Document:

Rex Energy Corporation Executive Change of Control Policy

 Exhibit 10.1 
 Rex Energy Corporation 
 Executive Change of Control Policy

 Rex Energy Corporation (the “Parent Company”, and together with its subsidiaries, the “Company”) has
adopted this Executive Change of Control Policy (together with the Additional Terms and Conditions attached as Exhibit A, this “Policy”) for the benefit of such of its executive employees as the Company may from time-to-time
designate (“Designated Executives”). 
  

	I.	Purpose. The purpose of this Policy is to provide for the payment of salary continuation and certain other benefits to Designated Executives whose employment
with the Company is terminated as a Direct Result (defined below) of a Change of Control (defined below) of the Parent Company. 

  

	II.	Change of Control. Solely for the purposes of this Policy, the following capitalized terms shall have the meanings given to those terms in this Section II:

 “Change of Control” means the occurrence of any of the following events: 

 

	 	(a)	The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange
Act”) (a “Covered Person”) of beneficial ownership (within the meaning of rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more of either: 

 

	 	(i)	the then outstanding shares of the common stock of Parent Company (the “Outstanding Parent Company Common Stock”), or 

 

	 	(ii)	the combined voting power of the then outstanding voting securities of Parent Company entitled to vote generally in the election of directors (the “Outstanding
Parent Company Voting Securities”); 

 provided, however, that for purposes of this definition, the
following acquisitions shall not constitute a Change of Control of Parent Company: 
  

	 	1.	any acquisition directly from Parent Company; 

  

	 	2.	any acquisition by Parent Company; 

  

	 	3.	any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Parent Company or any entity controlled by Parent Company; or

  

	 	4.	any acquisition pursuant to a transaction that complies with clauses (1), (2) and (3) of paragraph (c) below; or 

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

  

	 	(c)	Consummation of 

  

	 	(i)	a reorganization, merger or consolidation or sale of Parent Company or any subsidiary of Parent Company, or 

 

	 	(ii)	a disposition of all or substantially all of the assets of Parent Company (a “Business Combination”), 

in each case, unless, following such Business Combination, 

 

	 	1.	all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Parent Company Common Stock and Outstanding
Parent Company Voting Securities immediately prior to such Business Combination beneficially own, direct or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such
transaction owns Parent Company or all or substantially all of Parent Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination
of the Outstanding Parent Company Common Stock and Outstanding Parent Company Voting Securities, as the case may be, 

  

	 	2.	no Covered Person (excluding any employee benefit plan (or related trust) of Parent Company or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting
securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and 

  
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	 	3.	at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination. 

 “Direct Result”. Termination of employment without Cause (defined below) or resignation for Good Reason (defined below) shall be deemed a “Direct Result” of a Change of Control if it
occurs at any time: 
  

	 	(a)	Between 

  

	 	(i)	the date the Parent Company enters into a definitive agreement or files a proxy statement, or the date a third person begins a tender or exchange offer, in each case,
in connection with a transaction that, if consummated, would constitute a Change of Control, and 

  

	 	(ii)	the date the Change of Control transaction is either consummated, abandoned or terminated (for this purpose, the Parent Company’s Board of Directors shall have the
sole and absolute discretion to determine that a proposed transaction has been abandoned); or 

  

	 	(b)	Within one year after the consummation of a Change of Control. 

 “Cause” means: 
  

	 	(a)	conviction of a felony involving moral turpitude, 

  

	 	(b)	conduct that is materially and demonstrably injurious to the Company, or 

  

	 	(c)	willful engagement in one or more acts of dishonesty resulting in personal gain to the Designated Executive at the expense of the Company, or 

 

	 	(d)	a material breach by the Executive of the Parent Company’s Code of Business Conduct or similar applicable conduct policy. 

“Good Reason” means the occurrence of any of the following events within one year after a Change of Control without the
Designated Executive’s consent: 
  

	 	(a)	A material reduction in Designated Executive’s authority, duties or responsibilities from those the Designated Executive possessed immediately prior to the Change
of Control; 

  
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	 	(b)	A transfer of the Designated Executive to a location that is more than 25 miles away from the location where the Designated Executive was employed immediately
prior to the Change of Control; 

  

	 	(c)	Any material reduction in the Designated Executive’s rate of annual salary below his or her rate of annual salary immediately prior to the Change of Control; or

  

	 	(d)	Any material reduction in the level of the Designated Executive’s benefits or bonus below a level consistent with the Company’s practice prior to the Change
of Control, other than changes applicable to all similarly situated executive employees of the Company. 

  

	III.	Effective Date.                     , 2011.

  

	IV.	Eligibility and Ineligibility Criteria. 

  

	 	A.	Eligibility Criteria. To receive the severance benefits that this Policy provides, a Designated Executive must satisfy the following criteria:

  

	 	1.	Service Pending Change of Control. If the Parent Company or a third party takes action in furtherance of or that would result
in a Change of Control (including, without limitation, the commencement of a tender offer, the distribution of a proxy statement, the acquisition of shares or other interests, the commencement of negotiations or the execution of a definitive
agreement), the Designated Executive must: 

  

	 	(a)	agree not to voluntarily resign from the Company without Good Reason, 

  

	 	(b)	perform his or her responsibilities at a level meeting the Company’s expectations, and 

 

	 	(c)	cooperate with the Company in connection with the Change of Control, until the Change of Control is consummated. 

 

	 	2.	Separation Agreement and General Release. The Designated Executive must execute a separation agreement that includes, among
other things, the following: 

  

	 	(a)	a full and complete release of the Company from any liability or obligation (excluding accrued and vested pension and compensation obligations, the obligations under
this Policy, any indemnification to which the Designated Executive may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws and any coverage under directors and officers, fiduciary or errors or omissions policies that
benefit the Designated Executive) to the Designated Executive, 

  
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	 	(b)	an agreement to cooperate with the Company in litigation, disputes and investigations, 

 

	 	(c)	an agreement to keep the Company’s confidential information secret, 

  

	 	(d)	the details of how the severance benefits that the Company provides pursuant to this Policy will be delivered to the Designated Executive, 

 

	 	(e)	an agreement, during the Salary Continuation Period, not to solicit the Company’s employees, customers, dedicated contractors or business partners on the
Designated Executive’s behalf or for another person or entity for whom the Designated Executive is an officer, director, employee or agent for the purposes of or in connection with providing goods or services of the nature that the Company
provides, 

  

	 	(f)	an agreement not to disparage the Company or its businesses or services, and 

 

	 	(g)	an agreement to arbitrate any disputes regarding the separation agreement in binding arbitration, 

in such form as the Company may, in its sole discretion, request. 

 

	 	B.	Disqualification Events. A Designated Executive shall be disqualified from receiving the severance benefits that this Policy provides if any of the following
occurs: 

  

	 	1.	Termination for Cause. The Designated Executive’s employment is terminated for Cause. 

 

	 	2.	Death, Retirement, Resignation or Permanent Disability. The Designated Executive dies, retires prior to termination, resigns without Good Reason prior to
termination or suffers a Permanent Disability prior to termination. “Permanent Disability” means any such physical or mental impairment that is determined to make the individual eligible to receive a disability benefit in accordance with
the provisions of any insured long term disability plan applicable to such Executive by the insurance carrier underwriting such plan, or, if no such plan exists or if such plan is not applicable to Executive, any such impairment that the Company
determines in good faith constitutes Permanent Disability. 

  

	 	3.	Good Standing. The Designated Executive is not in Good Standing at or near the date of the Designated Executive’s termination. “Good
Standing” means a Designated Executive is properly performing all job duties, is following all of the Company’s policies and procedures, and is complying with all contractual obligations and fiduciary duties, in each case, as the Company
determines in its sole discretion. 

  
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	 	4.	Existing Change of Control Severance Agreement. The Designated Executive is a party to an agreement with the Company providing severance benefits on a Change of
Control or similar transaction. 

  

	 	C.	Participation. A Designated Executive who satisfies the Eligibility Criteria in Section IV.A. and who has not experienced a Disqualification Event described
in Section IV.B. shall become a “Participant” in the Policy and be entitled to the severance benefits described in Section V, upon the occurrence of a termination without Cause or resignation for Good Reason, in each case, as a
Direct Result of a Change of Control. The Company shall not be obligated to provide benefits under this Policy unless this criteria is met. 

  

	V.	Severance Benefits. Subject to the limitations in Section VI of Exhibit A, if a Designated Executive becomes a Participant pursuant to Section IV.C., the
severance benefits for which a Participant is eligible shall be as follows: 

  

	 	A.	Salary Continuation. A Participant shall be eligible for 18 months of salary continuation. Salary continuation payments will be made in accordance with the
Company’s applicable payroll schedule until the full salary continuation benefit is delivered to the Participant. The 18-month period during which these payments are made is the “Salary Continuation Period.” 

 

	 	B.	Benefits. During the Salary Continuation Period, the Participant shall also be entitled to receive (should he or she so elect) the COBRA continuation coverage he
or she would otherwise be entitled to at the rate payable by active employees of the Company (rather than payable at the standard premium rate established for COBRA continuation coverage) until the earlier of (1) the end of the Salary
Continuation Period and (2) the date the Participant becomes entitled to employer sponsored health plan coverage following new employment, regardless of whether or not that Participant elects the employer sponsored health plan coverage.
Following the end of this period, the Participant shall pay the balance of any COBRA continuation coverage payments at the standard rate established for COBRA eligible participants should he or she desire to continue COBRA throughout the COBRA
continuation coverage period. The Participant’s payment of the premium for these benefits shall be on an after-tax basis. The Company may automatically deduct these premium payments from the Participant’s salary continuation payments. The
Participant is required to notify the Company in writing of the availability of other coverage. The Participant’s failure to provide this notice will result in a discontinuation of all future severance benefits pursuant to this Policy.
Continued participation in the Company’s health care plans is subject to the terms and conditions of those plans. Participation in all other benefits that the Company may offer ceases upon termination. 

 

	 	C.	Equity Incentive Awards. Upon a Change of Control, a Participant’s rights regarding the Participant’s equity incentive awards shall be governed by the
Participant’s agreement and the incentive award plan that governs the awards. 

  
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	 	D.	Retirement Benefits. The Participant’s inactive employment during the Salary Continuation Period shall not count towards retirement or other benefits
determined by length of service nor shall it be considered continued employment under any equity incentive award plan. 

  

	 	E.	Annual Bonus or Pay-for-Performance Payment. If the Participant’s employment is terminated after the end of a calendar year but before annual bonus or
pay-for-performance payments for such year are distributed, the Participant shall be entitled to the annual bonus or pay-for-performance payment attributable to the immediately preceding calendar year, assuming for this purpose that all personal
performance targets or goals were met. The Company shall make this payment at the same time it pays all of its other employees in accordance with the Company’s normal practices but no later than March 31 of the applicable year.

 The Participant shall also be entitled to receive an annual bonus or pay-for-performance payment at the
Participant’s target level for the year in which the Participant’s employment is terminated, assuming for this purpose that all personal performance targets or goals were met. The Company shall make this payment to the Participant upon the
Participant’s termination of employment. 

  
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 EXHIBIT A 
 ADDITIONAL TERMS AND CONDITIONS 
 These Additional Terms and Conditions are
an integral part of the Policy. 
  

	VI.	Limitations on Severance Benefits. 

  

	 	A.	Severance benefits under this Policy are subject to all applicable taxes and withholdings. 

 

	 	B.	This Policy is not intended to be a retirement plan. Notwithstanding any other provision of this Policy, under no circumstances will the severance benefits that the
Company provides to any Participant exceed twice the amount of the Participant’s annual compensation, including the dollar value of all fringe benefits and other non-cash compensation, during the year immediately preceding the
Participant’s termination. In addition, all severance benefit payments must be completed: 

  

	 	1.	In the case of a Participant whose employment is terminated in connection with a limited program of terminations, within the later of 24 months after the Designated
Executive’s termination or 24 months after the Designated Executive reaches normal retirement age of 65; and 

  

	 	2.	In the case of all other Participants, within 24 months after the termination. 

 

	 	C.	Claims Procedure and Arbitration. The Company will pay the severance benefits that this Policy provides to a Participant without the necessity of filing a formal
claim. A Participant, however, may make a request for any severance benefits to which he or she may be entitled. Any such request must be made in writing, and it should be made to the Policy Administrator at the address listed in
Section VI.F(5). 

  

	 	1.	A Participant’s request for severance benefits under this Policy shall be considered a claim for those benefits, and it will be subject to a full and fair review.
If a Participant’s claim is wholly or partially denied, the Policy Administrator will furnish the Participant with a written notice of the denial. The Policy Administrator will provide written notice to the Participant within 90 days after the
Policy Administrator receives the claim. The Policy Administrator may extend this period for up to an additional 90 days if circumstances beyond its control require an extension to process the claim. If an extension is required, the Policy
Administrator will notify the Participant of the extension within the original 90-day period. The written notice must contain the following information: 

  

	 	(a)	The specific reason or reasons for the denial; 

  
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	 	(b)	A description of any additional information or material necessary to correct the claim and an explanation of why such material or information is necessary; and

  

	 	(c)	Appropriate information as to the steps to be taken if the Participant wishes to appeal the denial. 

If notice of the denial of a claim is not furnished to a Participant in accordance with the foregoing requirements within a reasonable
period of time, the Participant’s claim will be deemed denied. The Participant will then be permitted to proceed to the appeal stage described as follows in this Section VI. 

 

	 	2.	If a Participant’s claim has been denied, and he or she wishes to appeal the denial, the Participant must comply with the following claims appeal procedure.

  

	 	(a)	Upon the denial of the Participant’s claim for benefits, he or she may file an appeal of the denial, in writing, with the Policy Administrator.

  

	 	(b)	THE PARTICIPANT MUST FILE THE APPEAL NO LATER THAN 60 DAYS AFTER HE OR SHE RECEIVED WRITTEN NOTIFICATION OF THE DENIAL OF THE CLAIM FOR BENEFITS, OR IF NO WRITTEN
DENIAL OF THE CLAIM WAS PROVIDED, NO LATER THAN 60 DAYS AFTER THE DEEMED DENIAL OF THE CLAIM. 

  

	 	(c)	The Participant may review all pertinent documents relating to the denial of his or her claim and submit any issues and comments, in writing, to the Policy
Administrator. 

  

	 	(d)	The Participant’s claim must be given a full and fair review. If the Participant’s claim is denied on appeal, the Policy Administrator must provide the
Participant with written notice of this denial within 60 days after the Policy Administrator’s receipt of the Participant’s written appeal, unless special circumstances require an extension of time of up to an additional 60 days. If an
extension is necessary, the Policy Administrator will notify the Participant within the original 60-day period. 

  

	 	(e)	The Policy Administrator’s decision on the Participant’s appeal will be communicated to the Participant in writing and will include specific references to the
pertinent Policy provisions on which the decision was based. 

  
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	 	(f)	If the Policy Administrator’s decision on appeal is not furnished to the Participant within the time limitations described above, the Participant’s claim will
be deemed denied on appeal. 

  

	 	(g)	Claims for benefits under available health insurance plans (other than an Designated Executive’s right to continue such benefits as provided in this Policy) will
be subject to the terms and conditions of those plans and not the claims procedures set forth in the Policy. 

  

	 	3.	No legal action or arbitration for benefits under this Policy shall be brought unless and until the Participant has exhausted the procedures set forth above and
the Participant’s claim remains partly or wholly denied or deemed denied. Any such action must be filed within one year after the date the procedures set forth in this Policy are exhausted. 

If a controversy or dispute is not resolved after completion of the process described above in this Section VI, then, upon written notice
by any party to the other parties (an “Arbitration Notice”) and to the American Arbitration Association (the “AAA”), the controversy or dispute shall be submitted to a sole arbitrator who is independent and impartial, for binding
arbitration in the city in which the Company employed the Designated Executive immediately prior to the Designated Executive’s termination of employment in accordance with AAA’s Commercial Arbitration Rules (the “Rules”). The
parties agree that they will faithfully observe this agreement and the Rules and that they will abide by and perform any award rendered by the arbitrator. The Federal Arbitration Act, as amended (or by the same principles that the Act enunciates if
it may not be technically applicable), shall govern this agreement and the arbitration. The award or judgment of the arbitrator shall be final and binding on all parties and judgment upon the award or judgment of the arbitrator may be entered and
enforced by any court having jurisdiction. If any party becomes the subject of a bankruptcy, receivership or other similar proceeding under the laws of the United States of America, any state or commonwealth or any other nation or political
subdivision thereof, then, to the extent permitted or not prohibited by applicable law, any factual or substantive legal issues arising in or during the pendency of any such proceeding shall be subject to all of the foregoing mandatory arbitration
provisions and shall be resolved in accordance therewith. The agreements contained in this Section VI have been given for valuable consideration, are coupled with an interest and are not intended to be executory contracts. The fees and expenses of
the arbitrator will be shared by all parties engaged in the dispute or controversy on a basis determined to be fair and equitable by the arbitrator, taking into account the relative fault of each party, the relative credibility and merit of all
claims and defenses made by each party and the cooperation, speed and efficiency of each party in conducting the arbitration proceedings and complying with the Rules and with orders and requests of the arbitrator. 

  
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	 	D.	Policy Administrator. The administration of this Policy is under the supervision of the Policy Administrator. It is the principal duty of the Policy
Administrator to see that this Policy is carried out in accordance with it terms and for the exclusive benefit of persons entitled to participate in the Policy. The Policy Administrator has full power to administer this Policy in all of its details,
subject to the applicable requirements of law. For this purpose, the Policy Administrator’s powers include, but are not limited to, the following authority, in addition to all other powers provided by this Policy: 

 

	 	1.	To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of this Policy, including the establishment of any
claims procedures that may be required by applicable provisions of law; 

  

	 	2.	To interpret this Policy, its interpretation thereof in good faith to be final and conclusive on all persons claiming benefits under this Policy;

  

	 	3.	To decide all questions concerning this Policy, the eligibility of any person for severance benefits under this Policy, and the amount of any severance benefits to
which an Designated Executive may be entitled; 

  

	 	4.	To remedy possible ambiguities, inconsistencies or omissions; 

  

	 	5.	To appoint such agents, counsel, accountants, consultants and other persons as may be required to assist in administering this Policy; 

 

	 	6.	To allocate and delegate its responsibilities under this Policy and to designate other persons to carry out any of its responsibilities under this Policy; and

  

	 	7.	To enter into any and all contracts and agreements for carrying out the terms of this Policy and administering this Policy and to do all acts in connection therewith as
it, in its discretion, deems necessary or advisable. Such contracts and agreements shall be binding and conclusive on anyone claming benefits under this Policy. 

 

	 	8.	 The Policy Administrator has full and absolute discretion in the exercise of its authority under this Policy, including the authority to determine any
person's right to benefits under the Policy, the correct amount and form of any benefits, the authority to decide any appeal, the authority to review and correct the actions of any prior administrative committee, and all of the rights powers, and
authorities specified in the Policy. Notwithstanding any provision of law or any explicit or implicit provision of this document, any action taken or ruling or decision made, by the Policy Administrator in the exercise of any of its powers and
authorities under the Policy, shall be final and conclusive as to all parties, regardless of whether the Policy Administrator or one or more of its members may have an actual or potential conflict of interest with respect to the subject matter of
the 

  
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action, ruling, or decision. Thus, no final action, ruling, or decision of the Policy Administrator shall be subject to de novo review in any judicial or arbitral proceeding and no final
action, ruling, or decision of the Policy Administrator may be set aside unless it is held to have been arbitrary and capricious by a final judgment or award of a court or arbitral body having jurisdiction with respect to the issue.

  

	 	E.	Miscellaneous Provisions. 

  

	 	1.	This Policy does not constitute a contract of employment for a particular term or length between any Designated Executive and the Company, nor does it in any way alter
any Designated Executive’s status as an employee-at-will who may be terminated with or without cause for any reason or no reason at all except a reason prohibited by law. 

 

	 	2.	The Company is an “employment at will” employer. Employees have the right to resign their positions “at will” and the Company has the right to
terminate an employee “at will” with or without notice or Cause. No employee’s “at will” status may be modified except in a written contract binding on the Company. 

 

	 	3.	Except for any written agreements with Designated Executives that provide severance benefits on a Change of Control or similar transaction, the severance benefits
outlined in this Policy supersede, negate and replace all other severance benefits the Company has offered or may offer to the Designated Executives covered by this Policy. 

 

	 	4.	The Company intends to continue this Policy indefinitely. However, the Company reserves the right to terminate this Policy at any time and for any reason. If this
Policy is terminated, no Designated Executive will have any further rights under this Policy. Any termination of this Policy shall not retroactively terminate any severance benefits which are payable as of the date of termination of this Policy.

  

	 	5.	This Policy may be amended, in whole or in part, and the benefits described in this Policy may be expanded or reduced, at any time in the sole discretion of the Company
with or without notice. 

  

	 	6.	Neither a Designated Executive nor a Participant may assign or otherwise alienate his or her benefits or right to benefits under this Policy. This means that an
Designated Executive or Participant may not sell, give away, use as collateral for a loan, or otherwise interfere with his or her benefits or right to benefits. 

 

	 	7.	If a Participant owes any debt to the Company, any benefits that he or she is entitled to under this Policy may be reduced by such amounts. 

  
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	 	8.	Except as otherwise required by law, this Policy and all matters arising thereunder shall be governed by the laws of the State of Pennsylvania except as preempted by
ERISA (defined below). 

  

	 	9.	The headings in this Policy are for convenience only and shall not affect the interpretation or construction of this Policy. 

 

	 	10.	As used in this Policy, unless the context expressly requires the contrary, “including” means including, without limitation; references to
“Sections” are references to the sections and subsections of this Policy; the masculine includes the feminine and neutral and vice versa; and the singular includes the plural, and vice versa. 

 

	 	11.	To the extent any amounts payable under this Policy are subject to Internal Revenue Code Section 409A, then, to the extent possible, the Company shall have the
right in its sole and absolute discretion (without any obligation to do so or to indemnify any Participant for failure to do so) to adopt such amendments to the Policy or adopt such other policies and procedures (including amendments, policies and
procedures with retroactive effect) that it determines are necessary or appropriate to preserve the intended tax treatment of the benefits provided hereunder, to exempt the Policy from Code Section 409A or to comply with the requirements of
Code Section 409A and thereby avoid the application of penalty taxes thereunder, including, without limitation, instituting a time delay in the payment of benefits under this Policy. All terms of this Policy which are undefined or ambiguous
must be interpreted in a manner that is consistent with Code Section 409A if necessary to comply with Code Section 409A. Benefits under the Policy are intended to be exempt from the rules of Code Section 409A and will be construed
accordingly. However, the Company will not be liable to any Participant with respect to any benefit-related adverse tax consequences arising under Code Section 409A or other provision of the Code. 

 

	 	F.	Official Policy Information. 

  

	 	1.	Official Policy Name: Rex Energy Corporation Executive Change of Control Policy. 

 

	 	2.	Policy Sponsor: 

  Rex
Energy Corporation 
  Attention: Chief Financial Officer 

 476 Rolling Ridge Drive 
  Suite 300 
  State College, Pennsylvania 16801 

 

	 	3.	Plan Number: [                    ] 

  
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	 	4.	Policy Sponsor’s employer Identification Number (EIN): 20-8814402 

  

	 	5.	Policy Administrator: 

 Rex Energy Corporation 
  Attention: Chief Financial Officer 
  476 Rolling Ridge Drive

  Suite 300 
  State College, Pennsylvania 16801 
 Phone Number: 814.278.7267 

 

	 	6.	Agent for Service of Legal Process: 

  Rex Energy Corporation 
  c/o Corporation Trust Company 

 1209 Orange Street 
  Wilmington, Delaware 19801 
  

	 	7.	Type of ERISA Plan: Welfare Benefit Plan 

  

	 	8.	Policy Year: Calendar Year 

  

	 	9.	Effective Date:                     , 2011.

  

	 	10.	Policy Funding: The Company pays severance benefits under this Policy out of its general assets. Eligible Designated Executives and Participants do not make any
contributions to this Policy. 

  

	 	G.	ERISA Rights Statement. A Participant in this Policy is entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974, as
amended, also called “ERISA”. 

  

	 	1.	Explanation of a Participant’s ERISA Rights. ERISA provides that all Policy Participants are entitled to: 

 

	 	(a)	Examine, without charge, at the Policy Administrator’s office and at other locations (such as work sites), all Policy documents. 

 

	 	(b)	Obtain copies of all Policy documents and other Policy information upon written request to the Policy Administrator. The Policy Administrator may assess a reasonable
charge for the copies. 

  

	 	(c)	Receive a summary of the Policy's annual financial report which the Policy Administrator is required by law to furnish to each Participant. 

  
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	 	2.	Policy Administrator’s Responsibilities Under ERISA. In addition to creating rights for Participants, ERISA imposes duties upon the people who are responsible for
the operation of this Policy. The people who operate this Policy, called “fiduciaries” of the Policy, have a duty to do so prudently and in the interest of Participants. No one, including the Company or any other person, may fire a
Participant or otherwise discriminate against a Participant in any way in an attempt to prevent a Participant from obtaining a welfare benefit or exercising his or her rights under ERISA. 

 

	 	3.	Steps To Take to Enforce ERISA Rights. If a Participant’s claim for severance benefits pursuant to this Policy is denied or ignored in whole or in part, the
Participant must receive a written explanation of the reason for the denial. The Participant has the right to have the Policy Administrator review and reconsider the claim. (See Section VI.C). Under ERISA, there are steps a Participant can take to
enforce the above rights. For instance, if a Participant requests a copy of the Policy documents and does not receive them within 30 days, the Participant may file suit in a Federal court. In such a case, the court may require the Policy
Administrator to provide the materials and pay the Participant up to $110.00 a day until the Participant receives the materials, unless the materials were not sent because of reasons beyond the control of the Policy Administrator.

 If a Participant has a claim for benefits which is denied or ignored, in whole or in part, and the Participant
has been through the Policy’s appeals procedure, the Participant may file suit in a state or Federal court. Similarly, if a Participant believes the Policy’s fiduciaries are misusing the Policy’s money, or if a Participant is
discriminated against for asserting his or her rights, the Participant may seek assistance from the U.S. Department of Labor, or may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If the Participant is
successful, the court may order the person the Participant sued to pay these costs and fees. If the Participant loses, the court may order the Participant to pay these costs and fees if, for example, it finds the Participant’s claim is
frivolous. 
  

	 	4.	Questions. If a Participant has any questions about Policy, he or she should contact the Policy Administrator. If a Participant has any question about this statement or
about his or her rights under ERISA, he or she should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in the telephone directory or the Division of Technical Assistance and Inquiries,
Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210. A Participant may also obtain certain publications about his or her rights and responsibilities under ERISA by calling the
publications hotline at the Employee Benefits Security Administration or on the Employee Benefits Security Administration’s website at www.dol.gov. 

  
 -15-Incentive Plan

 Exhibit 10.1 

 

 

 2011 Zebra Incentive Plan 

 SECTION 1 – PURPOSE 
 Zebra Technologies Corporation and its subsidiaries (collectively, the “Company”) provides the 2011 Zebra Incentive Plan (the “Plan”) to focus the attention of Participants on growing
the business by rewarding performance for attaining a specific set of financial targets and goals. While Employees have many different roles within the Company, the Company will be successful only if all Employees are focused on achieving common
goals, strive individually for functional excellence in their assigned roles, and contribute to organizational excellence as a team. The Plan is established pursuant to the 2006 Zebra Technologies Corporation Incentive Compensation Plan (the
“Incentive Compensation Plan”) and is subject to the provisions set forth therein. 
 SECTION 2 – DEFINITIONS 

2.1 Definitions: Wherever used herein, the following terms shall have the meanings set forth below, unless otherwise expressly provided. Additional
terms shall have the meanings set forth in Exhibit A, under the “Definitions” heading, unless otherwise expressly provided. 
  

	 	(a)	“Employee” shall mean an individual classified as a regular full-time or regular part-time employee by the Company as defined in Section 3.

  

	 	(b)	“Base Earnings” shall mean the Participant’s base salary in effect during the Plan Year, pro-rated to reflect base salary adjustments (e.g., merit
increase) transacted throughout the Plan Year. 

  

	 	(c)	“Cause” shall (i) with respect to a Participant that is a Section 16 Officer, have the same meaning, if any, ascribed to it in the Section 16
Officer’s employment agreement with the Company, and (ii) with respect to any other Participant or to a Section 16 Officer that does not have an employment agreement with the Company that ascribes a meaning to it, mean a
Participant’s failure to follow directives and policies of the Company, the failure to follow the reasonable directives of a superior, willful malfeasance, gross negligence, acts of dishonesty, or conduct injurious to the Company.

  

	 	(d)	“Code” shall mean the Internal Revenue Code of 1986. 

  

	 	(e)	“Committee” shall mean the Compensation Committee of the Board of Directors of the Company. 

 

	 	(f)	“Financial Performance Goals” shall mean the budgeted level of Operating Income, as set forth in Section 4.2, Section 4.3 and
Exhibit A, and Return on Invested Capital as defined in Exhibit A. 

  

	 	(g)	“Incentive Award” shall mean the award earned by a Participant based on a comparison of actual results of the Company or applicable business unit against the
Financial Performance Goals and Individual Performance Goals established at the beginning of the Plan Year. 

  

	 	(h)	“Individual Performance Goals” shall mean clear, specific, and measurable goals of a Participant. 

 

	 	(i)	“Participant” shall mean an Employee of the Company who is in a position that satisfies the defined eligibility criteria for participation in the Plan stated
in Section 3. 

  

	 	(j)	“Performance Payout Percentage” shall mean the percentage of the Incentive Award awarded based on the level of goal achievement for the Plan Year, as set
forth in this Plan or in Exhibit A. 

  
 2 

	 	(k)	“Plan” shall mean the 2011 Zebra Incentive Plan. 

	 	(l)	“Plan Year” shall mean the fiscal year of the Company that extends from January 1, 2011 through December 31, 2011. 

 

	 	(m)	“Section 16 Officers” shall mean any officers of the Company as defined in Rule 16a-1 under the Securities Exchange Act of 1934. 

 

	 	(n)	“Target Incentive Percentage” shall mean the fixed percentage determined by (i) the Committee for each Participant that is a Section 16 Officer, and
(ii) the Vice President, Human Resources for all other Participants. 

 SECTION 3 – ELIGIBILITY AND PARTICIPATION

 3.1 Eligibility: Eligibility for participation in the Plan will be limited to those Employees who by the nature and scope of their
position, regularly and directly make or influence policy or operating decisions which impact the growth, profitability, and earnings results of the Company, but shall not include Employees of Zebra Enterprise Solutions Supply Chain Logistics
Operations. For purposes of this Plan, such Employees are limited to the Chief Executive Officer, Senior Vice Presidents, Vice Presidents, Directors and Managers, by job title, provided that they are assigned a salary grade of E-12 or above, and
Supervisors, by job title, provided that they are assigned a salary grade of E-7 or above; provided, however, that non-U.S. Employees will be eligible for participation in the Plan based upon job title only. Any Employee who is not a Section 16
Officer and who participates in a sales incentive or commission arrangement or any other incentive program, or is not in a job title indicated herewithin, shall be excluded from participation in this Plan unless otherwise determined by the Vice
President, Human Resources. 
 3.2 Participation: Participation in the Plan shall be determined annually by the Vice President, Human
Resources; provided, however, that participation by Section 16 Officers shall be determined by the Committee. 
 3.3 Partial Plan Year
Participation: The Vice President, Human Resources may allow an Employee who becomes eligible during the Plan Year, either as a new hire or as a result of an internal job change that qualifies an Employee under Section 3.1, to
participate in the Plan; provided, however, participation by Section 16 Officers shall be determined by the Committee. In either such case, for purposes of calculating any Incentive Award, any such Participant’s Base Earnings shall be
pro-rated based on the time during the Plan Year that the Employee was a Participant. Newly hired Employees or Employees who first become eligible as a result of an internal job change must have a hire date or a job effective date on or prior to
December 31, 2011 and Base Earnings during the Plan Year to be become a Participant for the Plan Year. 
 3.4 Changes In Participation
Level and/or Organizational Unit: A Participant who changes positions and/or is assigned to a different organizational unit (as defined by their reporting relationship), during the Plan Year, shall have their Incentive Award calculated on a
prorated basis based on the time during the Plan Year in each position. 
 3.5 Leave of Absence: A Participant on an approved leave of
absence, as defined by the Family and Medical Leave Act of 1993, shall be considered eligible for a full Incentive Award payable at the same time as other Participants. A Participant on any other form of approved leave of absence shall have their
Incentive Award calculated on a partial year basis, payable pursuant to Section 5. All Participants who are on an approved leave of absence shall be considered employed for purposes of Section 4.1. 

3.6 No Right to Participate: Participation by an Employee in the Plan in any period prior to the Plan Year does not provide a right or entitlement
to be selected for participation in the Plan Year or any future period. 

  
 3 

 SECTION 4 – INCENTIVE AWARD DETERMINATION 
 4.1 Eligibility for Incentive Award: Except as provided in Section 6, in order to be eligible to receive an Incentive Award, a Participant must be employed continuously as a Participant
through the entire Plan Year (or partial Plan Year, in accordance with Section 3.3) and at the time the Incentive Award is paid. 

4.2 Initial Financial Performance Goal: The initial Financial Performance Goal for Section 16 Officers shall be positive Zebra Operating Income as
defined in Exhibit A and shall be applied before any additional Financial Performance Goals or Individual Performance Goals are applied. In no case will the award amount for the Chief Executive Officer exceed 1.5% of Zebra Operating Income or
exceed .5% of Zebra Operating Income for each of the other Section 16 Officers as defined in Exhibit A. 
 4.3 Financial
Performance Goals:  
  

	 	(a)	Section 16 Officers – Additional Financial Performance Goals are set forth in Exhibit A for the purpose of exercising negative discretion under
Section 162(m) of the Code. The Financial Performance Goals shall consist of the performance goal achievement level required to earn a Performance Payout Percentage of one-hundred percent (100%). The minimum and maximum Performance Payout
Percentages for the Financial Performance Goals are 0% and 200% respectively. 

  

	 	(b)	All Other Participants – The Financial Performance Goals are set forth in Exhibit A and shall consist of the performance goal achievement level required to
establish an Incentive Award pool whereby the target equates to one-hundred percent (100%). The minimum and maximum for each of the Financial Performance Goals are 0% and 200% respectively, but the minimum and maximum for the Incentive Award pool
are 0% and 175% respectively. 

 4.4 Individual Performance Goals:  

 

	 	(a)	Section 16 Officers – Individual Performance Goals for the Plan Year may be established for purposes of exercising negative discretion under
Section 162(m) of the Code, which shall be communicated to Participants promptly after such Individual Performance Goals are determined. The Individual Performance Goals for the Chief Executive Officer shall be determined by the Committee prior
to March 31, 2011. The Individual Performance Goals for Section 16 Officers other than the Chief Executive Officer shall be determined by the Chief Executive Officer prior to March 31, 2011. 

 

	 	(b)	All Other Participants – The Individual Performance Goals for all Participants other than Section 16 Officers shall be approved by their respective functional
Vice Presidents. Participants are eligible to receive a portion of the Incentive Award pool based upon Individual Performance Goals for the Plan Year. 

  

	 	(c)	The Individual Performance Goal Performance Payout Percentages for all Participants shall be based upon actual performance levels achieved against their Individual
Performance Goals for the Plan Year and shall be determined in accordance with the following scale: 

 Maximum
performance level = Maximum Performance Payout Percentage (200%) 
 Target performance level = Target Performance Payout
Percentage (100%) 
 Minimum performance level = Minimum Performance Payout Percentage (0%) 

Performance Payout Percentages for achievement between these performance levels shall be based on a scale determined by the Vice
President, Human Resources (or Committee in the case of Section 16 Officers), and such scale shall be communicated to such Participants promptly after they are determined. In no case shall the Individual Performance Goal Performance Payout
Percentage exceed 200%. 

  
 4 

 4.5 Incentive Components: Section 16 Officer Participants shall first have their individual
Incentive Award calculated on the basis of achieving the initial Financial Performance Goal as described in Section 4.2. The Committee shall then apply negative discretion for determining the individual Incentive Award for each
Section 16 Officer Participant who may have their individual Incentive Award calculated on the basis of up to two independent incentive components, a “Financial Performance Component” (as measured by achievement of Financial
Performance Goals) and an “Individual Performance Component” (as measured by Individual Performance Goals), which shall each be given a weighting percentage such that the total of both percentages equals 100%. These two incentive
components will be calculated separately and added together to determine the Section 16 Officer Participant’s Incentive Award as set forth in Section 4.6, but in no event shall the individual Incentive Award exceed the initial
Financial Performance Goal as described in Section 4.2. The assignment and weighting of the two incentive components for Section 16 Officer Participants shall be communicated at the same time as their eligibility notification and
shall be determined by the Committee. All other Participants shall have their individual Incentive Award calculated first on the Financial Performance Component. Each of the other Participants Incentive Award amounts may then be increased or
decreased by each Participant’s department manager under the respective functional Vice President based upon each Participant’s individual performance as set forth in Section 4.7. 

4.6 Incentive Award Calculation – Section 16 Officers: 
  

	 	(a)	The Company shall first evaluate actual performance results for Operating Income for the Plan Year as Operating Income multiplied by 1.5% for the Chief Executive
Officer and Operating Income multiplied by .5% for each of the other Section 16 Officers. 

  

	 	(b)	The Company shall then evaluate actual performance results for the Plan Year, which shall be calculated as the Participant’s Financial Performance Component’s
weighting percentage multiplied by the Participant’s Base Earnings as an eligible Participant during the Plan Year, multiplied by the Participant’s Target Incentive Percentage, multiplied by the Participant’s Performance Payout
Percentage for the Plan Year, multiplied by a Return on Invested Capital (“ROIC”) multiplier. 

  

	 	(c)	Each Participant’s Incentive Award with respect to the Participant’s Individual Performance Goal shall then be calculated as the Participant’s Individual
Performance Component’s weighting percentage multiplied by the Participant’s Base Earnings as an eligible Participant during the Plan Year, multiplied by the Participant’s Target Incentive Percentage, multiplied by the
Participant’s Performance Payout Percentage for the Participant’s Individual Performance Goal. 

 After the initial
Financial Performance Goal is calculated, then the above computations shall be made using the following formula: 
 INCENTIVE
AWARD = 
 Financial Performance Component: multiply A x B x C x D x G 

Individual Performance Component: multiply A x B x E x F 
 Where: 
 A = Target Incentive Percentage 

B = Base Earnings during the Plan Year 
 C = Performance Payout Percentage for Financial Performance Goals 
 D = Financial
Performance Component weighting percentage 
 E = Performance Payout Percentage for Individual Performance Goals 

F = Individual Performance Component weighting percentage 
 G = ROIC modifier 
 The computation is subject to the initial Financial Performance Goal for
Section 16 Officers as set forth in Section 4.2. 

  
 5 

 Illustrative Example – Section 16 Officer: The following example is provided for
illustrative purposes. If (a) a Participant’s Target Incentive Percentage was equal to 10%, (b) the Participant’s Base Earnings during the Plan Year were equal to $80,000, (c) the applicable Performance Payout Percentage for
the Financial Performance Period was equal to 90%, (d) the applicable Performance Payout Percentage for the Participant’s Individual Performance Goal was equal to 120%, (e) Financial Performance Component weighting percentage was 80%
and Individual Performance Component weighting percentage was equal to 20%, and (f) for Section 16 Officers the ROIC modifier was equal to 1.2; then the amount of Incentive Award earned would be equal to: 

Financial Performance Component: 10% x $80,000 x 90% x 80% = $5,760 x 1.2 = $6,912 

Individual Performance Component: 10% x $80,000 x 120% x 20% = $1,920 

Total Incentive award = $6,912 + $1,920 = $8,832 
 4.7 Incentive Award Calculation – All Other Participants: 
  

	 	(a)	An Incentive Award pool is established, calculated as each Participant’s Base Earnings multiplied by each Participant’s Target Incentive Percentage,
multiplied by the Performance Payout Percentage of the Financial Performance Goals for the Plan Year. The Incentive Award pool is then allocated to the various department managers containing eligible Participants. 

 

	 	(b)	Each Participant’s Incentive Award shall be determined by each Participant’s manager assessing the performance of each Participant against their Individual
Performance Goals for the Plan Year. Each Participant shall be eligible to receive a portion of the established pool of incentive dollars, subject to Section 4.1 and Section 6. If a Participant’s employment is terminated
as described in Section 6 and after the Incentive Award pool has been allocated to other eligible Participants, the terminated Participant’s allocated Incentive Award is forfeited and not reallocated to other eligible Participants.

 The above computations shall be made using the following formula: 

INCENTIVE AWARD = 
 Financial Performance Component Pool: multiply A x B x C 
 Individual
Performance Goals: increase or decrease the Incentive Award within a range of 0% to 200% of the Participant’s Target Incentive Percentage. 
 Where: 
 A = Target Incentive Percentage of all other Participants 

B = Base Earnings of all other Participants during the Plan Year 
 C = Performance Payout Percentage for Financial Performance Goals 
 SECTION 5 – PAYMENT OF
INCENTIVE AWARDS 
 5.1 Form and Timing of Payment: Payment of Incentive Awards shall be made in cash, subject to applicable payroll tax
and benefit plan withholdings, after the end of the Plan Year following the final determination of the fiscal year’s financial results, but in any event, such payment shall be made during the calendar year following the end of the Plan Year.

 5.2 Performance-Based Compensation Exemption from Code Section 162(m): With respect to Incentive Awards payable to
Section 16 Officers, the Incentive Awards are intended to meet the performance-based exception under Code Section 162(m). Before any such Incentive Award is paid to a Section 16 Officer, the Committee shall certify in writing that the
related Financial Performance Goals, as applicable, have been satisfied. 

  
 6 

 5.3 Code Section 409A: The Plan is intended to satisfy the provisions of Section 409A of
the Code, so that any payments to individuals provided pursuant to this Plan will not be subject to additional tax and interest under Code Section 409A. 
 SECTION 6 – TERMINATION OF EMPLOYMENT 
 6.1 Termination of Employment Due to Voluntary
Resignation: In the event a Participant’s employment is terminated due to voluntary resignation, as determined by the Vice President, Human Resources, prior to the payment of his or her Incentive Award, the Incentive Award shall be
forfeited and the Participant shall not be entitled to payment. 
 6.2 Termination of Employment for Cause: In the event a
Participant’s employment is terminated for Cause prior to payment of his or her Incentive Award, the Incentive Award shall be forfeited and the Participant shall not be entitled to payment. 

6.3 Termination of Employment Due to Retirement: In the case of retirement (as determined by the Vice President, Human Resources) prior to the
payment of any Incentive Award, the Incentive Award shall be considered earned, calculated on a prorated basis, and paid at the same time as other Participants. 
 6.4 Termination of Employment Due to Death or Disability: In the event a Participant’s employment is terminated by reason of death or disability during the Plan Year prior to payment of his or
her Incentive Award, the Incentive Award shall be considered earned, calculated on a prorated basis, and paid at the same time as other Participants. 
 6.5 Termination of Employment for Reasons Other Than Voluntary Resignation, Cause, Death, Disability or Retirement: In the event a Participant’s employment is terminated for reasons other than
voluntary resignation, Cause, death, disability, or retirement prior to payment of his or her Incentive Award, a prorated Incentive Award may be paid in the sole discretion of the Vice President, Human Resources. Any payment made under this
Section 6.5 shall be conditioned upon the Participant’s execution of an agreement acceptable to the Company that (i) waives any rights the Participant may otherwise have against the Company, and (ii) releases the Company
from actions, suits, claims, proceedings, and demands related to Participant’s employment and/or termination of employment. Further, any payment made under this Section 6.5 will be made at the time described in
Section 5.1. 
 6.6 Section 16 Officers: Notwithstanding Sections 6.1 to 6.5, in the event a Section 16
Officer Participant’s employment is terminated by the Company, the payment of any Incentive Award shall be governed by the Section 16 Officer’s employment agreement. 
 SECTION 7 – RIGHTS OF PARTICIPANTS 
 Nothing in this Plan shall interfere with or limit in any
way the right of the Company to terminate or change a Participant’s employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. Nothing herein contained shall limit or affect in any manner or
degree the normal and usual powers of management, exercised by the officers and the Board of Directors of the Company to change the duties or the character of employment of any Employee or to remove the individual from the employment of the Company
at any time, all of which rights and powers are expressly reserved by the Company. 
 SECTION 8 – ADMINISTRATION 

8.1 Administration: This Plan shall be administered by the Vice President, Human Resources in accordance with the provisions contained herein;
subject to the direction and approval of the Committee with respect to matters relating to any Section 16 Officers. 
 8.2 Questions of
Construction and Interpretation: The determination of the Vice President, Human Resources or the Committee in construing or interpreting this Plan or making any decision with respect to 

  
 7 

 
the Plan shall be final, binding, and conclusive upon all persons including the Participants and their heirs, successors and assigns. The Vice President, Human Resources’ interpretative
responsibility shall include any and all definitions in the Plan other than the definition of “Cause” (which shall be interpreted pursuant to the terms of the employment agreements referenced therein). This Plan is established pursuant to
the Incentive Compensation Plan and the provisions hereof are in all respects governed by the Incentive Compensation Plan and subject to all of the terms and provisions thereof. In the event of any inconsistency between this Plan and the Incentive
Compensation Plan, the terms of the Incentive Compensation Plan shall govern. 
 8.3 Conflicts: To the extent that a Participant
and the Company have entered into a written employment agreement that contains provisions that conflict with the provisions of this Plan, the provisions contained in the employment agreement shall control. 

8.4 Amendments: The Company, in its absolute discretion, without notice, at any time and from time to time, may modify or amend, in whole
or in part, any or all of the provisions of this Plan, or suspend or terminate it entirely; provided, however, that no such modification, amendment, suspension, or termination, may without the consent of the Participant (or the Participant’s
beneficiary in the case of death) reduce after the end of the Plan Year the right of a Participant (or the Participant’s beneficiary, as the case may be) to a payment or distribution in accordance with the provisions contained in this Plan.

 8.5 Governing Law: This Plan shall be construed in accordance with, and governed by, the laws of the State of Illinois
without giving effect to conflicts of laws principles. 
 8.6 Committee Authority: Notwithstanding anything herein to the
contrary, any and all determinations or actions to be taken with respect to the Plan that relate to a Section 16 Officer shall be determined or taken by the Committee.  

  
 8 

 Exhibit A 
 I. Financial Performance Goals 
 The Financial Performance Goals shall be the
Board-approved budgeted level of Zebra Operating Income as defined in this Exhibit A and as approved by the Committee. For purposes of this Exhibit A, “Board” shall mean the Board of Directors of Zebra Technologies
Corporation. The Financial Performance Goals related to the Section 16 Officers shall also include the Board-approved budgeted levels of Return on Invested Capital (“ROIC”) as defined in this Exhibit A and as approved by the
Committee. 
 II. Definitions 
  

			
	 Performance
Measure
	  	 Definition

	Operating
Income	  	Operating Income (recurring pro-forma) is, for the applicable period, adjusted to remove non-recurring charges1, as applicable.
		
	Return on
Invested
Capital	  	Net Operating Profit After Tax (NOPAT) for 2011 divided by invested capital where (1) NOPAT = Operating Income x (1-budget tax rate) and (2) Invested Capital = total assets minus
(cash and cash equivalents + current and long-term investments and marketable securities + current liabilities which exclude any interest bearing current liabilities), and which is calculated as the average Invested Capital reflected on the five
balance sheets for the end of the following quarters: Q4 2010, Q1 2011, Q2 2011, Q3 2011 and Q4 2011.

  

	1	 Non-recurring charges specifically include such items as (i) One-time charges, non-operating charges or expenses incurred that are not
under the control of operations management, as ratified by the Compensation Committee; (ii) restructuring expenses; (iii) exit expenses; (iv) integration expenses; (v) Board of Directors Project Activities (e.g., director
searches); (vi) gains or losses on the sale of assets; (vii) acquired in-process technology; (viii) impairment charges; or (ix) changes in Generally Accepted Accounting Principles. The above list is not exhaustive and is meant to
represent examples of the kind of expenses typically excluded from the calculations of Operating Income. 

Acquisitions: generally, for the first quarter beginning at least six months after an acquisition closes, the financial targets
will be adjusted to incorporate the acquired company’s budget or financial plan. The reported financial performance will also be adjusted to include the acquired company’s actual performance the first quarter beginning at least six months
after an acquisition closes. 
 III. Performance Payout Percentages for Financial Performance Goals 

The Performance Payout Percentages that will be awarded for achievement of Financial Performance Goals at the indicated levels are set forth below and
shall be based upon actual performance levels achieved against the Financial Performance Goals during the Plan Year. Performance between any of the stated achievement levels shall be interpolated on a straight line basis between such stated
performance levels. 
  

							
	 Section 16 Officers
	  	 All Other Participants

	 Percent of

Performance Goal
 Achievement
	  	 Performance

Payout

Percentage
	  	 Percent of

Performance Goal
 Achievement
	  	 Performance

Payout

Percentage

	 <75.0%
	  	0%	  	<75.0%	  	0%
	 75.0%
	  	50.0%	  	75.0%	  	50.0%
	 80.0%
	  	60.0%	  	80.0%	  	60.0%
	 85.0%
	  	70.0%	  	85.0%	  	70.0%
	 90.0%
	  	80.0%	  	90.0%	  	80.0%
	 95.0%
	  	90.0%	  	95.0%	  	90.0%
	 100.0%
	  	100.0%	  	100.0%	  	100.0%
	 105.0%
	  	133.3%	  	105.0%	  	133.3%
	 110.0%
	  	166.7%	  	110.0%	  	166.7%
	 115.0%
	  	200.0%	  	115.0%	  	200.0% scale; 175.0% cap

IV. Return on Invested Capital – The results of the ROIC measure serves as a modifier to the Financial Performance Component for
Section 16 Officers, established in a series of ranges. If the ROIC goal is achieved, the Financial Performance Component is not modified. If the ROIC goal is exceeded, the Financial Performance Component of the Incentive Award is increased by
20%. If the ROIC goal is not achieved, the Financial Performance Component of the Incentive Award is reduced by 20%, 40% or 100% depending upon 

  
 9 

 
the level of achievement in relation to the goal. Interpolation is not performed between stated levels of ROIC performance. 

  
 10

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