Exhibit 10.2

MOTOROLA MOBILITY HOLDINGS, INC.

2011 INCENTIVE COMPENSATION PLAN

 

ARTICLE 1. PURPOSES OF THE PLAN

The purposes of the Motorola Mobility Holdings, Inc. 2011 Incentive Compensation
Plan (the “Plan”) are to attract and retain the best available personnel, to
provide additional incentives to Employees, Directors and Consultants and to
promote the success of the Company’s business by linking the personal interests
of the Directors, Employees, and Consultants to those of Company stockholders
and by providing such individuals with an incentive for outstanding performance
to generate superior returns to Company stockholders. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of Directors, Employees, and Consultants upon
whose judgment, interest, and special effort the success of the Company is
largely dependent.

 

ARTICLE 2. DEFINITIONS

Wherever the following terms are used in the Plan they shall have the meanings
specified below, unless the context clearly indicates otherwise. The singular
pronoun shall include the plural where the context so indicates.

2.1 “Affiliate” means a Subsidiary, Parent, or any corporation or other entity
(including, but not limited to, a partnership or joint venture) that is
controlled by, under common control with, or related to the Company.

2.2 “Affiliated Company” means any entity which controls, is controlled by or is
under common control with the Company.

2.3 “Award” means an Option, an award of Restricted Stock, a Stock Appreciation
Right, a Restricted Stock Unit, a Performance-Based Award or Other Share-Based
Award granted to a Participant pursuant to the Plan.

2.4 “Award Agreement” means any written agreement, contract, or other instrument
or document evidencing the terms and conditions of an Award, including through
electronic medium.

2.5 “Board” means the Board of Directors of the Company.

2.6 “Change in Control” means:

(a) Any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a “Person”) becomes the beneficial owner (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company

--------------------------------------------------------------------------------

Voting Securities”); provided, however, that, for purposes of this
Section 2.5(a), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Affiliated Company or
(iv) any acquisition pursuant to a transaction that complies with Sections
2.5(c)(i), 2.5(c)(ii) or 2.5(c)(iii) hereof;

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

(c) Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or securities of another
entity by the Company or any of its subsidiaries (each, a “Business
Combination”), in each case unless, following such Business Combination, (i) all
or substantially all of the individuals and entities that were the beneficial
owners of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of the then-outstanding shares of
common stock (or, for a non-corporate entity, equivalent securities) and the
combined voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors (or, for a non-corporate entity,
equivalent governing body), as the case may be, of the entity resulting from
such Business Combination (including, without limitation, an entity that, as a
result of such transaction, owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding any
entity resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such entity resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock (or, for a
non-corporate entity, equivalent securities) of the entity resulting from such
Business Combination or the combined voting power of the then-outstanding voting
securities of such entity, except to the extent that such ownership existed
prior to the Business Combination, and (iii) at least a majority of the members
of the board of directors (or, for a non-corporate entity, equivalent governing
body) of the entity resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement or of the
action of the Board providing for such Business Combination;

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

 

2

--------------------------------------------------------------------------------

2.7 “Code” means the U.S. Internal Revenue Code of 1986, as amended.

2.8 “Committee” means the committee of the Board appointed or described in
Article 13 to administer the Plan.

2.9 “Common Stock” means the common stock of the Company, par value $0.01 per
share, and such other securities of the Company that may be substituted for the
Common Stock pursuant to Article 12.

2.10 “Company” means Motorola Mobility Holdings Inc., a Delaware corporation.

2.11 “Consultant” means any consultant or adviser if: (a) the consultant or
adviser renders bona fide services to the Company or any Affiliate; (b) the
services rendered by the consultant or adviser are not in connection with the
offer or sale of securities in a capital-raising transaction and do not directly
or indirectly promote or maintain a market for the Company’s securities; and
(c) the consultant or adviser is a natural person.

2.12 “Covered Employee” means an Employee who is, or could be, a “covered
employee” within the meaning of Section 162(m) of the Code.

2.13 “Director” means a member of the Board, or as applicable, a member of the
board of directors of an Affiliate.

2.14 “Disability” means that the Participant would qualify to receive long-term
disability payments under the long-term disability policy, as it may be amended
from time to time, of the Company or the Affiliate to which the Participant
provides services regardless of whether the Participant is covered by such
policy. If the Company or the Affiliate to which the Participant provides
service does not have a long-term disability policy or plan in place,
“Disability” means that a Participant is unable to carry out the
responsibilities and functions of the position held by the Participant by reason
of any medically determined physical or mental impairment, as determined by a
physician acceptable to the Committee, for a period of not less than ninety
(90) consecutive days. A Participant shall not be considered to have incurred a
Disability unless he or she furnishes proof of such impairment sufficient to
satisfy the Committee in its discretion. Anything to the contrary in the
foregoing notwithstanding, for purposes of Incentive Stock Options, “Disability”
shall mean a total and permanent disability as defined in Section 22(e)(3) of
the Code.

2.15 “Dividend Equivalent Right” means a right granted to a Participant pursuant
to Section 9.1(a) hereof to receive the equivalent value (in cash or Shares) of
dividends paid on the Shares.

2.16 “Effective Date” shall have the meaning set forth in Section 14.1 hereof.

2.17 “Eligible Individual” means any person who is an Employee, a Consultant or
a Director, as determined by the Committee.

2.18 “Employee” means a full time or part time employee of the Company or any
Affiliate, including an officer or Director, who is treated as an employee in
the personnel records

 

3

--------------------------------------------------------------------------------

of the Company or Affiliate for the relevant period, but shall exclude
individuals who are classified by the Company or Affiliate as leased from or
otherwise employed by a third party or independent contractors, even if any such
classification is changed retroactively as a result of an audit, litigation or
otherwise. Subject to Section 409A of the Code, a Participant shall not cease to
be an Employee in the case of (a) any vacation or sick time or otherwise
approved paid time off in accordance with the Company or Affiliate’s policy or
in the case where the Participant is on a leave of absence but his or her
employment or service cannot be terminated pursuant to applicable law or
(b) transfers between locations of the Company or between the Company and/or any
Affiliate. Neither services as a Director nor payment of a director’s fee by the
Company or an Affiliate shall be sufficient to constitute “employment” by the
Company or any Affiliate. For purposes of Incentive Stock Options, no leave of
absence may exceed three (3) months, unless reemployment upon expiration of such
leave is guaranteed by statute or contract or has been agreed to by contract or
in a written policy of the Company which provides for a right of reemployment
following the leave of absence.

2.19 “Equity Restructuring” means a nonreciprocal transaction between the
Company and its stockholders, such as a stock dividend, stock split, spin-off,
rights offering or recapitalization through a large, nonrecurring cash dividend,
that affects the Shares (or other securities of the Company) or the price of
Shares (or other securities) and causes a change in the per share value of the
Shares underlying outstanding Awards.

2.20 “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

2.21 “Exercise Price” means the price of a Share, as fixed by the Committee,
which may be purchased under an Option or Other Share-Based Award, if
applicable, or with respect to which the amount of any payment pursuant to a
Stock Appreciation Right or Other Share-Based Award, if applicable, is
determined.

2.22 “Fair Market Value” means, with respect to the Shares, as of any date,
(a) the closing per-share sales price of the Shares (i) as reported by NYSE on
the stock exchange composite tape for securities traded on such exchange for
such date or (ii) if the Shares are no longer listed on NYSE, but are listed on
any other national stock exchange or national market system, as reported on the
stock exchange composite tape for securities traded on such exchange for such
date, or, with respect to each of clauses (i) and (ii), if there were no sales
on such date, on the closest preceding date on which there were sales of Shares,
or, (b) in the event there shall be no public market for the Shares on such
date, the Fair Market Value of the Shares as determined in good faith by the
Committee, and to the extent appropriate, based upon the reasonable application
of a reasonable valuation method.

2.23 “Incentive Stock Option” means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.

2.24 “Legacy Plan” means the Motorola Mobility Holdings, Inc. Legacy Incentive
Plan, as it may be amended from time to time.

 

4

--------------------------------------------------------------------------------

2.25 “Non-Employee Director” means a Director of the Company who qualifies as a
“Non-Employee Director” as defined in Rule 16b-3(b)(3) under the Exchange Act,
or any successor rule.

2.26 “Non-Qualified Stock Option” means an Option that is not intended to be an
Incentive Stock Option.

2.27 “Option” means a right granted to a Participant pursuant to Article 5 to
purchase a specified number of Shares at a specified Exercise Price during
specified time periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.

2.28 “Other Share-Based Award” shall mean an Award granted pursuant to Article
9.

2.29 “Parent” means any “parent corporation” of the Company as defined in
Section 424(e) of the Code and any applicable regulations promulgated
thereunder.

2.30 “Participant” means any Eligible Individual who has been granted an Award
pursuant to the Plan.

2.31 “Performance-Based Award” means an Award granted pursuant to Article 10.

2.32 “Performance Bonus Award” has the meaning set forth in Section 10.5 hereof.

2.33 “Performance Criteria” means the criteria that the Committee selects for
purposes of establishing the Performance Goal or Performance Goals for a
Participant for a Performance Period, determined as follows:

(a) The Performance Criteria that will be used to establish Performance Goals
are limited to the following: earnings or net earnings (either before or after
interest, taxes, depreciation and amortization), economic value-added, sales or
revenue, income, net income (either before or after taxes), operating earnings,
cash flow (including, but not limited to, operating cash flow and free cash
flow), cash flow return on capital, return on assets or net assets, return on
equity or stockholders’ equity, return on capital, stockholder returns, return
on sales, productivity, expense, margins, operating efficiency, customer
satisfaction, working capital, earnings per share, price per Share, market
share, cost; ratio of debt to debt plus equity; ratio of operating earnings to
capital spending; profit before taxes; net profit; economic profit, sales
growth, any of which may be measured either in absolute terms or as compared to
any incremental increase or as compared to results of a peer group. The
Committee shall define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance Period for such
Participant.

(b) The Committee may, in its discretion, provide that one or more objectively
determinable adjustments shall be made to one or more of the Performance Goals.
Such adjustments may include one or more of the following: (i) items related to
a change in accounting principle; (ii) items relating to financing activities;
(iii) expenses for restructuring or productivity initiatives; (iv) other
non-operating items; (v) items related to acquisitions; (vi) items attributable
to the business operations of any entity acquired by the Company during the
Performance Period; (vii) items related to the disposal of a business or segment
of a business;

 

5

--------------------------------------------------------------------------------

(viii) items related to discontinued operations that do not qualify as a segment
of a business under GAAP (or, if applicable, IFRS); (ix) items attributable to
any stock dividend, stock split, combination or exchange of shares occurring
during the Performance Period; or (x) any other items of significant income or
expense which are determined to be appropriate adjustments; (xi) items relating
to unusual or extraordinary corporate transactions, events or developments,
(xii) items related to amortization of acquired intangible assets; (xiii) items
that are outside the scope of the Company’s core, on-going business activities;
or (xiv) items relating to any other unusual or nonrecurring events or changes
in applicable laws, accounting principles or business conditions. For all Awards
intended to qualify as Qualified Performance-Based Compensation, such
determinations shall be made within the time prescribed by, and otherwise in
compliance with, Section 162(m) of the Code.

2.34 “Performance Goals” means, for a Performance Period, the goals established
in writing by the Committee for the Performance Period based upon the
Performance Criteria. Depending on the Performance Criteria used to establish
such Performance Goals, the Performance Goals may be expressed in terms of
overall Company performance, the performance of an Affiliate, the performance of
a division or a business unit of the Company or an Affiliate, or the performance
of an individual. As further set forth in Section 2.33(b) hereof, the Committee,
in its discretion, may, to the extent consistent with, and within the time
prescribed by, Section 162(m) of the Code, appropriately adjust or modify the
calculation of Performance Goals for such Performance Period in order to prevent
the dilution or enlargement of the rights of Participants (a) in the event of,
or in anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (b) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.

2.35 “Performance Period” means the one or more periods of time, which may be of
varying and overlapping durations, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant’s right to, and the payment of, a Performance-Based
Award.

2.36 “Plan” means this Motorola Mobility Holdings, Inc. 2011 Incentive
Compensation Plan, as it may be amended from time to time.

2.37 “Qualified Performance-Based Compensation” means any compensation that is
intended to qualify as “qualified performance-based compensation” as described
in Section 162(m)(4)(C) of the Code.

2.38 “Restricted Stock” means Shares awarded to a Participant pursuant to
Article 6 that are subject to certain restrictions and may be subject to risk of
forfeiture.

2.39 “Restricted Stock Unit” means an Award granted pursuant to Article 8 that
shall be evidenced by a bookkeeping entry representing the equivalent of one
Share.

2.40 “Securities Act” shall mean the U.S. Securities Act of 1933, as amended.

2.41 “Share” means a share of Common Stock.

 

6

--------------------------------------------------------------------------------

2.42 “Share Payment” means (a) a payment in the form of Shares, or (b) an option
or other right to purchase or acquire Shares, as part of any bonus, deferred
compensation or other arrangement, made in lieu of all or any portion of the
compensation, granted pursuant to Section 9.1(b) hereof.

2.43 “Stock Appreciation Right” or “SAR” means a right granted pursuant to
Article 7 to receive a payment equal to the excess of the fair market value of a
specified number of Shares on the date the SAR is exercised over the Exercise
Price as set forth in the applicable Award Agreement.

2.44 “Subsidiary” means any “subsidiary corporation” of the Company as defined
in Section 424(f) of the Code and any applicable regulations promulgated
thereunder.

 

ARTICLE 3. SHARES SUBJECT TO THE PLAN

3.1 Number of Shares. Subject to Article 12, the aggregate number of Shares
which may be issued or transferred pursuant to Awards under the Plan shall be
68,000,000 Shares (a) less any Shares required to be distributed pursuant to the
terms of the Legacy Plan and (b) plus any Shares subject to an award under the
Legacy Plan that are not issued and delivered to a participant for any reason
including, without limitation, (i) Shares subject to an award that terminates,
expires, lapses for any reason, or is settled in cash, (ii) Shares tendered or
withheld to satisfy the grant or exercise price or tax withholding obligation
pursuant to any award, and (iii) Shares that are not issued or delivered as a
result of the net settlement of an outstanding stock option or stock
appreciation right, provided, however, that the maximum aggregate number of
Shares that may be issued pursuant to the exercise of Incentive Stock Options
shall in no event exceed 68,000,000 Shares.

Shares covered by a benefit granted under the Plan shall not be counted as used
unless and until they are actually issued and delivered to a Participant. Thus,
to the extent that an Award terminates, expires, lapses for any reason, or is
settled in cash, any Shares subject to the Award shall again be available for
the grant of an Award pursuant to the Plan. Any Shares tendered or withheld to
satisfy the grant or exercise price or tax withholding obligation (including any
shifting of employer tax liability to the Participant) pursuant to any Award
shall also again be available for the grant of an Award pursuant to the Plan. In
addition, Shares that are not issued or delivered as a result of the net
settlement of an outstanding Option or SAR (including a SAR settled in Shares
which the Committee, in its discretion, may substitute for an outstanding
Option) shall not be counted against the maximum number of Shares available for
issuance pursuant to this Section 3.1 and shall instead be returned to the Plan.
The payment of Dividend Equivalent Rights in cash in conjunction with any
outstanding Awards shall not be counted against the Shares available for
issuance under the Plan. Notwithstanding the provisions of this Section 3.1, no
Shares may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

To the extent permitted by applicable law or any exchange rule, Shares issued in
assumption of, or in substitution for, any outstanding awards of any entity
acquired in any form of combination by the Company or any Subsidiary shall not
be counted against Shares available

 

7

--------------------------------------------------------------------------------

for grant pursuant to this Plan. Additionally, to the extent permitted by
applicable law or any exchange rule, in the event that a company acquired by (or
combined with) the Company or any Subsidiary has shares available under a
pre-existing plan approved by stockholders and not adopted in contemplation of
such acquisition or combination, the shares available for grant pursuant to the
terms of such pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or formula used in
such acquisition or combination to determine the consideration payable to the
holders of common stock of the entities party to such acquisition or
combination) may, at the discretion of the Committee, be used for Awards under
the Plan in lieu of awards under the applicable pre-existing plan of the other
company and shall not reduce the Shares authorized for grant under the Plan;
provided that Awards using such available shares shall not be made after the
date awards or grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be made to
individuals who were not employees or directors of the Company or any Subsidiary
prior to such acquisition or combination.

3.2 Shares Distributed. Any Shares distributed pursuant to an Award may consist,
in whole or in part, of authorized and unissued Shares, treasury Shares or
Shares purchased on the open market.

3.3 Limitation on Number of Shares Subject to Awards. Notwithstanding any
provision in the Plan to the contrary, and subject to Article 12, where it is
intended to comply with Section 162(m) of the Code, the maximum number of Shares
with respect to one or more Awards that may be granted to any one Participant
during any calendar year shall be 6,000,000 Shares with respect to Awards other
than Full Value Awards (e.g., Options and SARs) or 1,500,000 Full Value Awards
(e.g., Restricted Stock and Restricted Stock Units) and the maximum amount that
may be paid in cash during any calendar year with respect to any Award
(including, without limitation, any Performance Bonus Award) shall be
$10,000,000. As used herein, “Full Value Award” means any Award other than an
Option, SAR or other Award for which the Participant pays a minimum of the Fair
Market Value of the Shares, as determined as of the date of grant. To the extent
required by Section 162(m) of the Code or the Department of Treasury regulations
thereunder, in applying the foregoing limitations with respect to a Participant,
if any Option or SAR is canceled, the canceled Option or SAR shall continue to
count against the maximum number of Shares with respect to which Options and
SARs may be granted to the Participant. For this purpose, the repricing of an
Option (or in the case of a SAR, the reduction of the base amount on which the
stock appreciation is calculated in order to reflect a reduction in the Fair
Market Value of the Common Stock) shall be treated as the cancellation of the
existing Option or SAR and the grant of a new Option or SAR.

 

ARTICLE 4. ELIGIBILITY AND PARTICIPATION

4.1 Eligibility. Subject to the provisions of the Plan, each Eligible Individual
shall be eligible to be granted one or more Awards pursuant to the Plan.

4.2 Participation. Subject to the provisions of the Plan, the Committee may,
from time to time, select from among all Eligible Individuals, those to whom
Awards shall be granted and shall determine the nature and amount of each Award.
No Eligible Individual shall have any right to be granted an Award pursuant to
this Plan.

 

8

--------------------------------------------------------------------------------

4.3 Non-U.S. Participants. Notwithstanding any provision of the Plan to the
contrary, in order to comply with the laws in countries outside the United
States in which the Company and its Affiliates operate or have Eligible
Individuals, the Committee, in its sole discretion, shall have the power and
authority to: (i) determine which Affiliates shall be covered by the Plan;
(ii) determine which Eligible Individuals outside the United States are eligible
to participate in the Plan; (iii) modify the terms and conditions of any Award
granted to Eligible Individuals outside the United States to comply with
applicable laws of jurisdictions outside of the United States; (iv) establish
subplans and modify exercise procedures and other terms and procedures and
rules, to the extent such actions may be necessary or advisable, including
adoption of rules, procedures or subplans applicable to particular Affiliates or
Participants residing in particular locations; provided, however, that no such
subplans and/or modifications shall increase the share limitations contained in
Sections 3.1 and 3.3 hereof or otherwise require stockholder approval; and
(v) take any action, before or after an Award is made, that it deems advisable
to obtain approval or comply with any necessary local governmental regulatory
exemptions or approvals. Without limiting the generality of the foregoing, the
Committee is specifically authorized to adopt rules, procedures and subplans
with provisions that limit or modify rights on eligibility to receive an Award
under the Plan or on death, disability, retirement or termination of employment,
available methods of exercise or settlement of an Award, payment of income,
social insurance contributions and payroll taxes, the shifting of employer tax
liability to the Participant, the withholding procedures and handling of any
Share certificates or other indicia of ownership which may vary with local
requirements. Notwithstanding the foregoing, the Committee may not take any
actions hereunder, and no Awards shall be granted, that would violate the
Securities Act, Exchange Act, the Code, any securities law or governing statute
or any other applicable law.

 

ARTICLE 5. STOCK OPTIONS

5.1 General. The Committee is authorized to grant Options to Eligible
Individuals on the following terms and conditions and such additional terms and
conditions as may be specified by the Committee:

(a) Exercise Price. The Exercise Price per Share subject to an Option shall be
determined by the Committee and set forth in the Award Agreement; provided that,
subject to Section 5.2(c) hereof, the per Share Exercise Price for any Option
shall not be less than 100% of the Fair Market Value of a Share on the date of
grant.

(b) Time and Conditions of Exercise. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part; provided that the
term of any Option granted under the Plan shall not exceed ten years. The
Committee shall also determine the performance or other conditions, if any, that
must be satisfied before all or part of an Option may be exercised.

(c) Payment. The Committee shall determine the methods by which the Exercise
Price of an Option and applicable withholding taxes (as further set forth in
Section 16.3 hereof) may be paid and the form of payment, as shall be set forth
in the Participant’s Award Agreement, including, without limitation: (i) cash or
check, (ii) surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares as the Committee may require

 

9

--------------------------------------------------------------------------------

(including withholding of Shares otherwise deliverable upon exercise of the
Award) which have a fair market value on the date of surrender or attestation
equal to the aggregate Exercise Price of the Shares as to which the Award shall
be exercised, (iii) promissory note bearing interest at no less than such rate
as shall then preclude the imputation of interest under the Code), (iv) other
property acceptable to the Committee (including through the delivery of a notice
that the Participant has placed a market sell order with a broker with respect
to Shares then issuable upon exercise of the Option, and that the broker has
been directed to pay a sufficient portion of the net proceeds of the sale of
Shares to the Company in satisfaction of the Exercise Price and applicable
withholding taxes; provided that payment of such proceeds is then made to the
Company upon settlement of such sale), (v) by a “net exercise” arrangement
pursuant to which the number of Shares issuable upon exercise of the Option
shall be reduced by the largest whole number of Shares having an aggregate fair
market value that does not exceed the aggregate Exercise Price (plus tax
withholdings, if applicable) and any remaining balance of the aggregate Exercise
Price (and/or applicable tax withholdings) not satisfied by such reduction in
the number of whole Shares to be issued shall be paid by Participant in cash
other form of payment approved by the Committee. The Committee shall also
determine the methods by which Shares shall be delivered or deemed to be
delivered to Participants. Notwithstanding any other provision of the Plan to
the contrary, no Participant who is a Director or an “executive officer” of the
Company within the meaning of Section 13(k) of the Exchange Act shall be
permitted to pay the Exercise Price of an Option, or continue any extension of
credit with respect to the Exercise Price of an Option with a loan from the
Company or a loan arranged by the Company in violation of Section 13(k) of the
Exchange Act.

5.2 Incentive Stock Options. Incentive Stock Options shall be granted only to
Employees of the Company or any Parent or Subsidiary, and the terms of any
Incentive Stock Options granted pursuant to the Plan, in addition to the
requirements of Section 5.1 hereof, must comply with the provisions of this
Section 5.2.

(a) Expiration. Subject to Section 5.2(c) hereof, an Incentive Stock Option
shall expire and may not be exercised to any extent by anyone after the first to
occur of the following events:

(i) Ten years from the date it is granted, unless an earlier time is set in the
Award Agreement;

(ii) Three months after the Participant’s termination of employment as an
Employee; and

(iii) One year after the date of the Participant’s termination of employment or
service on account of Disability or death. Upon the Participant’s Disability or
death, any Incentive Stock Options exercisable at the Participant’s Disability
or death may be exercised by the Participant’s legal representative or
representatives, by the person or persons entitled to do so pursuant to the
Participant’s last will and testament, or, if the Participant fails to make
testamentary disposition of such Incentive Stock Option or dies intestate, by
the person or persons entitled to receive the Incentive Stock Option pursuant to
the applicable laws of descent and distribution.

 

10

--------------------------------------------------------------------------------

(b) Dollar Limitation. The aggregate Fair Market Value (determined as of the
time the Option is granted) of all Shares with respect to which Incentive Stock
Options are first exercisable by a Participant in any calendar year may not
exceed $100,000 or such other limitation as imposed by Section 422(d) of the
Code, or any successor provision. To the extent that Incentive Stock Options are
first exercisable by a Participant in excess of such limitation, the excess
shall be considered Non-Qualified Stock Options.

(c) Ten-Percent Owners. An Incentive Stock Option shall be granted to any
individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Shares of the
Company only if such Option is granted at an exercise price that is not less
than 110% of Fair Market Value of a Share on the date of grant and the Option is
exercisable for no more than five years from the date of grant.

(d) Notice of Disposition. The Participant shall give the Company prompt notice
of any disposition of Shares acquired by exercise of an Incentive Stock Option
within (i) two years from the date of grant of such Incentive Stock Option or
(ii) one year after the transfer of such Shares to the Participant.

(e) Right to Exercise. During a Participant’s lifetime, an Incentive Stock
Option may be exercised only by the Participant.

(f) Failure to Meet Requirements. Any Option (or portion thereof) purported to
be an Incentive Stock Option, which, for any reason, fails to meet the
requirements of Section 422 of the Code shall be considered a Non-Qualified
Stock Option.

5.3 Substitution of Stock Appreciation Rights. The Committee may provide in the
Award Agreement evidencing the grant of an Option that the Committee, in its
sole discretion, shall have to right to substitute a Stock Appreciation Right
for such Option at any time prior to or upon exercise of such Option; provided,
that such Stock Appreciation Right shall be exercisable with respect to the same
number of Shares for which such substituted Option would have been exercisable.

 

ARTICLE 6. RESTRICTED STOCK AWARDS

6.1 Grant of Restricted Stock. The Committee is authorized to make awards of
Restricted Stock to any Eligible Individual selected by the Committee in such
amounts and subject to such terms and conditions as determined by the Committee.

6.2 Purchase Price. At the time of the grant of an award of Restricted Stock,
the Committee shall determine the price, if any, to be paid by the Participant
for each Share subject to the award of Restricted Stock. To the extent required
by applicable law, the price to be paid by the Participant for each Share
subject to the award of Restricted Stock shall not be less than the par value of
a Share (or such higher amount required by applicable law). The purchase price
of Shares acquired pursuant to the award of Restricted Stock shall be paid
either: (i) in cash or cash equivalent at the time of purchase; (ii) at the sole
discretion of the Committee, by services rendered or to be rendered to the
Company or an Affiliate; or (iii) in any other form of legal consideration that
may be acceptable to the Committee in its sole discretion and in compliance with
applicable law.

 

11

--------------------------------------------------------------------------------

6.3 Issuance, Vesting and Restrictions. Restricted Stock may or may not be
subject to vesting, and shall be subject to such restrictions on transferability
and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right to
receive dividends on the Restricted Stock). The vesting, if any, and any
restrictions may occur or lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.

6.4 Forfeiture. Except as otherwise determined by the Committee at the time of
the grant of the Award or thereafter, upon termination of employment or service
during the applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited; provided, however, that the
Committee may (a) provide in any Restricted Stock Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes, and (b) in other cases waive in whole or in part restrictions or
forfeiture conditions relating to Restricted Stock.

6.5 Certificates for Restricted Stock. Restricted Stock granted pursuant to the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.

 

ARTICLE 7. STOCK APPRECIATION RIGHTS

7.1 Grant of Stock Appreciation Rights. The Committee is authorized to grant
Stock Appreciation Rights to Eligible Individuals on the following terms and
conditions and such additional terms and conditions as may be specified by the
Committee:

(a) Exercise Price. The Exercise Price per Share subject to a SAR shall be
determined by the Committee and set forth in the Award Agreement; provided that
the per Share Exercise Price for any SAR shall not be less than 100% of the Fair
Market Value of a Share on the date of grant.

(b) Time and Conditions of Exercise. The Committee shall determine the time or
times at which a SAR may be exercised in whole or in part; provided that the
term of any SAR granted under the Plan shall not exceed ten years. The Committee
shall also determine the performance or other conditions, if any, that must be
satisfied before all or part of a SAR may be exercised.

7.2 Payment and Limitations on Exercise.

(a) A Stock Appreciation Right shall entitle the Participant (or other person
entitled to exercise the SAR pursuant to the Plan) to exercise all or a
specified portion of the SAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount equal to the product of (i) the
excess of (A) the fair market value of the Shares on the date the SAR is
exercised over (B) the Exercise Price of the SAR and (ii) the number of Shares
with respect to which the SAR is exercised, less applicable withholding taxes
(as further set forth in Section 16.3 hereof), subject to any limitations the
Committee may impose.

 

12

--------------------------------------------------------------------------------

(b) Payment of the amounts determined under Section 7.2(a) hereof shall be in
cash, in Shares (based on the fair market value of the Shares as of the date the
Stock Appreciation Right is exercised) or a combination of both, as determined
by the Committee in the Award Agreement.

 

ARTICLE 8. RESTRICTED STOCK UNITS

8.1 Restricted Stock Units. The Committee is authorized to award Restricted
Stock Units to any Eligible Individual selected by the Committee in such amounts
and subject to such terms and conditions as determined by the Committee.

8.2 Vesting Conditions. The Committee shall specify the date or dates on which
the Restricted Stock Units shall become fully vested and nonforfeitable, and may
specify such conditions to vesting as it deems appropriate. The vesting
conditions may be based on the passage of time or the attainment of
performance-based conditions.

8.3 Form and Time of Settlement. The Committee shall specify the settlement date
applicable to each grant of Restricted Stock Units which shall be no earlier
than the vesting date, or it may be deferred to any later date, subject to
compliance with Section 409A of the Code, as applicable. On the settlement date,
subject to satisfaction of applicable withholding taxes (as further set forth in
Section 16.3 hereof), the Company shall transfer to the Participant one
unrestricted, fully transferable Share for each Restricted Stock Unit scheduled
to be paid out on such date and not previously forfeited. Alternatively,
settlement of a Restricted Stock Unit may be made in cash (in an amount
reflecting the fair market value of Shares that would have been issued) or any
combination of cash and Shares, as determined by the Committee, in its sole
discretion, in either case less applicable withholding taxes (as further set
forth in Section 16.3 hereof). Until a Restricted Stock Unit is settled, the
number of Restricted Stock Units shall be subject to adjustment pursuant to
Article 12 hereof.

8.4 General Creditors. A Participant who has been granted Restricted Stock Units
shall have no rights other than those of a general creditor of the Company.
Restricted Stock Units represent an unfunded and unsecured obligation of the
Company, subject to the terms and conditions of the applicable Award Agreement
evidencing the grant of the Restricted Stock Units.

 

ARTICLE 9. OTHER SHARE-BASED AWARDS

9.1 Grants of Other Share-Based Awards. The Committee is authorized under the
Plan to make Awards (other than Options, awards of Restricted Stock, SARs and
Restricted Stock Units) to an Eligible Individual subject to the terms and
conditions set forth in this Article 9 and such other terms and conditions as
may be specified by the Committee that are not inconsistent with the provisions
of the Plan and that by their terms involves or might involve the issuance of,
consist of, or are denominated in, payable in, valued in whole or in part by
reference to, or otherwise relate to, Shares. These Awards may include, among
other forms, Dividend Equivalent Rights and Share Payments. The Committee may
establish one or more separate

 

13

--------------------------------------------------------------------------------

programs under the Plan for the purpose of issuing particular forms of Awards to
one or more classes of Participants on such terms and conditions as determined
by the Committee from time to time.

(a) Dividend Equivalent Rights. Any Participant selected by the Committee may be
granted Dividend Equivalent Rights based on the dividends declared on the Shares
that are subject to any Award, to be credited as of dividend payment dates,
during the period between the date the Award is granted and the date the Award
is exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalent Rights shall be converted to cash or additional Shares by such
formula and at such time and subject to such limitations as may be determined by
the Committee; provided that to the extent Shares subject to an Award are
subject to performance-based vesting conditions, any Dividend Equivalent Rights
relating to such shares shall be subject to the same performance-based vesting
conditions.

(b) Share Payments. Any Eligible Individual selected by the Committee may
receive Share Payments in the manner determined from time to time by the
Committee. The number of Shares shall be determined by the Committee and may be
based upon Performance Criteria or other specific performance criteria
determined appropriate by the Committee, determined on the date such Share
Payment is made or on any date thereafter. Any Award of Share Payments shall be
made in compliance with Section 409A of the Code, if applicable.

9.2 Term. Except as otherwise provided herein, the term of any Other Share-Based
Award granted pursuant to this Article 9 shall be set by the Committee in its
discretion.

9.3 Exercise Price. The Committee may establish the Exercise Price, if any, of
any Other Share-Based Award granted pursuant to this Article 9; provided,
however, that such Exercise Price shall not be less than the par value of a
Share on the date of grant, unless otherwise permitted by applicable law.

9.4 Form of Payment. Payments with respect to any Awards granted under this
Article 9 shall be made in cash or cash equivalent, in Shares or any combination
of the foregoing, as determined by the Committee.

 

ARTICLE 10. PERFORMANCE-BASED AWARDS FOR COVERED EMPLOYEES

10.1 Purpose. The purpose of this Article 10 is to provide the Committee the
ability to qualify Awards other than Options and SARs and that are granted
pursuant to Articles 6, 8, 9 or Section 10.5 hereof as Qualified
Performance-Based Compensation. If the Committee, in its discretion, decides to
grant a Performance-Based Award to a Covered Employee, the provisions of this
Article 10 shall control over any contrary provision contained in Articles 6, 8,
9 or Section 10.5 hereof; provided, however, that the Committee may in its
discretion grant Awards to Covered Employees that are based on Performance
Criteria or Performance Goals but that do not satisfy the requirements of this
Article 10.

10.2 Applicability. This Article 10 shall apply only to those Covered Employees
selected by the Committee to receive Performance-Based Awards that are intended
to qualify as Qualified Performance-Based Compensation. The designation of a
Covered Employee as a

 

14

--------------------------------------------------------------------------------

Participant for a Performance Period shall not in any manner entitle the
Participant to receive an Award for the period. Moreover, designation of a
Covered Employee as a Participant for a particular Performance Period shall not
require designation of such Covered Employee as a Participant in any subsequent
Performance Period and designation of one Covered Employee as a Participant
shall not require designation of any other Covered Employees as a Participant in
such period or in any other period.

10.3 Procedures with Respect to Performance-Based Awards. To the extent
necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Articles 6, 8 or 9 which may be granted to one or more Covered
Employees, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (a) designate one or more Covered
Employees, (b) select the Performance Criteria applicable to the Performance
Period, (c) establish the Performance Goals, and amounts of such Awards, as
applicable, which may be earned for such Performance Period, and (d) specify the
relationship between Performance Criteria and the Performance Goals and the
amounts of such Awards, as applicable, to be earned by each Covered Employee for
such Performance Period. Following the completion of each Performance Period,
the Committee shall certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period. In determining the amount earned
by a Covered Employee, the Committee shall have the right to reduce or eliminate
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period. A
Participant shall be eligible to receive payment pursuant to a Performance-Based
Award for a Performance Period only if the Performance Goals for such period are
achieved.

10.4 Additional Limitations. Notwithstanding any other provision of the Plan,
any Award which is granted to a Covered Employee shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and the Plan shall be deemed amended to the extent necessary to conform to such
requirements.

10.5 Performance Bonus Awards. Any Eligible Individual selected by the Committee
may be granted one or more Performance-Based Awards in the form of a cash bonus
(a “Performance Bonus Award”) payable upon the attainment of Performance Goals
that are established by the Committee and relate to one or more of the
Performance Criteria, in each case on a specified date or dates or over any
period or periods determined by the Committee.

 

ARTICLE 11. PROVISIONS APPLICABLE TO AWARDS

11.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in
the discretion of the Committee, be granted either alone, in addition to, or in
tandem with, any other Award granted pursuant to the Plan. Awards granted in
addition to or in tandem with other Awards may be granted either at the same
time as or at a different time from the grant of such other Awards.

 

15

--------------------------------------------------------------------------------

11.2 Award Agreement. Awards under the Plan shall be evidenced by Award
Agreements that set forth the terms, conditions and limitations for each Award
which may include the term of an Award, the provisions applicable in the event
the Participant’s employment or service terminates, and the Company’s authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an
Award.

11.3 Limits on Transfer. No right or interest of a Participant in any Award may
be pledged, encumbered, or hypothecated to or in favor of any party other than
the Company or a Subsidiary, or shall be subject to any lien, obligation, or
liability of such Participant to any other party other than the Company or a
Subsidiary. Except as otherwise provided by the Committee, no Award shall be
assigned, transferred, or otherwise disposed of by a Participant other than by
will or the laws of descent and distribution, and any Restricted Stock Unit that
becomes payable after the Participant’s death shall be distributed to the
recipient’s estate. The Committee may permit an Award (other than an Incentive
Stock Option) to be transferred to, exercised by and paid to certain persons or
entities related to the Participant, subject to the applicable limitations, if
any, described in the General Instructions to Form S-8 Registration Statement
under the Securities Act.

11.4 Stock Certificates; Book Entry Procedures. Notwithstanding anything herein
to the contrary and as is further set forth in Section 16.12 hereof, the Company
shall not be required to issue or deliver any certificates or make any book
entries evidencing Shares pursuant to any Award, unless and until the Committee
has determined, with advice of counsel, that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange on
which the Shares are listed or traded. All certificates evidencing Shares
delivered pursuant to the Plan are subject to any stop-transfer orders and other
restrictions as the Committee deems necessary or advisable to comply with
federal, state local, securities or other laws, including laws of jurisdictions
outside of the United States, rules and regulations and the rules of any
national securities exchange or automated quotation system on which the Shares
are listed, quoted, or traded. The Committee may place legends on any
certificate evidencing Shares to reference restrictions applicable to the
Shares. In addition to the terms and conditions provided herein, the Committee
may require that a Participant make such reasonable covenants, agreements, and
representations as the Committee, in its discretion, deems advisable in order to
comply with any such laws, regulations, or requirements. The Committee shall
have the right to require any Participant to comply with any timing or other
restrictions with respect to the settlement or exercise of any Award, including
a window-period limitation, as may be imposed in the discretion of the
Committee. Notwithstanding any other provision of the Plan, unless otherwise
determined by the Committee or required by any applicable law, rule or
regulation, the Company shall not deliver to any Participant certificates
evidencing Shares issued in connection with any Award and instead such Shares
shall be recorded in the books of the Company (or, as applicable, its transfer
agent or stock plan administrator).

11.5 Paperless Administration. In the event that the Company establishes, for
itself or using the services of a third party, an automated system for the
documentation, granting or exercise of Awards, such as a system using an
internet website or interactive voice response, then the paperless
documentation, granting or exercise of Awards by a Participant may be permitted
through the use of such an automated system.

 

16

--------------------------------------------------------------------------------

ARTICLE 12. CHANGES IN CAPITAL STRUCTURE

12.1 Adjustments.

(a) Non-Equity Restructuring Capitalization Adjustments. In the event of any
stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting the Shares or the
price of the Shares other than an Equity Restructuring, the Committee shall make
such adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change with respect to (a) the aggregate number and
kind of shares that may be issued under the Plan (including, but not limited to,
adjustments of the limitations in Sections 3.1 and 3.3 hereof); (b) the number
and kind of shares (or other securities or property) subject to outstanding
Awards; (c) the terms and conditions of any outstanding Awards (including,
without limitation, any applicable performance targets or criteria with respect
thereto); and (d) the Exercise Price per Share for any outstanding Awards under
the Plan. Any adjustment affecting an Award intended as Qualified
Performance-Based Compensation shall be made consistent with the requirements of
Section 162(m) of the Code.

(b) Corporate Transactions. In the event of any transaction or event described
in Section 12.1(a) hereof or any unusual or nonrecurring transactions or events
affecting the Company, any affiliate of the Company, or the financial statements
of the Company or any affiliate, or of changes in applicable laws, regulations
or accounting principles, the Committee, in its sole and absolute discretion,
and on such terms and conditions as it deems appropriate, either by the terms of
the Award or by action taken prior to the occurrence of such transaction or
event is hereby authorized to take any one or more of the following actions
whenever the Committee determines that such action is appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan or with respect to any Award under the Plan,
to facilitate such transactions or events or to give effect to such changes in
laws, regulations or principles:

(i) To provide for either (A) termination of any such Award in exchange for an
amount of cash, if any, equal to the amount that would have been attained upon
the exercise of such Award or realization of the Participant’s rights (and, for
the avoidance of doubt, if as of the date of the occurrence of the transaction
or event described in Section 12.1(a) the Committee determines in good faith
that no amount would have been attained upon the exercise of such Award or
realization of the Participant’s rights, then such Award may be terminated by
the Company without payment) or (B) the replacement of such Award with other
rights or property selected by the Committee in its sole discretion;

(ii) To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

(iii) To make adjustments in the number and type of Shares (or other securities
or property) subject to outstanding Awards, and in the number and kind of
outstanding

 

17

--------------------------------------------------------------------------------

Restricted Stock and/or in the terms and conditions of (including the Exercise
Price), and the criteria included in, outstanding options, rights and awards and
options, rights and awards which may be granted in the future;

(iv) To provide that such Award shall be exercisable or payable or fully vested
with respect to all Shares covered thereby, notwithstanding anything to the
contrary in the Plan or the applicable Award Agreement, and in any event in
compliance with Section 409A of the Code; and

(v) To provide that the Award cannot vest, be exercised or become payable after
such event.

(c) Equity Restructuring Capitalization Adjustments. In connection with the
occurrence of any Equity Restructuring, and notwithstanding anything to the
contrary in Sections 12.1(a) and 12.1(b) hereof:

(i) The number and type of securities subject to each outstanding Award and the
Exercise Price thereof, if applicable, shall be equitably adjusted. The
adjustments provided under this Section 12.1(c)(i) shall be nondiscretionary and
shall be final and binding on the affected Participant and the Company.

(ii) The Committee shall make such equitable adjustments, if any, as the
Committee in its discretion may deem appropriate to reflect such Equity
Restructuring with respect to the aggregate number and kind of shares that may
be issued under the Plan (including, but not limited to, adjustments of the
limitations in Sections 3.1 and 3.3 hereof).

(iii) To the extent that such equitable adjustments result in tax consequences
to the Participant, the Participant shall be responsible for payment of such
taxes and shall not be compensated for such payments by the Company or its
Affiliates.

(d) Corporate Authority. The existence of the Plan, the Award Agreement and the
Awards granted hereunder shall not affect or restrict in any way the right or
power of the Company or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company’s
capital structure or its business, any merger or consolidation of the Company,
any issue of stock or of options, warrants or rights to purchase stock or of
bonds, debentures, preferred or prior preference stocks whose rights are
superior to or affect the Common Stock or the rights thereof or which are
convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

12.2 Acceleration in Connection with a Change in Control. Notwithstanding
Section 12.1 hereof, and except as may otherwise be provided in any applicable
Award Agreement or other written agreement entered into between the Company and
a Participant, if a Change in Control occurs and a Participant’s Awards are not
converted, assumed, or replaced by a successor entity or survivor corporation,
or a parent or subsidiary thereof, then immediately prior to the Change in
Control such Awards shall become fully exercisable, fully vested and all
forfeiture restrictions on such Awards shall lapse, as applicable and, in
connection with such

 

18

--------------------------------------------------------------------------------

Change in Control, all such Awards shall terminate and cease to be outstanding;
provided, however, that any amount that becomes payable in connection with the
vesting acceleration contemplated under this Section 12.2 of an Award that is
subject to Section 409A of the Code shall be paid within 60 days (or within such
other period specified in an Award Agreement) of a “change in control event”
within the meaning of Section 409A of the Code. In addition, where Awards are
converted, assumed, or replaced after a Change of Control, the Committee may
provide that the one or more Awards shall become fully exercisable, fully vested
and all forfeiture restrictions on such Awards shall lapse, as applicable, upon
the termination of the Participant’s employment or service within a designated
period following the effective date of such Change in Control. Upon, or in
anticipation of, a Change in Control, the Committee may cause any and all Awards
outstanding hereunder to terminate at a specific time in the future, including,
but not limited to, the date of such Change in Control, and shall give each
Participant the right to exercise such Awards during a period of time as the
Committee, in its sole and absolute discretion, shall determine. Except as may
otherwise be provided in any applicable Award Agreement or other written
agreement entered into between the Company and a Participant, to the extent that
there are tax consequences to the Participant as a result of the acceleration or
lapsing of forfeiture restrictions upon a Change in Control, the Participant
shall be responsible for payment of such taxes and shall not be compensated for
such payment by the Company or its Affiliates.

12.3 No Other Rights. Except as expressly provided in the Plan, no Participant
shall have any rights by reason of any subdivision or consolidation of Shares of
any class, the payment of any dividend, any increase or decrease in the number
of Shares of any class or any dissolution, liquidation, merger, or consolidation
of the Company or any other corporation. Except as expressly provided in the
Plan or pursuant to action of the Committee under the Plan, no issuance by the
Company of Shares of any class, or securities convertible into Shares of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of Shares subject to an Award or the grant or Exercise
Price of any Award.

 

ARTICLE 13. ADMINISTRATION

13.1 Committee. Unless otherwise determined by the Board, the Plan shall be
administered by the Committee which shall consist solely of two or more members
of the Board each of whom is an “independent director” under the NYSE rules (or
other principal securities market on which Shares are traded); provided that the
term “Committee” means (i) the Board when acting at any time in lieu of the
Committee, (ii) with respect to any decision involving an Award intended to
satisfy the requirements of Section 162(m) of the Code, a committee consisting
solely of two or more Directors of the Company who each are an “outside
director,” within the meaning of Section 162(m) of the Code, and (iii) with
respect to any decision relating to a Director or officer of the Company subject
to Section 16(a) of the Exchange Act, a committee consisting solely of two or
more Non-Employee Directors as defined under Rule 16b-3 under the Exchange Act;
and provided further that, any action taken by the Committee shall be valid and
effective, whether or not members of the Committee at the time of such action
are later determined not to have satisfied the requirements for membership set
forth in this Section 13.1 or otherwise provided in any charter of the
Committee. Notwithstanding the foregoing: (a) the full Board, acting by a
majority of its members in office, or a committee of the Board designated by the
Board, shall conduct the general administration of the Plan with respect to all
Awards granted to members of the Board who are not Employees and for purposes of
such Awards the term “Committee” as used in this Plan shall be deemed to refer
to the Board and (b) the Committee may delegate its authority hereunder to the
extent permitted by Section 13.4 hereof. In its sole discretion, the Board may
at any time and from time to time exercise any and all rights and duties of the
Committee under the Plan except with respect to matters which under Rule 16b-3
under the Exchange Act or Section 162(m) of the Code, or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Committee.

 

19

--------------------------------------------------------------------------------

13.2 Authority of Committee. Subject to any specific designation in the Plan,
the Committee has the exclusive power, authority and discretion to:

(a) Designate Participants to receive Awards;

(b) Determine the type or types of Awards to be granted to each Participant;

(c) Determine the number of Awards to be granted and the number of Shares to
which an Award will relate;

(d) Determine the terms and conditions of any Award granted pursuant to the
Plan, including, but not limited to, the Exercise Price, or purchase price, any
restrictions or limitations on the Award, any schedule for lapse of forfeiture
restrictions or restrictions on the exercisability of an Award, and
accelerations or waivers thereof, any provisions related to non-competition and
recapture of gain on an Award, based in each case on such considerations as the
Committee in its sole discretion determines; provided, however, that the
Committee shall not have the authority to accelerate the vesting or waive the
forfeiture of any Performance-Based Awards intended to qualify as Qualified
Performance Based-Compensation or if any such acceleration would result in a
violation of Section 409A of the Code;

(e) Determine whether, to what extent, and pursuant to what circumstances an
Award may be settled in, or the Exercise Price of an Award may be paid in, cash,
Shares, other Awards, or other property, or an Award may be canceled, forfeited,
or surrendered;

(f) Prescribe the form of each Award Agreement, which need not be identical for
each Participant;

(g) Decide all other matters that must be determined in connection with an
Award;

(h) Establish, adopt, or revise any rules and regulations including adopting
subplans to the Plan for the purposes of complying with non-U.S. laws and/or
taking advantage of tax favorable treatment for Awards granted to Participants
outside the United States (as further set forth in Section 4.3 hereof) as it may
deem necessary or advisable to administer the Plan;

(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any
Award Agreement; and

(j) Make all other decisions and determinations that may be required pursuant to
the Plan or as the Committee deems necessary or advisable to administer the
Plan.

13.3 Decisions Binding. The Committee’s interpretation of the Plan, any Awards
granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.

 

20

--------------------------------------------------------------------------------

13.4 Delegation of Authority. To the extent permitted by applicable law, the
Committee may from time to time delegate to one or more officers of the Company
the authority to grant or amend Awards to Participants; provided that the
Committee shall have the sole authority with respect to Awards granted to or
held by (a) Participants who are subject to Section 16 of the Exchange Act,
(b) Covered Employees, or (c) officers of the Company (or Directors) to whom
authority to grant or amend Awards has been delegated hereunder. For the
avoidance of doubt, provided it meets the limitation in the preceding sentence,
this delegation shall include the right to modify Awards as necessary to
accommodate changes in the laws or regulations, including in jurisdictions
outside the United States. Any delegation hereunder shall be subject to the
restrictions and limits that the Committee specifies at the time of such
delegation, and the Committee may at any time rescind the authority so delegated
or appoint a new delegatee. At all times, the delegatee appointed under this
Section 13.4 shall serve in such capacity at the pleasure of the Committee.

 

ARTICLE 14. EFFECTIVE AND EXPIRATION DATE

14.1 Effective Date. The Plan is effective as of the date that all outstanding
Shares are distributed to holders of shares of Motorola, Inc.’s common stock
(the “Effective Date”).

14.2 Expiration Date. The Plan will expire on, and no Award may be granted
pursuant to the Plan after the tenth anniversary of the Effective Date, except
that no Incentive Stock Options may be granted under the Plan after the earlier
of the tenth anniversary of (a) the date the Plan is approved by the Board or
(b) the Effective Date. Any Awards that are outstanding on the tenth anniversary
of the Effective Date shall remain in force according to the terms of the Plan
and the applicable Award Agreement.

 

ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION

15.1 Amendment, Modification, and Termination. At any time and from time to
time, the Committee may terminate, amend or modify the Plan; provided, however,
that (a) to the extent necessary and desirable to comply with any applicable
law, regulation, or stock exchange rule, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required, and (b) stockholder approval shall be required for any amendment to
the Plan that (i) increases the number of shares available under the Plan (other
than any adjustment as provided by Article 12), or (ii) permits the Committee to
extend the exercise period for an Option or SAR beyond ten years from the date
of grant. Notwithstanding any provision in this Plan to the contrary, absent
approval of the stockholders of the Company, no Option or SAR may be amended to
reduce the per share Exercise Price of the shares subject to such Option or SAR
below the per share Exercise Price as of the date the Option or SAR is granted
or cancel the outstanding Options or SARs in exchange for cash and, except as
permitted by Article 12, no Option or SAR may be granted in exchange for, or in
connection with, the cancellation or surrender of an Option or SAR having a
higher per share Exercise Price.

15.2 Awards Previously Granted. Except with respect to amendments made pursuant
to Section 16.14 hereof and except as may be provided in an Award Agreement, no
termination, amendment, or modification of the Plan shall adversely affect in
any material way any Award previously granted pursuant to the Plan without the
prior written consent of the Participant;

 

21

--------------------------------------------------------------------------------

provided, however, that an amendment or modification that may cause an Incentive
Stock Option to become a Non-Qualified Stock Option or that may have an
equivalent impact on an Award intended to qualify for tax-favorable treatment
under applicable non-U.S. law shall not be treated as adversely affecting the
rights of the Participant.

 

ARTICLE 16. GENERAL PROVISIONS

16.1 No Rights to Awards. No Eligible Individual or other person shall have any
claim to be granted any Award pursuant to the Plan, and neither the Company nor
the Committee is obligated to treat Eligible Individuals, Participants or any
other persons uniformly.

16.2 No Stockholders Rights. Except as otherwise provided herein, a Participant
shall have none of the rights of a stockholder with respect to Shares covered by
any Award, including to the right to vote or receive dividends, until the
Participant becomes the record owner of such Shares, notwithstanding the
exercise of an Option or other Award.

16.3 Withholding. The Company or any Affiliate, as appropriate, shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy U.S. federal, state, and local
taxes and taxes imposed by jurisdictions outside of the United States (including
the Participant’s employment tax obligations) required by law to be withheld and
any employer tax liability shifted to a Participant with respect to any taxable
event concerning a Participant arising as a result of this Plan or to take such
other action as may be necessary in the opinion of the Company or an Affiliate,
as appropriate, to satisfy withholding obligations for the payment of taxes,
including but not limited to selling Shares issued pursuant to an Award and
withholding from proceeds of the sale of such Shares. The Committee may in its
discretion and in satisfaction of the foregoing requirement withhold Shares
otherwise issuable under an Award (or allow the return of Shares) having a Fair
Market Value equal to the sums required to be withheld. To avoid negative
accounting treatment, the number of Shares which may be withheld with respect to
the issuance, vesting, exercise or payment of any Award or which may be
repurchased from the Participant of such Award in order to satisfy the
Participant’s U.S. federal, state, local and non-U.S. income and payroll tax
liabilities with respect to the issuance, vesting, exercise or payment of the
Award may be limited to the number of Shares which have a Fair Market Value on
the date of withholding or repurchase equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates or other applicable
minimum withholding rates for federal, state, local and foreign income tax and
payroll tax purposes that are applicable to such supplemental taxable income. No
Shares shall be delivered hereunder to any Participant or other person until the
Participant or such other person has made arrangements acceptable to the
Committee for the satisfaction of the tax obligations with respect to any
taxable event concerning the Participant or such other person arising as a
result of this Plan.

16.4 No Right to Employment or Services. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Affiliate to terminate any Participant’s employment or services at any time,
nor confer upon any Participant any right to continue in the employ or service
of the Company or any Affiliate.

 

22

--------------------------------------------------------------------------------

16.5 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan
for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company or any Affiliate.

16.6 Indemnification. To the extent allowable pursuant to applicable law, each
member of the Committee or of the Board shall be indemnified and held harmless
by the Company from any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by such member in connection with or resulting from
any claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action or failure to act
pursuant to the Plan and against and from any and all amounts paid by him or her
in satisfaction of judgment in such action, suit, or proceeding against him or
her; provided he or she gives the Company an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.

16.7 Relationship to Other Benefits. No payment pursuant to the Plan shall be
taken into account in determining any benefits pursuant to any severance,
resignation, termination, redundancy, end of service payment, long-term service
award, pension, retirement, savings, profit sharing, group insurance, welfare,
employee stock purchase or other benefit plan of the Company or any Affiliate
except to the extent otherwise expressly provided in writing in such other plan
or an agreement thereunder.

16.8 Expenses. The expenses of administering the Plan shall be borne by the
Company and its Affiliates.

16.9 Titles and Headings. The titles and headings of the Sections in the Plan
are for convenience of reference only and, in the event of any conflict, the
text of the Plan, rather than such titles or headings, shall control.

16.10 Fractional Shares. No fractional Shares shall be issued and the Committee
shall determine, in its discretion, whether cash shall be given in lieu of
fractional shares or whether such fractional shares shall be eliminated by
rounding up or down as appropriate.

16.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other
provision of the Plan, the Plan, and any Award granted or awarded to any
Participant who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3
under the Exchange Act) that are requirements for the application of such
exemptive rule. To the extent permitted by applicable law, the Plan and Awards
granted or awarded hereunder shall be deemed amended to the extent necessary to
conform to such applicable exemptive rule.

 

23

--------------------------------------------------------------------------------

16.12 Government and Other Regulations. The obligation of the Company to make
payment of awards in Shares or otherwise shall be subject to all applicable
laws, rules, and regulations of the United States and jurisdictions outside the
United States including the regulations of any stock exchange on which the
Company’s securities may then be listed, and to such approvals by government
agencies, including government agencies in jurisdictions outside of the United
States, in each case as may be required or as the Company deems necessary or
advisable. Without limiting the foregoing, the Company shall have no obligation
to issue or deliver evidence of title for Shares subject to Awards granted
hereunder prior to: (i) obtaining any approvals from governmental agencies that
the Company determines are necessary or advisable, and (ii) completion of any
registration or other qualification with respect to the Shares under any
applicable law in the United States or in a jurisdiction outside of the United
States or ruling of any governmental body that the Company determines to be
necessary or advisable or at a time when any such registration or qualification
is not current, has been suspended or otherwise has ceased to be effective. The
inability or impracticability of the Company to obtain or maintain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained. The Company shall be under no obligation to register pursuant to
the Securities Act, as amended, any of the Shares paid pursuant to the Plan. If
the Shares paid pursuant to the Plan may in certain circumstances be exempt from
registration pursuant to the Securities Act, as amended, the Company may
restrict the transfer of such Shares in such manner as it deems advisable to
ensure the availability of any such exemption.

16.13 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of Delaware, without
regard to the principles of conflict of laws of that State.

16.14 Section 409A. Except as provided in Section 16.15 hereof, to the extent
that the Committee determines that any Award granted under the Plan is subject
to Section 409A of the Code, the Award Agreement evidencing such Award shall
incorporate the terms and conditions required by Section 409A of the Code. It is
intended that the Plan and Awards will be exempt from or will comply with
Section 409A of the Code and the Treasury Regulations, and the Plan and Award
Agreements shall be interpreted, operated and administered in a manner
consistent with these intentions. Notwithstanding any provision of the Plan to
the contrary, in the event that the Committee determines that any Award may be
subject to Section 409A of the Code, the Committee may adopt such amendments to
the Plan and the applicable Award Agreement or adopt other policies and
procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions, including amendments or actions that would
result in a reduction to the benefits payable under an Award, in each case,
without the consent of the Participant, that the Committee determines are
necessary or appropriate to (a) exempt the Award from Section 409A of the Code
and/or preserve the intended tax treatment of the benefits provided with respect
to the Award, or (b) comply with the requirements of Section 409A of the Code
and related Department of Treasury guidance and thereby avoid the application of
any penalty taxes under such Section.

 

24

--------------------------------------------------------------------------------

16.15 No Representations or Covenants with Respect to Tax Qualification.
Although the Company may endeavor to (1) qualify an Award for favorable tax
treatment under the laws of the United States or jurisdictions outside of the
United States (e.g., incentive stock options under Section 422 of the Code or
French-qualified stock options) or (2) avoid adverse tax treatment (e.g., under
Section 409A of the Code), the Company makes no representation to that effect
and expressly disavows any covenant to maintain favorable or avoid unfavorable
tax treatment, anything to the contrary in this Plan, including Section 16.14
hereof, notwithstanding, and the Company will have not liability to a
Participant or any other party if a payment under an Award that is intended to
benefit from favorable tax treatment or avoid adverse tax treatment or for any
action taken by the Committee with respect to the Award. The Company shall be
unconstrained in its corporate activities without regard to the potential
negative tax impact on holders of Awards under the Plan.

 

25