Document:

EX-10.43 ERRATUM TO ADELPHIA/COMCAST ORDER

 

Exhibit 10.43

Federal Communications Commission

Before the

Federal Communications Commission

Washington, D.C. 20554

	 	 	 	 	 	 	 	 	 
	In the Matter of
	 	 	)	 	 	 	 	 
	 
	 	 	)	 	 	 	 	 
	Applications for Consent to the Assignment
	 	 	)	 	 	 	 	 
	and/or Transfer of Control of Licenses
	 	 	)	 	 	MB Docket No. 05-192

	 
	 	 	)	 	 	 	 	 
	Adelphia Communications Corporation,
	 	 	)	 	 	 	 	 
	(and subsidiaries, debtors-in-possession),
	 	 	)	 	 	 	 	 
	Assignors,
	 	 	)	 	 	 	 	 
	                    to
	 	 	)	 	 	 	 	 
	Time Warner Cable Inc. (subsidiaries),
	 	 	)	 	 	 	 	 
	Assignees;
	 	 	)	 	 	 	 	 
	 
	 	 	)	 	 	 	 	 
	Adelphia Communications Corporation,
	 	 	)	 	 	 	 	 
	(and subsidiaries, debtors-in-possession),
	 	 	)	 	 	 	 	 
	Assignors and Transferors,
	 	 	)	 	 	 	 	 
	                    to
	 	 	)	 	 	 	 	 
	Comcast Corporation (subsidiaries),
	 	 	)	 	 	 	 	 
	Assignees and Transferees;
	 	 	)	 	 	 	 	 
	 
	 	 	)	 	 	 	 	 
	Comcast Corporation, Transferor,
	 	 	)	 	 	 	 	 
	                    to
	 	 	)	 	 	 	 	 
	Time Warner Inc., Transferee;
	 	 	)	 	 	 	 	 
	 
	 	 	)	 	 	 	 	 
	Time Warner Inc., Transferor,
	 	 	)	 	 	 	 	 
	                    to
	 	 	)	 	 	 	 	 
	Comcast Corporation, Transferee
	 	 	)	 	 	 	 	 

ERRATUM

Released: July 27, 2006                    

By the Chief, Media Bureau:

     1. On July 21, 2006, the Commission released a Memorandum Opinion and Order (FCC 06-105) in
the above-captioned proceeding. This Erratum corrects that document as indicated.

     2. The words “Comcast Communications Corporation” are corrected to read as “Comcast
Corporation” in: (1) line II.B. of the Table of Contents; (2) the heading for Section II.B.,
before paragraph 7; (3) the first sentence of paragraph one; and (4) the Definitions section of
Appendix B.

     3. The words “TWE Redemption Transaction” are corrected to read as “TWE and Time Warner Cable
Redemption Transactions” in: (1) line X.C. of the Table of Contents and (2) the heading for
Section X.C., before paragraph 309.

     4. In the second sentence of footnote 19, the word “virtually” is deleted. Also in footnote
19, the third sentence, which reads, “Separately, Adelphia will transfer a small number of
subscribers

 

 

from the Century-TCI partnerships directly to Time Warner.”, is deleted.1

     5. In the first sentence of paragraph 13, the word “Following” is amended to “Prior
to”.2 Also in paragraph 13, the last sentence, which reads, “In addition, Time Warner
Cable would pay Comcast $1.9 billion in cash.”, is amended to read, “In addition, the Time Warner
Cable subsidiary would hold $1.9 billion in cash.”

     6. In footnote 57, after the words “Public Interest Statement at 3;” the following words are
inserted, “id. at Ex. A, Asset Purchase Agreement between Adelphia Communications Corp. and Time
Warner NY Cable LLC, Section 2.8, at 53”. Also in footnote 57, the word “segment” is
deleted.3

     7. In the first sentence of paragraph 14, the word “Next” is deleted and the first letter of
the word “under” is capitalized. Also in paragraph 14, the last sentence, which reads, “In
addition, TWE would pay $133 million in cash to Comcast.”, is amended to read, “In addition, the
limited liability company would hold $133 million in cash.”

     8. In the first sentence of paragraph 22, the word “related” is deleted.

     9. In the last sentence of paragraph 46, the words “and certain other systems acquired from
Adelphia” are deleted.4

     10. In paragraph 54, in the seventh sentence, the words “prior to the closing date of the
transactions,” are amended to read, “within 90 days after consummation of the transactions” and the
words “will be in compliance with the requirements of section 76.504 after the transactions.” are
amended to read, “is in compliance with the requirements of section 76.504.”

     11. In footnote 877, the word “received” is changed to “retained”.

     12. In the first sentence of paragraph 289, the words “in exchange for certain cable systems
and cash” are amended to “in exchange for subsidiaries holding certain cable systems and cash”.

     13. In footnote 911, the two references to “Time Warner” are amended to “Time Warner Cable” in
the sentence that begins “Such assets include . . . .” In the second sentence of paragraph 309,
the two references to “Time Warner” are amended to “Time Warner Cable”.

 

			
	1	 	See Letter from Michael H. Hammer,
Willkie Farr & Gallagher LLP, to Marlene H. Dortch, Secretary, FCC (July 25,
2006) (“July 25, 2006 Ex Parte”) at 2 (clarifying the record and
indicating that representations in the Public Interest statement relating to
footnote 19 and paragraph 46 of the Order are incorrect); Letter from Michael
H. Hammer, Willkie Farr & Gallagher LLP, to Marlene H. Dortch, Secretary, FCC
(July 26, 2006) (“July 26, 2006 Ex Parte”) at 1-2 (indicating that
Adelphia’s Dec. 12, 2005 Response to Information Request was incorrect with
respect to CUID CA1617 and further correcting and clarifying the record).
	 
	2	 	See July 26, 2006 Ex Parte at 1.
	 
	3	 	See July 25, 2006 Ex Parte, Att. at 2
(requesting deletion of the word “segment,” which appeared in the
title to the attachment to the letter from Arthur H. Harding, Fleischman and
Walsh, L.L.P., Counsel for Time Warner Inc., to Marlene H. Dortch, Secretary,
FCC (March 23, 2006)).
	 
	4	 	See July 25, 2006 Ex Parte at 2
(indicating that identical language in the Public Interest Statement is
incorrect).

2

 

     14. In the fifth sentence of paragraph 310, the word “partnership” is amended to “Interest”.
In the sixth sentence of paragraph 310, the words “unwinding of TWE” are amended to “unwinding of
the TWE Interest”.

     15. In paragraph 314, the words “within 60 days of consummation” are amended to read “within
60 days after consummation”.

     16. Paragraph 315 is amended to read “IT IS FURTHER ORDERED that within 90 days after
consummation of the transactions, Time Warner and Comcast each provide to the Office of the
Secretary of the Commission an affidavit, signed by a competent officer of the companies,
certifying without qualification that the requirements of section 76.504 of the Commission’s rules,
47 C.F.R. § 76.504, have been satisfied.”

     17. This action is taken under delegated authority pursuant to section 0.283 of the
Commission’s rules.5

FEDERAL COMMUNICATIONS COMMISSION

Donna C. Gregg

Chief, Media Bureau

 

			
	5	 	47 C.F.R. § 0.283.

3EX-10.45 STOCK INCENTIVE PLAN

 

Exhibit 10.45

TIME WARNER CABLE INC.

2006 STOCK INCENTIVE PLAN

1. Purpose of the Plan

     The purpose of the Plan is to aid the Company and its Affiliates in recruiting and retaining
employees, directors and advisors and to motivate such employees, directors and advisors to exert
their best efforts on behalf of the Company and its Affiliates by providing incentives through the
granting of Awards. The Company expects that it will benefit from the added interest which such
employees, directors and advisors will have in the welfare of the Company as a result of their
proprietary interest in the Company’s success.

2. Definitions

     The following capitalized terms used in the Plan have the respective meanings set forth in
this Section:

	 	(a)	 	“Act” means The Securities Exchange Act of 1934, as amended, or any
successor thereto.
	 
	 	(b)	 	“Affiliate” means any entity that is consolidated with the Company for
financial reporting purposes or any other entity designated by the Board in which the
Company or an Affiliate has a direct or indirect equity interest of at least twenty
percent (20%), measured by reference to vote or value.
	 
	 	(c)	 	“Award” means an Option, Stock Appreciation Right, Restricted Stock or
Other Stock-Based Award granted pursuant to the Plan.
	 
	 	(d)	 	“Board” means the Board of Directors of the Company.
	 
	 	(e)	 	“Change in Control” means the occurrence of any of the following events:

     (i) any “Person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Act
(other than (a) the Company or any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their ownership of
stock of the Company; or (b) Time Warner Inc. or any successor to Time Warner Inc.)
becomes the “Beneficial Owner” within the meaning of Rule 13d-3 promulgated under the
Act of 30% or more of the combined voting power of the then outstanding securities of
the Company entitled to vote generally in the election of directors at a time that Time
Warner Inc. or any successor controls less than a majority of such voting power;
excluding, however, any circumstance in which such beneficial ownership
resulted from any acquisition by an employee benefit plan (or

 

 

related trust) sponsored
or maintained by the Company or by any entity controlling, controlled by, or under
common control with, the Company;

     (ii) a change in the composition of the Board since the Effective Date, such that
the individuals who, as of such date, constituted the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of such Board;
provided that any individual who becomes a director of the Company subsequent
to the Effective Date whose election, or nomination for election by the Company’s
stockholders, was approved by either (a) the vote of at least a majority of the
directors then comprising the Incumbent Board or (b) Time Warner Inc., a successor to
Time Warner Inc. or subsidiaries of Time Warner Inc. or a successor to Time Warner
Inc., at a time that Time Warner Inc. or a successor to Time Warner Inc. controls a
majority of the combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors of the Company, shall be deemed
a member of the Incumbent Board; and provided further, that any individual who
was initially elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-12 of Regulation 14A
promulgated under the Act, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any person or Entity other than the Board shall not be
deemed a member of the Incumbent Board;

     (iii) a reorganization, recapitalization, merger or consolidation (a
“Corporate Transaction”) involving the Company, unless securities representing
more than 50% of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the Company or the
corporation resulting from such Corporate Transaction (or the parent of such
corporation) are held subsequent to such transaction either (a) by the person or
persons who were the beneficial holders of the outstanding voting securities entitled
to vote generally in the election of directors of the Company immediately prior to such
Corporate Transaction, in substantially the same proportions as their ownership
immediately prior to such Corporate Transaction or (b) by the person or persons who
were the beneficial holders of the outstanding voting securities entitled to vote
generally in the election of directors of Time Warner Inc. or any successor to Time
Warner Inc. immediately prior to such Corporate Transaction, in substantially the same
proportions as their ownership immediately prior to such Corporate Transaction, if such
Corporate Transaction occurs at a time that Time Warner Inc. or a successor to Time
Warner Inc. controls a majority of the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election of directors of
the Company;; or

     (iv) the sale, transfer or other disposition of all or substantially all of the
assets of the Company.

2

 

	 	(f)	 	“Code” means The Internal Revenue Code of 1986, as amended, or any
successor thereto.
	 
	 	(g)	 	“Committee” means the Compensation Committee of the Board or its
successor, or such other committee of the Board to which the Board has delegated power
to act under or pursuant to the provisions of the Plan or a subcommittee of the
Compensation Committee (or such other committee) established by the Compensation
Committee or such other committee.
	 
	 	(h)	 	“Company” means Time Warner Cable Inc., a Delaware corporation.
	 
	 	(i)	 	“Effective Date” means the date the Board approved the Plan (June 8,
2006).
	 
	 	(j)	 	“Employment” means (i) a Participant’s employment if the Participant is
an employee of the Company or any of its Affiliates and (ii) a Participant’s services as
a non-employee director, if the Participant is a non-employee member of the Board or the
board of directors of an Affiliate; provided, however that unless
otherwise determined by the Committee, a change in a Participant’s status from employee
to non-employee (other than to a director of the Company or an Affiliate) shall
constitute a termination of employment hereunder.
	 
	 	(k)	 	“Fair Market Value” means, on a given date, (i) if there should be a
public market for the Shares on such date, the closing price of the Shares on the New
York Stock Exchange, or, if the Shares are not listed or admitted on any national
securities exchange, the average of the per Share closing bid price and per Share
closing asked price on such date as quoted on the National Association of Securities
Dealers Automated Quotation System (or such market in which such prices are regularly
quoted) (the “NASDAQ”), or, if no sale of Shares shall have been reported on the New
York Stock Exchange or quoted on the NASDAQ on such date, then the immediately preceding
date on which sales of the Shares have been so reported or quoted shall be used, and
(ii) if there should not be a public market for the Shares on such date, the Fair Market
Value shall be the value established by the Committee in good faith.
	 
	 	(l)	 	“ISO” means an Option that is also an incentive stock option granted
pursuant to Section 6(d).
	 
	 	(m)	 	“Option” means a stock option granted pursuant to Section 6.
	 
	 	(n)	 	“Option Price” means the price for which a Share can be purchased upon
exercise of an Option, as determined pursuant to Section 6(a).
	 
	 	(o)	 	“Other Stock-Based Awards” means awards granted pursuant to Section 9.

3

 

	 	(p)	 	“Participant” means an employee, prospective employee, director or
advisor of the Company or an Affiliate who is selected by the Committee to participate
in the Plan.
	 
	 	(q)	 	“Performance-Based Awards” means certain Other Stock-Based Awards granted
pursuant to Section 9(b).
	 
	 	(r)	 	“Plan” means the Time Warner Cable Inc. 2006 Stock Incentive Plan, as
amended from time to time.
	 
	 	(s)	 	“Ratio” means the quotient resulting from dividing (a) the grant date
fair value of a share of Restricted Stock or other Stock-Based Award payable in Stock,
as the case may be, as determined for financial reporting purposes (the “grant date fair
value”) by (b) the grant date fair value of an Option with a ten-year term that becomes
exercisable in installments of 25% on the first four anniversaries of the date of grant;
provided, however, that if such grant date fair value is not available, the fair value
shall be the fair value as determined for financial reporting purposes as of the most
recently completed fiscal quarter of the Company for which financial statements and such
valuation have been prepared. 
	 
	 	(t)	 	“Restricted Stock” means any Share granted under Section 8.
	 
	 	(u)	 	“Shares” means shares of Class A Common Stock of the Company, $.01 par
value per share.
	 
	 	(v)	 	“Stock Appreciation Right” means a stock appreciation right granted
pursuant to Section 7.
	 
	 	(w)	 	“Subsidiary” means a subsidiary corporation, as defined in Section 424(f)
of the Code (or any successor section thereto), of the Company.

3. Shares Subject to the Plan

     The total number of Shares which may be issued under the Plan is 100,000,000. Any Shares
issued in connection with Awards other than Option or Stock Appreciation Rights shall be counted
against this authorization as the number of Shares equal to the Ratio for every one Share issued in
connection with such Award or by which the Award is valued by reference. Any shares issued in
connection with Awards of Options or Stock Appreciation Rights shall be counted against this limit
as one share for every one share issued. The maximum aggregate number of Shares with respect to
which Awards may be granted during a calendar year, net of any Shares which are subject to Awards
(or portions thereof) which, during such year, terminate or lapse without payment of consideration,
shall be equal to 1.5% of the number of Shares outstanding on December 31 of the preceding calendar
year; provided that for the year ended December

4

 

31, 2006 if such number of outstanding
shares is less than one billion, such number shall be deemed to be one billion. The maximum number
of Shares with respect to which Awards may be granted during a calendar year to any Participant
shall be 1,500,000; provided that the maximum number of Shares that may be awarded in the
form of Restricted Stock or Other Stock-Based Awards payable in Shares during any calendar year to
any Participant shall be 1,500,000 divided by the Ratio. The number of Shares available for
issuance under the Plan shall be reduced by the full number of Shares covered by Awards granted
under the Plan (including, without limitation, the full number of Shares covered by any Stock
Appreciation Right, regardless of whether any such Stock Appreciation Right or other Award covering
Shares under the Plan is ultimately settled in cash or by delivery of Shares); provided,
however, that the number of Shares covered by Awards (or portions thereof) that are forfeited
or that otherwise terminate or lapse without the payment of consideration in respect thereof shall
again become available for issuance under the Plan; and provided further that any Shares
that are forfeited after the actual issuance of such Shares to a Participant under the Plan shall
not become available for re-issuance under the Plan.

4. Administration

	 	(a)	 	The Plan shall be administered by the Committee, which may delegate its duties
and powers in whole or in part to any subcommittee thereof consisting solely of at
least two individuals who are intended to qualify as “independent directors” within the
meaning of the New York Stock Exchange listed company rules (to the extent required),
“Non-Employee Directors” within the meaning of Rule 16b-3 under the Act (or any
successor rule thereto) and, to the extent required by Section 162(m) of the Code (or
any successor section thereto), “outside directors” within the meaning thereof. In
addition, the Committee may delegate the authority to grant Awards under the Plan to
any employee or group of employees of the Company or an Affiliate; provided
that such grants are consistent with guidelines established by the Committee from
time to time.
	 
	 	(b)	 	The Committee shall have the full power and authority to make, and establish
the terms and conditions of, any Award to any person eligible to be a Participant,
consistent with the provisions of the Plan and to waive any such terms and conditions
at any time (including, without limitation, accelerating or waiving any vesting
conditions). Awards may, in the discretion of the Committee, be made under the Plan in
assumption of, or in substitution for, outstanding awards previously granted by the
Company or its affiliates or a company acquired by the Company or with which the
Company combines. The number of Shares underlying such substitute awards shall be
counted against the aggregate number of Shares available for Awards under the Plan.
	 
	 	(c)	 	The Committee is authorized to interpret the Plan, to establish, amend and
rescind any rules and regulations relating to the Plan, and to make any other
determinations that it deems necessary or desirable for the administration of

5

 

	 	 	 	the Plan,
and may delegate such authority, as it deems appropriate. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan in the manner
and to the extent the Committee deems necessary or desirable. Any decision of the
Committee in the interpretation and administration of the Plan, as described herein,
shall lie within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned (including, but not limited to, Participants and their
beneficiaries or successors).
	 
	 	(d)	 	The Committee shall require payment of any amount it may determine to be
necessary to withhold for federal, state, local or other taxes as a result of the
exercise, grant or vesting of an Award. Unless the Committee specifies otherwise, the
Participant may elect to pay a portion or all of such withholding taxes by (a) delivery
of Shares or (b) having Shares withheld by the Company with a Fair Market Value equal
to the minimum statutory withholding rate from any Shares that would have otherwise
been received by the Participant.

5. Limitations

	 	(a)	 	No Award may be granted under the Plan after the fifth anniversary of the first
grant of an Award under the Plan, but Awards granted prior to such fifth anniversary
may extend beyond that date.
	 
	 	(b)	 	No Option or Stock Appreciation Right, once granted hereunder, may be repriced.

6. Terms and Conditions of Options

     Options granted under the Plan shall be, as determined by the Committee, nonqualified or
incentive stock options for federal income tax purposes, as evidenced by the related Award
agreements, and shall be subject to the foregoing and the following terms and conditions and to
such other terms and conditions, not inconsistent therewith, as the Committee shall determine, and
as evidenced by the related Award agreement:

	 	(a)	 	Option Price. The Option Price per Share shall be determined by the
Committee, but shall not be less than 100% of the Fair Market Value of a Share on the
date an Option is granted.
	 
	 	(b)	 	Exercisability. Options granted under the Plan shall be exercisable at
such time and upon such terms and conditions as may be determined by the Committee, but
in no event shall an Option be exercisable more than ten years after the date it is
granted, except as may be provided pursuant to Section 15.
	 
	 	(c)	 	Exercise of Options. Except as otherwise provided in the Plan or in an
Award agreement, an Option may be exercised for all, or from time to time any part,

6

 

		 	of
the Shares for which it is then exercisable. For purposes of this Section 6, the
exercise date of an Option shall be the date a notice of exercise is received by the
Company, together with provision for payment of the full purchase price in accordance
with this Section 6(c). The purchase price for the Shares as to which an Option is
exercised shall be paid to the Company, as designated by the Committee, pursuant to one
or more of the following methods: (i) in cash or its equivalent (e.g., by check); (ii)
in Shares having a Fair Market Value equal to the aggregate Option Price for the Shares
being purchased and satisfying such other requirements as may be imposed by the
Committee; provided that such Shares have been held by the Participant for no
less than six months (or such other period as established from time to time by the
Committee in order to avoid adverse accounting treatment applying generally accepted
accounting principles); (iii) partly in cash and partly in such Shares or (iv) if there
is a public market for the Shares at such time, through the delivery of irrevocable
instructions to a broker to sell Shares obtained upon the exercise of the Option and to
deliver promptly to the Company an amount out of the proceeds of such Sale equal to the
aggregate Option Price for the Shares being purchased. No Participant shall have any
rights to dividends or other rights of a stockholder with respect to Shares subject to
an Option until the Shares are issued to the Participant.
	 
	(d)	 	ISOs. The Committee may grant Options under the Plan that are intended
to be ISOs. Such ISOs shall comply with the requirements of Section 422 of the Code (or
any successor section thereto). No ISO may be granted to any Participant who at the
time of such grant, owns more than ten percent of the total combined voting power of
all classes of stock of the Company or of any Subsidiary, unless (i) the Option Price
for such ISO is at least 110% of the Fair Market Value of a Share on the date the ISO
is granted and (ii) the date on which such ISO terminates is a date not later than the
day preceding the fifth anniversary of the date on which the ISO is granted. Any
Participant who disposes of Shares acquired upon the exercise of an ISO either (i)
within two years after the date of grant of such ISO or (ii) within one year after the
transfer of such Shares to the Participant, shall notify the Company of such
disposition and of the amount realized upon such disposition. All Options granted under
the Plan are intended to be nonqualified stock options, unless the applicable Award
agreement expressly states that the Option is intended to be an ISO. If an Option is
intended to be an ISO, and if for any reason such Option (or portion thereof) shall not
qualify as an ISO, then, to the extent of such non-qualification, such Option (or
portion thereof) shall be regarded as a nonqualified stock option granted under the
Plan; provided that such Option (or portion thereof) otherwise complies with
the Plan’s requirements relating to nonqualified stock options. In no event shall any
member of the Committee, the Company or any of its Affiliates (or their respective
employees, officers or directors) have any liability to any Participant (or any other
person) due to the failure of an Option to qualify for any reason as an ISO.

7

 

	 	(e)	 	Attestation. Wherever in this Plan or any agreement evidencing an
Award a Participant is permitted to pay the exercise price of an Option or taxes
relating to the exercise of an Option by delivering Shares, the Participant may,
subject to procedures satisfactory to the Committee, satisfy such delivery requirement
by presenting proof of beneficial ownership of such Shares, in which case the Company
shall treat the Option as exercised without further payment and/or shall withhold such
number of Shares from the Shares acquired by the exercise of the Option, as
appropriate.

7. Terms and Conditions of Stock Appreciation Rights

	 	(a)	 	Grants. The Committee may grant (i) a Stock Appreciation Right
independent of an Option or (ii) a Stock Appreciation Right in connection with an
Option, or a portion thereof. A Stock Appreciation Right granted pursuant to clause
(ii) of the preceding sentence (A) may be granted at the time the related Option is
granted or at any time prior to the exercise or cancellation of the related Option, (B)
shall cover the same number of Shares covered by an Option (or such lesser number of
Shares as the Committee may determine) and (C) shall be subject to the same terms and
conditions as such Option except for such additional limitations as are contemplated by
this Section 7 (or such additional limitations as may be included in an Award
agreement).
	 
	 	(b)	 	Terms. The exercise price per Share of a Stock Appreciation Right
shall be an amount determined by the Committee but in no event shall such amount be
less than the Fair Market Value of a Share on the date the Stock Appreciation Right is
granted; provided, however, that notwithstanding the foregoing in the
case of a Stock Appreciation Right granted in conjunction with an Option, or a portion
thereof, the exercise price may not be less than the Option Price of the related
Option. Each Stock Appreciation Right granted independent of an Option shall entitle a
Participant upon exercise to an amount equal to (i) the excess of (A) the Fair Market
Value on the exercise date of one Share over (B) the exercise price per Share, times
(ii) the number of Shares covered by the Stock Appreciation Right. Each Stock
Appreciation Right granted in conjunction with an Option, or a portion thereof, shall
entitle a Participant to surrender to the Company the unexercised Option, or any
portion thereof, and to receive from the Company in exchange therefor an amount equal
to (i) the excess of (A) the Fair Market Value on the exercise date of one Share over
(B) the Option Price per Share, times (ii) the number of Shares covered by the Option,
or portion thereof, which is surrendered. Payment shall be made in Shares or in cash,
or partly in Shares and partly in cash (any such Shares valued at such Fair Market
Value), all as shall be determined by the Committee. Stock Appreciation Rights may be
exercised from time to time upon actual receipt by the Company of written notice of
exercise stating the number of Shares with respect to which the Stock Appreciation
Right is being

8

 

	 	 	 	exercised. The date a notice of exercise is received by the Company
shall be the exercise date. No fractional Shares will be issued in payment for Stock
Appreciation Rights, but instead cash will be paid for a fraction or, if the Committee
should so determine, the number of Shares will be rounded downward to the next whole
Share. No Participant shall have any rights to dividends or other rights of a
stockholder with respect to Shares covered by Stock Appreciation Rights until the
Shares are issued to the Participant.
	 
	 	(c)	 	Limitations. The Committee may impose, in its discretion, such
conditions upon the exercisability of Stock Appreciation Rights as it may deem fit, but
in no event shall a Stock Appreciation Right be exercisable more than ten years after
the date it is granted, except as may be provided pursuant to Section 15.

8. Restricted Stock

	 	(a)	 	Grant. Subject to the provisions of the Plan, the Committee shall
determine the number of Shares of Restricted Stock to be granted to each Participant,
the duration of the period during which, and the conditions, if any, under which, the
Restricted Stock may be forfeited to the Company, and the other terms and conditions of
such Awards; provided that, except with respect to Awards to members of the
Company’s Board, not less than 95% of the Shares of Restricted Stock (other than those
awarded pursuant to Section 8(d)) shall remain subject to forfeiture for at least three
years after the date of grant, subject to earlier termination of such potential for
forfeiture in whole or in part in the event of a Change in Control or the death,
disability or other termination of the Participant’s employment.
	 
	 	(b)	 	Transfer Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as provided in the Plan
or the applicable Award agreement. Certificates, or other evidence of ownership, issued
in respect of Shares of Restricted Stock shall be registered in the name of the
Participant and deposited by such Participant, together with a stock power endorsed in
blank, with the Company. After the lapse of the restrictions applicable to such Shares
of Restricted Stock, the Company shall deliver such certificates, or other evidence of
ownership, to the Participant or the Participant’s legal representative.
	 
	 	(c)	 	Dividends. Dividends paid on any Shares of Restricted Stock may be
paid directly to the Participant, withheld by the Company subject to vesting of the
Restricted Shares pursuant to the terms of the applicable Award agreement, or may be
reinvested in additional Shares of Restricted Stock, as determined by the Committee in
its sole discretion.
	 
	 	(d)	 	Performance-Based Grants. Notwithstanding anything to the contrary
herein, certain Shares of Restricted Stock granted under this Section 8 may, at the
discretion of the Committee, be granted in a manner which is intended to be

9

 

	 	 	 	deductible
by the Company under Section 162(m) of the Code (or any successor section thereto). The
restrictions applicable to such Restricted Stock shall lapse based wholly or partially
on the attainment of written performance goals approved by the Committee for a
performance period established by the Committee (i) while the outcome for that
performance period is substantially uncertain and (ii) no more than 90 days after the
commencement of the performance period to which the performance goal relates or, if
less, the number of days which is equal to 25 percent of the relevant performance
period. The performance goals, which must be objective, shall be based upon one or more
of the criteria set forth in Section 9(b) below. The Committee shall determine in its
discretion whether, with respect to a performance period, the applicable performance
goals have been met with respect to a given Participant and, if they have, shall so
certify prior to the release of the restrictions on the Shares.

9. Other Stock-Based Awards

	 	(a)	 	Generally. The Committee, in its sole discretion, may grant or sell
Awards of Shares and Awards that are valued in whole or in part by reference to, or are
otherwise based on the Fair Market Value of, Shares (“Other Stock-Based Awards”). Such
Other Stock-Based Awards shall be in such form, and dependent on such conditions, as
the Committee shall determine, including, without limitation, the right to receive, or
vest with respect to, one or more Shares (or the equivalent cash value of such Shares)
upon the completion of a specified period of service, the occurrence of an event and/or
the attainment of performance objectives. Other Stock-Based Awards may be granted alone
or in addition to any other Awards granted under the Plan. Subject to the provisions of
the Plan, the Committee shall determine the number of Shares to be awarded to a
Participant under (or otherwise related to) such Other Stock-Based Awards; whether such
Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and
Shares; and all other terms and conditions of such Awards (including, without
limitation, the vesting provisions thereof and provisions ensuring that all Shares so
awarded and issued shall be fully paid and non-assessable). The maximum amount of Other
Stock-Based Awards that may be granted during a calendar year to any Participant shall
be: (x) with respect to Other Stock-Based Awards that are denominated or payable in
Shares, the number of Shares equal to 1,500,000 divided by the Ratio. and (y) with
respect to Other Stock-Based Awards that are not denominated or payable in Shares, $10
million. Notwithstanding any other provision, with respect to Other Stock-Based Awards
settled in Shares that are subject to time-based vesting, except with respect to Awards
to members of the Company’s Board, not less than 95% of such Other Stock-Based Awards
payable in Shares shall vest and become payable at least three years after the date of
grant, subject to earlier termination of such potential for forfeiture in whole or in
part in the event of a Change in Control or the death, disability or other termination
of the Participant’s employment.

10

 

	 	(b)	 	Performance-Based Awards. Notwithstanding anything to the contrary
herein, certain Other Stock-Based Awards granted under this Section 9 may be granted in
a manner which is intended to be deductible by the Company under Section 162(m) of the
Code (or any successor section thereto) (“Performance-Based Awards”). A Participant’s
Performance-Based Award shall be determined based on the attainment of written
performance goals approved by the Committee for a performance period of not less than
one year established by the Committee (i) while the outcome for that performance period
is substantially uncertain and (ii) no more than 90 days after the commencement of the
performance period to which the performance goal relates or, if less, the number of
days which is equal to 25 percent of the relevant performance period. The performance
goals, which must be objective, shall be based upon one or more of the following
criteria: (i) operating income before depreciation and amortization; (ii) operating
income; (iii) earnings per share; (iv) return on shareholders’ equity; (v) revenues or
sales; (vi) free cash flow; (vii) return on invested capital; (viii) total stockholder
return; and (ix) revenue generating unit-based metrics. The foregoing criteria may
relate to the Company, one or more of its Affiliates or one or more of its or their
divisions or units, or any combination of the foregoing, and may be applied on an
absolute basis and/or be relative to one or more peer group companies or indices, or
any combination thereof, all as the Committee shall determine. In addition, to the
degree consistent with Section 162(m) of the Code (or any successor section thereto),
the performance goals may be calculated without regard to extraordinary items. The
Committee shall determine whether, with respect to a performance period, the applicable
performance goals have been met with respect to a given Participant and, if they have,
shall so certify and ascertain the amount of the applicable Performance-Based Award. No
Performance-Based Awards will be paid for such performance period until such
certification is made by the Committee. The amount of the Performance-Based Award
actually paid to a given Participant may be less than the amount determined by the
applicable performance goal formula, at the discretion of the Committee. The amount of
the Performance-Based Award determined by the Committee for a performance period shall
be paid to the Participant at such time as determined by the Committee in its sole
discretion after the end of such performance period; provided, however,
that a Participant may, if and to the extent permitted by the Committee and consistent
with the provisions of Section 162(m) of the Code and Section 19 below, elect to defer
payment of a Performance-Based Award.

10. Adjustments Upon Certain Events

     Notwithstanding any other provisions in the Plan to the contrary, the following provisions
shall apply to all Awards granted under the Plan:

11

 

	 	(a)	 	Generally. In the event of any change in the outstanding Shares
(including, without limitation, the value thereof) after the Effective Date by reason
of any Share dividend or split, reorganization, recapitalization, merger,
consolidation, spin-off, combination, combination or transaction or exchange of Shares
or other corporate exchange, or any distribution to stockholders of Shares other than
regular cash dividends or any transaction similar to the foregoing, the Committee in
its sole discretion and without liability to any person shall make such substitution or
adjustment, if any, as it deems to be equitable (subject to Section 19), as to (i) the
number or kind of Shares or other securities issued or reserved for issuance pursuant
to the Plan or pursuant to outstanding Awards, (ii) the maximum number of Shares for
which Awards (including limits established for Restricted Stock or Other Stock-Based
Awards) may be granted during a calendar year to any Participant, (iii) the Option
Price or exercise price of any Stock Appreciation Right and/or (iv) any other affected
terms of such Awards.
	 
	 	(b)	 	Change in Control. In the event of a Change in Control after the
Effective Date, the Committee may (subject to Section 19), but shall not be obligated
to, (A) accelerate, vest or cause the restrictions to lapse with respect to, all or any
portion of an Award, (B) cancel Awards for fair value (as determined in the sole
discretion of the Committee) which, in the case of Options and Stock Appreciation
Rights, may equal the excess, if any, of value of the consideration to be paid in the
Change in Control transaction to holders of the same number of Shares subject to such
Options or Stock Appreciation Rights (or, if no consideration is paid in any such
transaction, the Fair Market Value of the Shares subject to such Options or Stock
Appreciation Rights) over the aggregate exercise price of such Options or Stock
Appreciation Rights, (C) provide for the issuance of substitute Awards that will
substantially preserve the otherwise applicable terms of any affected Awards previously
granted hereunder as determined by the Committee in its sole discretion or (D) provide
that for a period of at least 30 days prior to the Change in Control, such Options
shall be exercisable as to all shares subject thereto and that upon the occurrence of
the Change in Control, such Options shall terminate and be of no further force and
effect.

11. No Right to Employment or Awards

     The granting of an Award under the Plan shall impose no obligation on the Company or any
Affiliate to continue the Employment of a Participant and shall not lessen or affect the Company’s
or Subsidiary’s right to terminate the Employment of such Participant. No Participant or other
person shall have any claim to be granted any Award, and there is no obligation for uniformity of
treatment of Participants, or holders of Awards. The terms and conditions of Awards and the
Committee’s determinations and interpretations with respect thereto need not be the same with
respect to each Participant (whether or not such Participants are similarly situated).

12

 

12. Successors and Assigns

     The Plan shall be binding on all successors and assigns of the Company and a Participant,
including without limitation, the estate of such Participant and the executor, administrator or
trustee of such estate, or any receiver or trustee in bankruptcy or representative of the
Participant’s creditors.

13. Non-transferability of Awards

     Unless otherwise determined by the Committee (and subject to the limitation that in no
circumstances may an Award be transferred by the Participant for consideration or value), an Award
shall not be transferable or assignable by the Participant otherwise than by will or by the laws of
descent and distribution. An Award exercisable after the death of a Participant may be exercised by
the legatees, personal representatives or distributees of the Participant.

14. Amendments or Termination

     The Board or the Committee may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made, (a) without the approval of the stockholders of the
Company, if such action would (except as is provided in Section 10 of the Plan), increase the total
number of Shares reserved for the purposes of the Plan or increase the maximum number of Shares of
Restricted Stock or Other Stock-Based Awards that may be awarded hereunder, or the maximum number
of Shares for which Awards may be granted to any Participant, (b) without the consent of a
Participant, if such action would diminish any of the rights of the Participant under any Award
theretofore granted to such Participant under the Plan or (c) to Section 5(b), relating to
repricing of Options or Stock Appreciation Rights, to permit such repricing; provided,
however, that the Committee may amend the Plan in such manner as it deems necessary to
permit the granting of Awards meeting the requirements of the Code or other applicable laws.

     Without limiting the generality of the foregoing, to the extent applicable, notwithstanding
anything herein to the contrary, this Plan and Awards issued hereunder shall be interpreted in
accordance with Section 409A of the Code and Department of Treasury regulations and other
interpretative guidance issued thereunder, including without limitation any such regulations or
other guidance that may be issued after the Effective Date. Notwithstanding any provision of the
Plan to the contrary, in the event that the Committee determines that any amounts payable hereunder
will be taxable to a Participant under Section 409A of the Code and related Department of Treasury
guidance, prior to payment to such Participant of such amount, the Company may (a) adopt such
amendments to the Plan and Awards and appropriate policies and procedures, including amendments and
policies with retroactive effect, that the Committee determines necessary or appropriate to
preserve the intended tax treatment of the benefits provided by the Plan and Awards hereunder
and/or (b) take such other

13

 

actions as the Committee determines necessary or appropriate to avoid or
limit the imposition of an additional tax under Section 409A of the Code.

15. International Participants

     With respect to Participants who reside or work outside the United States of America and who
are not (and who are not expected to be) “covered employees” within the meaning of Section 162(m)
of the Code, the Committee may, in its sole discretion, amend the terms of the Plan or Awards with
respect to such Participants in order to conform such terms with the requirements of local law or
to obtain more favorable tax or other treatment for a Participant, the Company or an Affiliate.

16. Other Benefit Plans

     All Awards shall constitute a special incentive payment to the Participant and shall not be
taken into account in computing the amount of salary or compensation of the Participant for the
purpose of determining any benefits under any pension, retirement, profit-sharing, bonus, life
insurance or other benefit plan of the Company or under any agreement between the Company and the
Participant, unless such plan or agreement specifically provides otherwise.

17. Choice of Law

     The Plan shall be governed by and construed in accordance with the laws of the State of New
York without regard to conflicts of laws, and except as otherwise provided in the pertinent Award
agreement, any and all disputes between a Participant and the Company or any Affiliate relating to
an Award shall be brought only in a state or federal court of competent jurisdiction sitting in
Manhattan, New York.

18. Effectiveness of the Plan

     The Plan shall be effective as of the Effective Date.

19. Section 409A

     Notwithstanding other provisions of the Plan or any Award agreements thereunder, no Award
shall be granted, deferred, accelerated, extended, paid out or modified under this Plan in a manner
that would result in the imposition of an additional tax under Section 409A of the Code upon a
Participant. In the event that it is reasonably determined by the Committee that, as a result of
Section 409A of the Code, payments in respect of any Award under the Plan may not be made at the
time contemplated by the terms of the Plan or the relevant Award agreement, as the case may be,
without causing the Participant holding such Award to be subject to taxation under Section 409A of
the Code, the Company will make such payment on the first day that would not result in the
Participant incurring any tax liability under Section 409A of the Code.

14

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