than one such counterpart.

		
	6.6
	The terms of this Agreement are and will remain confidential and Employee agrees not to discuss, publish or otherwise disclose or allow to be disclosed any of the terms hereof unless compelled or required to do so by a court or agency of competent jurisdiction.  Employee also agrees to notify the Company in writing and in advance, of any forced disclosure(s) as set out in this paragraph.

		
	6.7
	By signing this Agreement, Employee acknowledges that additional facts may be discovered later relating to Employee's employment or otherwise, but that it is the intention of Employee to fully, finally, and forever settle and release all of Employee's matters, rights, claims, and any controversies whatsoever, known or unknown, which now exist or formerly have existed against the Company.  Employee acknowledges that this Agreement shall be and will remain in effect as a full and complete general release of such matters, notwithstanding the discovery or existence of any additional or different facts unless such facts arise after the execution of this Agreement.

VII. AGE DISCRIMINATION

PLEASE READ CAREFULLY.  THIS SEPARATION AGREEMENT AND GENERAL RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

Pursuant to the Age Discrimination in Employment Act of 1967 (29 U.S.C. Sec. 626 et seq.) as amended, please be advised of the following:

		
	7.1
	Employee is advised to have the Agreement reviewed by an attorney by an independent attorney of Employee's choosing before executing the Agreement.

		
	7.2
	Employee is releasing all claims relating to Employee's termination under the Age Discrimination in Employment Act of 1967 and the Older Workers Benefits Protection Act except rights or claims that may arise after the date Employee executes this Agreement.  

		
	7.3
	Employee has a minimum of twenty-one (21) days from the date of receipt to review this Agreement and return it to the Company.

7.4    Employee may revoke this Agreement within seven (7) days of the execution thereof.

		
	7.5
	By executing this Agreement, Employee represents that Employee fully understands all provisions of the Agreement and understands the consequences of executing this Agreement and that Employee has entered into the Agreement knowingly and voluntarily.

EACH PARTY SIGNING THIS AGREEMENT ACKNOWLEDGES THAT THIS AGREEMENT COMPLETELY AND ADEQUATELY RESOLVES ALL DIFFERENCES BETWEEN THE PARTIES ARISING OUT OF EMPLOYEE'S EMPLOYMENT RELATIONSHIP WITH THE COMPANY AND EMPLOYEE'S RESIGNATION/TERMINATION THEREFROM AS WELL AS EMPLOYEE'S SERVICES TO THE COMPANY IN ANY OTHER CAPACITY.

ENSCO plc

	
							
	By:
	 /s/ John S. Knowlton
	 
	 /s/ Jay W. Swent III

	 
	John S. Knowlton
	 
	 
	Jay W. Swent III

	 
	Senior Vice President - Technical
	 
	Employee
	 

	 
	 
	 
	 
	 
	 
	 

	Date:
	13   November
	2015
	 
	Date:
	13   November
	2015

	 
	 
	 
	 
	 
	 
	 

STATE OF TEXAS
COUNTY OF HARRIS

BEFORE me on this _13th_ day of   November_, 2015, personally appeared Jay W. Swent III to me known to be the same person described in and who executed the foregoing instrument, who acknowledged that he executed the same of his own free will and for the purposes and consideration set forth therein.
	
							
	 
	 
	 
	 /s/ Julie Johnson
	 

	 
	 
	 
	NOTARY PUBLIC
	 

	 
	 
	Name: 
	Julie Johnson
	 

	 
	 
	 
	My commission expires:
	July 9, 2016
	 

EXHIBIT A

13 November 2015

Re:    Release

Dear Jay:

Pursuant to the Retirement Agreement between you and Ensco plc dated 13 November  2015 (the “Retirement Agreement”), this letter agreement sets forth a release of claims.  Per the Retirement Agreement, your employment with Ensco plc is terminated effective today.  If you execute this letter agreement below and do not revoke it, you will receive the consideration described in Sections 3.2 and 3.3 of the Retirement Agreement.  

		
	•
	In exchange for receiving the consideration in Sections 3.2 and 3.3 of the Retirement Agreement, you agree to irrevocably and unconditionally release the Company (as defined in the Retirement Agreement) from any and all claims, (a) any claim for any wages, salary, compensation, vacation pay, paid leave or other remuneration of any kind; (b) any claim for additional or different compensation or benefits of any sort; (c) any claim of retaliation or discrimination on the basis of race, sex, religion, marital status, sexual preference, age, national origin, handicap or disability, veteran status, or special disabled veteran status; (d) any claim arising under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, the Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act of 1938, the Sarbanes-Oxley Act, the Dodd-Frank Act, the Texas Commission on Human Rights and/or the Equal Employment Opportunity Commission, and any amendments to such statutes; (e) any and all state wage payment and unemployment laws; (f) any claim arising out of or related to an express or implied employment contract, any other contract affecting terms and conditions of employment, or a covenant of good faith and fair dealing; (g) any claim for personal injury or property damage; (h) any claim for defamation, invasion of privacy, negligence, breach of fiduciary duty, fraud or misrepresentation; (i) any claim arising under any anti-retaliation or whistleblower provisions of any state or federal law; (j) any claim based on any other federal and/or state laws and/or regulations related to and/or addressing employment and separation from employment; and (k) any claim based on any other statutory prohibition or any other tort.  Notwithstanding any other provision of this Agreement, the Deed of Indemnity signed by you on 22 December 2009 shall continue in effect in all respects during your continued employment and for such period of time following the termination of employment as are established in section 15 of such Deed of Indemnity. Further, you will be entitled to the benefit of any insurance policies the Company maintains for the benefit of its officers and directors against all liabilities, claims, costs, charges and expenses incurred in connection with any action, suit or proceeding to which you may be made, or threatened to be made, a party, witness or other participant by reason of being an officer or employee of the Company.

		
	•
	You further agree that this Agreement specifically incorporates all Sections of the Retirement Agreement and that you continue to be obligated to follow those terms.  

		
	•
	You may revoke this Agreement by notice to the Company, in writing, within seven (7) days of the date of its execution by you (the “Revocation Period”). You agree that you will not receive the consideration provided by in Sections 3.2 and 3.3 of the Retirement Agreement if you revoke this Agreement.  You also acknowledge and agree that if the Company has not received from you notice of your revocation of this Agreement prior to the expiration of the Revocation Period, you will have forever waived your right to revoke this Agreement and this Agreement shall thereafter be enforceable and have full force and effect.

By executing this letter agreement, you acknowledge that (a) you have had at least twenty-one (21) days to consider the terms of this Agreement and have considered its terms for that period of time or have knowingly and voluntarily waived your right to do so; (b) you have been advised by the Company to consult with an attorney regarding the terms of this Agreement; (c) you have consulted with, or have had sufficient opportunity to consult with, an attorney of your own choosing regarding the terms of this Agreement; (d) you have read this Agreement and fully understand its terms and their import; (e) except as provided by this Agreement, you have no contractual right or claim to the benefits described herein; (f) the consideration provided for herein is good and valuable; and (g) you are entering into this Agreement voluntarily, of your own free will, and without any coercion, undue influence, threat, or intimidation of any kind or type whatsoever.
We at the Company wish you the best in your future endeavors.                    

	
							
	 
	 
	 
	Sincerely,
	 
	 

	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	Ensco plc
	 
	 

	 
	 
	 
	By:
	 /s/ John S. Knowlton
	 

	 
	 
	Name:
	John S. Knowlton
	 

	 
	 
	 
	Title:
	Senior Vice President - Technical

AGREED:

	
							
	13 November 2015
	 
	 /s/ Jay W. Swent III

	Date
	 
	 
	 
	Jay W. Swent III

NOTICE
(Notice of Waiver of Rights)

PLEASE READ THIS NOTICE AND THE ACCOMPANYING RETIREMENT AGREEMENT CAREFULLY.  BE ADVISED THAT THE RETIREMENT AGREEMENT INCLUDES A RELEASE OF ALL CLAIMS YOU MAY HAVE AGAINST ENSCO PLC ("Ensco" or the "Company").

Pursuant to the Age Discrimination in Employment Act of 1967 and the Older Workers Benefits Protection Act, Ensco hereby advises you of the following:

		
	1.
	You are advised to have the attached Agreement reviewed by an independent attorney of your choosing before executing the Agreement.

		
	2.
	If you sign the attached Agreement, you will be releasing all claims relating to, and arising from, your association with Ensco, including claims, if any, under the Age Discrimination in Employment Act of 1967 and the Older Workers Benefits Protection Act, each as they may have been amended as of the date of the Agreement, except that you will not waive rights or claims that may arise after the date you execute the Agreement.  

		
	3.
	You have twenty-one (21) days from the date of receipt to review the attached Agreement, execute the same, and return it to the Company.  

		
	4.
	If you sign the attached Agreement, you may revoke your agreement to the terms of the Agreement within seven (7) days following its execution by you.  The Agreement will not become effective until after the seven (7) days have expired. 

		
	5.
	If you do not return the Agreement, executed where indicated, within twenty-one (21) days or if you revoke the Agreement during the seven (7)-day revocation period, there will be no "agreement," and you will receive nothing from the Company.

		
	6.
	By executing the attached Agreement, you represent that you fully understand all provisions of this Notice and the attached Agreement and that you understand the consequences of executing the same and that you have entered into the Agreement knowingly and voluntarily.Exhibit 10.1

 

THE ESTÉE LAUDER COMPANIES INC.

AMENDED AND RESTATED FISCAL 2002

SHARE INCENTIVE PLAN

(as of November 12, 2015)

 

1.                                      Purpose.  The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (the “Plan”) is intended to provide incentives which will attract, retain, motivate and reward highly competent people as officers, directors and key employees of The Estée Lauder Companies Inc. (the “Company”) and its subsidiaries and affiliates, by providing them opportunities to acquire shares of the Class A Common Stock, par value $.01 per share, of the Company (“Class A Common Stock”) or to receive monetary payments based on the value of such shares pursuant to the Benefits (as defined below) described herein. Additionally, the Plan is intended to assist in further aligning the interests of the Company’s officers, directors and key employees to those of its other stockholders.

 

2.                                      Administration.

 

(a)                                 The Plan will be administered by a committee (the “Committee”) appointed by the Board of Directors of the Company (the “Board”) from among its members (which may be the Compensation Committee or the Stock Plan Subcommittee) and shall be comprised, unless otherwise determined by the Board, solely of not less than two members who shall be (i) “Non-Employee Directors” within the meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (ii) “outside directors” within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The Committee is authorized, subject to the provisions of the Plan, to establish such rules and regulations as it deems necessary for the proper administration of the Plan and to make such determinations and interpretations and to take such action in connection with the Plan and any Benefits (as defined below) granted hereunder as it deems necessary or advisable, including the right to establish the terms and conditions of Benefits, to accelerate the vesting or exercisability of Benefits and to cancel Benefits. The Committee may determine the extent to which any Benefit under the Plan is required to comply, or not comply, with Section 409A of the Code. All determinations and interpretations made by the Committee shall be binding and conclusive on all participants and their legal representatives. No member of the Committee and no employee of the Company shall be liable for any act or failure to act hereunder, except in circumstances involving his or her bad faith, gross negligence or willful misconduct, or for any act or failure to act hereunder by any other member or employee or by any agent to whom duties in connection with the administration of the Plan have been delegated. The Company shall indemnify members of the Committee and any agent of the Committee who is an employee of the Company, a subsidiary or an affiliate against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of the Plan, except in circumstances involving such person’s bad faith, gross negligence or willful misconduct.

 

(b)                                 The Committee may delegate to one or more of its members, or to one or more agents, such administrative duties as it may deem advisable, and the Committee, or any person to whom it has delegated duties as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company, or the subsidiary or affiliate whose employees have benefited from the Plan, as determined by the Committee.

 

(c)                                  Notwithstanding any provision of the Plan to the contrary, the Board may from time to time reserve to a committee (the “Employee Equity Award Committee”), comprised of one or more members of the Board whether or not such member(s) serve on the Committee, any or all of the authority and responsibility of the Committee under the Plan (other than with respect to Sections 13 and 21 of the Plan) with respect to Benefits granted to employees of the Company other than (i) executive officers of the Company, (ii) members of the Board, (iii) any individual who is a “covered employee” within the meaning of Section 162(m)(3) of the Code, or (iv) any individual who is subject to the reporting and liability provisions of Section 16 of the Exchange Act. To the extent and during such time as the Board has so reserved any authority and responsibility to the Employee Equity Award Committee, the Employee Equity Award Committee shall have all of the powers of the Committee hereunder, and any reference herein to the Committee (other than in this Section 2(c) and in Sections 13 and 21 and of the Plan) shall include the Employee Equity Award Committee. To the extent that any action of the

 

 

Employee Equity Award Committee under the Plan made within such authority conflicts with actions taken by the Committee, the actions of the Committee shall control.

 

3.                                      Participants.  Participants will consist of such officers, directors and key employees of the Company and its subsidiaries and affiliates as the Committee in its sole discretion determines to be significantly responsible for the success and future growth and profitability of the Company and whom the Committee may designate from time to time to receive Benefits under the Plan. Designation of a participant in any year shall not require the Committee to designate such person to receive a Benefit in any other year or, once designated, to receive the same type or amount of Benefit as granted to the participant in any other year. The Committee shall consider such factors as it deems pertinent in selecting participants and in determining the type and amount of their respective Benefits.

 

4.                                      Type of Benefits.  Benefits under the Plan may be granted in any one or a combination of the following (collectively, “Benefits”): (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock Awards, (d) Performance Awards and (e) Stock Units (each as described below). Stock Awards, Performance Awards, and Stock Units may, as determined by the Committee in its discretion, constitute Performance-Based Awards, as described in Section 11 hereof. Benefits shall be evidenced by agreements (which need not be identical) in such forms as the Committee may from time to time approve (each a “Benefit Agreement”); provided, however, that in the event of any conflict between the provisions of the Plan and any Benefit Agreement and subject to Section 12, the provisions of the Plan shall prevail.

 

5.                                      Common Stock Available Under the Plan; Minimum Vesting.

 

(a)                                 Subject to the provisions of this Section 5 and any adjustments made in accordance with Section 13 hereof, the maximum number of shares of Class A Common Stock that is available for issuance to participants (including permitted assignees) and their beneficiaries under this Plan shall be 74,000,000 (the “Maximum Aggregate Share Amount”), which may be authorized and unissued or treasury shares. Any shares of Class A Common Stock covered by a Benefit (or portion of a Benefit) granted under the Plan, which is forfeited or canceled, expires or, in the case of a Benefit other than a Stock Option, is settled in cash, shall again be available for issuance under the Plan. The preceding sentence shall apply only for purposes of determining the aggregate number of shares of Class A Common Stock available for Benefits but shall not apply for purposes of determining (x) the maximum number of shares of Class A Common Stock with respect to which Benefits (including the maximum number of shares of Class A Common Stock subject to Stock Options and Stock Appreciation Rights) may be granted to an individual participant under the Plan or (y) the maximum number of shares of Class A common Stock that may be delivered through Stock Options under the Plan.

 

(b)                                 Shares of Class A Common Stock withheld or tendered (either actually or by attestation) to satisfy tax withholding obligations for Benefits granted under the Plan or any shares of Class A Common Stock withheld or tendered to pay the exercise price of Stock Options under the Plan shall be counted against the shares of Class A Common Stock available for issuance under the Plan and shall not be available again for grant. Shares of Class A Common Stock delivered under the Plan in settlement, assumption or substitution of outstanding awards (or obligations to grant future awards) under the plans or arrangements of another entity (“Assumed Awards”) shall not reduce the maximum number of shares of Class A Common Stock available for issuance under the Plan, to the extent that such settlement, assumption or substitution is as a result of the Company or its subsidiaries or affiliates acquiring another entity (or an interest in another entity). This Section 5(b) shall apply only for purposes of determining the aggregate number of shares of Class A Common Stock available for Benefits but shall not apply for purposes of determining (x) the maximum number of shares of Class A Common Stock with respect to which Benefits (including the maximum number of shares of Class A Common Stock subject to Stock Options and Stock Appreciation Rights) may be granted to an individual participant under the Plan or (y) the maximum number of shares of Class A Common Stock that may be delivered through Stock Options under the Plan.

 

(c)                                  Subject to any adjustments made in accordance with Section 13 hereof, the following additional aggregate and individual maximums are imposed under the Plan. The aggregate number of shares of Class A Common Stock that may be delivered through Stock Options shall be the Maximum Aggregate Share Amount. Subject to any adjustments made in accordance with Section 13 hereof, the number of shares of Class A Common Stock with respect to which Benefits may be granted to an individual participant under the Plan in any fiscal year of the Company shall not exceed 4,000,000; provided, however, that the number of such shares granted to any non-employee director of the Company in any fiscal year of the Company shall not exceed 24,000.

 

(d)                                 For all Stock Awards, Performance Awards or Stock Units (collectively, “Share Awards”) granted after August 18, 2010, except in the event of a participant’s death, disability, or retirement, or in the event of a Change in Control (as define below) (i) Share Awards granted as to which vesting is based solely on continuation of service will vest over a

 

 

minimum period of three (3) years from the date of grant, (ii) Share Awards granted that do not exceed 600 shares of Class A Common Stock (subject to any adjustments made in accordance with Section 13 hereof) per participant as to which vesting is based solely on continuation of service will vest over a minimum period of one (1) year, and (iii) Share Awards as to which vesting is based solely or in part on the achievement of one or more performance conditions will vest based on a performance period of no shorter than one (1) year (and if vesting is within one year of the grant date, the grant date must be within the first three months of the performance period). Notwithstanding the foregoing, such minimum vesting requirements shall not apply to (x) Assumed Awards and (y) Share Awards granted after September 8, 2015 involving an aggregate number of shares of Class A Common Stock not in excess of 5% of the Remaining Available Shares (as defined below). “Remaining Available Shares” means 16,397,036, which equals (i) the shares of Class A Common Stock remaining available for issuance under the Plan as of September 8, 2015 plus (ii) 10,000,000 shares of Class A Common Stock. Vesting over a minimum period of three (3) years or one (1) year shall not require cliff vesting and may include periodic vesting over such applicable period.

 

6.                                      Stock Options.  Stock Options will consist of awards from the Company that will enable the holder to purchase a number of shares of Class A Common Stock at set terms. Stock Options may be “incentive stock options” within the meaning of Section 422 of the Code (“Incentive Stock Options”), or Stock Options which do not constitute Incentive Stock Options (“Nonqualified Stock Options”). The Committee will have the authority to grant to any participant one or more Incentive Stock Options, Nonqualified Stock Options, or both types of Stock Options (in each case with or without Stock Appreciation Rights). Each Stock Option shall be subject to such terms and conditions consistent with the Plan as the Committee may impose from time to time, subject to the following limitations:

 

(a)                                 Exercise Price.  Each Stock Option granted hereunder shall have such per-share exercise price as the Committee may determine at the date of grant; provided, however, except in the case of Assumed Awards to the extent permitted by Section 409A of the Code and subject to subsection (d) below, that the per-share exercise price shall not be less than 100% of the Fair Market Value (as defined below) of the Class A Common Stock on the date the Stock Option is granted.

 

(b)                                 Payment of Exercise Price.  The exercise price may be paid in cash or, in the discretion of the Committee, by the delivery of shares of Class A Common Stock of the Company then owned by the participant, by the withholding of shares of Class A Common Stock for which a Stock Option is exercisable or by a combination of these methods. In the discretion of the Committee, payment also may be made by delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise price. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms. The Committee may prescribe any other method of paying the exercise price that it determines to be consistent with applicable law and the purposes of the Plan, including, without limitation, in lieu of the exercise of a Stock Option by delivery of shares of Class A Common Stock of the Company then owned by a participant, providing the Company with a notarized statement attesting to the number of shares owned, in which case upon verification by the Company, the Company would issue to the participant only the number of incremental shares to which the participant is entitled upon exercise of the Stock Option. In determining which methods a participant may utilize to pay the exercise price, the Committee may consider such factors as it determines are appropriate.

 

(c)                                  Exercise Period.  Stock Options granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee; provided, however, that no Stock Option shall be exercisable later than ten years after the date it is granted except, for Stock Options granted before April 10, 2007, in the event of a participant’s death, the exercise period of such participant’s Stock Options may be extended beyond such period but no longer than one year after the participant’s death. All Stock Options shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in the Benefit Agreement relating to the option grant.

 

(d)                                 Limitations on Incentive Stock Options.  Incentive Stock Options may be granted only to participants who are employees of the Company or one of its subsidiaries (within the meaning of Section 424(f) of the Code) at the date of grant. The aggregate Fair Market Value (determined as of the time the Stock Option is granted) of the Class A Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under all option plans of the Company and of any parent corporation or subsidiary corporation (as defined in Sections 424(e) and (f) of the Code, respectively)) shall not exceed $100,000 and any Stock Options exercisable in excess of the $100,000 limit shall be treated as nonqualified Stock Options. For purposes of the preceding sentence, Incentive Stock Options will be taken into account in the order in which they are granted. The per-share exercise price of an Incentive Stock Option shall not be less than 100% of the Fair Market Value of the Class A Common Stock on the date of grant, and no Incentive Stock Option may be exercised later than ten years after the date it is granted; provided, however, that Incentive

 

 

Stock Options may not be granted to any participant who, at the time of grant, owns stock possessing (after the application of the attribution rules of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company, unless the exercise price is fixed at not less than 110% of the Fair Market Value of the Class A Common Stock on the date of grant and the exercise of such option is prohibited by its terms after the expiration of five years from the date of grant of such option.

 

(e)                                  Post-Employment Exercises.  The exercise of any Stock Option after termination of employment shall be subject to satisfaction of the conditions precedent that the participant neither (i) competes with, or takes employment with or renders services to a competitor of, the Company, its subsidiaries or affiliates without the written consent of the Company, nor (ii) conducts himself or herself in a manner adversely affecting the Company.

 

7.                                      Stock Appreciation Rights.

 

(a)                                 The Committee may, in its discretion, grant Stock Appreciation Rights to the holders of any Stock Options granted hereunder. In addition, Stock Appreciation Rights may be granted independently of, and without relation to, Stock Options. A Stock Appreciation Right is a right to receive a payment in cash, Class A Common Stock or a combination thereof, in an amount equal to the excess of (x) the Fair Market Value, or other specified valuation (which shall be no less than the Fair Market Value), of a specified number of shares of Class A Common Stock on the date the right is exercised over (y) the Fair Market Value, or other specified valuation (which, except in the case of Assumed Awards to the extent permitted by Section 409A of the Code, shall be no less than the Fair Market Value) of such shares of Class A Common Stock on the date the right is granted, all as determined by the Committee; provided, however, that if a Stock Appreciation Right is granted in tandem with or in substitution for a Stock Option, the Fair Market Value designated in the Benefit Agreement may be the Fair Market Value on the date such Stock Option was granted. Each Stock Appreciation Right shall be subject to such terms and conditions as the Committee shall impose from time to time.

 

(b)                                 Stock Appreciation Rights granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee; provided, however, that no Stock Appreciation Right shall be exercisable later than ten years after the date it is granted except, for Stock Appreciation Rights granted before April 10, 2007, in the event of a participant’s death, the exercise period of such participant’s Stock Appreciation Rights may be extended beyond such period but no longer than one year after the participant’s death. All Stock Appreciation Rights shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in such right.

 

(c)                                  The exercise of any Stock Appreciation Right after termination of employment shall be subject to satisfaction of the conditions precedent that the participant neither (i) competes with, or takes other employment with or renders services to a competitor of, the Company, its subsidiaries or affiliates without the written consent of the Company, nor (ii) conducts himself or herself in a manner adversely affecting the Company.

 

8.                                      Stock Awards.  The Committee may, in its discretion, grant Stock Awards (which may include mandatory payment of bonus incentive compensation in stock) consisting of Class A Common Stock issued or transferred to participants with or without payments therefor. Stock Awards may be subject to such terms and conditions as the Committee determines to be appropriate, including, without limitation, restrictions on the sale or other disposition of such shares and the right of the Company to reacquire such shares for no consideration upon termination of the participant’s employment within specified periods, and may constitute Performance-Based Awards, as described in Section 11 hereof. The Committee may require the participant to deliver a duly signed stock power, endorsed in blank, relating to the Class A Common Stock covered by a Stock Award. The Committee also may require that the stock certificates evidencing such shares be held in custody or bear restrictive legends until the restrictions thereon shall have lapsed. The Stock Award shall specify whether the participant shall have, with respect to the shares of Class A Common Stock subject to a Stock Award, all of the rights of a holder of shares of Class A Common Stock of the Company, including the right to receive dividends and to vote the shares.

 

9.                                      Performance Awards.

 

(a)                                 Performance Awards may be granted to participants at any time and from time to time, as shall be determined by the Committee. Performance Awards may constitute Performance-Based Awards, as described in Section 11 hereof. The Committee shall have complete discretion in determining the number, amount and timing of awards granted to each participant; provided, that for Performance Awards subject to Section 409A of the Code, these determinations must be made on or before the date of grant of the Performance Award. Performance Awards may be in the form of shares of Class A Common Stock or Stock Units. Performance Awards may be awarded as short-term or long-term incentives. Performance targets may be based upon Company-wide, divisional and/or individual performance, or other factors as determined by the Committee.

 

 

(b)                                 With respect to those Performance Awards that are not intended to constitute Performance-Based Awards, the Committee shall have the authority at any time to make adjustments to performance targets for any outstanding Performance Awards which the Committee deems necessary or desirable unless at the time of establishment of such targets the Committee shall have precluded its authority to make such adjustments, provided that, for Performance Awards that are subject to Section 409A of the Code, the adjustments are compliant with Section 409A of the Code and the regulations thereunder.

 

(c)                                  Payment of earned Performance Awards shall be made in accordance with terms and conditions prescribed or authorized by the Committee. The participant may elect to defer, or the Committee may require or permit the deferral of, the receipt of Performance Awards upon such terms as the Committee deems appropriate, provided that, for Performance Awards that vest on or after January 1, 2005, any election and deferral is compliant with the requirements of Section 409A of the Code and the regulations thereunder.

 

10.                               Stock Units.

 

(a)                                 The Committee may, in its discretion, grant Stock Units to participants hereunder. A “Stock Unit” means a notional account representing one share of Class A Common Stock. Stock Units shall be evidenced by a Benefit Agreement, which shall conform to the requirements of the Plan and may contain such other provisions as the Committee shall deem advisable. Stock Units may constitute Performance-Based Awards, as described in Section 11 hereof. Each Benefit Agreement evidencing a Stock Unit grant shall specify the vesting requirements, the duration of any applicable deferral period, the performance or other conditions (including the termination of a participant’s service due to death, disability or other reason) under which the Stock Unit may be forfeited and such other provisions as the Committee shall determine. A Stock Unit granted by the Committee shall provide for payment in either shares of Class A Common Stock or cash, as determined by the Committee. Shares of Class A Common Stock issued pursuant to this Section 10 may be issued with or without payments or other consideration therefor, as may be required by applicable law or as may be determined by the Committee. On or before the grant date, the Committee shall determine whether a participant granted a Stock Unit shall be entitled to a Dividend Equivalent Right. A “Dividend Equivalent Right” means the right to receive the amount of any dividend paid on the share of Class A Common Stock underlying a Stock Unit, which shall be payable in cash or in the form of additional Stock Units.

 

(b)                                 For Stock Units that vest on or after January 1, 2005, any deferral feature must comply with the requirements of Section 409A of the Code and the regulations thereunder.

 

11.                               Performance-Based Awards.  Certain Benefits granted under the Plan may be granted in a manner such that the Benefits qualify for the performance-based compensation exception to Section 162(m) of the Code (“Performance-Based Awards”). As determined by the Committee in its sole discretion, either the granting or vesting of such Performance-Based Awards shall be based on achievement of goals in one or more business criteria that apply to the individual participant, one or more business units or the Company as a whole. The business criteria shall be as follows, individually or in combination: (i) net earnings; (ii) earnings per share; (iii) net sales; (iv) market share; (v) net operating profit and/or margin; (vi) expense targets; (vii) working capital targets relating to inventory and/or accounts receivable; (viii) operating income and/or margin; (ix) return on equity; (x) return on assets; (xi) planning accuracy (as measured by comparing planned results to actual results); (xii) market price per share; (xiii) gross income and/or margin; (xiv) return on invested capital; (xv) total return to stockholders and (xvi) cash flows. In addition, Performance-Based Awards may include comparisons to the performance of other companies, such performance to be measured by one or more of the foregoing business criteria. Furthermore, the measurement of performance against goals may exclude or adjust for the impact of certain events or occurrences that were not budgeted or planned for in setting the goals, including, among other things, acquisitions, restructurings, discontinued operations, changes in foreign currency exchange rates, extraordinary items and other unusual or non-recurring items, and the cumulative effects of accounting changes. With respect to Performance-Based Awards, (i) the Committee shall establish in writing (x) the performance goals applicable to a given period specifying in terms of an objective formula or standard the method for computing the amount of compensation payable to the participant if such performance goals are achieved and (y) the individual employees or class of employees to which such performance goals apply no later than 90 days after the commencement of such period (but in no event after one-quarter of such period has elapsed) and (ii) no Performance-Based Awards shall be payable to or vest with respect to any participant for a given period until the Committee certifies in writing that the objective performance goals (and any other material terms) applicable to such period have been satisfied. With respect to any Benefits intended to qualify as Performance-Based Awards, after establishment of a performance goal, the Committee shall not revise such performance goal or increase the amount of compensation payable thereunder (as determined in accordance with Section 162(m) of the Code) upon the attainment of such performance goal. Notwithstanding the preceding sentence, and unless restricted by the applicable Benefit Agreement,

 

 

the Committee may reduce or eliminate the number of shares of Class A Common Stock or cash granted or the number of shares of Class A Common Stock vested upon the attainment of such performance goal.

 

12.                               Foreign Laws.  The Committee may grant Benefits to individual participants who are subject to the tax laws of nations other than the United States, which Benefits may have terms and conditions which the Committee determines to be necessary to comply with applicable foreign laws. The Committee may take any action which it deems advisable to obtain approval of such Benefits by the appropriate foreign governmental entity; provided, however, that no Benefits may be granted pursuant to this Section 12 and no action may be taken which would result in a violation of the Exchange Act, the Code or any other applicable law.

 

13.                               Adjustment Provisions; Change in Control.

 

(a)                                 If there is any change in the Class A Common Stock of the Company, through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, the Committee will adjust, in a fair and equitable manner, the Plan and each outstanding Benefit under the Plan to prevent dilution or enlargement of participants’ rights under the Plan. The Committee will make this adjustment each time one of the changes identified above occurs by (i) adjusting the number of shares of Class A Common Stock and/or kind of shares of common stock of the Company or other securities that may be issued under the Plan or that are subject to other share limitations under the Plan, the number of shares of Class A Common Stock and/or kind of shares of common stock of the Company or other securities that are subject to outstanding Benefits, and/or where applicable, the exercise price or purchase price applicable to outstanding Benefits, (ii) granting a right to receive one or more payments of securities, cash and/or property (which right may be evidenced as an additional Benefit under this Plan) in respect of any outstanding Benefit, or (iii) providing for the settlement of any outstanding Benefit (other than a Stock Option or Stock Appreciation Right) in such securities, cash and/or property as would have been received had the Benefit been settled in full immediately prior to the change. However, any adjustment or change or other action under this Section 13 shall comply with or otherwise ensure exemption from Section 409A of the Code, as applicable. Appropriate adjustments also may be made by the Committee to the terms of any Benefits under the Plan to reflect such changes or distributions (and any extraordinary dividend or distribution of cash or other assets) and to modify any other terms of outstanding Benefits on an equitable basis, including modifications of performance targets and changes in the length of performance periods (except that Benefits intended to constitute Performance-Based Awards shall only be adjusted to the extent permitted under Section 11 hereof, and all Benefits will only be adjusted to ensure compliance with, or exemption from, Section 409A of the Code). In addition, other than with respect to Stock Options, Stock Appreciation Rights, and other awards intended to constitute Performance-Based Awards, the Committee is authorized to make adjustments to the terms and conditions of, and the criteria included in, Benefits in recognition of unusual or nonrecurring events affecting the Company or the financial statements of the Company, or in response to changes in applicable laws, regulations, or accounting principles.

 

(b)                                 Notwithstanding any other provision of this Plan, in the event of a Change in Control (as defined below), the Committee, in its discretion, may take such actions as it deems appropriate with respect to outstanding Benefits, including, without limitation, accelerating the exercisability or vesting of such Benefits on a Change in Control or, if such Benefits are assumed by an acquirer, on a termination of employment following a Change in Control, or such other actions provided in an agreement approved by the Board in connection with a Change in Control and such Benefits shall be subject to the terms of such agreement as the Committee, in its discretion, shall determine, provided that all such actions ensure Benefits are compliant with, or otherwise exempt from, Section 409A of the Code. The Committee, in its discretion, may determine that, upon the occurrence of a Change in Control, each Stock Option and Stock Appreciation Right outstanding hereunder shall terminate within a specified number of days after notice to the holder, and such holder shall receive, with respect to each share of Common Stock subject to such Stock Option or Stock Appreciation Right, an amount equal to the excess, if any, of the Fair Market Value of such shares of Common Stock immediately prior to the occurrence of such Change in Control over the exercise price or purchase price per share of such Stock Option or Stock Appreciation Right; such amount to be payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine. For purposes of this Plan, a “Change in Control” of the Company shall be deemed to have occurred upon any of the following events:

 

(i)  On or after the date there are no shares of Class B Common Stock, par value $.01 per share, of the Company outstanding, any person as such term is used in Section 13(d) of the Exchange Act or person(s) acting together which would constitute a “group” for purposes of Section 13(d) of the Exchange Act (other than the Company, any subsidiary, any employee benefit plan sponsored by the Company or any member of the Lauder family or any family-controlled entities) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person(s)) and “beneficially owns” (as defined in Rule 13d-3 under the

 

 

Exchange Act), directly or indirectly, at least 30% of the total voting power of all classes of capital stock of the Company entitled to vote generally in the election of the Board; or

 

(ii)  During any period of twelve consecutive months, either (A) the individuals who at the beginning of such period constitute the Company’s Board of Directors or any individuals who would be “Continuing Directors” (as defined below) cease for any reason to constitute at least a majority thereof or (B) at any meeting of the stockholders of the Company called for the purpose of electing directors, a majority of the persons nominated by the Board for election as directors fail to be elected; or

 

(iii)  Consummation of a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company; or

 

(iv)  Consummation of a merger or consolidation of the Company (A) in which the Company is not the continuing or surviving corporation (other than a consolidation or merger with a wholly-owned subsidiary of the Company in which all shares of the Company’s common stock outstanding immediately before the effectiveness of that consolidation or merger are changed into or exchanged for common stock of the subsidiary) or (B) in which all shares of the Company’s common stock are converted into cash, securities or other property, except in either case, a consolidation or merger of the Company in which the holders of the shares of Common Stock immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the shares of Common Stock of the continuing or surviving corporation immediately after such consolidation or merger or in which the Board immediately prior to the merger or consolidation would, immediately after the merger or consolidation, constitute a majority of the board of directors of the continuing or surviving corporation.

 

Notwithstanding the foregoing, none of the following shall constitute a Change in Control: (A) changes in the relative beneficial ownership among members of the Lauder family and family-controlled entities, without other changes that would constitute a Change in Control; or (B) any spin-off of a division or subsidiary of the Company to its stockholders.

 

For purposes of this Section 13(b), “Continuing Directors” shall mean (x) the directors of the Company in office on the Effective Date (as defined below) and (y) any successor to any such director and any additional director who after the Effective Date whose appointment or election is endorsed by a majority of the Continuing Directors at the time of his or her nomination or election.

 

14.                               Nontransferability.  Each Benefit granted under the Plan to a participant shall not be transferable otherwise than by will or the laws of descent and distribution, and shall be exercisable, during the participant’s lifetime, only by the participant. In the event of the death of a participant, each Stock Option or Stock Appreciation Right theretofore granted to him or her shall be exercisable during such period after his or her death as the Committee shall in its discretion set forth in such option or right at the date of grant and then only by the executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant’s rights under the Stock Option or Stock Appreciation Right shall pass by will or the laws of descent and distribution. Notwithstanding the foregoing, at the discretion of the Committee, an award of a Benefit other than an Incentive Stock Option may permit the transferability of a Benefit by a participant solely to the participant’s spouse, siblings, parents, children and grandchildren or trusts for the benefit of such persons or partnerships, corporations, limited liability companies or other entities owned solely by such persons, including trusts for such persons, subject to any restriction included in the award of the Benefit.

 

15.                               Other Provisions.  The award of any Benefit under the Plan also may be subject to such other provisions (whether or not applicable to a Benefit awarded to any other participant) as the Committee determines appropriate, including without limitation for the forfeiture of, or restrictions on resale or other disposition of, Class A Common Stock acquired under any form of Benefit, for the acceleration of exercisability or vesting of Benefits in the event of a change of control (whether or not a Change in Control) of the Company, for the payment of the value of Benefits that are exempt from Section 409A of the Code to participants in the event of a change of control (whether or not a Change in Control) of the Company, or to comply with federal and state securities laws, or understandings or conditions as to the participant’s employment in addition to those specifically provided for under the Plan. The award of any Benefit under the Plan shall be subject to the receipt of the Company of consideration required under applicable state law.

 

16.                               Fair Market Value.  For purposes of this Plan and any Benefits awarded hereunder, Fair Market Value shall be the closing price of the Class A Common Stock on the date of calculation (or on the last preceding trading date if Class A Common Stock was not traded on such date) if the Class A Common Stock is readily tradeable on a national securities exchange or other market system. If the Class A Common Stock is not readily tradeable, Fair Market Value shall

 

 

mean the amount determined in good faith by the Committee as the fair market value of the Class A Common Stock; provided that, for Stock Options and Stock Appreciation Rights that vested on and after January 1, 2005, Fair Market Value will be determined in accordance with the requirements of Section 409A of the Code and the regulations thereunder.

 

17.                               Withholding.  All payments or distributions of Benefits made pursuant to the Plan shall be net of any amounts required to be withheld pursuant to applicable federal, state and local tax-withholding requirements at the minimum statutory withholding rates. Notwithstanding the foregoing, if the Company proposes or is required to distribute Class A Common Stock pursuant to the Plan, it may require the recipient to remit to it or to the corporation that employs such recipient an amount sufficient to satisfy such tax-withholding requirements prior to the delivery of any certificates for such Class A Common Stock. In lieu thereof, the Company or the employing corporation shall have the right, to the extent compliant with Section 409A of the Code, to withhold the amount of such taxes from any other sums due or to become due from such corporation to the recipient as the Committee shall prescribe. The Committee may, in its discretion and subject to such rules as it may adopt (including any as may be required to satisfy applicable tax and/or non-tax regulatory requirements), permit an optionee or award or right holder to pay all or a portion of the federal, state and local withholding taxes arising in connection with any Benefit consisting of shares of Class A Common Stock by electing to have the Company withhold shares of Class A Common Stock having a fair market value, determined based on the average of the high and low trading prices of Class A Common Stock on the date of vesting (or if the date of vesting does not fall on a trading day, such average price on the next trading day after the date of vesting), equal to the amount of tax to be withheld at the minimum statutory withholding rates.

 

18.                               Tenure.  A participant’s right, if any, to continued employment with the Company or any of its subsidiaries or affiliates as an officer, employee, or otherwise, shall not be enlarged or otherwise affected by his or her designation as a participant under the Plan. For purposes of this Plan, in respect of participants who are non-employee directors, the term “employment” shall mean service.

 

19.                               Unfunded Plan.  Participants shall have no right, title, or interest whatsoever in or to any investments that the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan.

 

20.                               No Fractional Shares.  No fractional shares of Class A Common Stock shall be issued or delivered pursuant to the Plan or any Benefit. On or before the date of grant of any Benefit under the Plan that is subject to Section 409A of the Code, the Committee shall determine whether cash, or Benefits, or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated with respect to that Benefit.

 

21.                               Duration, Amendment and Termination.  No Benefit shall be granted more than ten years after the Effective Date. The Committee may amend the Plan from time to time or suspend or terminate the Plan at any time. No amendment of the Plan may be made without approval of the stockholders of the Company if the amendment will: (a) disqualify any Incentive Stock Options granted under the Plan; (b) increase the aggregate number of shares of Class A Common Stock that may be delivered through Stock Options under the Plan; (c) increase the maximum amount which can be paid to an individual participant under the Plan as set forth in the third sentence of Section 5(c) hereof; (d) change the types of business criteria on which Performance-Based Awards are to be based under the Plan; (e) modify the requirements as to eligibility for participation in the Plan, (f) allow for the repricing of Stock Options or Stock Appreciation Rights for which the stockholder approval is required by the stock exchange on which the Class A Common Stock is listed, or (g) allow for the repurchasing of Stock Options or Stock Appreciation Rights for cash or otherwise. Notwithstanding anything to the contrary contained herein, the Committee may amend the terms of any outstanding Benefit or any provision of the Plan as the Committee deems necessary to ensure compliance with Section 409A of the Code.

 

22.                               Governing Law.  This Plan, Benefits granted hereunder and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of New York (regardless of the law that might otherwise govern under applicable New York principles of conflict of laws).

 

 

23.                               Compliance with Section 409A of the Code and Section 457A of the Code

 

(a)  General.  The Company intends that any Benefits be structured in compliance with, or to satisfy an exemption from, Section 409A of the Code, such that there are no adverse tax consequences, interest, or penalties pursuant to Section 409A of the Code as a result of the Benefits. Notwithstanding the Company’s intention, in the event any Benefit is subject to Section 409A of the Code, the Committee may, in its sole discretion and without a participant’s prior consent, amend the Plan and/or outstanding Benefits, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and actions with retroactive effect) as are necessary or appropriate to (i) exempt the Plan and/or any Benefit from the application of Section 409A of the Code, (ii) preserve the intended tax treatment of any such Benefit, or (iii) comply with the requirements of Section 409A of the Code, including without limitation any such regulations guidance, compliance programs and other interpretative authority that may be issued after the date of grant of a Benefit. This Plan shall be interpreted at all times in such a manner that the terms and provisions of the Plan and Benefits are exempt from or comply with Section 409A of the Code.

 

(b)  Payments to Specified Employees.  Notwithstanding any contrary provision in the Plan or Benefit Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) that are otherwise required to be made under the Plan to a “specified employee” (as defined under Section 409A of the Code) as a result of his or her “separation from service” (as defined below) (other than a payment that is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following such “separation from service” and shall instead be paid (in a manner set forth in the Benefit Agreement) on the payment date that immediately follows the end of such six-month period (or, if earlier, within 10 business days following the date of death of the specified employee) or as soon as administratively practicable within 90 days thereafter, but in no event later than the end of the applicable taxable year.

 

(c)  Separation from Service.  A termination of employment shall not be deemed to have occurred for purposes of any provision of the Plan or any Benefit Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Section 409A of the Code upon or following a termination of employment, unless such termination is also a “separation from service” within the meaning of Section 409A of the Code and the payment thereof prior to a “separation from service” would violate Section 409A of the Code. For purposes of any such provision of the Plan or any Benefit Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment,” “termination of continuous service” or like terms shall mean “separation from service.”

 

(d)  Section 457A.  The Company intends that any Benefits be structured in compliance with, or to satisfy an exemption from, Section 457A of the Code and all regulations, guidance, compliance programs and other interpretative authority thereunder (“Section 457A”), such that there are no adverse tax consequences, interest, or penalties as a result of the Benefits and Section 457. Notwithstanding the Company’s intention, in the event any Benefit is subject to Section 457A, the Committee may, in its sole discretion and without a Participant’s prior consent, amend the Plan and/or Benefits, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and actions with retroactive effect) as are necessary or appropriate to (i) exempt the Plan and/or any Benefit from the application of Section 457A, (ii) preserve the intended tax treatment of any such Benefit, or (iii) comply with the requirements of Section 457A, including without limitation any such regulations, guidance, compliance programs and other interpretative authority that may be issued after the date of the grant.

 

(e)  No Guarantee.  Nothing in this Plan shall be a guarantee of any particular tax treatment.

 

24.                               Recoupment Policy.  Benefits awarded under the Plan shall be subject to any recoupment policy adopted by the Company as it exists from time to time.

 

25.                               Effective Date.  The Plan shall be effective on the date it is approved by stockholders of the Company at an annual meeting or any special meeting of the stockholders of the Company (the “Effective Date”).

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