Document:

exv10w85

 EXHIBIT 10.85

QUALCOMM Incorporated

2006 Long-Term Incentive Plan

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	1. Establishment, Purpose and Term of Plan
	 	 	1	 
	 
	 	 	 	 
	1.1 Establishment
	 	 	1	 
	 
	 	 	 	 
	1.2 Purpose
	 	 	1	 
	 
	 	 	 	 
	1.3 Term of Plan
	 	 	1	 
	 
	 	 	 	 
	2. Definitions and Construction
	 	 	1	 
	 
	 	 	 	 
	2.1 Definitions
	 	 	1	 
	 
	 	 	 	 
	2.2 Construction
	 	 	9	 
	 
	 	 	 	 
	3. Administration
	 	 	9	 
	 
	 	 	 	 
	3.1 Administration by the Committee
	 	 	9	 
	 
	 	 	 	 
	3.2 Authority of Officers
	 	 	9	 
	 
	 	 	 	 
	3.3 Administration with Respect to Insiders
	 	 	9	 
	 
	 	 	 	 
	3.4 Committee Complying with Section 162(m)
	 	 	9	 
	 
	 	 	 	 
	3.5 Powers of the Committee
	 	 	10	 
	 
	 	 	 	 
	3.6 Indemnification
	 	 	11	 
	 
	 	 	 	 
	3.7 Arbitration
	 	 	11	 
	 
	 	 	 	 
	3.8 Repricing Prohibited
	 	 	11	 
	 
	 	 	 	 
	4. Shares Subject to Plan
	 	 	12	 
	 
	 	 	 	 
	4.1 Maximum Number of Shares Issuable
	 	 	12	 
	 
	 	 	 	 
	4.2 Adjustments for Changes in Capital Structure
	 	 	12	 
	 
	 	 	 	 
	5. Eligibility and Award Limitations
	 	 	13	 
	 
	 	 	 	 
	5.1 Persons Eligible for Awards
	 	 	13	 
	 
	 	 	 	 
	5.2 Participation
	 	 	13	 
	 
	 	 	 	 
	5.3 Incentive Stock Option Limitations
	 	 	13	 
	 
	 	 	 	 
	5.4 Award Limits
	 	 	14	 
	 
	 	 	 	 
	6. Terms and Conditions of Options
	 	 	15	 
	 
	 	 	 	 
	6.1 Exercise Price
	 	 	15	 
	 
	 	 	 	 
	6.2 Exercisability and Term of Options
	 	 	15	 
	 
	 	 	 	 
	6.3 Payment of Exercise Price
	 	 	16	 
	 
	 	 	 	 
	6.4 Effect of Termination of Service
	 	 	16	 
	 
	 	 	 	 
	6.5 Transferability of Options
	 	 	17	 
	 
	 	 	 	 
	7. Terms and Conditions of Stock Appreciation Rights
	 	 	17	 

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TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	7.1 Types of SARs Authorized
	 	 	18	 
	 
	 	 	 	 
	7.2 Exercise Price
	 	 	18	 
	 
	 	 	 	 
	7.3 Exercisability and Term of SARs
	 	 	18	 
	 
	 	 	 	 
	7.4 Deemed Exercise of SARs
	 	 	18	 
	 
	 	 	 	 
	7.5 Effect of Termination of Service
	 	 	18	 
	 
	 	 	 	 
	7.6 Nontransferability of SARs
	 	 	18	 
	 
	 	 	 	 
	8. Terms and Conditions of Restricted Stock Awards
	 	 	19	 
	 
	 	 	 	 
	8.1 Types of Restricted Stock Awards Authorized
	 	 	19	 
	 
	 	 	 	 
	8.2 Purchase Price
	 	 	19	 
	 
	 	 	 	 
	8.3 Purchase Period
	 	 	19	 
	 
	 	 	 	 
	8.4 Vesting and Restrictions on Transfer
	 	 	19	 
	 
	 	 	 	 
	8.5 Voting Rights; Dividends and Distributions
	 	 	20	 
	 
	 	 	 	 
	8.6 Effect of Termination of Service
	 	 	20	 
	 
	 	 	 	 
	8.7 Nontransferability of Restricted Stock Award Rights
	 	 	20	 
	 
	 	 	 	 
	9. Terms and Conditions of Performance Awards
	 	 	20	 
	 
	 	 	 	 
	9.1 Types of Performance Awards Authorized
	 	 	20	 
	 
	 	 	 	 
	9.2 Initial Value of Performance Shares and Performance Units
	 	 	20	 
	 
	 	 	 	 
	9.3 Establishment of Performance Period, Performance Goals and Performance Award Formula
	 	 	21	 
	 
	 	 	 	 
	9.4 Measurement of Performance Goals
	 	 	21	 
	 
	 	 	 	 
	9.5 Settlement of Performance Awards
	 	 	21	 
	 
	 	 	 	 
	9.6 Voting Rights; Dividend Equivalent Rights and Distributions
	 	 	22	 
	 
	 	 	 	 
	9.7 Effect of Termination of Service
	 	 	23	 
	 
	 	 	 	 
	9.8 Nontransferability of Performance Awards
	 	 	23	 
	 
	 	 	 	 
	10. Terms and Conditions of Restricted Stock Unit Awards
	 	 	23	 
	 
	 	 	 	 
	10.1 Grant of Restricted Stock Unit Awards
	 	 	23	 
	 
	 	 	 	 
	10.2 Vesting
	 	 	24	 
	 
	 	 	 	 
	10.3 Voting Rights, Dividend Equivalent Rights and Distributions
	 	 	24	 
	 
	 	 	 	 
	10.4 Effect of Termination of Service
	 	 	24	 
	 
	 	 	 	 
	10.5 Settlement of Restricted Stock Unit Awards
	 	 	24	 
	 
	 	 	 	 
	10.6 Nontransferability of Restricted Stock Unit Awards
	 	 	25	 

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TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	11. Deferred Compensation Awards
	 	 	25	 
	 
	 	 	 	 
	11.1 Establishment of Deferred Compensation Award Programs
	 	 	25	 
	 
	 	 	 	 
	11.2 Terms and Conditions of Deferred Compensation Awards
	 	 	26	 
	 
	 	 	 	 
	12. Other Stock-Based Awards
	 	 	27	 
	 
	 	 	 	 
	13. Effect of Change in Control on Options and SARs
	 	 	27	 
	 
	 	 	 	 
	13.1 Accelerated Vesting
	 	 	27	 
	 
	 	 	 	 
	13.2 Assumption or Substitution
	 	 	27	 
	 
	 	 	 	 
	13.3 Effect of Change in Control on Awards Other Than Options and SARs.
	 	 	28	 
	 
	 	 	 	 
	14. Compliance with Securities Law
	 	 	28	 
	 
	 	 	 	 
	15. Tax Withholding
	 	 	28	 
	 
	 	 	 	 
	15.1 Tax Withholding in General
	 	 	28	 
	 
	 	 	 	 
	15.2 Withholding in Shares
	 	 	28	 
	 
	 	 	 	 
	16. Amendment or Termination of Plan
	 	 	29	 
	 
	 	 	 	 
	17. Miscellaneous Provisions
	 	 	29	 
	 
	 	 	 	 
	17.1 Repurchase Rights
	 	 	29	 
	 
	 	 	 	 
	17.2 Provision of Information
	 	 	29	 
	 
	 	 	 	 
	17.3 Rights as Employee, Consultant or Director
	 	 	29	 
	 
	 	 	 	 
	17.4 Rights as a Stockholder
	 	 	30	 
	 
	 	 	 	 
	17.5 Fractional Shares
	 	 	30	 
	 
	 	 	 	 
	17.6 Severability
	 	 	30	 
	 
	 	 	 	 
	17.7 Beneficiary Designation
	 	 	30	 
	 
	 	 	 	 
	17.8 Unfunded Obligation
	 	 	30	 
	 
	 	 	 	 
	    French Addendum
	 	 	32	 

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QUALCOMM Incorporated

2006 Long-Term Incentive Plan

     1. Establishment, Purpose and Term of Plan.

          1.1 Establishment. The QUALCOMM Incorporated 2006 Long-Term Incentive Plan (the “Plan”) is
hereby adopted December 5, 2005, subject to approval by the stockholders of the Company (the date
of such approval, the “Effective Date”). The Plan is a restatement of the Company’s 2001 Stock
Option Plan. The Plan is also a successor to the Company’s 1991 Stock Option Plan and the
Company’s 2001 Non-Employee Directors’ Stock Option Plan and its predecessor plan (the “Prior
Plans”) and the source of shares for the Company’s Executive Retirement Matching Contribution Plan
(“ERMCP”). The Plan is amended through September 9, 2009.

          1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract and retain the best qualified
personnel to perform services for the Participating Company Group, by motivating such persons to
contribute to the growth and profitability of the Participating Company Group, by aligning their
interests with interests of the Company’s stockholders, and by rewarding such persons for their
services by tying a significant portion of their total compensation package to the success of the
Company. The Plan seeks to achieve this purpose by providing for Awards in the form of Options, Stock Appreciation Rights, Restricted Stock Awards, Performance
Shares, Performance Units, Restricted Stock Units, Deferred Compensation Awards and other
Stock-Based Awards as described below. The Plan is also a source for the issuance of shares
pursuant to the ERMCP.

          1.3 Term of Plan. The Plan shall continue in effect until the earlier of its termination by
the Board or the date on which all of the shares of Stock available for issuance under the Plan
have been issued and all restrictions on such shares under the terms of the Plan and the agreements
evidencing Awards granted under the Plan have lapsed. However, Awards shall not be granted later
than ten (10) years from the Effective Date. The Company intends that the Plan comply with Section
409A of the Code (including any amendments to or replacements of such section), and the Plan shall
be so construed.

     2. Definitions and Construction.

          2.1 Definitions. Whenever used herein, the following terms shall have their respective
meanings set forth below:

               (a) “Affiliate” means (i) an entity, other than a Parent Corporation, that directly, or
indirectly through one or more intermediary entities, controls the Company or (ii) an entity, other
than a Subsidiary Corporation, that is controlled by the Company directly, or indirectly through
one or more intermediary entities. For this purpose, the term “control” (including the term
“controlled by”) means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of the relevant entity, whether

2

 

through the ownership of voting securities, by contract or otherwise; or shall have such other meaning assigned such term
for the purposes of registration on Form S-8 under the Securities Act.

               (b) “Award” means any Option, SAR, Restricted Stock Award, Performance Share, Performance
Unit, Restricted Stock Unit or Deferred Compensation Award or other Stock-Based Award granted under
the Plan or an award of shares pursuant to the ERMCP.

               (c) “Award Agreement” means a written agreement between the Company and a Participant setting
forth the terms, conditions and restrictions of the Award granted to the Participant.

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

               (e) A “Change in Control” shall mean an Ownership Change Event or a series of related
Ownership Change Events (collectively, a “Transaction”) wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the Transaction, in
substantially the same proportions as their ownership of shares of the Company’s voting stock
immediately before the Transaction, direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding voting securities of the
Company or, in the case of a Transaction described in Section 2.1(z)(iii), the corporation or other
business entity to which the assets of the Company were transferred
(the “Transferee”), as the case
may be. The Board shall determine in its discretion whether multiple sales or exchanges of the
voting securities of the Company or multiple Ownership Change Events are related. Notwithstanding
the preceding sentence, a Change in Control shall not include a Spinoff Transaction.

               (f) “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.

               (g) “Committee” means the Compensation Committee or other committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified by the Board. If no
committee of the Board has been appointed to administer the Plan, the Board shall exercise all of
the powers of the Committee granted herein, and, in any event, the Board may in its discretion
exercise any or all of such powers. The Committee shall have the exclusive authority to administer
the Plan and shall have all of the powers granted herein, including, without limitation, the power
to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law.

               (h) “Company” means QUALCOMM Incorporated, a Delaware corporation, or any Successor.

               (i) “Consultant” means a person engaged to provide consulting or advisory services (other than
as an Employee or a member of the Board) to a Participating Company.

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               (j) “Deferred Compensation Award” means an award of Stock Units granted to a Participant
pursuant to Section 11 of the Plan.

               (k) “Director” means a member of the Board or of the board of directors of any Participating
Company.

               (l) “Disability” means the Participant has been determined by the long-term disability insurer
of the Participating Company Group as eligible for disability benefits under the long-term
disability plan of the Participating Company Group or the Participant has been determined eligible
for Supplemental Security Income benefits by the Social Security Administration of the United
States of America; provided, however that with respect to Nonemployee Director Awards, “Disability”
means the Participant has been determined eligible for supplemental Security Income benefits by the
Social Security Administration of the United States of America and also means the inability of the
Participant, in the opinion of a qualified physician acceptable to the Company, to perform the
duties of the Participant’s position with the Participating Company Group because of sickness or
other physical or mental incapacity.

               (m) “Dividend Equivalent” means a credit, made at the discretion of the Committee or as
otherwise provided by the Plan, to the account of a Participant in an amount equal to the cash
dividends paid on one share of Stock for each share of Stock represented by an Award held by such
Participant.

               (n) “Employee” means any person treated as an employee (including an Officer or a member of
the Board who is also treated as an employee) in the records of a Participating Company and, with
respect to any Incentive Stock Option granted to such person, who is an employee for purposes of
Section 422 of the Code; provided, however, that neither service as a member of the Board nor
payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.
The Company shall determine in good faith and in the exercise of its discretion whether an
individual has become or has ceased to be an Employee and the effective date of such individual’s
employment or termination of employment, as the case may be. For purposes of an individual’s
rights, if any, under the Plan as of the time of the Company’s determination, all such
determinations by the Company shall be final, binding and conclusive, notwithstanding that the
Company or any court of law or governmental agency subsequently makes a contrary determination.

               (o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

               (p) “Fair Market Value” means, as of any date, the value of a share of Stock or other property
as determined by the Committee, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the following:

                    (i) Except as otherwise determined by the Committee, if, on such date, the Stock is listed on
a national or regional securities exchange or market system, the Fair Market Value of a share of
Stock shall be the closing price of a share of Stock as quoted on such national or regional
securities exchange or market system constituting the primary market

4

 

for the Stock on the last trading day prior to the day of determination (effective March 13, 2007, such closing price on the
day of determination), as reported in The Wall Street Journal or such other source as the Company
deems reliable. Effective March 13, 2007, if there is no such closing price on the day of
determination, the Fair Market Value of a share of Stock under this Section 2.1(p)(i) shall be the
closing price of a share of Stock on the next trading day following the day of determination.

                    (ii) Notwithstanding the foregoing, the Committee may, in its discretion, determine the Fair
Market Value on the basis of the closing, high, low or average sale price of a share of Stock or
the actual sale price of a share of Stock received by a Participant, on such date, the preceding
trading day, the next succeeding trading day or an average determined over a period of trading days; provided,
however, that the Fair Market Value shall not be less that the Fair Market Value determined under
Section 2.1(p)(i). The Committee may vary its method of determination of the Fair Market Value as
provided in this Section for different purposes under the Plan.

                    (iii) If, on such date, the Stock is not listed on a national or regional securities exchange
or market system, the Fair Market Value of a share of Stock shall be as determined by the Committee
in good faith without regard to any restriction other than a restriction which, by its terms, will
never lapse.

               (q) “Incentive Stock Option” means an Option intended to be (as set forth in the Award
Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of
the Code.

               (r) “Insider” means an Officer, a Director or any other person whose transactions in Stock are
subject to Section 16 of the Exchange Act.

               (s) “Non-Control Affiliate” means any entity in which any Participating Company has an
ownership interest and which the Committee shall designate as a Non-Control Affiliate.

               (t) “Nonemployee Director” means a Director who is not an Employee.

               (u) “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Award
Agreement) an incentive stock option within the meaning of Section 422(b) of the Code.

               (v) “Normal Retirement Age” means the date on which a Participant has attained the age of
sixty (60) years and has completed ten years of continuous Service; provided, however, that with
respect to Nonemployee Director Awards, “Normal Retirement Age” means the date on which a
Participant has attained the age of seventy (70) years and has completed nine years of continuous
Service.

               (w) “Officer” means any person designated by the Board as an officer of the Company.

5

 

               (x) “Option” means the right to purchase Stock at a stated price for a specified period of
time granted to a Participant pursuant to Section 6 of the Plan. An Option may be either an
Incentive Stock Option or a Nonstatutory Stock Option.

               (y) “Option Expiration Date” means the date of expiration of the Option’s term as set forth in
the Award Agreement.

               (z) An “Ownership Change Event” shall be deemed to have occurred if any of the following
occurs with respect to the Company: (i) the direct or indirect sale or exchange in a single or
series of related transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all, as determined by the Board in
its discretion, of the assets of the Company; or (iv) a liquidation or dissolution of the Company.

               (aa) “Parent Corporation” means any present or future “parent corporation” of the Company, as
defined in Section 424(e) of the Code.

               (bb) “Participant” means any eligible person who has been granted one or more Awards.

               (cc) “Participating Company” means the Company or any Parent Corporation, Subsidiary
Corporation or Affiliate.

               (dd) “Participating Company Group” means, at any point in time, all entities collectively
which are then Participating Companies.

               (ee) “Performance Award” means an Award of Performance Shares or Performance Units.

               (ff) “Performance Award Formula” means, for any Performance Award, a formula or table
established by the Committee pursuant to Section 9.3 of the Plan which provides the basis for
computing the value of a Performance Award at one or more threshold levels of attainment of the
applicable Performance Goal(s) measured as of the end of the applicable Performance Period.

               (gg) “Performance Goal” means a performance goal established by the Committee pursuant to
Section 9.3 of the Plan.

               (hh) “Performance Period” means a period established by the Committee pursuant to Section 9.3
of the Plan at the end of which one or more Performance Goals are to be measured.

               (ii) “Performance Share” means a bookkeeping entry representing a right granted to a
Participant pursuant to Section 9 of the Plan to receive a payment equal to the value of a
Performance Share, as determined by the Committee, based on
performance.

6

 

               (jj) “Performance Unit” means a bookkeeping entry representing a right granted to a
Participant pursuant to Section 9 of the Plan to receive a payment equal to the value of a
Performance Unit, as determined by the Committee, based upon performance.

               (kk) “Restricted Stock Award” means an Award of Restricted Stock.

               (ll) “Restricted Stock Unit” or “Stock Unit” means a bookkeeping entry representing a right
granted to a Participant pursuant to Section 10 or Section 11 of the Plan, respectively, to receive
a share of Stock on a date determined in accordance with the provisions of Section 10 or Section
11, as applicable, and the Participant’s Award Agreement.

               (mm) “Restriction Period” means the period established in accordance with Section 8.4 of the
Plan during which shares subject to a Restricted Stock Award are subject to Vesting Conditions.

               (nn) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or
any successor rule or regulation.

               (oo) “SAR”
or “Stock Appreciation Right” means a bookkeeping entry representing, for each
share of Stock subject to such SAR, a right granted to a Participant pursuant to Section 7 of the
Plan to receive payment in any combination of shares of Stock or cash of an amount equal to the
excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR
over the exercise price.

               (pp) “Section 162(m)” means Section 162(m) of the Code.

               (qq) “Securities Act” means the Securities Act of 1933, as amended.

               (rr) “Service” means

                    (i) a Participant’s employment or service with the Participating Company Group, whether in the
capacity of an Employee, a Director or a Consultant. A Participant’s Service shall not be deemed
to have terminated merely because of a change in the capacity in which the Participant renders
Service to the Participating Company Group or a change in the Participating Company for which the
Participant renders such Service, provided that there is no interruption or termination of the
Participant’s Service. Furthermore, only to such extent as may be provided by the Company’s leave
policy, a Participant’s Service with the Participating Company Group shall not be deemed to have
terminated if the Participant takes any military leave, sick leave, or other leave of absence
approved by the Company. Notwithstanding the foregoing, a leave of absence shall be treated as
Service for purposes of vesting only to such extent as may be provided by the Company’s leave
policy. The Participant’s Service shall be deemed to have terminated either upon an actual
termination of Service or upon the entity for which the Participant performs Service ceasing to be
a Participating Company; except, and only for purposes of this Plan, if the entity for which
Participant performs Service is a Subsidiary Corporation and ceases to be a Participating Company
as a result of the distribution of the voting stock of such Subsidiary Corporation to the
shareholders of the Company, Service shall not be deemed to have terminated as a result of such

7

 

distribution. Subject to the foregoing, the Company, in its discretion, shall determine
whether the Participant’s Service has terminated and the effective date of such termination.

                    (ii) Notwithstanding any other provision of this Section, a Participant’s Service shall not be
deemed to have terminated merely because the Participating Company for which the Participant
renders Service ceases to be a member of the Participating Company Group by reason of a Spinoff
Transaction, nor shall Service be deemed to have terminated upon resumption of Service from the
Spinoff Company to a Participating Company. For all purposes under this Plan, and only for
purposes of this Plan, a Participant’s Service shall include Service, whether in the capacity of an
Employee, Director or a Consultant, for the Spinoff Company provided a Participant was employed by
the Participating Company Group immediately prior to the Spinoff Transaction.

                         In the event that the Participating Company for which Participant renders service ceases to be
a member of the Participating Company Group by reason of a Spinoff Transaction, the Company shall
have the authority to impose any restrictions, including but not limited to, with respect to the
method of payment of the exercise price of the Options held by such individuals, if the Company
determines that such restrictions are necessary to comply with applicable local laws.

                         Further, notwithstanding the foregoing, if the Participant resides outside the United States
and the Participating Company for which the individual renders service ceases to be a member of the
Participating Company Group by reason of a Spinoff Transaction, the Company may consider such
individual to have terminated his or her Service if it determines that there are material adverse
tax, securities law or other regulatory consequences to the Participant, the Company or the former
Participating Company as a result of the Spinoff Transaction. In this circumstance, the Company
will, in its discretion, (i) equitably adjust the Participant’s Option to ensure that he or she
maintains equivalent Option rights over the shares of common stock of the Spinoff Company for which
he or she is employed following the Spinoff Transaction, or (ii) determine that the Participant’s
Options shall fully vest and be fully exercisable and shall terminate if not exercised prior to
such Spinoff transaction or (iii) take any other action that, in its discretion, does not impair
the rights of such Participant with respect to the Option.

               (ss) “Spinoff Company” means a Participating Company which ceases to be such as a result of a
Spinoff Transaction.

               (tt) “Spinoff Transaction” means a transaction in which the voting stock of an entity in the
Participating Company Group is distributed to the shareholders of a parent corporation as defined
by Section 424(e) of the Code, of such entity.

               (uu) “Stock” means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.2 of the Plan.

               (vv) “Stock-Based Awards” means any award that is valued in whole or in part by reference to,
or is otherwise based on, the Stock, including dividends on the Stock, but not limited to those
Awards described in Sections 6 through 11 of the Plan.

8

 

               (ww) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.

               (xx) “Successor” means a corporation into or with which the Company is merged or consolidated
or which acquires all or substantially all of the assets of the Company and which is designated by
the Board as a Successor for purposes of the Plan.

               (yy) “Ten Percent Owner” means a Participant who, at the time an Option is granted to the
Participant, owns stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of
Section 422(b)(6) of the Code.

               (zz) “Vesting Conditions” mean those conditions established in accordance with Section 8.4 or
Section 10.2 of the Plan prior to the satisfaction of which shares subject to a Restricted Stock
Award or Restricted Stock Unit Award, respectively, remain subject to forfeiture or a repurchase
option in favor of the Company upon the Participant’s termination of Service.

          2.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated
by the context, the singular shall include the plural and the plural shall include the singular.
Use of the term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.

     3. Administration.

          3.1 Administration by the Committee. The Plan shall be administered by the Committee. All
questions of interpretation of the Plan or of any Award shall be determined by the Committee, and
such determinations shall be final and binding upon all persons having an interest in the Plan or
such Award.

          3.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided the Officer has apparent
authority with respect to such matter, right, obligation, determination or election.

          3.3 Administration with Respect to Insiders. With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements,
if any, of Rule 16b-3.

          3.4 Committee Complying with Section 162(m). While the Company is a “publicly held
corporation” within the meaning of Section 162(m), the Board may establish a Committee of “outside
directors” within the meaning of Section 162(m) to approve the grant of any Award which might
reasonably be anticipated to result in the payment of employee remuneration that would otherwise
exceed the limit on employee remuneration deductible for income tax purposes pursuant to Section
162(m).

9

 

          3.5 Powers of the Committee. In addition to any other powers set forth in the Plan and
subject to the provisions of the Plan, the Committee shall have the full and final power and
authority, in its discretion:

               (a) to determine the persons to whom, and the time or times at which, Awards shall be granted
and the number of shares of Stock or units to be subject to each Award;

               (b) to determine the type of Award granted and to designate Options as Incentive Stock Options
or Nonstatutory Stock Options;

               (c) to determine the Fair Market Value of shares of Stock or other property;

               (d) to determine the terms, conditions and restrictions applicable to each Award (which need
not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the
exercise or purchase price of shares purchased pursuant to any Award, (ii) the method of payment
for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax
withholding obligation arising in connection with Award, including by the withholding or delivery
of shares of Stock, (iv) the timing, terms and conditions of the exercisability or vesting of any
Award or any shares acquired pursuant thereto, (v) the Performance Award Formula and Performance
Goals applicable to any Award and the extent to which such Performance Goals have been attained,
(vi) the time of the expiration of any Award, (vii) the effect of the Participant’s termination of
Service on any of the foregoing, and (viii) all other terms, conditions and restrictions applicable
to any Award or shares acquired pursuant thereto not inconsistent with the terms of the Plan;

               (e) to determine whether an Award will be settled in shares of Stock, cash, or in any
combination thereof;

               (f) to approve one or more forms of Award Agreement;

               (g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or
conditions applicable to any Award or any shares acquired pursuant thereto;

               (h) to accelerate, continue, extend or defer the exercisability or vesting of any Award or any
shares acquired pursuant thereto, including with respect to the period following a Participant’s
termination of Service;

               (i) without the consent of the affected Participant and notwithstanding the provisions of any
Award Agreement to the contrary, to unilaterally substitute at any time a Stock Appreciation Right
providing for settlement solely in shares of Stock in place of any outstanding Option, provided
that such Stock Appreciation Right covers the same number of shares of Stock and provides for the
same exercise price (subject in each case to adjustment in accordance with Section 4.2) as the
replaced Option and otherwise provides substantially equivalent terms and conditions as the
replaced Option, as determined by the Committee;

               (j) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to
adopt sub-plans or supplements to, or alternative versions of, the Plan,

10

 

including, without limitation, as the Committee deems necessary or desirable to comply with
the laws or regulations of or to accommodate the tax policy, accounting principles or custom of,
foreign jurisdictions whose citizens may be granted Awards;

               (k) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award Agreement and to make all other determinations and take such other actions with respect
to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with
the provisions of the Plan or applicable law; and

               (l) to delegate to any proper Officer the authority to grant, amend, modify, extend, cancel or
renew one or more Awards, without further approval of the Committee, to any person eligible
pursuant to Section 5, other than a person who, at the time of such grant, is an Insider; provided,
however, that (i) the exercise price per share of each such Option shall be equal to the Fair
Market Value per share of the Stock on the effective date of grant, and (ii) each such Award shall
be subject to the terms and conditions of the appropriate standard form of Award Agreement approved
by the Committee and shall conform to the provisions of the Plan and such other guidelines as shall
be established from time to time by the Committee.

          3.6 Indemnification. In addition to such other rights of indemnification as they may have as
members of the Board or the Committee or as officers or employees of the Participating Company
Group, members of the Board or the Committee and any officers or employees of the Participating
Company Group to whom authority to act for the Board, the Committee or the Company is delegated
shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees,
actually and necessarily incurred in connection with the defense of any action, suit or proceeding,
or in connection with any appeal therein, to which they or any of them may be a party by reason of
any action taken or failure to act under or in connection with the Plan, or any right granted
hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters as to which it shall
be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad
faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the
institution of such action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.

          3.7 Arbitration. Any dispute or claim concerning any Awards granted (or not granted) pursuant
to this Plan and any other disputes or claims relating to or arising out of the Plan shall be
fully, finally and exclusively resolved by binding arbitration conducted pursuant to the Commercial
Arbitration Rules of the American Arbitration Association in San Diego, California. By accepting
an Award, Participants and the Company waive their respective rights to have any such disputes or
claims tried by a judge or jury.

          3.8 Repricing Prohibited. Without the affirmative vote of holders of a majority of the shares
of Stock cast in person or by proxy at a meeting of the stockholders of the Company at which a
quorum representing a majority of all outstanding shares of Stock is present or represented by
proxy, the Committee shall not approve a program providing for either (a) the

11

 

cancellation of outstanding Options or SARs and the grant in substitution therefore of new
Options or SARs having a lower exercise price or (b) the amendment of outstanding Options or SARs
to reduce the exercise price thereof. This paragraph shall not be construed to apply to the
issuance or assumption of an Award in a transaction to which Code section 424(a) applies, within
the meaning of Section 424 of the Code.

     4. Shares Subject to Plan.

          4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Section 4.2, the
maximum aggregate number of shares of Stock that may be issued under the Plan shall be 405,284,432
and shall consist of authorized but unissued or reacquired shares of Stock or any combination
thereof. The share reserve, determined at any time, shall be reduced by the number of shares
subject to Prior Plan Options and shares issued under the ERMCP. Any shares of Stock subject to
Prior Plan Option shall again be available for issuance under the Plan only if the Prior Plan
Option is terminated or cancelled but not if it expires. Any shares of Stock that are subject to
Awards of Options or SARs without a related Dividend Equivalent shall be counted against the limit
as one (1) share for every one (1) share granted. Any shares of Stock that are subject to Awards
(other than Options or SARs without a related Dividend Equivalent) shall be counted against this
limit as three (3) shares for every one (1) share granted. If an outstanding Award, excluding
Prior Plan Options, for any reason expires or is terminated or canceled without having been
exercised or settled in full, or if shares of Stock acquired pursuant to an Award subject to
forfeiture or repurchase, and shares issued under the ERMCP, are forfeited to the Company, the
shares of Stock allocable to the terminated portion of such Award or such forfeited shares of Stock
shall again be available for issuance under the Plan. Any shares of Stock that again become
available for shares pursuant to this Section 4.1 shall be added back as one (1) share if such
shares were subject to Options without a Dividend Equivalent or SARs granted under the Plan or
under a Prior Plan and as three (3) shares if such shares were subject to Awards (other than
Options without a Dividend Equivalent or SARs) granted under the Plan or a Prior Plan.
Notwithstanding anything to the contrary contained herein: (i) shares of Stock tendered in payment
of an Option shall not be added to the aggregate plan limit described above; (ii) shares of Stock
withheld by the Company to satisfy any tax withholding obligation shall not be added to the
aggregate plan limit described above; (iii) shares of Stock that are repurchased by the Company
with Option proceeds shall not be added to the aggregate plan limit described above; and (iv) all
shares of Stock covered by an SAR, to the extent that it is exercised and settled in shares of
Stock, and whether or not shares of Stock are actually issued to the Participant upon exercise of
the SAR, shall be considered issued or transferred pursuant to the Plan.

          4.2 Adjustments for Changes in Capital Structure. Subject to any required action by the
stockholders of the Company, in the event of any change in the Stock effected without receipt of
consideration by the Company, whether through merger, consolidation, reorganization,
reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change
in the capital structure of the Company, or in the event of payment of a dividend or distribution
to the stockholders of the Company in a form other than Stock (excepting normal cash dividends)
that has a material effect on the Fair Market Value of shares of Stock, appropriate adjustments
shall be made in the number and kind of shares subject to the Plan and

12

 

to any outstanding Awards, in the Award limits set forth in Section 5.4, and in connection
with the ERMCP, and in the exercise or purchase price per share under any outstanding Award in
order to prevent dilution or enlargement of Participants’ rights under the Plan. For purposes of
the foregoing, conversion of any convertible securities of the Company shall not be treated as
“effected without receipt of consideration by the Company.” If a majority of the shares which are
of the same class as the shares that are subject to outstanding Awards are exchanged for, converted
into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another
corporation (the “New Shares”), the Committee may unilaterally amend the outstanding Options to
provide that such Options are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to, and the exercise price per share of, the outstanding Awards shall be
adjusted in a fair and equitable manner as determined by the Board, in its discretion. Any
fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to
the nearest whole number. The Committee in its sole discretion, may also make such adjustments in
the terms of any Award to reflect, or related to, such changes in the capital structure of the
Company or distributions as it deems appropriate, including modification of Performance Goals,
Performance Award Formulas and Performance Periods. The adjustments determined by the Committee
pursuant to this Section 4.2 shall be final, binding and conclusive.

     5. Eligibility and Award Limitations.

          5.1 Persons Eligible for Awards. Awards may be granted only to Employees, Consultants and
Directors. For purposes of the foregoing sentence, “Employees,” “Consultants“and “Directors” shall
include prospective Employees, prospective Consultants and prospective Directors to whom Awards are
offered to be granted in connection with written offers of an employment or other service
relationship with the Participating Company Group; provided, however, that no Stock subject to any
such Award shall vest, become exercisable or be issued prior to the date on which such person
commences Service.

          5.2 Participation. Eligible persons may be granted more than one Award. However, eligibility
in accordance with this Section shall not entitle any person to be granted an Award, or, having
been granted an Award, to be granted an additional Award.

          5.3 Incentive Stock Option Limitations.

               (a) Persons Eligible. An Incentive Stock Option may be granted only to a person who, on the
effective date of grant, is an Employee of the Company, a Parent Corporation or a Subsidiary
Corporation (each being an “ISO-Qualifying Corporation”). Any person who is not an Employee of an
ISO-Qualifying Corporation on the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee of an ISO-Qualifying Corporation
shall be deemed granted effective on the date such person commences Service with an ISO-Qualifying
Corporation, with an exercise price determined as of such date in accordance with Section 6.1.

               (b) Fair Market Value Limitation. To the extent that options designated as Incentive Stock
Options (granted under all stock option plans of the Participating

13

 

Company Group, including the Plan) become exercisable by a Participant for the first time
during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand
Dollars ($100,000), the portion of such options which exceeds such amount shall be treated as
Nonstatutory Stock Options. For purposes of this Section, options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and the Fair Market
Value of stock shall be determined as of the time the option with respect to such stock is granted.
If the Code is amended to provide for a limitation different from that set forth in this Section,
such different limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such amendment to the Code. If an Option is
treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason
of the limitation set forth in this Section, the Participant may designate which portion of such
Option the Participant is exercising. In the absence of such designation, the Participant shall be
deemed to have exercised the Incentive Stock Option portion of the Option first. Upon exercise,
shares issued pursuant to each such portion shall be separately identified.

          5.4 Award Limits.

               (a) Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject to
adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be
issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed
226,239,821 shares. The maximum aggregate number of shares of Stock that may be issued under the
Plan pursuant to all Awards other than Incentive Stock Options shall be the number of shares
determined in accordance with Section 4.1, subject to adjustment as provided in Section 4.2 and
further subject to the limitation set forth in Section 5.4(b) below.

               (b) Limits on Full Value Awards. Except for shares granted under the Executive Retirement
Matching Contribution Plan, any Restricted Stock Awards, Restricted Stock Unit Awards, Performance
Awards or Stock-Based Awards based on the full value of shares of Stock (“Full Value Awards”),
which vest on the basis of the Participant’s continued Service, shall not provide for vesting which
is any more rapid than annual pro rata vesting over a three (3) year period and any Full Value
Awards which vest upon the Participant’s attainment of Performance Goals shall provide for a
Performance Period of at least twelve (12) months. There shall be no acceleration of vesting of
such Full Value Awards, except in connection with death, Disability or a Change in Control.
Notwithstanding any contrary provision of the Plan, a maximum of two percent (2%) of the shares
authorized for issuance under the Plan may be issued as Awards to Non-Employee Directors without
regard to the limitations of this Section 5.4(b).

               (c) Section 162(m) Award Limits. The following limits shall apply to the grant of any Award
if, at the time of grant, the Company is a “publicly held corporation” within the meaning of
Section 162(m).

                    (i) Options and SARs. Subject to adjustment as provided in Section 4.2, no Employee shall be
granted within any fiscal year of the Company one or more Options or Freestanding SARs which in the
aggregate are for more than 3,000,000 shares of Stock reserved for issuance under the Plan.

14

 

                    (ii) Restricted Stock and Restricted Stock Unit Awards. Subject to adjustment as provided in
Section 4.2, no Employee shall be granted within any fiscal year of the Company one or more
Restricted Stock Awards or Restricted Stock Unit Awards, subject to Vesting Conditions based on the
attainment of Performance Goals, for more than 1,000,000 shares of Stock reserved for issuance
under the Plan.

                    (iii) Performance Awards. Subject to adjustment as provided in Section 4.2, no Employee shall
be granted (1) Performance Shares which could result in such Employee receiving more than 1,000,000
shares of Stock reserved for issuance under the Plan for each full fiscal year of the Company
contained in the Performance Period for such Award, or (2) Performance Units which could result in
such Employee receiving more than $8,000,000 for each full fiscal year of the Company contained in
the Performance Period for such Award. No Participant may be granted more than one Performance
Award for the same Performance Period.

     6. Terms and Conditions of Options.

          Options shall be evidenced by Award Agreements specifying the number of shares of Stock
covered thereby, in such form as the Committee shall from time to time establish. No Option or
purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully
executed Award Agreement. Award Agreements evidencing Options may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the following terms and
conditions:

          6.1 Exercise Price. The exercise price for each Option shall be established in the discretion
of the Committee; provided, however, that (a) the exercise price per share shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no
Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less
than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum
exercise price set forth above if such Option is granted pursuant to an assumption or substitution
for another option in a manner qualifying under the provisions of Section 424(a) of the Code.

          6.2 Exercisability and Term of Options.

               (a) Option Vesting and Exercisability. Options shall be exercisable at such time or times, or
upon such event or events, and subject to such terms, conditions, performance criteria and
restrictions as shall be determined by the Committee and set forth in the Award Agreement
evidencing such Option; provided, however, that (a) no Option shall be exercisable after the
expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive
Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5)
years after the effective date of grant of such Option, (c) no Option shall become fully vested in
a period of less than three (3) years from the date of grant, other than in connection with a
termination of Service or a Change in Control or in the case of an Option granted to a Nonemployee
Director, and (d) no Option offered or be granted to a prospective Employee, prospective Consultant
or prospective Director may become exercisable prior to the

15

 

date on which such person commences Service. Subject to the foregoing, unless otherwise
specified by the Committee in the grant of an Option, any Option granted hereunder shall terminate
ten (10) years after the effective date of grant of the Option, unless earlier terminated in
accordance with its provisions, or the terms of the Plan.

               (b) Participant Responsibility for Exercise of Option. Each Participant is responsible for
taking any and all actions as may be required to exercise any Option in a timely manner, and for
properly executing any documents as may be required for the exercise of an Option in accordance
with such rules and procedures as may be established from time to time. By signing an Option
Agreement each Participant acknowledges that information regarding the procedures and requirements
for the exercise of any Option is available upon such Participant’s request. The Company shall
have no duty or obligation to notify any Participant of the expiration date of any Option.

          6.3 Payment of Exercise Price.

               (a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the
exercise price for the number of shares of Stock being purchased pursuant to any Option shall be
made (i) in cash, by check or in cash equivalent, (ii) by tender to the Company, or attestation to
the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than
the exercise price, (iii) provided that the Participant is an Employee, and not an Officer or
Director (unless otherwise not prohibited by law, including, without limitation, any regulation
promulgated by the Board of Governors of the Federal Reserve System) and in the Company’s sole and
absolute discretion at the time the Option is exercised, by delivery of the Participant’s
promissory note in a form approved by the Company for the aggregate exercise price, provided that,
if the Company is incorporated in the State of Delaware, the Participant shall pay in cash that
portion of the aggregate exercise price not less than the par value of the shares being acquired,
(iv) by such other consideration as may be approved by the Committee from time to time to the
extent permitted by applicable law, or (v) by any combination thereof. The Committee may at any
time or from time to time grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which otherwise restrict one or more
forms of consideration.

               (b) Limitations on Forms of Consideration.

                    (i) Tender of Stock. Notwithstanding the foregoing, an Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock.

                    (ii) Payment by Promissory Note. No promissory note shall be permitted if the exercise of an
Option using a promissory note would be a violation of any law. Any permitted promissory note
shall be on such terms as the Committee shall determine. The Committee shall have the authority to
permit or require the Participant to secure any promissory note used to exercise an Option with the
shares of Stock acquired upon the exercise of the Option or with other collateral acceptable to the
Company. Unless otherwise provided by the Committee, if the Company at any time is subject to the
regulations promulgated by the

16

 

Board of Governors of the Federal Reserve System or any other governmental entity affecting
the extension of credit in connection with the Company’s securities, any promissory note shall
comply with such applicable regulations, and the Participant shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable regulations.

          6.4 Effect of Termination of Service.

               (a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided
herein and unless otherwise provided by the Committee, an Option shall be exercisable after a
Participant’s termination of Service only during the applicable time periods provided in the Award
Agreement.

               (b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, unless the
Committee provides otherwise in the Award Agreement, if the exercise of an Option within the
applicable time periods is prevented by the provisions of Section 14 below, the Option shall remain
exercisable until three (3) months (or such longer period of time as determined by the Committee,
in its discretion) after the date the Participant is notified by the Company that the Option is
exercisable, but in any event no later than the Option Expiration Date.

               (c) Extension if Participant Subject to Section 16(b). Notwithstanding the foregoing, if a
sale within the applicable time periods of shares acquired upon the exercise of the Option would
subject the Participant to suit under Section 16(b) of the Exchange Act, the Option shall remain
exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a
sale of such shares by the Participant would no longer be subject to such suit, (ii) the one
hundred and ninetieth (190th) day after the Participant’s termination of Service, or (iii) the
Option Expiration Date.

          6.5 Transferability of Options. During the lifetime of the Participant, an Option shall be
exercisable only by the Participant or the Participant’s guardian or legal representative. Prior
to the issuance of shares of Stock upon the exercise of an Option, the Option shall not be subject
in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. Notwithstanding the foregoing,
to the extent permitted by the Committee, in its discretion, and set forth in the Award Agreement
evidencing such Option, a Nonstatutory Stock Option shall be assignable or transferable subject to
the applicable limitations, if any, described in the General Instructions to Form S-8 Registration
Statement under the Securities Act.

     7. Terms and Conditions of Stock Appreciation Rights.

          Stock Appreciation Rights shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Committee shall from time to time
establish. No SAR or purported SAR shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement. Award Agreements evidencing SARs may incorporate
all or any of the terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

17

 

          7.1 Types of SARs Authorized. SARs may be granted in tandem with all or any portion of a
related Option (a “Tandem SAR”) or may be granted independently of any Option (a “Freestanding
SAR”). A Tandem SAR may be granted either concurrently with the grant of the related Option or at
any time thereafter prior to the complete exercise, termination, expiration or cancellation of such
related Option.

          7.2 Exercise Price. The exercise price for each SAR shall be established in the discretion of
the Committee; provided, however, that (a) the exercise price per share subject to a Tandem SAR
shall be the exercise price per share under the related Option and (b) the exercise price per share
subject to a Freestanding SAR shall be not less than the Fair Market Value of a share of Stock on
the effective date of grant of the SAR.

          7.3 Exercisability and Term of SARs.

               (a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the extent, and
only to the extent, that the related Option is exercisable, subject to such provisions as the
Committee may specify where the Tandem SAR is granted with respect to less than the full number of
shares of Stock subject to the related Option.

               (b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or times, or upon
such event or events, and subject to such terms, conditions, performance criteria and restrictions
as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR;
provided, however, that no Freestanding SAR shall be exercisable after the expiration of ten (10)
years after the effective date of grant of such SAR.

No SAR shall become fully vested in a period of less than three (3) years from the date of grant,
other than in connection with a termination of Service or a Change in Control or the case of an SAR
granted to a Nonemployee Director.

          7.4 Deemed Exercise of SARs. If, on the date on which an SAR would otherwise terminate or
expire, the SAR by its terms remains exercisable immediately prior to such termination or
expiration and, if so exercised, would result in a payment to the holder of such SAR, then any
portion of such SAR which has not previously been exercised shall automatically be deemed to be
exercised as of such date with respect to such portion.

          7.5 Effect of Termination of Service. Subject to earlier termination of the SAR as otherwise
provided herein and unless otherwise provided by the Committee in the grant of an SAR and set forth
in the Award Agreement, an SAR shall be exercisable after a Participant’s termination of Service
only as provided in the Award Agreement.

          7.6 Nontransferability of SARs. During the lifetime of the Participant, an SAR shall be
exercisable only by the Participant or the Participant’s guardian or legal representative. Prior
to the exercise of an SAR, the SAR shall not be subject in any manner to anticipation, alienation,
sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution.

18

 

     8. Terms and Conditions of Restricted Stock Awards.

          Restricted Stock Awards shall be evidenced by Award Agreements specifying the number of shares
of Stock subject to the Award, in such form as the Committee shall from time to time establish. No
Restricted Stock Award or purported Restricted Stock Award shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement. Award Agreements evidencing
Restricted Stock Awards may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions:

          8.1 Types of Restricted Stock Awards Authorized. Restricted Stock Awards may or may not
require the payment of cash compensation for the stock. Restricted Stock Awards may be granted
upon such conditions as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 9.4. If either the grant of a
Restricted Stock Award or the lapsing of the Restriction Period is to be contingent upon the
attainment of one or more Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 9.3 through 9.5(a).

          8.2 Purchase Price. The purchase price, if any, for shares of Stock issuable under each
Restricted Stock Award and the means of payment shall be established by the Committee in its
discretion.

          8.3 Purchase Period. A Restricted Stock Award requiring the payment of cash consideration
shall be exercisable within a period established by the Committee; provided, however, that no
Restricted Stock Award granted to a prospective Employee, prospective Consultant or prospective
Director may become exercisable prior to the date on which such person commences Service.

          8.4 Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock
Award may or may not be made subject to Vesting Conditions based upon the satisfaction of such
Service requirements, conditions, restrictions or performance criteria, including, without
limitation, Performance Goals as described in Section 9.4, as shall be established by the Committee
and set forth in the Award Agreement evidencing such Award. During any Restriction Period in which
shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such
shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other
than as provided in the Award Agreement or as provided in Section 8.7. Upon request by the
Company, each Participant shall execute any agreement evidencing such transfer restrictions prior
to the receipt of shares of Stock hereunder.

          8.5 Voting Rights; Dividends and Distributions. Except as provided in this Section, Section
8.4 and any Award Agreement, during the Restriction Period applicable to shares subject to a
Restricted Stock Award, the Participant shall have all of the rights of a stockholder of the
Company holding shares of Stock, including the right to vote such shares and to receive all
dividends and other distributions paid with respect to such shares. However, in the event of a
dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the
capital structure of the Company as described in Section 4.2, any and all new, substituted or
additional securities or other property (other than normal cash dividends) to which

19

 

the Participant is entitled by reason of the Participant’s Restricted Stock Award shall be
immediately subject to the same Vesting Conditions as the shares subject to the Restricted Stock
Award with respect to which such dividends or distributions were paid or adjustments were made.

          8.6 Effect of Termination of Service. Unless otherwise provided by the Committee in the grant
of a Restricted Stock Award and set forth in the Award Agreement, if a Participant’s Service
terminates for any reason, whether voluntary or involuntary (including the Participant’s death or
disability), then the Participant shall forfeit to the Company any shares acquired by the
Participant pursuant to a Restricted Stock Award which remain subject to Vesting Conditions as of
the date of the Participant’s termination of Service in exchange for the payment of the purchase
price, if any, paid by the Participant. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company.

          8.7 Nontransferability of Restricted Stock Award Rights. Prior to the issuance of shares of
Stock pursuant to a Restricted Stock Award, rights to acquire such shares shall not be subject in
any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance
or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by
will or the laws of descent and distribution. All rights with respect to a Restricted Stock Award
granted to a Participant hereunder shall be exercisable during his or her lifetime only by such
Participant or the Participant’s guardian or legal representative.

     9. Terms and Conditions of Performance Awards.

          Performance Awards shall be evidenced by Award Agreements in such form as the Committee shall
from time to time establish. No Performance Award or purported Performance Award shall be a valid
and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Performance Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and conditions:

          9.1 Types of Performance Awards Authorized. Performance Awards may be in the form of either
Performance Shares or Performance Units. Each Award Agreement evidencing a Performance Award shall
specify the number of Performance Shares or Performance Units subject thereto, the Performance
Award Formula, the Performance Goal(s) and Performance Period applicable to the Award, and the
other terms, conditions and restrictions of the Award.

          9.2 Initial Value of Performance Shares and Performance Units. Unless otherwise provided by
the Committee in granting a Performance Award, each Performance Share shall have an initial value
equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as provided in
Section 4.2, on the effective date of grant of the Performance Share. Each Performance Unit shall
have an initial value determined by the Committee. The final value payable to the Participant in
settlement of a Performance Award determined on the basis of the applicable Performance Award
Formula will depend on the extent to which Performance Goals

20

 

established by the Committee are attained within the applicable Performance Period established
by the Committee.

          9.3 Establishment of Performance Period, Performance Goals and Performance Award Formula. In
granting each Performance Award, the Committee shall establish in writing the applicable
Performance Period, Performance Award Formula and one or more Performance Goals which, when
measured at the end of the Performance Period, shall determine on the basis of the Performance
Award Formula the final value of the Performance Award to be paid to the Participant. To the
extent compliance with the requirements under Section 162(m) with respect to “performance-based
compensation” is desired, the Committee shall establish the Performance Goal(s) and Performance
Award Formula applicable to each Performance Award no later than the earlier of (a) the date ninety
(90) days after the commencement of the applicable Performance Period or (b) the date on which 25%
of the Performance Period has elapsed, and, in any event, at a time when the outcome of the
Performance Goals remains substantially uncertain. Once established, the Performance Goals and
Performance Award Formula shall not be changed during the Performance Period. The Company shall
notify each Participant granted a Performance Award of the terms of such Award, including the
Performance Period, Performance Goal(s) and Performance Award Formula.

          9.4 Measurement of Performance Goals. Performance Goals shall be established by the Committee
on the basis of targets to be attained (“Performance Targets”) with respect to one or more measures
of business or financial performance (each, a “Performance Measure”), subject to the following:

               (a) Performance Measures. Performance Measures may be one or more of the following, as
determined by the Committee: (i) revenues; (ii) gross margin; (iii) operating margin; (iv)
operating income; (v) earnings before tax; (vi) earnings before interest, taxes and depreciation
and amortization; (vii) net income; (viii) expenses; (ix) the market price of the Stock; (x)
earnings per share; (xi) return on stockholder equity; (xii) return on capital; (xiii) return on
net assets; (xiv) economic value added; (xv) market share; (xvi) customer service; (xvii) customer
satisfaction; (xviii) safety; (xix) total stockholder return; (xx) free cash flow; or (xxi) such
other measures as determined by the Committee consistent with this Section 9.4(a).

               (b) Performance Targets. Performance Targets may include a minimum, maximum, target level and
intermediate levels of performance, with the final value of a Performance Award determined under
the applicable Performance Award Formula by the level attained during the applicable Performance
Period. A Performance Target may be stated as an absolute value or as a value determined relative
to a standard selected by the Committee.

          9.5 Settlement of Performance Awards.

               (a) Determination of Final Value. As soon as practicable following the completion of the
Performance Period applicable to a Performance Award, the Committee shall certify in writing the
extent to which the applicable Performance Goals have been attained

21

 

and the resulting final value
of the Award earned by the Participant and to be paid upon its settlement in accordance with the
applicable Performance Award Formula.

               (b) Discretionary Adjustment of Award Formula. In its discretion, the Committee may, either
at the time it grants a Performance Award or at any time thereafter, provide for the positive or
negative adjustment of the Performance Award Formula applicable to a Performance Award that is not
intended to constitute “qualified performance based compensation” to a “covered employee” within
the meaning of Section 162(m) (a “Covered Employee”) to reflect such Participant’s individual
performance in his or her position with the Company or such other factors as the Committee may
determine. With respect to a Performance Award intended to constitute qualified performance-based
compensation to a Covered Employee, the Committee shall have the discretion to reduce some or all
of the value of the Performance Award that would otherwise be paid to the Covered Employee upon its
settlement notwithstanding the attainment of any Performance Goal and the resulting value of the
Performance Award determined in accordance with the Performance Award Formula.

               (c) Payment in Settlement of Performance Awards. As soon as practicable following the
Committee’s determination and certification in accordance with Sections 9.5(a) and (b), payment
shall be made to each eligible Participant (or such Participant’s legal representative or other
person who acquired the right to receive such payment by reason of the Participant’s death) of the
final value of the Participant’s Performance Award. Payment of such amount shall be made in cash,
shares of Stock, or a combination thereof as determined by the Committee.

          9.6 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Performance Share Awards until the
date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement evidencing any Performance Share Award that the
Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash
dividends on Stock having a record date prior to the date on which the Performance Shares are
settled or forfeited. Such Dividend Equivalents, if any, shall be credited to the Participant in
the form of additional whole Performance Shares as of the date of payment of such cash dividends on
Stock. The number of additional Performance Shares to be so credited shall be determined by
dividing (a) the amount of cash dividends paid on such date with respect to the number of shares of
Stock represented by the Performance Shares previously credited to the Participant by (b) the
Fair Market Value per share of Stock on such date. Dividend Equivalents may be paid
currently or may be accumulated and paid to the extent that Performance Shares become
nonforfeitable, as determined by the Committee. Settlement of Dividend Equivalents may be made in
cash, shares of Stock, or a combination thereof as determined by the Committee, and may be paid on
the same basis as settlement of the related Performance Share as provided in Section 9.5, except
that fractional shares shall be paid in cash within thirty (30) days following the date of
settlement of the Performance Share Award. Dividend Equivalents shall not be paid with respect to
Performance Units. In the event of a dividend or distribution paid in shares of Stock or any other
adjustment made upon a change in the capital structure of the Company as described in Section 4.2,
appropriate adjustments shall be made in the Participant’s Performance Share Award so that it

22

 

represents the right to receive upon settlement any and all new, substituted or additional
securities or other property (other than normal cash dividends) to which the Participant would be
entitled by reason of the shares of Stock issuable upon settlement of the Performance Share
Award, and all such new, substituted or additional securities or other property shall be
immediately subject to the same Performance Goals as are applicable to the Award.

          9.7 Effect of Termination of Service. Unless otherwise provided by the Committee in the grant
of a Performance Award and set forth in the Award Agreement, the effect of a Participant’s
termination of Service on the Performance Award shall be as follows:

               (a) Death or Disability. If the Participant’s Service terminates because of the death or
Disability of the Participant before the completion of the Performance Period applicable to the
Performance Award, the final value of the Participant’s Performance Award shall be determined by
the extent to which the applicable Performance Goals have been attained with respect to the entire
Performance Period and shall be prorated based on the number of months of the Participant’s Service
during the Performance Period. Payment shall be made following the end of the Performance Period
in any manner permitted by Section 9.5.

               (b) Other Termination of Service. If the Participant’s Service terminates for any reason
except death or Disability before the completion of the Performance Period applicable to the
Performance Award, such Award shall be forfeited in its entirety; provided, however, that in the
event of an involuntary termination of the Participant’s Service, the Committee, in its sole
discretion, may waive the automatic forfeiture of all or any portion of any such Award.

          9.8 Nontransferability of Performance Awards. Prior to settlement in accordance with the
provisions of the Plan, no Performance Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Performance Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

     10. Terms and Conditions of Restricted Stock Unit Awards.

          Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying the number of
Restricted Stock Units subject to the Award, in such form as the Committee shall from time to time
establish. No Restricted Stock Unit Award or purported Restricted Stock Unit Award shall be a
valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement.
Award Agreements evidencing Restricted Stock Units may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms and conditions:

          10.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon
such conditions as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 9.4. If either the grant of a
Restricted Stock Unit Award or the Vesting Conditions with respect to such

23

 

Award is to be
contingent upon the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 9.3 through 9.5(a).

          10.2 Vesting. Restricted Stock Units may or may not be made subject to Vesting Conditions
based upon the satisfaction of such Service requirements, conditions, restrictions or performance
criteria, including, without limitation, Performance Goals as described in Section 9.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing such Award.

          10.3 Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Restricted Stock Units until the date
of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion,
may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant
shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on
Stock having a record date prior to the date on which Restricted Stock Units held by such
Participant are settled. Such Dividend Equivalents, if any, shall be paid by crediting the
Participant with additional whole Restricted Stock Units as of the date of payment of such cash
dividends on Stock. The number of additional Restricted Stock Units (rounded to the nearest whole
number) to be so credited shall be determined by dividing (a) the amount of cash dividends paid on
such date with respect to the number of shares of Stock represented by the Restricted Stock Units
previously credited to the Participant by (b) the Fair Market Value per share of Stock on such
date. Such additional Restricted Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time (or as soon thereafter as practicable) as
the Restricted Stock Units originally subject to the Restricted Stock Unit Award, except that
fractional shares may be settled in cash within thirty (30) days following the date of settlement
of the Restricted Stock Unit Award. In the event of a dividend or distribution paid in shares of
Stock or any other adjustment made upon a change in the capital structure of the Company as
described in Section 4.2, appropriate adjustments shall be made in the Participant’s Restricted
Stock Unit Award so that it represents the right to receive upon settlement any and all new,
substituted or additional securities or other property (other than normal cash dividends) to which
the Participant would entitled by reason of the shares of Stock issuable upon settlement of the
Award, and all such new, substituted or additional securities or other property shall be
immediately subject to the same Vesting Conditions as are applicable to the Award.

          10.4 Effect of Termination of Service. Unless otherwise provided by the Committee in the
grant of a Restricted Stock Unit Award and set forth in the Award Agreement, if a Participant’s
Service terminates for any reason, whether voluntary or involuntary (including the Participant’s
death or disability), then the Participant shall forfeit to the Company any Restricted Stock Units
pursuant to the Award which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service.

          10.5 Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on
the date on which Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award
vest or on such other date determined by the Committee, in its

24

 

discretion, and set forth in the
Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities
or other property pursuant to an adjustment described in Section 10.3) for each Restricted Stock
Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of
applicable taxes. Notwithstanding the foregoing, if
permitted by the Committee and set forth in the Award Agreement, the Participant may elect in
accordance with terms specified in the Award Agreement to defer receipt of all or any portion of
the shares of Stock or other property otherwise issuable to the Participant pursuant to this
Section.

          10.6 Nontransferability of Restricted Stock Unit Awards. Prior to the issuance of shares of
Stock in settlement of a Restricted Stock Unit Award, the Award shall not be subject in any manner
to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by
will or by the laws of descent and distribution. All rights with respect to a Restricted Stock
Unit Award granted to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participant’s guardian or legal representative.

     11. Deferred Compensation Awards.

          11.1 Establishment of Deferred Compensation Award Programs. This Section 11 shall not be
effective unless and until the Committee determines to establish a program pursuant to this
Section. The Committee, in its discretion and upon such terms and conditions as it may determine,
may establish one or more programs pursuant to the Plan under which:

               (a) Participants designated by the Committee who are Insiders or otherwise among a select
group of highly compensated Employees may irrevocably elect, prior to a date specified by the
Committee, to reduce such Participant’s compensation otherwise payable in cash (subject to any
minimum or maximum reductions imposed by the Committee) and to be granted automatically at such
time or times as specified by the Committee one or more Awards of Stock Units with respect to such
numbers of shares of Stock as determined in accordance with the rules of the program established by
the Committee and having such other terms and conditions as established by the Committee.

               (b) Participants designated by the Committee who are Insiders or otherwise among a select
group of highly compensated Employees may irrevocably elect, prior to a date specified by the
Committee, to be granted automatically an Award of Stock Units with respect to such number of
shares of Stock and upon such other terms and conditions as established by the Committee in lieu
of:

                    (i) shares of Stock otherwise issuable to such Participant upon the exercise of an Option;

                    (ii) cash or shares of Stock otherwise issuable to such Participant upon the exercise of an
SAR; or

                    (iii) cash or shares of Stock otherwise issuable to such Participant upon the settlement of a
Performance Award or Performance Unit.

25

 

          11.2 Terms and Conditions of Deferred Compensation Awards. Deferred Compensation Awards
granted pursuant to this Section 11 shall be evidenced by Award Agreements in such form as the
Committee shall from time to time establish. No such Deferred
Compensation Award or purported Deferred Compensation Award shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award Agreement. Award Agreements
evidencing Deferred Compensation Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and conditions:

               (a) Vesting Conditions. Deferred Compensation Awards shall not be subject to any vesting
conditions.

               (b) Terms and Conditions of Stock Units.

                    (i) Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Stock Units until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company). However, a Participant shall be entitled to
receive Dividend Equivalents with respect to the payment of cash dividends on Stock having a record
date prior to date on which Stock Units held by such Participant are settled. Such Dividend
Equivalents shall be paid by crediting the Participant with additional whole and/or fractional
Stock Units as of the date of payment of such cash dividends on Stock. The method of determining
the number of additional Stock Units to be so credited shall be specified by the Committee and set
forth in the Award Agreement. Such additional Stock Units shall be subject to the same terms and
conditions and shall be settled in the same manner and at the same time (or as soon thereafter as
practicable) as the Stock Units originally subject to the Stock Unit Award. In the event of a
dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the
capital structure of the Company as described in Section 4.2, appropriate adjustments shall be made
in the Participant’s Stock Unit Award so that it represent the right to receive upon settlement any
and all new, substituted or additional securities or other property (other than normal cash
dividends) to which the Participant would be entitled by reason of the shares of Stock issuable
upon settlement of the Award.

                    (ii) Settlement of Stock Unit Awards. A Participant electing to receive an Award of Stock
Units pursuant to this Section 11 shall specify at the time of such election a settlement date with
respect to such Award. The Company shall issue to the Participant as soon as practicable following
the earlier of the settlement date elected by the Participant or the date of termination of the
Participant’s Service, a number of whole shares of Stock equal to the number of whole Stock Units
subject to the Stock Unit Award. Such shares of Stock shall be fully vested, and the Participant
shall not be required to pay any additional consideration (other than applicable tax withholding)
to acquire such shares. Any fractional Stock Unit subject to the Stock Unit Award shall be settled
by the Company by payment in cash of an amount equal to the Fair Market Value as of the payment
date of such fractional share.

                    (iii) Nontransferability of Stock Unit Awards. Prior to their settlement in accordance with
the provision of the Plan, no Stock Unit Award shall be subject in

26

 

any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a
Stock Unit Award granted to a Participant hereunder shall be exercisable during his or her
lifetime only by such Participant or the Participant’s guardian or legal representative.

     12. Other Stock-Based Awards.

     In addition to the Awards set forth in Sections 6 through 11 above, the Committee, in its sole
discretion, may carry out the purpose of this Plan by awarding Stock-Based Awards as it determines
to be in the best interests of the Company and subject to such other terms and conditions as it
deems necessary and appropriate.

     13. Effect of Change in Control on Options and SARs.

          13.1 Accelerated Vesting. The Committee, in its sole discretion, may provide in any Award
Agreement or, in the event of a Change in Control, may take such actions as it deems appropriate to
provide for the acceleration of the exercisability and vesting in connection with such Change in
Control of any or all outstanding Options and SARs and shares acquired upon the exercise of such
Options and SARs upon such conditions and to such extent as the Committee shall determine. The
previous sentence notwithstanding such acceleration shall not occur to the extent an Option or SAR
is assumed or substituted with a substantially similar Award in connection with a Change in
Control.

          13.2 Assumption or Substitution. In the event of a Change in Control, the surviving,
continuing, successor, or purchasing corporation or other business entity or parent thereof, as the
case may be (the “Acquiring Corporation”), may, without the consent of the Participant, either
assume the Company’s rights and obligations under outstanding Options and SARs or substitute for
outstanding Options and SARs substantially equivalent options or stock appreciation rights for the
Acquiring Corporation’s stock. Any Options or SARs which are neither assumed or substituted for by
the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of
the Change in Control shall terminate and cease to be outstanding effective as of the date of the
Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option or
SAR prior to the Change in Control and any consideration received pursuant to the Change in Control
with respect to such shares shall continue to be subject to all applicable provisions of the Award
Agreement evidencing such Award except as otherwise provided in such Award Agreement. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding
Options or SARs immediately prior to an Ownership Change Event described in Section 2.1(z)(i)
constituting a Change in Control is the surviving or continuing corporation and immediately after
such Ownership Change Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions
of Section 1504(b) of the Code, the outstanding Options and SARs shall not terminate unless the
Board otherwise provides in its discretion.

27

 

          13.3 Effect of Change in Control on Awards Other Than Options and SARs. The Committee may, in
its discretion, provide in any Award Agreement evidencing any Award other than an Option or SAR
that, in the event of a Change in Control, the lapsing of any applicable Vesting Condition, vesting
restriction, Restriction Period, Performance Goal or other
limitation applicable to the Award or the Stock subject to such Award held by a Participant
whose Service has not terminated prior to the Change in Control shall be accelerated and/or waived,
effective immediately prior to the consummation of the Change in Control, to such extent as
specified in such Award Agreement; provided, however, that such acceleration or waiver shall not
occur to the extent an Award is assumed or substituted with a substantially equivalent Award in
connection with the Change in Control. Any acceleration, waiver or the lapsing of any restriction
that was permissible solely by reason of this Section 13.3 and the provisions of such Award
Agreement shall be conditioned upon the consummation of the Change in Control.

     14. Compliance with Securities Law.

          The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject
to compliance with all applicable requirements of federal, state and foreign law with respect to
such securities and the requirements of any stock exchange or market system upon which the Stock
may then be listed. In addition, no Award may be exercised or shares issued pursuant to an Award
unless (a) a registration statement under the Securities Act shall at the time of such exercise or
issuance be in effect with respect to the shares issuable pursuant to the Award or (b) in the
opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in
accordance with the terms of an applicable exemption from the registration requirements of the
Securities Act. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal 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. As a condition to issuance of any Stock, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.

     15. Tax Withholding.

          15.1 Tax Withholding in General. The Company shall have the right to deduct from any and all
payments made under the Plan, or to require the Participant, through payroll withholding, cash
payment or otherwise, including by means of a cashless exercise or net exercise of an Option, to
make adequate provision for, the federal, state, local and foreign taxes, if any, required by law
to be withheld by the Participating Company Group with respect to an Award or the shares acquired
pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release
shares of Stock from an escrow established pursuant to an Award Agreement, or to make any payment
in cash under the Plan until the Participating Company Group’s tax withholding obligations have
been satisfied by the Participant.

          15.2 Withholding in Shares. The Company shall have the right, but not the obligation, to
deduct from the shares of Stock issuable to a Participant upon the exercise or

28

 

settlement of an
Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a
Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of
any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall
not exceed the amount determined by the applicable minimum statutory withholding rates.

     16. Amendment or Termination of Plan.

          The Board or the Committee may amend, suspend or terminate the Plan at any time. However,
without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum
aggregate number of shares of Stock that may be issued under the Plan (except by operation of the
provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive
Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s
stockholders under any applicable law, regulation or rule. No amendment, suspension or termination
of the Plan shall affect any then outstanding Award unless expressly provided by the Board or the
Committee. In any event, no amendment, suspension or termination of the Plan may adversely affect
any then outstanding Award without the consent of the Participant unless necessary to comply with
any applicable law, regulation or rule.

     17. Miscellaneous Provisions.

          17.1 Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase
options, or other conditions and restrictions as determined by the Committee in its discretion at
the time the Award is granted. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder
and shall promptly present to the Company any and all certificates representing shares of Stock
acquired hereunder for the placement on such certificates of appropriate legends evidencing any
such transfer restrictions.

          17.2 Provision of Information. Each Participant shall be given access to information
concerning the Company equivalent to that information generally made available to the Company’s
common stockholders.

          17.3 Rights as Employee, Consultant or Director. No person, even though eligible pursuant to
Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be
selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall
confer on any Participant a right to remain an Employee, Consultant or Director or interfere with
or limit in any way any right of a Participating Company to terminate the Participant’s Service at
any time. To the extent that an Employee of a Participating Company other than the Company
receives an Award under the Plan, that Award shall in no event be understood or interpreted to mean
that the Company is the Employee’s employer or that the Employee has an employment relationship
with the Company.

29

 

          17.4 Rights as a Stockholder. A Participant shall have no rights as a stockholder with
respect to any shares covered by an Award until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date such shares are
issued, except as provided in Section 4.2 or another provision of the Plan.

          17.5 Fractional Shares. The Company shall not be required to issue fractional shares upon the
exercise or settlement of any Award.

          17.6 Severability. If any one or more of the provisions (or any part thereof) of this Plan
shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so
as to make it valid, legal and enforceable, and the validity, legality and enforceability of the
remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired
thereby.

          17.7 Beneficiary Designation. Subject to local laws and procedures, each Participant may file
with the Company a written designation of a beneficiary who is to receive any benefit under the
Plan to which the Participant is entitled in the event of such Participant’s death before he or she
receives any or all of such benefit. Each designation will revoke all prior designations by the
same Participant, shall be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Company during the Participant’s lifetime. If a
married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness
of such designation may be subject to the consent of the Participant’s spouse. If a Participant
dies without an effective designation of a beneficiary who is living at the time of the
Participant’s death, the Company will pay any remaining unpaid benefits to the Participant’s legal
representative.

          17.8 Unfunded Obligation. Participants shall have the status of general unsecured creditors
of the Company. Any amounts payable to Participants pursuant to the Plan shall be unfunded and
unsecured obligations for all purposes, including, without limitation, Title I of the Employee
Retirement Income Security Act of 1974. No Participating Company shall be required to segregate
any monies from its general funds, or to create any trusts, or establish any special accounts with
respect to such obligations. The Company shall retain at all times beneficial ownership of any
investments, including trust investments, which the Company may make to fulfill its payment
obligations hereunder. Any investments or the creation or maintenance of any trust or any
Participant account shall not create or constitute a trust or fiduciary relationship between the
Committee or any Participating Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant’s creditors in any assets of any
Participating Company. The Participants shall have no claim against any Participating Company for
any changes in the value of any assets which may be invested or reinvested by the Company with
respect to the Plan. Each Participating Company shall be responsible for making benefit payments
pursuant to the Plan on behalf of its Participants or for reimbursing the Company for the cost of
such payments, as determined by the Company in its sole discretion. In the event the respective
Participating Company fails to make such payment or reimbursement, a Participant’s (or other
individual’s) sole recourse shall be against the

30

 

respective Participating Company, and not against
the Company. A Participant’s acceptance of an Award pursuant to the Plan shall constitute
agreement with this provision.

31exv10w1

Exhibit 10.1

          EMPLOYMENT AGREEMENT made this 31st day of July, 2009 and effective as of August 3, 2009 (the
“Effective Date”), between TIME WARNER CABLE INC., a Delaware corporation (the “Company”), and
GLENN A. BRITT (“you” and “your”) (together, the “Parties”).

          You are currently employed by the Company pursuant to an Employment Agreement, including Annex
A, between you and the Company, dated August 1, 2006, as amended by the First Amendment to
Employment Agreement made as of January 1, 2008 (the “Prior Agreement”). The Company wishes to
amend and restate the terms of your employment with the Company and to secure your services on a
full-time basis for the period to and including December 31, 2012 (the “Term Date”) on the terms
and conditions set forth in this Agreement, and you are willing to provide such services on and
subject to the terms and conditions set forth in this Agreement. You and the Company therefore
agree as follows:

          1. Term of Employment. Your “term of employment” as this phrase is used throughout
this Agreement, shall be for the period beginning on the Effective Date and ending on the Term
Date, subject, however, to earlier termination as set forth in this Agreement.

          2. Employment.

               2.1 General. During the term of employment, you shall serve as Chairman, Chief
Executive Officer and President of the Company and you shall have the authority, functions, duties,
powers and responsibilities normally associated with such position at the Company and such
additional authority, functions, duties, powers and responsibilities as may be assigned to you from
time to time by the Board of Directors of the Company (the “Board”) consistent with your positions
with the Company. During the term of employment, your services shall be rendered on a
substantially full-time, exclusive basis and you will apply on a substantially full-time basis all
of your skill and experience to the performance of your duties. The foregoing shall not prevent
you from devoting such time to your personal affairs as shall not interfere with the performance of
your duties hereunder.

 

 

               2.2 Reporting. You shall report only to the Board.

               2.3 Other Employment and Activities. You shall have no other employment and, without
the prior written consent of the Board, no outside business activities which require the devotion
of substantial amounts of your time.

               2.4 Place of Performance. The place for the performance of your services shall be the
principal executive offices of the Company in the New York City metropolitan area, subject to such
reasonable travel as may be required in the performance of your duties.

          3. Compensation.

               3.1 Base Salary. The Company shall pay you a base salary at the rate of not less
than $1,000,000 per annum for the 2009 calendar year and not less than $1,250,000 per annum
beginning January 1, 2010 through your remaining term of employment (“Base Salary”). The Company
may increase, but not decrease, your Base Salary during the term of employment. Base Salary shall
be paid in accordance with the Company’s customary payroll practices.

               3.2 Bonus. You are eligible for an annual cash bonus (“Bonus”) pursuant to the terms
of the Time Warner Cable Inc. 2007 Annual Bonus Plan or any replacement plan (the “Bonus Plan”).
Although your Bonus is fully discretionary, your target annual Bonus (“Target Bonus”) is 500% of
Base Salary (i.e., a Target Bonus at $5,000,000 for calendar year 2009, assuming no Base Salary
increase, and $6,250,000 for calendar year 2010 and thereafter, assuming no Base Salary increase),
but the Parties acknowledge that your actual Bonus will vary depending on the actual performance of
you and the Company, from a minimum of $0 and up to a maximum Bonus equal to 150% of target (i.e.,
a maximum bonus at $7,500,000 for calendar year 2009, assuming no Base Salary increase, and
$9,375,000 for calendar year 2010 and thereafter, assuming no Base Salary increase); provided that
in no event shall your Bonus exceed the maximum individual annual bonus provided for in the Bonus
Plan. Each year, your personal performance will be considered in the context of your executive
duties and any individual and corporate goals set for you by the Board, and your actual Bonus will
be determined. Although as a general matter the Company expects to pay bonuses at the target level
in cases where individual and corporate goals are achieved, it does not commit to do so, and your
Bonus may be negatively affected by the exercise of the Board’s discretion or by

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overall Company performance. Your Bonus amount, if any, will be paid to you between January 1
and March 15 of the calendar year immediately following the performance year in respect of which
such Bonus is earned. 

               3.3 Long-Term Incentive Compensation.

                    3.3.1 On the next regularly scheduled grant date following execution of this Agreement by both
Parties, the Company shall provide you with a single stock option on shares of the Company’s Common
Stock with a Black-Scholes value of $2 million, determined in accordance with the Company’s option
valuation procedures (for compensation grant purposes) and having the same general vesting and
other terms as provided for under the Company’s annual long-term incentive option grants, pursuant
to the stock option award agreement substantially in the form attached hereto as Annex A, which
provides, among other things, that you shall be entitled to retirement eligible treatment of the
foregoing option or any equity awards granted to you on or after the Effective Date of this
Agreement. For purposes of this Agreement “retirement eligible treatment” shall mean the treatment
afforded to executives of the Company who are retirement eligible with respect to the vesting,
exercise and other features of options and other equity awards, consistent with the terms of the
option agreements and restricted stock units agreements previously granted to you and as may be in
effect with respect to future grants to you under the Company’s equity plans; it being understood
that such treatment, as applicable to the awards granted to you prior to the Effective Date and the
option granted pursuant to this Section 3.3.1, provides for full vesting upon retirement and an
exercise period equal to five years from the date of retirement or the remaining term of the award
or grant (which ever is shorter).

                    3.3.2 The Company shall provide you for each year of your term of employment with long term
incentive compensation with a target value beginning with calendar year 2010 (the 2009 long term
compensation having already been determined in accordance with the Prior Agreement) of
approximately $7,500,000 (based on the valuation method used by the Company for its senior
executives for compensation grant purposes) through a combination of stock option grants,
restricted stock units or other equity-based awards, cash-based long-term plans or other components
as may be determined and in such proportions as may be determined by the Compensation Committee of
the Board (“Compensation Committee”) from time to time in its sole

3

 

discretion. Such awards shall have the same general vesting and other terms as then provided
for under the Company’s equity award agreements, which shall provide for retirement eligible
treatment.

               3.4 Deferred Compensation. Pursuant to the terms of your previous employment
agreements with the Company, you have earned deferred compensation which has been reflected in a
special account (the “Trust Account”) maintained on the books of the Time Warner Entertainment
Company, L.P. Grantor Trust (“Rabbi Trust”) for your benefit. Pursuant to the terms of the Prior
Agreement, your 2008 deferred compensation election and the Rabbi Trust, the amount reflected in
the Trust Account shall be distributed to you in a lump sum on the first Company payroll date in
the month after the earlier of (a) December 31, 2009 and (b) the date you separate from service
(within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)).

               3.5 Indemnification. You shall be entitled throughout the term of employment in your
capacity as an officer or director of the Company or any of its subsidiaries or a member of a
governing body of any partnership or joint venture in which the Company has an equity interest (and
after the end of the term of employment, to the extent relating to service during the term of
employment) to the benefit of the indemnification provisions contained on the date hereof in the
Certificate of Incorporation and By-laws of the Company (not including any amendments or additions
after August 1, 2006 that limit or narrow, but including any that add to or broaden, the protection
afforded to you by those provisions), to the extent not prohibited by applicable law at the time of
the assertion of any liability against you. In addition, with respect to services you provided to
or on behalf of Time Warner Entertainment Company, L.P. (“TWE”) in your capacity as an officer or
director of TWE, consistent with the Prior Agreement, you shall be entitled to the benefit of the
applicable indemnification provisions contained in the Agreement of Limited Partnership, dated
October 29, 1991, as amended, of TWE (not including any amendments or additions after the date of
execution of the Prior Agreement that limit or narrow, but including any that add to or broaden,
the protection afforded to you by those provisions), to the extent not prohibited by applicable law
at the time of the assertion of any liability against you.

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          4. Termination.

               4.1 Termination for Cause The Company may terminate the term of employment and all of
the Company’s obligations under this Agreement, other than its obligations set forth below in this
Section 4.1, for “cause”. Termination by the Company for “cause” shall mean termination because of
your (a) conviction (treating a nolo contendere plea as a conviction) of a felony (whether or not
any right to appeal has been or may be exercised) other than as a result of a moving violation or a
Limited Vicarious Liability (as defined below), (b) willful failure or refusal without proper cause
to perform your material duties with the Company, including your obligations under this Agreement
(other than any such failure resulting from your incapacity due to physical or mental impairment),
(c) willful misappropriation, embezzlement or reckless or willful destruction of Company property,
(d) willful and material breach of any statutory or common law duty of loyalty to the Company
having a significant adverse financial impact on the Company or on the Company’s reputation; (e)
intentional and improper conduct materially prejudicial to the business of the Company or any of
its affiliates, (f) willful or material breach of any of the restrictive covenants provided for in
Section 9 hereof, or (g) a willful violation of any material Company policy, including the
Company’s Standards of Business Conduct, having a significant adverse financial effect on the
Company or a significant adverse effect on the Company’s reputation. Such termination shall be
effected by written notice thereof delivered by the Company to you and shall be effective as of the
date of such notice; provided, however, that if (i) such termination is because of your willful
failure or refusal without proper cause to perform any one or more of your obligations under this
Agreement, (ii) such notice is the first such notice of termination for any reason delivered by the
Company to you under this Section 4.1, and (iii) within 15 days following the date of such notice
you shall cease your refusal and shall use your best efforts to perform such obligations, the
termination shall not be effective. The term “Limited Vicarious Liability” shall mean any
liability which is based on acts of the Company for which you are responsible solely as a result of
your office(s) with the Company; provided that (x) you are not directly involved in such acts and
either had no prior knowledge of such intended actions or, upon obtaining such knowledge, promptly
acted reasonably and in good faith to attempt to prevent the acts causing such liability or (y)
after consulting with the Company’s counsel, you reasonably believed that no law was being violated
by such acts.

5

 

                    4.1.1 In the event of termination by the Company for cause, without prejudice to any other
rights or remedies that the Company may have at law, in equity or Section 11.7.2, the Company shall
have no further obligation to you other than (i) to pay Base Salary through the effective date of
termination, (ii) to pay any Bonus for any year prior to the year in which such termination occurs
that has been determined but not yet paid as of the date of such termination (other than to the
extent any such Base Salary and Bonus may be repayable under the provisions of Section 11.7), (iii)
with respect to any rights you have pursuant to any insurance, benefit or incentive plans or
arrangements of the Company; (iv) your deferred compensation pursuant to Section 3.4 and (v) your
rights to indemnification under Section 3.5 or any other agreement or arrangement with the Company.
You hereby disclaim any right to receive a pro rata portion of any Bonus with respect to the year
in which such termination for cause occurs. Payments of Base Salary and Bonus required under this
Section shall be made at the same time as such payments would otherwise have been made to you
pursuant to Sections 3.1 and 3.2 if you had not been terminated.

               4.2 Termination by You for Material Breach by the Company and Termination by the Company
Without Cause. Unless previously terminated pursuant to any other provision of this Agreement
and unless a Disability Period shall be in effect, you shall have the right, exercisable by written
notice to the Company, to terminate the term of employment effective 30 days after the giving of
such notice, if, at the time of the giving of such notice, the Company is in material breach of its
obligations under this Agreement; provided, however, that, with the exception of clause (i) below,
this Agreement shall not so terminate if such notice is the first such notice of termination
delivered by you pursuant to this Section 4.2 and within such 30-day period the Company shall have
cured all such material breaches; and provided further such notice is provided to the Company
within 90 days after your knowledge of the occurrence of such material breach. A material breach
by the Company shall include, but not be limited to, (i) the Company violating Section 2 with
respect to your title, your reporting solely to the Board of Directors, authority, functions,
powers, duties, or place of employment, (ii) the Company failing to cause any successor to all or
substantially all of the business and assets of the Company expressly to assume the obligations of
the Company under this Agreement or (iii) the failure to reelect you to the Board or your otherwise
ceasing to be a member of the Board other than in connection with your removal as a Director for
cause under the Company’s by-laws; provided that it shall not be a material breach
of this Agreement if

6

 

you may no longer serve as Chairman of the Company as a result of any change in applicable
law, regulation or stock exchange listing requirements (to the extent your continued role as
Chairman does not otherwise qualify for “grandfather” treatment under such law, regulation or
requirements), so long as you continue to serve as a Director and Chief Executive Officer and
President of the Company. The Company shall have the right, exercisable by written notice to you
delivered before the date which is sixty (60) days prior to the Term Date, to terminate your
employment under this Agreement without cause, which notice shall specify the effective date of
such termination. If such notice is delivered on or after the date which is 60 days prior to the
Term Date, the provisions of Section 4.3 shall apply. The effective date of termination of your
employment pursuant to this Section 4.2 shall be either (x) 30 days after you have given notice as
provided for in the first sentence of this Section 4.2 and the Company has failed to cure the
material breach set forth in such notice or (y) the date specified in the Company’s notice as
provided for in the preceding sentence (in each case, the “Effective Date of Termination”).

                    4.2.1 Termination Benefits. After the Effective Date of Termination pursuant to
Section 4.2 (a “termination without cause”), you shall receive Base Salary and a pro rata portion
of your Bonus through the Effective Date of Termination, subject to the actual achievement of the
performance criteria established under the Bonus Plan for the year of termination, and subject also
to exercise by the Board’s Compensation Committee of its negative discretion in such a manner that
your Bonus, expressed as a percentage of your Target Bonus for the year of termination, is not less
than the Average Percentage (as defined below in this Section 4.1.2), but in no event shall such
pro rata bonus exceed a pro rata portion of the maximum Bonus provided for under Section 3.2 of
this Agreement. You will also be entitled to any accrued, but unpaid Bonus for any year prior to
the year of termination, which has been determined pursuant to Section 3.2 (which, if not
determined, shall be subject to the actual achievement of the performance criteria established
under the Bonus Plan for the applicable year, and subject also to exercise by the Board’s
Compensation Committee of its negative discretion in such a manner that your Bonus, expressed as a
percentage of your Target Bonus for the year, is not less than the Average Percentage) and your
vested long-term compensation as provided in Sections 3.3.1 and 3.3.2 (if any), and your deferred
compensation pursuant to Section 3.4. “Average Percentage” means the quotient (expressed as a
percentage) obtained by dividing (x) the sum of the Individual Percentages for each of the named
executive officers of the Company for purposes of the Company’s proxy statement for such applicable
year

7

 

(other than you) (each individually, a “Covered NEO” and collectively, the “Covered NEOs”) ,
by (y) the number of Covered NEOs for such applicable year. “Individual Percentage” means the
quotient obtained by dividing (A) the actual bonus determined by the Compensation Committee for the
Covered NEO, by (B) the Covered NEO’s target annual bonus used for purposes of applying the
criteria under the Company’s 2008 incentive plan (TWCIP) or any successor plans. The payment of
your pro rata Bonus or any Bonus for a year prior to the year of termination pursuant to this
Section 4.2.1 shall be paid to you at the times set forth in Section 4.6.

                    4.2.2 Severance Benefits. After the Effective Date of Termination under Section 4.2,
subject to Section 4.6, you shall be eligible to continue to receive the salary and benefits
payable as if you were an employee of the Company, in the form and at such times as you would have
received them had you remained employed during such period, for a period ending on the date (the
“Severance Term Date”) which is the later of (i) September 30, 2012 and (ii) the date which is 24
months after the Effective Date of Termination (in the case of either (i) or (ii), the “Severance
Period”). During this Severance Period, you (or your estate if you die before payments are
completed) shall be entitled to receive severance payments in an amount determined as follows: (a)
an annual amount equal to your Base Salary in effect immediately prior to the notice of
termination, and (b) an amount equal to the annual Target Bonus that you would have received
pursuant to Section 3.2 of this Agreement (based on your Base Salary immediately prior to the
notice of termination) in respect of each calendar year during the Severance Period or portion
thereof (in which case a pro rata portion of such Bonus will be payable) in the case of (a) and
(b), not to exceed amounts payable during the 24 months after the Effective Date of Termination;
provided that the amounts payable to you pursuant to this sub-clause (b) shall not
duplicate the pro rata bonus for the year in which the Effective Date of Termination occurs, as
provided for in Section 4.2.1. If the Severance Period is longer than 24 months, the aggregate
payments of Base Salary and Target Bonus to be made in each pay period shall be reduced so that
such payments are made pro rata over the Severance Period, without increasing the total value of
payments made under this Section 4.2.2.

                    4.2.3 Subsequent Employment. Except as provided in the following sentence, if you
accept other full-time employment during the Severance Period or notify the Company in writing of
your intention to no longer be treated as if you were an

8

 

employee during the Severance Period, you shall cease to be treated as if you were an employee
of the Company, including for purposes of your rights to receive certain post-termination benefits
under Section 8.2 (provided, however, you shall continue to eligible to participate in the
Company’s medical, hospitalization, and dental programs during the Severance Period or otherwise be
provided with coverage and benefits comparable to those available under such programs at such time
until such time as you become eligible for comparable coverage in connection with accepting such
full time employment), with such cessation of post-termination benefits effective upon the
commencement of such other employment or the effective date of such termination as specified by you
in such notice, whichever is applicable, but you shall continue to receive the remaining payments
you would have received pursuant to Sections 4.2.1 and 4.2.2 at the times specified therein.
Notwithstanding the foregoing, if you accept full-time employment with any affiliate of the
Company, then the payments provided for in Section 4.2.2 shall immediately cease. For purposes of
this Agreement, the term “affiliate” shall mean any entity which, directly or indirectly, controls,
is controlled by, or is under common control with, the Company.

                    4.2.4 Office Facilities. In the event of a termination without cause or a termination
pursuant to Section 4.3, then for the period beginning as of the Effective Date of Termination and
ending on the earlier of (a) twelve months thereafter or (b) the date you commence other full-time
employment, the Company shall, without charge to you, make available to you office space at or near
your principal job location immediately prior to such termination, together with secretarial
services, office facilities, services and furnishings, in each case reasonably appropriate to an
executive of your position and responsibilities prior to such termination, but taking into account
your reduced need for such office space, secretarial services and office facilities, services and
furnishings as a result of you no longer being a full-time employee.

                    4.2.5 Reduction of Severance Payments. Notwithstanding any provision of this
Agreement to the contrary, if you breach the provisions of Section 9.1 or 9.2 during the relevant
restricted period provided for in such sections (the “Restricted Period”), all payment and other
obligations of the Company pursuant to Section 4.2.2 and Section 8.2 shall cease as of the date of
the breach. In addition, if at any time following the expiration of the Restricted Period, and
during the remaining Severance Period, you render services to, or act in any capacity for, or
acquire any interest of any type in (in excess of the investment level permitted under Section 9.2
hereof), any “Competitive Entity”

9

 

(whether or not such activity falls within the Restricted Period) the amount of any cash
compensation which you are eligible to receive during such period (whether actually paid to you or
deferred at your election into equity or any other deferral arrangement) shall reduce (dollar for
dollar) any subsequent payments of Base Salary and/or Target Bonus that would otherwise be paid to
you during the Severance Period. The provisions of this Section 4.2.5 shall not affect (x) the
terms and conditions of any of your then outstanding options, restricted stock units or other
Company equity awards and (y) your continued medical, dental and hospitalization coverage as
provided for in Section 8.2 hereof. Notwithstanding anything herein to the contrary, the reduction
of payments provided for in this Section 4.2.5 shall not apply after the first twelve months of the
Severance Period if you are employed by an entity or person that is not itself a Competitive
Entity, but either (x) has a division, business unit or segment that is a division, business unit
or segment that is a Competitive Entity or (y) has an affiliate that (i) is a Competitive Entity or
(ii) has a division, business unit or segment that is a Competitive Entity, so long as you
demonstrate, to the Company’s reasonable satisfaction (e.g., represent and warrant to the Company
in writing and describe the nature and scope of your responsibilities) from time to time that you
do not and will not, directly or indirectly, provide services or advice to such division, business
unit or segment, or such affiliate (or its division, business unit or segment) that is a
Competitive Entity, or otherwise breach your obligations under Section 9 hereof. Nothing in this
Section 4.2.5 shall limit your repayment obligations to the Company under Section 11.7.

               4.3 Expiration of Term. If at the Term Date, the term of employment shall not have
been previously terminated pursuant to the provisions of this Agreement, no Disability Period is
then in effect and the Parties shall not have agreed to an extension or renewal of this Agreement
or on the terms of a new employment agreement, then your employment shall be terminated effective
on the Term Date and the Company shall have no further obligation to you, other than (i) to pay
Base Salary through the Effective Date of Termination, (ii) to pay any Bonus compensation for the
last calendar year of the term of employment, based on actual performance results (subject to the
exercise by the Compensation Committee of its negative discretion in such a manner that your Bonus,
expressed as a percentage of your Target Bonus for the year, is not less than the Average
Percentage), at such time as such Bonus compensation would otherwise be due and payable, (iii) with
respect to any rights you have pursuant to any insurance or benefit and incentive plans or
arrangements of the Company (iv) your rights to

10

 

indemnification under Section 3.5 or any other agreement or arrangement of the Company and (v)
any Bonus for any year prior to the year in which such termination occurs that has been determined
but not yet paid as of the date of such termination (or if not then determined, such Bonus shall be
subject to the actual achievement of the performance criteria established under the Bonus Plan for
the applicable year, and subject also to exercise by the Board’s Compensation Committee of its
negative discretion in such a manner that your Bonus, expressed as a percentage of your Target
Bonus for the year, is not less than the Average Percentage).

               4.4 Termination By You Absent Material Breach By the Company. You recognize and agree
that by virtue of your position you will have access to confidential and sensitive business and
proprietary information and valued client and other business relationships and that as a result it
is reasonable and necessary to provide for a smooth transition in the event you chose to resign or
retire. Consequently, in the event of your resignation or retirement before the Term Date you
agree to provide the Company with sixty (60) days prior written notice of your intent to terminate
your employment after the expiration of such sixty (60) day period (the “Notice Period”). During
the Notice Period, the Company may, in its sole discretion, require you to perform your regular
duties, reduce your previous duties or assign to you other duties, as well as directing you to no
longer physically be present in the Company’s offices or premises; provided that during such period
you shall receive your normal compensation and benefits. In the event of your resignation or
retirement pursuant to this Section 4.4, the Company shall have no further obligation to you other
than (i) to pay Base Salary through the effective date of termination, as provided for in this
Section 4.4 and any Bonus for any year prior to the year in which such termination occurs that has
been determined by the Compensation Committee but not yet paid as of the date of such termination
(other than to the extent any such Base Salary and Bonus may be repayable under the provisions of
Section 11.7), (ii) with respect to any rights you have pursuant to any insurance or benefit or
incentive plans or arrangements of the Company, (iii) your deferred compensation pursuant to
Section 3.4 and (iv) your rights to indemnification under Section 3.5 or any other agreement or
arrangement of the Company. You hereby disclaim any right to receive a pro rata portion of any
Bonus with respect to the year in which such resignation or retirement before the Term Date occurs.

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               4.5 Release. A condition precedent to the Company’s obligation to make the payments
associated with a termination without cause or a termination by you as a result of a material
breach by the Company shall be your execution and delivery of a release in the form attached hereto
as Annex B. Such release must be returned no later than sixty (60) days after your separation from
service with the Company; assuming your compliance with the foregoing, such payments shall commence
on the first regular payroll date on or after the sixtieth (60th) day after your
termination of employment. If you fail to execute and deliver such release, or if you revoke such
release as provided therein, then you shall not be entitled to any severance benefits under this
Agreement.

               4.6 Payments. Subject to the provisions of Section 4.5 with respect to the
commencement of payments due you and the last sentence of this Section 4.6, payments of Base Salary
and Bonus required to be made to you after a termination without cause shall be made at the same
times as such payments otherwise would have been paid to you pursuant to Sections 3.1 and 3.2 if
you had not been terminated; provided, however, that any payment or benefit otherwise required to
be made or provided after a termination without cause or a termination by you as a result of a
material breach by the Company of this Agreement that the Company reasonably determines is subject
to Section 409A(a)(2)(B)(i) of the Code shall not be paid or payment commenced until the later of
(a) six months after the date of your “separation from service” (within the meaning of Section 409A
of the Code) and (b) the payment date or commencement date specified in this Agreement for such
payment(s). On the earliest date on which such payments can be made or commenced without violating
the requirements of Section 409A(a)(2)(B)(i) of the Code, you shall be paid, in a single lump sum,
an amount equal to the aggregate amount of all payments delayed pursuant to the preceding sentence.
Notwithstanding the foregoing, if your employment is terminated pursuant to Section 4.2 hereof
within two years after a change in control event, as defined in Treasury Regulations Section
1.409A-3(i)(5), all of the cash severance payments due you pursuant to Section 4.2.2 shall be paid
in a single lump sum (less all applicable payroll tax deductions and applicable deductions for any
benefits otherwise continuing during the Severance Period) within 30 days of the termination of
your employment, provided that $200,000 of the payments due you shall be paid in equal payroll
installments through September 30, 2012.

               4.7 Mitigation of Damages. The Parties agree that you are not required to seek other
employment or to mitigate the amounts payable under the

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Agreement. Except as provided for in Section 4.2.5, no compensation earned by you from
subsequent employment will reduce any amount payable under this Agreement, except that the
availability of benefits and office space shall cease upon your commencement of full-time
employment, as provided for in Sections 4.2.3 and 4.2.4, respectively.

                    4.8 IRC Sections 280G and 4999. Notwithstanding anything to the contrary contained in
this Agreement, to the extent that any amount or benefit paid or distributed to you pursuant to
this Agreement or any other agreement or arrangement between the Company and you (collectively, the
“Payments”) (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and
(ii) but for this Section 4.8, would be subject to the excise tax imposed by Section 4999 of the
Code, then the Payments shall be payable either (i) in full or (ii) as to such lesser amount which
would result in no portion of such Payments being subject to excise tax under Section 4999 of the
Code; whichever of the foregoing amounts, taking into account the applicable federal, state and
local income or excise taxes (including the excise tax imposed by Section 4999) results in your
receipt on an after-tax basis, of the greatest amount of benefits under this Agreement,
notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the
Code. Unless you and the Company otherwise agree in writing, any determination required under this
Section shall be made in writing by an independent public accountant selected by the Company and
reasonably acceptable to you (the “Accountants”), whose determination shall be conclusive and
binding upon you and the Company for all purposes. For purposes of making the calculations
required by this Section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The Company and you shall furnish to the
Accountants such information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by this Section.

                         4.8.1 If you receive reduced payments and benefits by reason of this Section 4.8 and it is
established pursuant to a final determination of the court or an Internal Revenue Service
proceeding that you could have received a greater amount without resulting in an excise tax, then
the Company shall promptly thereafter pay you the

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aggregate additional amount which could have been paid without resulting in an excise tax as
soon as practicable.

                    4.8.2 The parties agree to cooperate generally and in good faith with respect to (i) the
review and determinations to be undertaken by the Accountants as set forth in this Section 4.8.1
and (ii) any audit, claim or other proceeding brought by the Internal Revenue Service to review or
contest or otherwise related to the determinations of the Accountants as provided for in this
Section 4.8.1, including any claim or position taken by the Internal Revenue Service that, if
successful, would require the payment by you of any additional excise tax, over and above the
amounts of excise tax established under the procedure set forth in this Section 4.8.1.

                    4.8.3 The reduction of Company payments, if applicable, shall be effected in the following
order (unless you, to the extent permitted by Section 409A of the Code, elect another method of
reduction by written notice to the Company prior to the Section 280G event): (i) any cash severance
payments, (ii) any other cash amounts payable to you, (iii) any benefits valued as parachute
payments (iv) acceleration of vesting of any stock options for which the exercise price exceeds the
then fair market value of the underlying stock, in order of the option tranches with the largest
Section 280G parachute value, (v) acceleration of vesting of any equity award that is not a stock
option and (vi) acceleration of vesting of any stock options for which the exercise price is less
then the fair market value of the underlying stock in such manner as would net you the largest
remaining spread value if the options were all exercised as of the Section 280G event.

          5. Disability.

               5.1 Disability Payments. If during the term of employment and prior to the delivery
of any notice of termination without cause, you become physically or mentally disabled, whether
totally or partially, so that you are unable to engage in substantial gainful activity by reason of
any medically determinable physical or mental impairment, which can be expected to result in death
or can be expected to last for a continuous period of not less than twelve (12) months, the Company
shall, nevertheless, continue to pay your full compensation through the last day of the sixth
consecutive month of disability or the date on which any shorter periods of disability shall have
equaled a total of six months in any twelve-month period (such last day or date being referred to
herein as

14

 

the “Disability Date”). If you have not resumed your usual duties on or prior to the
Disability Date, the Company shall pay you a pro rata Bonus (based on actual performance results
and the exercise by the Board’s Compensation Committee of its negative discretion in such a manner
that your Bonus, expressed as a percentage of your Target Bonus for the year, is not less than the
Average Percentage for the year in which the Disability Date occurs) and thereafter shall pay you
disability benefits for the period ending on the later of (i) the Term Date or (ii) the date which
is twelve months after the Disability Date (in the case of either (i) or (ii), the “Disability
Period”), in an annual amount equal to 75% of (a) your Base Salary at the time you become disabled
and (b) your Target Bonus. All payments pursuant to this Section 5.1 shall be made at the times
specified in Section 4.6 and shall be subject to Section 11.17.

               5.2 Recovery from Disability. If during the Disability Period you shall fully
recover from your disability, the Company shall have the right (exercisable within 60 days after
notice from you of such recovery), but not the obligation, to restore you to full-time service at
full compensation. If the Company elects to restore you to full-time service, then this Agreement
shall continue in full force and effect in all respects and the Term Date shall not be extended by
virtue of the occurrence of the Disability Period. If the Company elects not to restore you to
full-time service, you shall be entitled to obtain other employment, subject, however, to the
following: (i) you shall perform advisory services during any balance of the Disability Period;
and (ii) you shall comply with the provisions of Section 9 during the Disability Period and
afterward as provided for therein. The advisory services referred to in clause (i) of the
immediately preceding sentence shall consist of rendering advice concerning the business, affairs
and management of the Company as requested by the Board but you shall not be required to devote
more than five days (up to eight hours per day) each month to such services, which shall be
performed at a time and place mutually convenient to both Parties. Any income from such other
employment shall not be applied to reduce the Company’s obligations under this Agreement.

               5.3 Other Disability Provisions. The Company shall be entitled to deduct from all
payments to be made to you during the Disability Period pursuant to Section 5.1 an amount equal to
all disability payments received by you during the Disability Period from Worker’s Compensation,
Social Security and disability insurance policies maintained by the Company; provided, however,
that for so long as, and to the

15

 

extent that, proceeds paid to you from such disability insurance policies are not includible
in your income for federal income tax purposes, the Company’s deduction with respect to such
payments shall be equal to the product of (i) such payments and (ii) a fraction, the numerator of
which is one and the denominator of which is one less the maximum marginal rate of federal income
taxes applicable to individuals at the time of receipt of such payments. All payments made under
Section 5 after the Disability Date are intended to be disability payments, regardless of the
manner in which they are computed. Except as otherwise provided in Section 5, the term of
employment shall continue during the Disability Period, and you shall be entitled to all of the
rights and benefits provided for in this Agreement, except that Sections 4.2 and 4.3 shall not
apply during the Disability Period. Unless the Company has restored you to full-time service at
full compensation prior to the end of the Disability Period, the term of employment shall end and
you shall cease to be treated as an employee of the Company at the end of the Disability Period and
shall not be entitled to notice and severance or to receive or be paid for any accrued vacation
time.

          6. Death. If you die during the term of employment, this Agreement and all
obligations of the Company to make any payments hereunder shall terminate except that your estate
(or a designated beneficiary) shall be entitled to receive Base Salary to the last day of the month
in which your death occurs, any Bonus award for any year prior to the year in which your death
occurs that has been determined but not yet paid (which if not determined, shall be based on the
actual achievement of the performance targets set up under the Bonus Plan for the applicable year,
subject to exercise by the Board’s Compensation Committee of its negative discretion in such a
manner that your bonus, expressed as a percentage of your target Bonus for the year, is not less
than the Average Percentage) as of the date of your death, and Bonus compensation (at the time
bonuses are normally paid) for the year in which your death occurs based on the actual performance
results for that year (subject to the exercise by the Board’s Compensation Committee of its
negative discretion in a manner that is not materially greater than the negative discretion applied
to other senior executives), but prorated according to the number of whole or partial months you
were employed by the Company in such calendar year. For the purposes of clarity, it is intended
that any vested rights you or your beneficiaries may have at the time of your death or as a result
of your death pursuant to any insurance or benefit and incentive plans or arrangements of the
Company or any benefit and incentive plans

16

 

described in Sections 3.4 and 8 shall be governed by the terms and provisions of such
insurance or benefit and incentive plans and arrangements. 

          7. Insurance. During your employment with the Company, the Company shall (i) provide
you with $50,000 of group life insurance and (ii) pay you annually an amount equal to two times the
premium you would have to pay to obtain life insurance under the Group Universal Life (“GUL”)
insurance program made available by the Company in an amount equal to $4,000,000. You shall be
under no obligation to use the payments made by the Company pursuant to the preceding sentence to
purchase GUL insurance or to purchase any other life insurance. If the Company discontinues its
GUL insurance program, the Company shall nevertheless make the payments required by this Section 7
as if such program were still in effect. The payments made to you hereunder shall not be
considered as “salary” or “compensation” or “bonus” in determining the amount of any payment under
any pension, retirement, profit-sharing or other benefit plan of the Company or any subsidiary of
the Company.

          8. Other Benefits.

               8.1 Generally Available Benefits. To the extent that (a) you are eligible under the
general provisions thereof (including without limitation, any plan provision providing for
participation to be limited to persons who were employees of the Company or certain of its
subsidiaries prior to a specific point in time) and (b) the Company maintains such plan or program
for the benefit of its executives, during the term of employment and so long as you are an employee
of the Company, you shall be eligible to participate in any pension, excess plan, profit-sharing,
savings, or similar plan or program and in any group life insurance (to the extent set forth in
Section 7), hospitalization, medical, dental, accident, disability or similar plan or program of
the Company now existing or established hereafter for its senior corporate executives. For the
purpose of clarity, you shall be entitled during the term of employment and so long as you are an
employee of the Company, to receive other benefits generally available to all senior executives of
the Company to the extent you are eligible under the general provisions thereof, including, without
limitation, to the extent maintained in effect by the Company for its senior executives, an
automobile allowance and financial services; provided that, effective December 31, 2009, your
eligibility for automobile allowance benefits shall terminate automatically.

17

 

               8.2 Benefits After a Termination or Disability. During the Severance Period or the
Disability Period, subject to Section 4.2.3, you shall continue to be treated as if you were an
employee of the Company and shall continue to be eligible to participate in the Company’s life
insurance (including GUL premiums provided for in Section 7) and medical, dental and
hospitalization programs, and receive Company courtesy services and financial planning services, as
provided for under Section 8.1 above, in each case to the extent such benefits are maintained in
effect by the Company for its senior executives or comparable arrangements that may be implemented
for former employees covered by severance arrangements; provided, further, that you shall not be
entitled to any additional awards or grants under any stock option, restricted stock or other stock
based incentive plan. As of your Effective Date of Termination or the end of the Disability Period
(or earlier if you are deemed to have incurred a separation from service due to disability), you
will no longer be permitted to contribute to or receive a Company match in the TWC Savings Plan and
you will no longer accrue benefit service under the Time Warner Cable Pension Plan or the Time
Warner Cable Excess Benefit Pension Plan, and your rights under those plans will be determined in
accordance with the terms of those plans and applicable law. After the Severance Period or
Disability Period, as applicable, your rights to benefits and payments under any benefit plans or
any insurance or other death benefit plans or arrangements of the Company or under any stock
option, restricted stock, stock appreciation right, bonus unit, management incentive or other plan
of the Company shall be determined in accordance with the terms and provisions of such plans and
any agreements under which such stock options, restricted stock units, or other awards were
granted.

               8.3 Payments in Lieu of Other Benefits. In the event the term of employment and your
employment with the Company is terminated pursuant to any section of this Agreement, you shall not
be entitled to notice and severance under the Company’s general employee policies or to be paid for
any accrued vacation time, the payments provided for in such sections of this Agreement being in
lieu thereof.

18

 

          9. Protection of Confidential Information; Non-Compete; Ownership of Work Product.

               9.1 Confidentiality Covenant. You acknowledge that your employment by the Company
will, throughout the term of employment, bring you into close contact with many confidential
affairs of the Company, including information about costs, profits, markets, sales, products, key
personnel, pricing policies, operational methods, technical processes and other business affairs
and methods and other information not readily available to the public, and plans for future
development. You further acknowledge that (i) the services to be performed under this Agreement
are of a special, unique, unusual, extraordinary and intellectual character and (ii) while the
business is currently domestic in scope, it may in the future expand and become international in
scope, with its products and services marketed throughout the world, and that if that were to be
the case the nature of your services, position and expertise are such that you would be capable of
competing with the Company not merely in the United States but from nearly any location in the
world. In recognition of the foregoing, you covenant and agree:

                    9.1.1 You shall keep secret all confidential matters of the Company and, except in the
performance of your duties, shall not disclose such matters to anyone outside of the Company, and
shall not use such information for personal benefit or the benefit of a third party, either during
or after the term of employment, except with the Company’s written consent, provided that (i) you
shall have no such obligation to the extent such matters are or become publicly known other than as
a result of your breach of your obligations hereunder, (ii) you may, after giving prior notice to
the Company to the extent practicable under the circumstances, disclose such matters to the extent
required by applicable laws or governmental regulations or judicial or regulatory process and (iii)
to the extent necessary to enforce the terms of this Agreement;

                    9.1.2 You shall deliver promptly to the Company on termination of your employment, or at any
other time the Company may so request, all memoranda, notes, records, reports and other documents
(and all copies thereof) relating to the Company’s business, which you obtained while employed by,
or otherwise serving or acting on behalf of, the Company and which you may then possess or have
under your control; provided that you may retain your personal tax, financial or accounting records
and your documents in your personal files related to your benefits, equity and rights under this
Agreement; and

19

 

                    9.1.3 If the term of employment is terminated pursuant to Section 4, for a period of one year
after such termination, without the prior written consent of the Company, you shall not directly or
indirectly, (i) solicit, induce, encourage or attempt to influence any customer, independent
contractor, joint venturer or supplier of the Company to cease to do business with or to otherwise
terminate his, her or its relationship with the Company, (ii) solicit or hire or cause any entity
of which you are an affiliate to solicit or hire, any person who was a full-time employee of the
Company at the date of such termination or within six months prior thereto; provided that such
prohibition shall not apply to your secretary or executive assistant or to any other employee
eligible to receive overtime pay or (iii) breach your non-disparagement obligations in Section
11.18 hereof. Nothing in this Section 9.1.3 shall restrict your ability to (i) solicit customers
on behalf of an entity that at the time of such solicitation does not, and as a result of such
solicitation will not, qualify as a Competitive Entity under the provisions of Section 9.2(vii),
(ii) solicit any independent contractor, joint venturer or supplier of the Company on behalf of an
entity that qualifies as a Competitive Entity under the provisions of Section 9.2(vii), (iii)
engage in general advertising not targeted at Company employees or serve as a reference for an
employee with regard to an entity with which you are not affiliated or (iv) hire any former
employee of the Company who was terminated involuntarily by the Company, so long as you were not,
directly or indirectly, involved in the circumstances giving rise to such termination.

               9.2 Non-Compete. During the term of employment and through twelve months after the
effective date of any termination of the term of employment pursuant to Section 4, you shall not,
directly or indirectly, without the prior written consent of the Board of the Company, render any
services to, or act in any capacity for, any person or entity which is a Competitive Entity (as
defined below) with the Company, or acquire any interest of any type in any such person or entity;
provided, however, that the foregoing shall not be deemed to prohibit you from acquiring, (a)
solely as an investment and through market purchases, securities of any Competitive Entity (defined
below) which are registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934 and
which are publicly traded, so long as you are not part of any control group of such Competitive
Entity and such securities, including converted securities, do not constitute more than one percent
(1%) of the outstanding voting power of that entity and (b) securities of any Competitive Entity
that are not publicly traded, so long as you are not part of any control group of such Competitive
Entity and such securities, including converted securities, do

20

 

not constitute more than three percent (3%) of the outstanding voting power of that entity. For
purposes of the foregoing, a person or entity is deemed to be a Competitive Entity if such entity
is (I) one of the companies set forth below in sub-clauses (i)-(vii)(each individually a
“Designated Company,” and collectively the “Designated Companies”) or (II) any subsidiary, division
or business unit or segment of, or joint venturer with, or successor to, any Designated Company (a
“Direct Affiliate”), or (III) any person or entity controlling, controlled by or under common
control with such Designated Company (a “Category III Affiliate”): (i) AT&T Inc., (ii) Verizon
Communications Inc., (iii) DIRECT TV, Inc., (iv) DISH Network L.L.C., (v) Comcast Corporation, (vi)
Cablevision Systems Corporation, or (vii) any provider of multichannel video, high-speed data or
telephone services, in each case through any technological platform, to residential or commercial
customers with 3,000,000 or more customers; provided that you may be employed by
any Category III Affiliate, so long as you demonstrate to the Company’s reasonable satisfaction
(e.g. represent and warrant to the Company in writing and describe the nature of your
responsibilities) that you do not and will not, directly or indirectly, provide services or advice
to, or have any responsibility for or supervision of, any Designated Company or Direct Affiliate.

               9.3 Ownership of Work Product. You acknowledge that during the term of employment,
you may conceive of, discover, invent or create inventions, improvements, new contributions,
literary property, material, ideas and discoveries, whether patentable or copyrightable or not (all
of the foregoing being collectively referred to herein as “Work Product”), and that various
business opportunities shall be presented to you by reason of your employment by the Company. You
acknowledge that all of the foregoing shall be owned by and belong exclusively to the Company and
that you shall have no personal interest therein, provided that they are either related in any
manner to the business (commercial or experimental) of the Company, or are, in the case of Work
Product, conceived or made on the Company’s time or with the use of the Company’s facilities or
materials, or, in the case of business opportunities, are presented to you for the possible
interest or participation of the Company. You shall (i) promptly disclose any such Work Product
and business opportunities to the Company; (ii) assign to the Company, upon request and without
additional compensation, the entire rights to such Work Product and business opportunities; (iii)
sign all papers necessary to carry out the foregoing; and (iv) give testimony in support of your
inventorship or creation in any appropriate case. You agree that you will not assert any rights to
any Work Product or business opportunity

21

 

as having been made or acquired by you prior to the date of this Agreement except for Work Product
or business opportunities, if any, disclosed to and acknowledged by the Company in writing prior to
the date hereof.

               9.4 You acknowledge that the restrictions contained in this Section 9, in light of the nature
of the Company’s business and your position and responsibilities, are reasonable and necessary to
protect the legitimate interests of the Company.

          10. Notices. All notices, requests, consents and other communications required or
permitted to be given under this Agreement shall be effective only if given in writing and shall be
deemed to have been duly given if delivered personally or sent by a nationally recognized overnight
delivery service, or mailed first-class, postage prepaid, by registered or certified mail, or by
facsimile with receipt confirmed, as follows (or to such other or additional address as either
party shall designate by notice in writing to the other in accordance herewith):

               10.1 If to the Company:

Time Warner Cable Inc.

60 Columbus Circle

New York, New York 10023

Attention: General Counsel

Facsimile: 212-364-8254

               10.2 If to you, to your residence address set forth on the records of the Company, with a copy
to:

Paul M. Ritter, Esq.

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, New York 10036

Facsimile: 212.715.8091

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          11. General.

               11.1 Governing Law. This Agreement shall be governed by and construed and enforced
in accordance with the substantive laws of the State of New York applicable to agreements made and
to be performed entirely in New York.

               11.2 Captions. The section headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.

               11.3 Entire Agreement. This Agreement, including Annexes A, B and C, set forth the
entire agreement and understanding of the Parties relating to the subject matter of this Agreement
and supersedes all prior agreements, arrangements and understandings, written or oral, between the
Parties.

               11.4 No Other Representations. No representation, promise or inducement has been
made by either party that is not embodied in this Agreement, and neither party shall be bound by or
be liable for any alleged representation, promise or inducement not so set forth.

               11.5 Assignability. This Agreement and your rights and obligations hereunder may not
be assigned by you and except as specifically contemplated in this Agreement, neither you, your
legal representative nor any beneficiary designated by you shall have any right, without the prior
written consent of the Company, to assign, transfer, pledge, hypothecate, anticipate or commute to
any person or entity any payment due in the future pursuant to any provision of this Agreement, and
any attempt to do so shall be void and shall not be recognized by the Company. The Company shall
assign its rights together with its obligations hereunder in connection with any sale, transfer or
other disposition of all or substantially all of the Company’s business and assets, whether by
merger, purchase of stock or assets or otherwise, as the case may be. Upon any such assignment, the
Company shall cause any such successor expressly to assume such obligations, and such rights and
obligations shall inure to and be binding upon any such successor. In addition, if in the event
that the assets of the Company are directly or indirectly combined (whether by merger, sale of
assets or stock, joint venture or otherwise) with the assets of another entity, whether or not the
Company has control over the

23

 

combined entity, the Company shall be in material breach of its obligations under this Agreement
if, at such time, you are employed as Chief Executive Officer of the Company and you are not
offered the position of Chief Executive Officer of such combined company.

               11.6 Amendments; Waivers. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended and the terms or covenants hereof may be waived only by written
instrument executed by both of the Parties hereto, or in the case of a waiver, by the party waiving
compliance; provided that, no such amendment or modification shall be effective solely as a result
of an e-mail exchange and shall require the manual signatures of an authorized representative of
the Company and yourself on a document expressly prepared to amend or modify this Agreement. The
failure of either party at any time or times to require performance of any provision hereof shall
in no manner affect such party’s right at a later time to enforce the same. No waiver by either
party of the breach of any term or covenant contained in this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing waiver of any such
breach, or a waiver of the breach of any other term or covenant contained in this Agreement. In
addition, the Parties agree that the Board may delegate its authority under this Agreement to the
Compensation Committee or any other special committee of the Board that the Board deems appropriate
under the circumstances; provided that in no event shall you be required to report to any body
other than the Board.

               11.7 Remedies.

                    11.7.1 Specific Remedy. In addition to such other rights and remedies as the Company
may have at equity or in law with respect to any breach of this Agreement, if you commit a material
breach of any of the provisions of Section 9, the Company shall have the right and remedy to have
such provisions specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to
the Company.

                    11.7.2 Option, Stock and Other Compensation Forfeiture. In addition to the injunctive
remedies available to the Company pursuant to Section 11.7.1 above, you agree that in the event of
the termination of your employment for a “Covered Cause Event” (as defined below)(each a
“Forfeiture Event”), the Company shall be entitled

24

 

to the following additional remedies: (i) your options and any other equity or cash-based
awards granted on or after the Effective Date and within one year of the occurrence of the Covered
Cause Event shall be subject to the forfeiture and repayment conditions set forth on Annex C to
this Agreement and (ii) you shall repay to the Company, within sixty (60) days of written demand,
all Base Salary and Bonus previously made to you during the period in which you engaged in the
conduct giving rise to the Covered Cause Event. Notwithstanding any of the foregoing, the Board or
committee to whom the Board has delegated such matters shall retain sole discretion regarding
whether to seek the remedies set forth in this Section 11.7.2 and in Section 11.7.3. For purposes
of this Section 11.7.2 (I) a “Covered Cause Event” shall mean any conduct and/or activity falling
within sub-clauses (a), (c), (d), (e), (f)(other than a breach of Section 9.1.3 hereof or a
non-material breach of Sections 9.1.1 or 9.1.2 hereof) and (g) of the definition of “cause” set
forth in Section 4.1 above, (II) in the case of sub-clauses (a) (c), (d),(e) and (g) the conduct
has a significant adverse financial impact on the Company, (III) the reference to “felony” in
sub-clause (a) shall be limited solely to any acts or omissions arising in the performance of your
duties and responsibilities for, or matters involving the assets or property of, the Company or its
affiliates and (IV) for purposes of this Section 11.7.2, no act or failure to act will be
considered “willful” with respect to “cause” unless it has been done, or omitted to be done, by you
in bad faith and without reasonable belief that the action was in the best interests of the
Company; provided further that any act, or failure to act, based upon authority or instruction(s)
given to you pursuant to a resolution duly adopted by the Board, or based upon the advice of
counsel for the Company, will be conclusively presumed to be done or omitted to be done, by you in
good faith and in the best interests of the Company. Notwithstanding any other provision of this
Agreement to the contrary, and to the extent permitted by applicable law, the Company shall have
the right to offset against any amounts owed to you by the Company any repayment obligations or
liabilities that you may have under Sections 11.7.2 and 11.7.3 and Annex C of this Agreement. This
Section 11.7.2 and Annex C shall not apply unless the Company gives you written notice of its
exercise of its rights under this Section 11.7.2 and Annex C within ninety (90) days of the Board
becoming aware of the conduct giving rise to the Covered Cause Event; provided that other than in
the case of an ongoing course of conduct, the Company shall provide you with written notice within
eighteen (18) months of conduct giving rise to the Covered Cause Event, or in the case of the
cessation of an ongoing course of conduct, within eighteen (18) months of such cessation, and if it
fails to do so such conduct shall no longer provide a basis for any forfeiture pursuant to this
Section 11.7.2. In the event of a change

25

 

of ownership or control of the Company, or a change in the ownership of a substantial portion
of the assets of the Company (in each case as defined under Section 280G of the Code), no person or
entity acquiring such ownership or control may enforce the provisions of this Section 11.7.2
against you if at the time of such transaction such person or entity was aware of, or reasonably
should have known of, events or circumstances that would have given the Company grounds to have
terminated your employment for a Covered Cause Event.

                    11.7.3 Other Forfeitures of Compensation. You hereby acknowledge and agree that you
are subject to Section 304 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) and that
pursuant thereto you may under certain circumstances be obligated to pay back to the Company
certain amounts previously received by you. In addition, in connection with any grant, payment or
settlement made on your behalf (i.e., in connection with any incentive and/or performance based
compensation), based in whole or in part on the financial performance criteria of the Company, or
any division thereof, that are subsequently determined by the Board or a committee thereof to be
materially incorrect, you hereby agree that you shall pay back to the Company upon request of the
Board, the Board’s audit committee, or a committee of independent Board members, within sixty (60)
days of written demand, amounts previously received by you as bonuses or other incentive or equity
compensation, equal to the amount by which your compensation would have been reduced had the
performance criteria been correctly applied; it being understood that you shall retain any such
remaining compensation attributable to the correct application of such performance criteria.
Notwithstanding anything herein to the contrary, no amount shall be repaid by you more than once
under Section 11.7.2 and this Section 11.7.3. If, as a result of any determination hereunder, the
Board or a committee thereof determines that additional amounts may be due you and other
executives, based on the correct application of such performance criteria, such amounts shall be
paid to you in the calendar year in which such determination occurs.

                    11.7.4 Tax Liabilities with Respect to Forfeitures of Reimbursement Obligations.
Except to the extent required under the Sarbanes-Oxley Act, repayments to the Company of amounts
previously paid to you or of gain realized by you in connection with any option or equity award, as
may be provided for in Sections 11.7.2 and 11.7.3 and Annex C, shall be reduced by the Net Tax Cost
of amounts of previously

26

 

paid compensation and/or gain. “Net Tax Cost” shall mean the net amount of any federal,
foreign, state or local income and employment taxes paid by you in respect of the compensation or
gain received that is subject to reimbursement, after taking into account any and all available
deductions, credits or other offsets allowable to you (including, without limitation, any deduction
permitted under the claim of right doctrine), and regardless of whether you would be required to
amend any prior income or other tax returns, subject to your documentation that deductions, credits
or other offsets otherwise available or allowable to you could not be used as a result of your
actual tax position.

               11.8 Resolution of Disputes. Except as provided in the preceding Section 11.7, any
dispute or controversy arising with respect to this Agreement and your employment hereunder
(whether based on contract or tort or upon any federal, state or local statute, including but not
limited to claims asserted under the Age Discrimination in Employment Act, Title VII of the Civil
Rights Act of 1964, as amended, any state Fair Employment Practices Act and/or the Americans with
Disability Act) shall, at the election of either you or the Company, be submitted to JAMS for
resolution in arbitration in accordance with the rules and procedures of JAMS. Either party shall
make such election by delivering written notice thereof to the other party at any time (but not
later than 45 days after such party receives notice of the commencement of any administrative or
regulatory proceeding or the filing of any lawsuit relating to any such dispute or controversy) and
thereupon any such dispute or controversy shall be resolved only in accordance with the provisions
of this Section 11.8. Any such proceedings shall take place in New York City before a single
arbitrator (rather than a panel of arbitrators), pursuant to any streamlined or expedited (rather
than a comprehensive) arbitration process, before a non-judicial (rather than a judicial)
arbitrator, and in accordance with an arbitration process which, in the judgment of such
arbitrator, shall have the effect of reasonably limiting or reducing the cost of such arbitration.
The resolution of any such dispute or controversy by the arbitrator appointed in accordance with
the procedures of JAMS shall be final and binding. Judgment upon the award rendered by such
arbitrator may be entered in any court having jurisdiction thereof, and the Parties consent to the
jurisdiction of the New York courts for this purpose. The prevailing party shall be entitled to
recover the costs of arbitration (including reasonable attorneys’ fees and the fees of experts)
from the losing party; provided that each party shall bear its own costs (including
attorney’s fess and the fees of experts) with respect to any action arising under Section 11.7.2.
If at the time any dispute or controversy arises with respect to this Agreement, JAMS is not in
business or is

27

 

no longer providing arbitration services, then the American Arbitration Association shall be
substituted for JAMS for the purposes of the foregoing provisions of this Section 11.8. If you
shall be the prevailing party in such arbitration, the Company shall promptly pay, upon your
demand, all legal fees, court costs and other costs and expenses incurred by you in any legal
action seeking to enforce the award in any court.

               11.9 Beneficiaries. Whenever this Agreement provides for any payment to your estate,
such payment may be made instead to such beneficiary or beneficiaries as you may designate by
written notice to the Company. You shall have the right to revoke any such designation and to
redesignate a beneficiary or beneficiaries by written notice to the Company (and to any applicable
insurance company) to such effect.

               11.10 No Conflict. You represent and warrant to the Company that this Agreement is
legal, valid and binding upon you and the execution of this Agreement and the performance of your
obligations hereunder does not and will not constitute a breach of, or conflict with the terms or
provisions of, any agreement or understanding to which you are a party (including, without
limitation, any other employment agreement). The Company represents and warrants to you that this
Agreement is legal, valid and binding upon the Company and the execution of this Agreement and the
performance of the Company’s obligations hereunder does not and will not constitute a breach of, or
conflict with the terms or provisions of, any agreement or understanding to which the Company is a
party.

               11.11 Withholding Taxes. Payments made to you pursuant to this Agreement shall be
subject to withholding and social security taxes and other ordinary and customary payroll
deductions.

               11.12 No Offset. Except as provided by Section 11.7 and Annex C, neither you nor the
Company shall have any right to offset any amounts owed by one party hereunder against amounts owed
or claimed to be owed to such party, whether pursuant to this Agreement or otherwise, and you and
the Company shall make all the payments provided for in this Agreement in a timely manner.

               11.13 Severability. If any provision of this Agreement shall be held invalid, the
remainder of this Agreement shall not be affected thereby; provided,

28

 

however, that the Parties shall negotiate in good faith with respect to equitable modification
of the provision or application thereof held to be invalid. To the extent that it may effectively
do so under applicable law, each party hereby waives any provision of law which renders any
provision of this Agreement invalid, illegal or unenforceable in any respect.

               11.14 Survival. Sections 3.4, 4.8 8.3 and 9 through 11 shall survive any termination
of the term of employment by the Company pursuant to Sections 4.1, 4.3, or 4.4. Sections 3.4, 4.5,
4.8 and 8 through 11 shall survive any termination of the term of employment pursuant to Sections
4.2, 5 or 6.

               11.16 Definitions. The following terms are defined in this Agreement in the places
indicated:

Accountants — Section 4.8

affiliate — Section 4.2.3

Average Percentage — Section 4.2.1

Base Salary — Section 3.1

Board — Section 2.1

Bonus — Section 3.2

Bonus Plan — Section 3.2

Category III Affiliate — Section 9.2

cause — Section 4.1

Code — Section 3.4

Company — the first paragraph on page 1

Compensation Committee — Section 3.3.2

Competitive Entity — Section 9.2

Covered Cause Event — Section 11.7.2

Covered NEOs — Section 4.2.1

Designated Company — Section 9.2

Direct Affiliate — Section 9.2

Disability Date — Section 5

Disability Period — Section 5

Effective Date — the first paragraph on page 1

Effective Date of Termination—Section 4.2

Forfeiture Event — 11.7.2

GUL — Section 7

Individual Percentage —Section 4.2.1

Limited Vicarious Liability — Section 4.1

Net Tax Cost — Section 11.7.4

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Notice Period — Section 4.4

Parties — the first paragraph on page 1

Payments — Section 4.8

Prior Agreement — the second paragraph on page 1

Rabbi Trust — Section 3.4

Restricted Period — Section 4.2.5

retirement-eligible treatment —Section 3.3.1

Sarbanes-Oxley Act — Section 11.7.3

separation from service — Section 4.6

Severance Period — Section 4.2.2

Severance Term Date — Section 4.2.2

Target Bonus — Section 3.2

Term Date — the second paragraph on page 1

term of employment — Section 1

termination without cause — Section 4.2.1

Trust Account — Section 3.4

TWE — Section 3.5

you — the first paragraph on page 1

your — the first paragraph on page 1

Work Product — Section 9.3

               11.17 Compliance with Section 409A. This Agreement is intended to comply with Section
409A of the Code and will be interpreted, administered and operated in a manner consistent with
that intent. Notwithstanding anything herein to the contrary, if at the time of your separation
from service with the Company you are a “specified employee” as defined in Section 409A of the Code
(and the regulations thereunder) and any payments or benefits otherwise payable hereunder as a
result of such separation from service are subject to Section 409A of the Code, then the Company
will defer the commencement of the payment of any such payments or benefits hereunder (without any
reduction in such payments or benefits ultimately paid or provided to you) until the date that is
six months following your separation from service with the Company (or the earliest date as is
permitted under Section 409A of the Code), and the Company will pay any such delayed amounts in a
lump sum at such time. If any other payments of money or other benefits due to you hereunder could
cause the application of an accelerated or additional tax under Section 409A of the Code, such
payments or other benefits shall be deferred if deferral will make such payment or other benefits
compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be
restructured, to the extent possible, in a manner, determined by the Company, that does not cause
such an accelerated or additional tax. To the extent any reimbursements or in-kind benefits due to

30

 

you under this Agreement constitute “deferred compensation” under Section 409A of the Code,
any such reimbursements or in-kind benefits shall be paid to you in a manner consistent with Treas.
Reg. Section 1.409A-3(i)(1)(iv). Each payment made under this Agreement shall be designated as a
“separate payment” within the meaning of Section 409A of the Code. References to “termination of
employment” and similar terms used in this Agreement are intended to refer to “separation from
service” within the meaning of Section 409A of the Code to the extent necessary to comply with
Section 409A of the Code. The Company shall consult with you in good faith regarding the
implementation of the provisions of this Section 11.17; provided that neither the Company nor any
of its employees or representatives shall have any liability to you with respect to thereto.

               11.18 Mutual Non-Disparagement. For a period of one year after the termination of
your employment with the Company, you shall not, directly or indirectly, disparage, make negative
statements about or act in any manner which is intended to or does damage to the goodwill of, or
the business or personal reputations of the Company or any of its affiliates, or those individuals
who serve or served as an officer or director of the Company or any of its affiliates on or after
the Effective Date. During such period, the senior executive team of the Company shall not,
directly or indirectly, disparage, make negative statements about or act in any manner which is
intended to or does damage your business or personal reputation. Nothing in this Section 11.18
shall prohibit or bar the Company or you from providing truthful testimony in any legal proceeding
or in communicating with any governmental agency or representative, or from making any truthful
disclosure required under law or from enforcing any rights under this Agreement (including any
violation by the other party of the provisions of this Section 11.18). It shall not be a violation
of this Section 11.18 if (i) you respond to any disparaging or negative statements about you or any
action which is intended to or does damage your business or personal reputation, in each case
resulting from acts or statements by the Company or its officers, directors or employees, in each
case so long as your response is otherwise truthful and not misleading or (ii) the Company responds
to any statements or actions by you in violation of this Section 11.18, so long as its response is
otherwise truthful and not misleading.

[Remainder of page intentionally left blank.]

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          IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	TIME WARNER CABLE INC.

 	 
	 	 By   	/s/ Marc Lawrence-Apfelbaum
 	 
	 	 	 
	 	 	 
	 
	 	 	 
	 	 	/s/ Glenn A. Britt
 	 
	 	 	Glenn A. Britt 	 
	 	 	 
	 

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ANNEX A — I

Time Warner Cable Inc. 2006 Stock Incentive Plan

Non-Qualified Stock Option Agreement,

For Use after the Separation Date

Time Warner Cable Inc.

Non-Qualified Stock Option Agreement

General Terms and Conditions

          WHEREAS, the Company has adopted the Plan (as defined below), the terms of which are hereby
incorporated by reference and made a part of this Agreement; and

          WHEREAS, the Committee has determined that it would be in the best interests of the Company
and its stockholders to grant the Option provided for herein to the Participant pursuant to the
Plan and the terms set forth herein.

          NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
agree as follows:

          1. Definitions. Whenever the following terms are used in this Agreement, they shall
have the meanings set forth below. Capitalized terms not otherwise defined herein shall have the
same meanings as in the Plan.

               (a) “Cause” means “Cause” as defined in an employment, consulting, advisory or similar
agreement between the Company or any of its Affiliates and the Participant or, if not defined
therein or if there is no such agreement, “Cause” means (i) the Participant’s continued failure
substantially to perform such Participant’s duties (other than as a result of total or partial
incapacity due to physical or mental illness) for a period of ten (10) days following written
notice by the Company or any of its Affiliates to the Participant of such failure, (ii) dishonesty
in the performance of the Participant’s duties, (iii) the Participant’s conviction of, or plea of
nolo contendere to, a crime constituting (A) a felony under the laws of the United States or any
state thereof or (B) a misdemeanor involving moral turpitude, (iv) the Participant’s
insubordination, willful malfeasance or willful misconduct in connection with the Participant’s
duties or any act or omission which is injurious to the financial condition or business reputation
of the Company or any of its Affiliates, or (v) the Participant’s breach of any non-competition,
non-solicitation or confidentiality provisions to which the Participant is subject. The
determination of the Committee as to the existence of “Cause” will be conclusive on the Participant
and the Company.

               (b) “Disability” means, “Disability” as defined in an

33

 

employment, consulting, advisory or similar agreement between the Company or any of its
Affiliates and the Participant or, if not defined therein or if there shall be no such agreement,
“disability” of the Participant shall have the meaning ascribed to such term in the Company’s
long-term disability plan or policy, as in effect from time to time.

               (c) “Expiration Date” means the expiration date set forth on the Notice (as defined
below).

               (d) “Good Reason” means “Good Reason” as defined in an employment, consulting,
advisory or similar agreement between the Company or any of its Affiliates and the Participant or,
if not defined therein or if there is no such agreement, “Good Reason” means (i) a breach by the
Company or any Affiliate of any employment or consulting agreement to which the Participant is a
party and (ii) following a Change in Control, (x) the failure of the Company to pay or cause to be
paid the Participant’s base salary or annual bonus when due or (y) any substantial and sustained
diminution in the Participant’s authority or responsibilities materially inconsistent with the
Participant’s position; provided that either of the events described in clauses (x) and (y)
will constitute Good Reason only if the Company fails to cure such event within 30 days after
receipt from the Participant of written notice of the event which constitutes Good Reason;
provided, further, that “Good Reason” will cease to exist for an event on the
sixtieth (60th) day following the later of its occurrence or the Participant’s knowledge
thereof, unless the Participant has given the Company written notice of his or her termination of
employment for Good Reason prior to such date.

               (e) “Notice” means the Notice of Grant of Stock Option, which has been provided to the
Participant separately and which accompanies and forms a part of this Agreement.

               (f) “Participant” means an individual to whom Options as set forth in the Notice have
been awarded pursuant to the Plan and shall have the same meaning as may be assigned to the terms
“Holder” or “Participant” in the Plan.

               (g) “Plan” means the equity plan, as such plan may be amended, supplemented or
modified from time to time, maintained by the Company that is specified in the Notice.

               (h) “Retirement” means a voluntary termination of Employment by the Participant (i)
following the attainment of age 55 with ten (10) or more years of service as an employee or a
director with the Company or, with respect to any years of service before the Separation Date, any
Time Warner Affiliate or (ii) pursuant to a retirement plan or early retirement program of the
Company or any Affiliate.

               (i) “Time Warner Affiliate” means, during any period when the Company was consolidated
with Time Warner Inc. for financial reporting purposes, Time Warner Inc. and any entity that was
consolidated with Time Warner Inc. for financial reporting purposes or any other entity designated
by the Board in which Time Warner Inc. had a direct or indirect equity interest of at least twenty
percent (20%), measured by

34

 

reference to vote or value.

               (j) “Vested Portion” means, at any time, the portion of an Option which has become
vested, as described in Section 3 of this Agreement.

          2. Grant of Option. The Company hereby grants to the Participant the right and option
(the “Option”) to purchase, on the terms and conditions hereinafter set forth, the number
of Shares set forth on the Notice, subject to adjustment as set forth in the Plan. The purchase
price of the Shares subject to the Option (the
“Option Price”) shall be as set forth on the
Notice. The Option is intended to be a non-qualified stock option, and as such is not intended to
be treated as an option that complies with Section 422 of the Internal Revenue Code of 1986, as
amended.

          3. Vesting of the Option.

               (a) In General. Subject to (i) the terms of any employment, consulting, advisory or
similar agreement entered into by the Participant and the Company or an Affiliate that provides for
treatment of Options that is more favorable to the Participant and (ii) Sections 3(b) and 3(c), the
Option shall vest and become exercisable at such times as are set forth in the Notice.

               (b) Change in Control. Notwithstanding the foregoing, in the event of a Change in
Control, the unvested portion of the Option, to the extent not previously canceled or forfeited,
shall immediately become vested and exercisable upon the earlier of (i) the first anniversary of
the Change in Control or (ii) the termination of the Participant’s Employment (A) by the Company
other than for Cause (unless such termination is due to death or Disability) or (B) by the
Participant for Good Reason.

               (c) Termination of Employment. If the Participant’s Employment with the Company and
its Affiliate terminates for any reason (including, unless otherwise determined by the Committee, a
Participant’s change in status from an employee to a non-employee (other than director of the
Company or any Affiliate)), the Option, to the extent not then vested, shall be immediately
canceled by the Company without consideration; provided, however, that if the
Participant’s Employment terminates due to death, Disability or Retirement, the unvested portion of
the Option, to the extent not previously canceled or forfeited, shall immediately become vested and
exercisable. The Vested Portion of the Option shall remain exercisable for the period set forth in
Section 4(a) of this Agreement. For purposes of this paragraph 5, a temporary leave of absence
shall not constitute a termination of Employment or a failure to be continuously employed by the
Company or any Affiliate regardless of the Participant’s payroll status during such leave of
absence if such leave of absence is approved in writing by the Company or any Affiliate subject to
the other terms and conditions of the Agreement and the Plan. Notice of any such approved leave of
absence should be sent to the Company, but such notice shall not be required for the leave of
absence to be considered approved.

35

 

          4. Exercise of Option.

               (a) Period of Exercise. Subject to the provisions of the Plan and this Agreement, and
the terms of any employment, consulting, advisory or similar agreement entered into by the
Participant and the Company or an Affiliate that provides for treatment of Options that is more
favorable to the Participant than clauses (i) — (vii) of this Section 4(a), the Participant may
exercise all or any part of the Vested Portion of the Option at any time prior to the Expiration
Date. Notwithstanding the foregoing, if the Participant’s Employment terminates prior to the
Expiration Date, the Vested Portion of the Option shall remain exercisable for the period set forth
below. If the last day on which the Option may be exercised, whether the Expiration Date or due to
a termination of the Optionee’s Employment prior to the Expiration Date, is a Saturday, Sunday or
other day that is not a trading day on the New York Stock Exchange (the “NYSE”) or, if the
Company’s Shares are not then listed on the NYSE, such other stock exchange or trading system that
is the primary exchange on which the Company’s Shares are then traded, then the last day on which
the Option may be exercised shall be the preceding trading day on the NYSE or such other stock
exchange or trading system.

               (i) Death or Disability. If the Participant’s Employment with the Company or
its Affiliates terminates due to the Participant’s death or Disability, the Participant (or
his or her representative) may exercise the Vested Portion of the Option for a period
ending on the earlier of (A) three (3) years following the date of such termination and (B)
the Expiration Date;

               (ii) Retirement. If the Participant’s Employment with the Company or its
Affiliates terminates due to the Participant’s Retirement, the Participant may exercise the
Vested Portion of the Option for a period ending on the earlier of (A) five (5) years
following the date of such termination and (B) the Expiration Date; provided, that
if the Company or its Affiliates has given the Participant notice that the Participant’s
Employment is being terminated for Cause prior to the Participant’s election to terminate
due to the Participant’s Retirement, then the provisions of Section 4(a)(v) shall control;

               (iii) Unsatisfactory Performance; Voluntary Termination without Good Reason.
If the Participant’s Employment with the Company or its Affiliates is terminated by the
Company or its Affiliates (other than after a Change in Control as set forth in Section
4(a)(vi)) for unsatisfactory performance, but not for Cause (as determined in its sole
discretion by the Company), or the Participant voluntarily terminates Employment at any
time without Good Reason, the Participant may exercise the Vested Portion of the Option for
a period ending on the earlier of (A) three months following the date of such termination
and (B) the Expiration Date; provided, that if the Company or its Affiliates has
given the Participant notice that the Participant’s Employment is being terminated for
Cause prior to the Participant’s election to voluntarily terminate Employment without Good
Reason, then the provisions of Section 4(a)(v) shall control;

               (iv) Termination other than for Cause. Subject to the provision of Section
4(a)(vi), if the Participant’s Employment with the Company or

36

 

its Affiliates is terminated by the Company for any reason other than by the Company
or its Affiliates for Cause, unsatisfactory performance or due to the Participant’s death
or Disability, the Participant may exercise the Vested Portion of the Option for a period
ending on the earlier of (A) one year following the date of such termination and (B) the
Expiration Date;

               (v) Termination by the Company for Cause. If the Participant’s Employment with
the Company or its Affiliates is terminated by the Company or its Affiliates for Cause, the
Participant may exercise the Vested Portion of the Option for a period ending on the
earlier of (A) one month following the date of such termination and (B) the Expiration
Date; provided, however, that if the Participant is terminated by the Company or its
Affiliates for Cause on account of one or more acts of fraud, embezzlement or
misappropriation committed by the Participant, the Vested Portion of the Option shall
immediately terminate in full and cease to be exercisable;

               (vi) After a Change in Control. If the Participant’s Employment with the
Company or its Affiliate terminates after a Change in Control due to a termination by the
Company or its Affiliate other than for Cause or due to the Participant’s resignation for
Good Reason, the Participant may exercise the Vested Portion of the Option for a period
ending on the earlier of (A) one year following the date of such termination and (B) the
Expiration Date; and

               (vii) Transfers of Employment. If the Affiliate with which the Participant has
a service relationship ceases to be an Affiliate due to a sale or other disposition by the
Company or an Affiliate, the Option, to the extent not then vested, shall be immediately
canceled by the Company without consideration and the Participant may exercise the Vested
Portion of the Option for a period ending on the earlier of (A) one year following the date
of such transfer, sale, or other disposition and (B) the Expiration Date.

               (b) Method of Exercise.

               (i) Subject to Section 4(a) of this Agreement, the Vested Portion of an Option may be
exercised by delivering to the Company at its principal office written notice of intent to
so exercise; provided that the Option may be exercised with respect to whole Shares
only. Such notice shall specify the number of Shares for which the Option is being
exercised, shall be signed (whether or not in electronic form) by the person exercising the
Option and shall make provision for the payment of the Option Price. Payment of the
aggregate Option Price shall be paid to the Company, at the election of the Committee,
pursuant to one or more of the following methods: (A) in cash, or its equivalent; (B) by
transferring Shares having a Fair Market Value equal to the aggregate Option Price for the
Shares being purchased to the Company 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 (6) months (or such other period as

37

 

established from time to time by the Committee or generally accepted accounting
principles); (C) partly in cash and partly in Shares; provided that such Shares
have been held by the Participant for no less than six (6) months (or such other period as
established from time to time by the Committee or generally accepted accounting
principles); or (D) if there is a public market for the Shares at such time, subject to
such rules as may be established by the Committee, through delivery of irrevocable
instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the
Option and to deliver promptly to the Company an amount equal to the aggregate Option
Price. No Participant shall have any rights to dividends or other rights of a stockholder
with respect to the Shares subject to the Option until the issuance of the Shares.

               (ii) Notwithstanding any other provision of the Plan or this Agreement to the
contrary, absent an available exemption to registration or qualification, the Option may
not be exercised prior to the completion of any registration or qualification of the Option
or the Shares under applicable state and federal securities or other laws, or under any
ruling or regulation of any governmental body or national securities exchange that the
Committee shall in its sole reasonable discretion determine to be necessary or advisable.

               (iii) Upon the Company’s determination that the Option has been validly exercised as
to any of the Shares, the Company shall issue certificates in the Participant’s name for
such Shares. However, the Company shall not be liable to the Participant for damages
relating to any delays in issuing the certificates to the Participant, any loss by the
Participant of the certificates, or any mistakes or errors in the issuance of the
certificates or in the certificates themselves.

               (iv) In the event of the Participant’s death, the Vested Portion of an Option shall
remain vested and exercisable by the Participant’s executor or administrator, or the person
or persons to whom the Participant’s rights under this Agreement shall pass by will or by
the laws of descent and distribution as the case may be, to the extent set forth in Section
4(a) of this Agreement. Any heir or legatee of the Participant shall take rights herein
granted subject to the terms and conditions hereof.

               (v) At the discretion of the Board or the Committee, in accordance with procedures
established by the Board or the Committee (including with respect to compliance with
Section 409A of the Code), the Participant may be permitted to defer the delivery of Shares
otherwise deliverable upon the exercise of the Option.

          5. Right of Company to Terminate Employment. Nothing contained in the Plan or this
Agreement shall confer on any Participant any right to continue in the employ of the Company or any
of its Affiliates, and the Company and any such Affiliate shall have the right to terminate the
Employment of the Participant at any such time, with

38

 

or without cause, notwithstanding the fact that some or all of the Options covered by this
Agreement may be forfeited as a result of such termination. The granting of the Option under this
Agreement shall not confer on the Participant any right to any future Awards under the Plan.

          6. Legend on Certificates. The certificates representing the Shares purchased by
exercise of an Option shall be subject to such stop transfer orders and other restrictions as the
Committee may deem reasonably advisable under the Plan or the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares
are listed, any applicable federal or state laws and the Company’s Articles of Incorporation and
Bylaws, and the Committee may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.

          7. Transferability. Unless otherwise determined by the Committee, an Option may not be
assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the
Participant otherwise than by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void
and unenforceable against the Company or any Affiliate.

          8. Withholding. The Participant may be required to pay to the Company or its Affiliate
and the Company or its Affiliate shall have the right and is hereby authorized to withhold from any
payment due or transfer made under the Option or under the Plan or from any compensation or other
amount owing to a Participant the amount (in cash, Shares, other securities, other Awards or other
property) of any applicable withholding taxes in respect of the Option, its exercise, or any
payment or transfer under the Option or under the Plan and to take such action as may be necessary
in the option of the Company to satisfy all obligations for the payment of such taxes.

          9. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of an
Option, the Participant will make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with applicable securities
laws or with this Agreement.

          10. Notices. Any notice under this Agreement shall be addressed to the Company in care
of its General Counsel at the principal executive office of the Company, with a copy to the
Director, Executive Compensation, at the principal executive office of the Company, and to the
Participant at the address appearing in the personnel records of the Company for the Participant or
to either party at such other address as either party hereto may hereafter designate in writing to
the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

          11. Personal Data. The Company, the Participant’s local employer and the local
employer’s parent company or companies may hold, collect, use, process and transfer, in electronic
or other form, certain personal information about the Participant for

39

 

the exclusive purpose of implementing, administering and managing the Participant’s
participation in the Plan. Participant understands that the following personal information is
required for the above named purposes: his/her name, home address and telephone number, office
address (including department and employing entity) and telephone number, e-mail address,
citizenship, country of residence at the time of grant, work location country, system employee ID,
employee local ID, employment status (including international status code), supervisor (if
applicable), job code, title, salary, bonus target and bonuses paid (if applicable), termination
date and reason, tax payer’s identification number, tax equalization code, US Green Card holder
status, contract type (single/dual/multi), any shares of stock or directorships held in the
Company, details of all stock option grants (including number of grants, grant dates, exercise
price, vesting type, vesting dates, expiration dates, and any other information regarding options
that have been granted, canceled, vested, unvested, exercisable, exercised or outstanding) with
respect to the Participant, estimated tax withholding rate, brokerage account number (if
applicable), and brokerage fees (the “Data”). Participant understands that Data may be
collected from the Participant directly or, on Company’s request, from Participant’s local
employer. Participant understands that Data may be transferred to third parties assisting the
Company in the implementation, administration and management of the Plan, including the brokers
approved by the Company, the broker selected by the Participant from among such Company-approved
brokers (if applicable), tax consultants and the Company’s software providers (the “Data
Recipients”). Participant understands that some of these Data Recipients may be located outside
the Participant’s country of residence, and that the Data Recipient’s country may have different
data privacy laws and protections than the Participant’s country of residence. Participant
understands that the Data Recipients will receive, possess, use, retain and transfer the Data, in
electronic or other form, for the purposes of implementing, administering and managing the
Participant’s participation in the Plan, including any requisite transfer of such Data as may be
required for the administration of the Plan and/or the subsequent holding of shares of common stock
on the Participant’s behalf by a broker or other third party with whom the Participant may elect to
deposit any shares of common stock acquired pursuant to the Plan. Participant understands that Data
will be held only as long as necessary to implement, administer and manage the Participant’s
participation in the Plan. Participant understands that Data may also be made available to public
authorities as required by law, e.g., to the U.S. government. Participant understands that the
Participant may, at any time, review Data and may provide updated Data or corrections to the Data
by written notice to the Company. Except to the extent the collection, use, processing or transfer
of Data is required by law, Participant may object to the collection, use, processing or transfer
of Data by contacting the Company in writing. Participant understands that such objection may
affect his/her ability to participate in the Plan. Participant understands that he/she may contact
the Company’s Stock Plan Administration to obtain more information on the consequences of such
objection.

          12. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to conflicts of laws, and any and all
disputes between the Participant and the Company relating to the Option shall be brought only in a
state or federal court of competent jurisdiction sitting in Manhattan, New York, and the
Participant and the Company hereby

40

 

irrevocably submit to the jurisdiction of any such court and irrevocably agree that venue for
any such action shall be only in any such court.

          13. Entire Agreement. This Agreement, together with the Notice and the Plan, embodies
the entire agreement and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or agreement not
expressly set forth in this Agreement or the Notice shall affect or be used to interpret, change or
restrict, the express terms and provisions of this Agreement or the Notice; provided, that
this Agreement and the Notice shall be subject to and governed by the Plan, and in the event of any
inconsistency between the provisions of this Agreement or the Notice and the provisions of the
Plan, the provisions of the Plan shall govern.

          14. Modifications And Amendments. The terms and provisions of this Agreement and
the Notice may be modified or amended as provided in the Plan.

          15. Waivers And Consents. Except as provided in the Plan, the terms and provisions
of this Agreement and the Notice may be waived, or consent for the departure therefrom granted,
only by a written document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent
with respect to any other terms or provisions of this Agreement or the Notice, whether or not
similar. Each such waiver or consent shall be effective only in the specific instance and for the
purpose for which it was given, and shall not constitute a continuing waiver or consent.

          16. Reformation; Severability. If any provision of this Agreement or the Notice
(including any provision of the Plan that is incorporated herein by reference) shall hereafter be
held to be invalid, unenforceable or illegal, in whole or in part, in any jurisdiction under any
circumstances for any reason, (i) such provision shall be reformed to the minimum extent necessary
to cause such provision to be valid, enforceable and legal while preserving the intent of the
parties as expressed in, and the benefits of the parties provided by, this Agreement, the Notice
and the Plan or (ii) if such provision cannot be so reformed, such provision shall be severed from
this Agreement or the Notice and an equitable adjustment shall be made to this Agreement or the
Notice (including, without limitation, addition of necessary further provisions) so as to give
effect to the intent as so expressed and the benefits so provided. Such holding shall not affect or
impair the validity, enforceability or legality of such provision in any other jurisdiction or
under any other circumstances. Neither such holding nor such reformation or severance shall affect
the legality, validity or enforceability of any other provision of this Agreement, the Notice or
the Plan.

          17. Entry into Force. By entering into this Agreement, the Participant agrees and
acknowledges that (i) the Participant has received and read a copy of the Plan and (ii) the Option
is granted pursuant to the Plan and is therefore subject to all of the terms of the Plan.

41

 

          18. Changes in Capitalization and Other Regulations. The Option shall be subject to
all of the terms and provisions as provided in this Agreement and in the Plan, which are
incorporated by reference herein and made a part hereof, including, without limitation, the
provisions of Section 10 of the Plan (generally relating to adjustments to the number of Shares
subject to the Option, upon certain changes in capitalization and certain reorganizations and other
transactions).

42

 

ANNEX A — II

[insert form stock option agreement]

I, <Participant Name>, am the Participant.

Participant has been granted nonqualified options (the “Stock Options”) to buy common stock of Time

Warner Cable Inc. (the “Company”) as follows:

	 	 	 	 	 
	 

	 	Date of Grant:
	 	<Grant Date>
	 

	 	Purchase Price Per Share:
	 	$<Grant price>
	 

	 	Total Number of Shares:
	 	<Number of Shares>
	 

	 	Grant Expiration Date:
	 	<Expiration Date>

Time Warner Cable and I agree that these options are granted under and governed by the terms and
conditions of the Time Warner Cable Inc. 2006 Stock Incentive Plan, as amended from time to time
(the “Plan”), this Notice and the Time Warner Cable Inc. Non-Qualified Stock Option Agreement (the
“Agreement”), all of which are incorporated by reference into, and made a part of this Notice, and
which I can access and review through the Fidelity website at www.netbenefits.fidelity.com. I am
also advised to refer to the prospectus that contains a description of the Plan (the “Prospectus”),
which also may be accessed through the Fidelity website.

I hereby consent to receive the Plan, the Agreement and the Prospectus, and other communications
related to the Plan, electronically via the Fidelity website, and I agree that I have had an
opportunity to review these records.

I understand that my Stock Options shall become vested and exercisable only in accordance with the
following vesting schedule, subject to the Plan and Agreement terms.

     Vesting Schedule: 25% upon each of the first four anniversaries of the date of the grant.

I understand that the vesting of my Stock Options will cease in certain circumstances, including
but not limited to, termination of employment, as provided in the Plan and Agreement.

I understand there is a limited time period to exercise my vested and exercisable Stock Options
following a termination of employment, and that if vested and exercisable Stock Options are not
exercised within the prescribed time period in the Agreement, they will be canceled and cannot be
exercised, as provided in the Plan and Agreement.

I understand that my unvested Stock Options will be canceled upon a termination of employment and
cannot ever be exercised, except as otherwise provided in the Plan and Agreement.

I understand that, in order to manage and administer my Stock Options, the Company will process,
use and transfer certain personal information about me, as detailed and described in Section 11 of
the Agreement, which is incorporated by reference into and made part of this Notice.

I further agree that I have read and will comply with the Company’s Securities Trading Policy (also
accessible on the Fidelity website), which I understand may be updated from time to time.

I understand that I may be entitled now and from time to time to receive certain other documents,
including the Company’s annual report to stockholders and proxy statements (which become available
each year approximately three months after the Company’s fiscal year end), and I hereby consent to
receive such documents electronically on the internet or as the Company directs.

43

 

By signing below, I am indicating my agreement with each provision of this Notice and the
Agreement, which is part of this Notice.

Click on the “I Accept” button to show your intent to sign this Notice of Grant of Stock Options.

44

 

ANNEX B

RELEASE

               Pursuant to the terms of the Employment Agreement made as of                               , between TIME
WARNER CABLE INC. (the “Company”) and the undersigned (the “Agreement”), and in consideration of
the payments made to me and other benefits to be received by me pursuant thereto, I, [Name], being
of lawful age, do hereby release and forever discharge the Company and any successors,
subsidiaries, affiliates, related entities, predecessors, merged entities and parent entities and
their respective officers, directors, shareholders, employees, benefit plan administrators and
trustees, agents, attorneys, insurers, representatives, affiliates, successors and assigns from any
and all actions, causes of action, claims, or demands for general, special or punitive damages,
attorney’s fees, expenses, or other compensation or damages (collectively, “Claims”), which in any
way relate to or arise out of my employment with the Company or any of its subsidiaries or the
termination of such employment, which I may now or hereafter have under any federal, state or local
law, regulation or order, including without limitation, Claims related to any stock options held by
me or granted to me by the Company that are scheduled to vest subsequent to my termination of
employment (except for those stock options scheduled to vest after the date of my termination under
Section 8 of the Agreement) and Claims under the Age Discrimination in Employment Act (with the
exception of Claims that may arise after the date I sign this Release), Title VII of the Civil
Rights Act of 1964, the Americans with Disabilities Act, the Fair Labor Standards Act, the Family
and Medical Leave Act, the Worker Adjustment Retraining and Notification Act, the Employee
Retirement Income Security Act, the New York State Human Rights Law, the New York City Human Rights
Law (each as amended through and including the date of this Release); as well as any other claims
under state contract or tort law, including, but not limited to, claims for employment
discrimination, wrongful termination, constructive termination, violation of public policy, breach
of any express or implied contract, breach of any implied covenant, fraud, intentional or negligent
misrepresentation, emotional distress, slander, and invasion of privacy; provided, however, that
the execution of this Release shall not prevent the undersigned from bringing a lawsuit against the
Company to enforce its obligations under the Agreement; provided further, that the execution of
this Release does not release any rights I may have against the Company for indemnification under
the Agreement or any other agreement, plan or arrangement.

45

 

               I acknowledge that I have been given at least twenty-one (21) days from the day I received a
copy of this Release to sign it and that I have been advised to consult an attorney. I understand
that I have the right to revoke my consent to this Release for seven (7) days following my signing.
This Release shall not become effective or enforceable until the expiration of the seven-day
period following the date it is signed by me.

               I ALSO ACKNOWLEDGE THAT BY SIGNING THIS RELEASE I MAY BE GIVING UP VALUABLE LEGAL RIGHTS AND
THAT I HAVE BEEN ADVISED TO CONSULT A LAWYER BEFORE SIGNING. I further state that I have read this
document and the Agreement referred to herein, that I know the contents of both and that I have
executed the same as my own free act.

          WITNESS my hand this            day of                          ,      

                                                                           
                              

46

 

ANNEX C

               As provided for in Section 11.7 of this Employment Agreement, and unless otherwise determined
by the Company’s Board or a committee thereof, if the Board or a committee thereof determines that
a Forfeiture Event has occurred, the options (“Options”) or other equity awards (“Other Equity
Awards”), or other cash-based awards, in all cases subject to Section 11.7.2(i) shall be subject
to the following forfeiture conditions, at the discretion of the Board or a committee thereof, to
which you, by accepting such Options or Other Equity Awards, hereby agree:

               (i) The unexercised portion of the Options and any Other Equity Awards, and any other
cash-based award, in all cases not otherwise settled or paid (in each case, both unvested and
vested, if any) will immediately be forfeited and canceled without payment upon the occurrence of
the Forfeiture Event; and

               (ii) You will be obligated to repay to the Company, in cash, within sixty (60) days after
written demand is made therefore by the Company (the “Notice Date”), an amount equal to (A) the
total amount of Award Gain (as defined herein) realized by you upon each exercise of Options and
the value you have received with respect to any settlement or payment in connection with any Other
Equity Awards, or any other cash-based award, in each case on or after the date that the acts
giving rise to the Forfeiture Event commenced or occurred (the “Forfeiture Date”), and (B) the fair
market value of all Other Equity Awards awarded to you or which have become vested, in each case on
or after the Forfeiture Date; provided that the return to the Company of such Other Equity Awards
shall satisfy your repayment obligations with respect to amounts owed pursuant to this sub-clause
(B). “Award Gain” shall mean the product of (x) the fair market value per share of stock at the
date of such Option exercise or exercise of Other Equity Awards (without regard to any subsequent
change in the market price of such share of stock) minus the exercise price times (y) the number of
shares as to which the Options and Other Equity Awards were exercised at that date.

47

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