Document:

EX-10.1

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, as of May 1, 2008 by and between The Hartford Financial Services Group,
Inc., a Delaware corporation (the “Company”), and John C. Walters (“Executive”).

W I T N E S S E T H:

WHEREAS, the Company and Executive desire to enter into an Employment Agreement, effective as
of the date first written above;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and Executive’s
participation in certain incentive compensation plans pursuant to which the level, if any, of
participation is determined by the administrators of such plans, the Company and Executive hereby
agree that the Employment Agreement is to read as follows (hereinafter referred to as the
“Agreement”), effective as of the date first written above (the “Commencement Date”):

1. Employment.

	 	(a)	 	Agreement to Employ. Upon the terms and subject to the conditions of this
Agreement, the

Company hereby agrees to employ Executive and Executive hereby agrees to enter employment by the
Company.

(b) Term of Employment. Except as otherwise provided below, the Company shall employ
Executive for the period commencing on the Commencement Date and ending on the third anniversary
of the Commencement Date. At the expiration of the original term or any extended term (each a
“Renewal Date”), Executive’s employment hereunder shall be extended automatically, upon the same
terms and conditions, for successive one-year periods, unless either party shall give written
notice to the other of its intention not to renew such employment at least fifteen months prior
to such Renewal Date. Without limiting the generality of the foregoing, upon the occurrence of
a Change of Control (as defined below), the term of this Agreement shall be extended
automatically without any action by either party until the second anniversary of such Change of
Control. Notwithstanding the foregoing, if not previously terminated pursuant to Sections 1(b),
5(a) or 6(a), the term of this Agreement shall terminate on the last day of the month in which
Executive attains age 65, and such a termination upon Executive reaching age 65 shall be deemed
to be a Termination Due to Retirement for purposes of this Agreement. The period during which
Executive is employed pursuant to this Agreement, including any extension thereof in accordance
with this Section 1(b), shall be referred to as the “Employment Period.”

2. Position and Duties.

During the Employment Period, Executive shall serve as President and Chief Operating Officer of
Hartford Life Operations and as a member of the Office of the Chairman of the Company, and/or in
such other position or positions with the Company or its affiliates commensurate with his/her
position and experience as the Board of Directors of the Company (the “Board”) shall from time to
time specify. During the Employment Period, Executive shall have the duties, responsibilities and
obligations customarily assigned to individuals serving in the position or positions in which
Executive serves hereunder and such other duties, responsibilities and obligations as the Board or
the Chairman shall from time to time specify. Executive shall devote his/her full time to the
services required of him/her hereunder, except for vacation time and reasonable periods of absence
due to sickness, personal injury or other disability, and shall use his/her best efforts, judgment,
skill and energy to perform such services in a manner consonant with the duties of his/her position
and to improve and advance the business and interests of the Company and its affiliates. During
the Employment Period, Executive shall comply with the Code of Ethics and Business Conduct of the
Company. Unless and to the extent inconsistent with the terms of any published Company policy or
code of conduct as in effect on the date hereof and as hereafter amended, nothing contained herein
shall preclude Executive from (a) serving on the board of directors of any business corporation
with the consent of the Board, (b) serving on the board of, or working for, any charitable or
community organization, or (c) pursuing his/her personal financial and legal affairs, so long as
the foregoing activities, individually or collectively, do not interfere with the performance of
Executive’s duties hereunder or violate any of the provisions of Section 9 hereof.

3. Compensation.

(a) Base Salary. During the Employment Period, the Company shall pay Executive a base
salary at the annual rate as in effect on the date hereof. The annual base salary payable under
this paragraph shall be reduced, however, to the extent that Executive elects to defer such
salary under the terms of any deferred compensation or savings plan or arrangement maintained or
established by the Company or its affiliates. The Board or the appropriate committee of the
Board may in its discretion periodically review Executive’s base salary in light of competitive
practices, the base salaries paid to other executive officers of the Company and the performance
of Executive and the Company and its applicable affiliates, and may, in its discretion, increase
such base salary by an amount it determines to be appropriate. Any such increase shall not
reduce or limit any other obligation of the Company hereunder. Executive’s base salary (as set
forth above or as may be increased from time to time) shall not be reduced following any Change
of Control, but may be reduced prior to a Change of Control solely pursuant to a cost-saving
plan or structural realignment of total compensation elements that includes all senior
executives and only to the extent that such reduction is proportionate to the reductions
applicable to other senior executives. Executive’s annual base salary payable hereunder, as it
may be increased or reduced from time to time as provided herein and without reduction for any
amounts deferred as described above, shall be referred to herein as “Base Salary.” The Company
shall pay Executive the portion of his/her Base Salary not deferred not less frequently than in
equal monthly installments.

(b) Annual Bonus. For each calendar year ending during the Employment Period,
Executive shall have the opportunity to earn and receive an annual bonus, based on the
achievement of target levels of performance, equal to the percentage of his/her Base Salary used
to calculate such annual bonus as of the date hereof. Executive’s annual bonus opportunity may
be increased above such percentage from time to time by the Board or the appropriate committee
thereof. Executive’s annual bonus opportunity shall not be reduced following any Change of
Control, but may be reduced prior to a Change of Control solely pursuant to a cost-saving plan
or structural realignment of total compensation elements that includes all senior executives and
only to the extent that such reduction is proportionate to the reductions applicable to other
senior executives. Executive’s annual bonus opportunity, as it may be increased or reduced from
time to time as provided herein, shall be referred to herein as “Target Bonus.” The actual
bonus, if any, payable for any such year shall be determined in accordance with the terms of the
Company’s Annual Executive Bonus Program or any successor annual incentive plan (the “Annual
Plan”) based upon the performance of the Company and/or its applicable affiliates and/or
Executive against target objectives established under such Annual Plan. Subject to Executive’s
election to defer all or a portion of any annual bonus payable hereunder pursuant to the terms
of any deferred compensation or savings plan or arrangement maintained or established by the
Company or its affiliates, any annual bonus payable under this Section 3(b) shall be paid to
Executive in accordance with the terms of the Annual Plan.

(c) Long-term Incentive Compensation. During the Employment Period, Executive shall
participate in all of the Company’s existing and future long-term incentive compensation
programs for key executives at a level commensurate with his/her position with the Company and
consistent with the Company’s then current policies and practices, as determined in good faith
by the Board or the appropriate committee of the Board.

4. Benefits, Perquisites and Expenses.

(a) Benefits. During the Employment Period, Executive (and, to the extent applicable,
his/her dependents) shall be eligible to participate in or be covered under (i) each welfare
benefit plan or program maintained or as hereafter amended or established by the Company or its
applicable affiliates, including, without limitation, each group life, hospitalization, medical,
dental, health, accident or disability insurance or similar plan or program thereof that is
available to Tier 1 executives, and (ii) each applicable pension, retirement, savings, deferred
compensation, stock purchase or other similar plan or program maintained or as hereafter amended
or established by the Company or its applicable affiliates, in each case to the extent that
Executive is eligible to participate in any such plan or program under the generally applicable
provisions thereof. Nothing in this Section 4(a) shall limit the Company’s right to amend or
terminate any such plan or program in accordance with the procedures set forth therein or as
permitted by applicable law.

(b) Perquisites. For each calendar year during the Employment Period, Executive shall
be entitled to at least the number of paid vacation days per year that a Tier 1 Executive is
entitled to as of the date hereof, and shall also be entitled to receive such other perquisites
as are generally provided to similarly situated Tier 1 executives as of the date hereof or are
hereafter provided to other similarly situated Tier 1 senior executives of the Company in
accordance with the then current policies and practices of the Company.

(c) Business Expenses. During the Employment Period, the Company shall pay or
reimburse Executive for all reasonable business expenses incurred or paid by Executive in the
performance of Executive’s duties hereunder, upon presentation of expense statements or vouchers
and such other information as the Company may require and in accordance with the generally
applicable policies and procedures of the Company.

(d) Office and Support Staff. During the Employment Period, Executive shall be
entitled to an office with furnishings and other material appointments, and to secretarial and
other assistance, at a Tier 1 level and that is at least commensurate to similarly situated
executives as of the date hereof or is hereafter provided to other similarly situated senior
executives of the Company.

(e) Indemnification. The Company shall indemnify Executive and hold Executive harmless
from and against any third party claim, loss or cause of action, regardless whether asserted
during or after the Employment Period, arising from or out of Executive’s performance as an
officer, director or employee of the Company or any of its affiliates or in any other capacity,
including any fiduciary capacity in which Executive serves at the request of the Company, to the
maximum extent permitted by applicable law and under the Certificate of Incorporation and
By-Laws of the Company, as they may be amended from time to time (the “Governing Documents”),
provided that in no event shall the protection afforded to Executive be less
than that afforded under the Governing Documents as in effect on the Commencement Date.

5. Termination of Employment.

The provisions of this Section 5 shall apply prior to the occurrence of a Change of Control and, if
Executive is still in the Company’s employ, shall again become applicable upon the second
anniversary of such Change of Control.

(a) Early Termination of the Employment Period. Notwithstanding Section 1(b)
hereof, the Employment Period shall end upon the earliest to occur of (i) a Termination
For Cause, (ii) a Termination Without Cause, (iii) a Voluntary Termination, (iv) a
Termination Due to Retirement, (v) a Termination Due to Disability, or (vi) a Termination
Due to Death.

(b) Notice of Termination. Communication of termination under this Section 5
shall be made to the other party by Notice of Termination in the case of (i) a
Termination For Cause, (ii) a Termination Without Cause, or (iii) a Voluntary
Termination.

1

(c) Benefits Payable Upon Termination; Rules for Determining Reason for
Termination.

(i) Benefits Payable Upon Termination. Following the end of the
Employment Period pursuant to Section 5(a), Executive (or, in the event of
his/her death, his/her surviving spouse, if any, or if none, his/her estate)
shall be paid the type or types of compensation determined to be payable in
accordance with the following table, such payment to be made in the form
specified in such table and at the time established pursuant to Section 7 hereof.
Capitalized terms used in such table shall have the meanings set forth in
Section 5(d) hereof.

(ii) Rules for Determining Reason for Termination.

(A) If a Voluntary Termination occurs on a date that Executive is
eligible for Retirement as defined in The Hartford Investment and
Savings Plan, as may be amended from time to time, or any
successor plan thereof (the “Savings Plan”), such Voluntary
Termination shall instead be treated as a Termination Due to
Retirement solely for purposes of this Section 5.

(B) No Termination Without Cause shall be treated as a
Termination Due to Retirement or a Termination Due to Disability
for purposes of any Pro Rata Target Bonus, Severance Payment,
Equity Awards or Vested Benefits Enhancement under this Section 5,
notwithstanding the fact that, either on, before or after the date
of termination of the Employment Period with respect thereto, (I)
Executive was eligible for Retirement as defined in the Savings
Plan, (II) Executive requested to be treated as a retiree for
purposes of the Savings Plan or any other plan or program of the
Company or its affiliates, or (III) Executive or the Company could
have terminated Executive’s employment in a Termination Due to
Disability hereunder.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	BENEFITS PAYABLE :

	 	NON-CHANGE OF CO
	 	NTROL
	 	

	 	

	 	

	 	

	 	

	 

	BENEFIT:

	 	Accrued Salary
	 	Pro Rata Target

Bonus
	 	Severance Payment
	 	Equity Awards
	 	Vested Benefits
	 	Vested Benefits

Enhancement (only

applicable in the

event that

Executive’s

employment by the

Company terminates

prior to July 1,

2009)
	 	

Welfare

Benefits

Continuation
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	FORM OF PAYMENT:

	 	Lump Sum
	 	Lump Sum
	 	Lump Sum
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	Lump Sum
	 	Determined Under

the Applicable Plan
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Termination For

Cause

	 	Payable
	 	Not Payable
	 	Not Payable
	 	Not Payable
	 	Determined Under

the Applicable Plan
	 	Not Payable
	 	Not

Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	
 
	 	 	 	 	 	 	 	Options /Restricted

Stock:
	 	

	 	

	 	

	
 
	 	 	 	 	 	 	 	Payable
	 	

	 	

	 	

	
 
	 	 	 	 	 	 	 	 
	 	

	 	

	 	

	Termination Without

Cause

	 	Payable
	 	Payable
	 	Payable
	 	Other Equity

Awards: Determined

Under the

Applicable Plan
	 	

Determined Under

the Applicable Plan
	 	

Payable
	 	

Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Voluntary

Termination

	 	Payable
	 	Determined Under

the Applicable Plan
	 	Not

Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	

Not Payable
	 	

Not Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Termination Due to

Retirement

	 	Payable
	 	Determined Under

the Applicable Plan
	 	Not Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	

Not Payable
	 	

Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Termination Due to

Disability

	 	Payable
	 	Payable
	 	Not Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	

Not Payable
	 	

Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Termination Due to

Death

	 	Payable
	 	Payable
	 	Not Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	

Not Payable
	 	

Not Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

2

(d) Definitions.

“Accrued Salary” means any Base Salary earned, but unpaid, for services rendered to the
Company on or prior to the date on which the Employment Period ends pursuant to Section
5(a) (other than Base Salary deferred pursuant to Executive’s election, as contemplated
by Section 3(a) hereof), plus any vacation pay accrued by Executive as of such date.

“Available” means that the particular benefit shall be made available to Executive to
the extent specifically provided herein or required by applicable law.

“Determined Under the Applicable Plan” means that the determination of whether a
particular benefit shall or shall not be paid to Executive, and, where specifically
required by this Agreement, the timing or form of any benefit payment, shall be made
solely by application of the terms of the plan or program providing such benefit,
except to the extent that the terms of such plan or program are expressly superseded or
modified by this Agreement.

“Equity Awards” means the outstanding stock option, restricted stock, restricted
stock unit, performance share and other equity or long-term incentive compensation
awards, if any, held by Executive as of the date of his/her termination.

“ERPs” means any excess retirement plans maintained or as hereafter amended or
established by the Company or its applicable affiliates.

“ESPs” means any excess investment and savings plans maintained or as hereafter amended
or established by the Company or its applicable affiliates.

“Lump Sum” means a single lump sum cash payment.

“Not Available” means that the particular benefit shall be not be made available to
Executive, except to the extent required by applicable law.

“Notice of Termination” means (i) in the case of a Termination For Cause, a written
notice given by the Company to Executive within 30 calendar days of the Company’s
having actual knowledge of the events giving rise to such Termination For Cause, (ii)
in the case of a Termination Without Cause, a written notice given by the Company to
Executive at least 30 calendar days before the effective date of such Termination
Without Cause, and (iii) in the

case of a Voluntary Termination, a written notice given by Executive to the Company
indicating the effective date of Executive’s termination of the Employment Period in
such Voluntary Termination, such effective date to be no earlier than 90 days following
the date such notice is received by the Company from Executive.

“Not Payable” means (i) with respect to benefits other than Equity Awards, such
benefits shall not be paid or otherwise provided to Executive, and (ii) with respect to
Equity Awards, such Equity Awards, to the extent unvested, unexercisable, or subject to
restrictions that have not yet lapsed, shall be forfeited and/or canceled as of the
date of termination of the Employment Period, unless otherwise determined by the Board
or the appropriate committee of the Board in its discretion.

“Payable” means (i) with respect to benefits other than those described in clause (ii)
of this paragraph, such benefits shall be paid to Executive in the amount, at the time,
and in the form specified herein, and (ii) with respect to benefits described in this
clause (ii), the following shall apply solely in the event of a Termination Without
Cause, notwithstanding anything in the applicable plan or program to the contrary: (A)
with respect to any outstanding stock options not yet expired as of the date of
termination of the Employment Period, Executive shall be treated as though he/she
remained in the employ of the Company for the two year period following such date, and
except to the extent that any such options first expire during such period under the
applicable plan or program, (I) any such options that would have become vested over
such two year period solely by reason of Executive remaining in the employ of the
Company during such period shall become immediately vested and nonforfeitable, (II)
with respect to any options that by their terms would vest if the stock of the Company
or an affiliate were to reach a specified market price, such options shall become
vested and nonforfeitable if and when such stock reaches such price during such two
year period, and (III) Executive shall have an additional two years to exercise any
vested options (beyond the time to exercise such options permitted under the applicable
plan or program), and (B) with respect to any restricted stock subject to restrictions
that have not yet lapsed as of the date of termination of the Employment Period, such
restrictions shall be deemed to have lapsed and such restricted stock shall become
immediately vested and nonforfeitable as of such date.

“Pro-Rata Target Bonus” means an amount equal to the product of: (i) an amount equal
to the Target Bonus Executive would have been entitled to receive under Section 3(b)
for the calendar year in which the Employment Period terminates, and (ii) a fraction
(the “Service Fraction”), the numerator of which is equal to the number of rounded
months in such calendar year which have elapsed as of the date of such termination, and
the denominator of which is 12; provided that, if the Employment Period
terminates in the last quarter of any calendar year, the Pro-Rata Target Bonus shall be
the amount determined under the above formula or, if greater, the product of: (A) the
bonus that would have been paid to Executive based on actual performance for such
calendar year, and (B) the Service Fraction.

“Severance Payment” means an amount equal to two times the sum of: (i) Executive’s
Base Salary, and (ii) Executive’s Target Bonus amount under Section 3(b) hereof for the
calendar year in which the Employment Period terminates.

“Termination Due to Death” means a termination of Executive’s employment due to the
death of Executive.

“Termination Due to Disability” means (i) a termination of Executive’s employment by
the Company as a result of a determination by the Board or the appropriate committee
thereof that Executive has been incapable of substantially fulfilling the positions,
duties, responsibilities and obligations set forth in this Agreement on account of
physical, mental or emotional incapacity resulting from injury, sickness or disease for
a period of (A) at least four consecutive months, or (B) more than six months in any
twelve month period, or (ii) Executive’s termination of employment on account of
Disability as defined in The Hartford Investment and Savings Plan, as may be amended
from time to time.

“Termination Due to Retirement” means Executive’s termination of employment on account
of Executive’s Retirement as defined in The Hartford Investment and Savings Plan, as
may be amended from time to time.

“Termination For Cause” means a termination of Executive’s employment by the Company
for any of the following reasons: (i) Executive is convicted of or enters a plea of
guilty or nolo contendere to a felony, a crime of moral turpitude, dishonesty,
breach of trust or unethical business conduct, or any crime involving the business of
the Company or its affiliates; (ii) in the performance of his/her duties hereunder or
otherwise to the detriment of the Company or its affiliates, Executive engages in (A)
willful misconduct, (B) willful or gross neglect, (C) fraud, (D) misappropriation, (E)
embezzlement, or (F) theft; (iii) Executive willfully fails to adhere to the policies
and practices of the Company or devote substantially all of his/her business time and
effort to the affairs thereof, or disobeys the directions of the Board to do either of
the foregoing; (iv) Executive breaches this Agreement in any material respect; (v)
Executive is adjudicated in any civil suit to have committed, or acknowledges in
writing or in any agreement or stipulation his/her commission, of any theft,
embezzlement, fraud or other intentional act of dishonesty involving any other person;
or (vi) Executive willfully violates the Code of Ethics and Business Conduct of the
Company. Executive shall be permitted to respond and defend himself/herself before the
Board within 30 days after delivery to Executive of written notification of any
proposed Termination For Cause that specifies in detail the reasons for such
termination. If the majority of the members of the Board (excluding Executive) do not
confirm that the Company had grounds for a Termination For Cause within 30 days after
Executive has had his/her hearing before the Board, Executive shall have the option of
treating his/her employment as not having terminated or as having been terminated in a
Termination Without Cause.

“Termination Without Cause” means any involuntary termination of Executive’s employment
by the Company other than a Termination For Cause, a Termination Due to Disability or a
Termination Due to Death.

“Vested Benefits” means amounts that are vested or that Executive is otherwise entitled
to receive, without the performance by Executive of further services or the resolution
of a contingency, under the terms of or in accordance with any investment and savings
plan or retirement plan (including any plan providing retiree medical benefits) of the
Company or its affiliates, and any ERPs or ESPs related thereto, and any deferred
compensation or employee stock purchase plan or similar plan or program of the Company
or its affiliates.

“Vested Benefits Enhancement” means (i) a cash amount equal to the present value,
calculated using a discount rate equal to the then prevailing applicable Federal rate
as determined under Section 1274(d) of the Internal Revenue Code of 1986, as amended
(the “Code”), of the additional retirement benefits that would have been payable or
available to Executive under any ERPs, based on (A) the age and service Executive would
have attained or completed had Executive continued in the Company’s employ until the
second anniversary of the date of termination of the Employment Period, and (B) where
compensation is a relevant factor, his/her pensionable compensation as of such date,
such compensation to include, on the same terms as apply to other executives, any
Severance Payment made to Executive, and (ii) solely for purposes vesting in any
benefits under any ESPs, Executive shall be treated as having continued in the
Company’s employ until the second anniversary of the date of termination of the
Employment Period. A Vested Benefits Enhancement shall only be applicable in the event
that Executive’s employment by the Company terminates prior to July 1, 2009.

“Voluntary Termination” means any voluntary termination of Executive’s Employment by
Executive pursuant to this Section 5, other than a Termination Due to Retirement or a
Termination Due to Disability by Executive.

“Welfare Benefits Continuation” means that until the second anniversary of the date of
termination of the Employment Period, Executive and, if applicable, his/her dependents
shall be entitled to continue participation in the life and health insurance benefit
plans of the Company or its affiliates in which Executive and/or such dependents were
participating as of the date of termination of the Employment Period, and such other
welfare benefit plans thereof in which the Company is required by law to permit the
participation of Executive and/or his/her dependents, (collectively, the “Welfare
Benefit Plans”). Such participation shall be on the same terms and conditions
(including the requirement that Executive pay any premiums generally paid by an
employee) as would apply if Executive were still in the employ of the Company;
provided that the continued participation of Executive and/or his/her
dependents in such Welfare Benefit Plans shall cease on such earlier date as Executive
may become eligible for comparable welfare benefits provided by a subsequent employer.
To the extent that Welfare Benefits Continuation cannot be provided under the terms of
the applicable plan, policy or program, the Company shall provide a comparable benefit
under another plan or from the Company’s general assets.

6. Termination Following a Change of Control.

This Section 6 shall apply (instead of Section 5) during the period commencing upon a Change of
Control and continuing until the second anniversary thereof.

(a) Early Termination of the Employment Period. Notwithstanding Section 1(b) hereof,
the Employment Period shall end upon the earliest to occur of (i) a Termination For Cause, (ii)
a Termination Without Cause, (iii) a Voluntary Termination, (iv) a Termination For Good Reason,
(v) a Termination Due to Retirement, (vi) a Termination Due to Disability, or (vii) a
Termination Due to Death.

(b) Notice of Termination. Communication of termination under this Section 6 shall be
made to the other party by Notice of Termination in the case of (i) a Termination For Cause,
(ii) a Termination Without Cause, (iii) a Voluntary Termination, or (iv) a Termination For Good
Reason.

(c) Benefits Payable Upon Termination; Rules for Determining Reason for Termination.

	 	(i)	 	Benefits Payable Upon Termination.

(A) Following the end of the Employment Period, Executive (or, in the event of
his/her death, his/her surviving spouse, if any, or if none, his/her estate)
shall be paid the type or types of compensation determined to be payable in
accordance with the following table, such payment to be made in the form
specified in such table and at the time established pursuant to Section 7
hereof. Capitalized terms used in such table (and otherwise in this Section 6)
that are defined in Section 5, and not specifically defined in Section 6(d)
hereof, shall have the meanings ascribed thereto under Section 5. Where such a
capitalized term is defined solely in Section 6(d), or in both Section 5 and
Section 6(d), such term shall have the meaning ascribed to it in Section 6(d).

(B) The Company’s obligation to make the payments provided for in
this Section 6 and otherwise to perform its obligations under this Section 6
shall not be affected by any set-off, counterclaim, recoupment, defense or
other claim, right or action which the Company may have against Executive or
others. In no event shall Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to Executive
under any of the provisions of this Section 6 and such amounts shall not be
reduced whether or not Executive obtains other employment.

(ii) Rules for Determining Reason for Termination.

(A) No Termination Without Cause or Termination For Good Reason shall be
treated as a Termination Due to Retirement or a Termination Due to Disability
for purposes of any Pro Rata Target Bonus, Severance Payment, Equity Awards or
Vested Benefits Enhancement under this Section 6, notwithstanding the fact
that, either on, before or after the Date of Termination with respect thereto,
(I) Executive was eligible for Retirement as defined in the Savings Plan,
(II) Executive requested to be treated as a retiree for purposes of the
Savings Plan or any other plan or program of the Company or its affiliates, or
(III) Executive or the Company could have terminated Executive’s employment in
a Termination Due to Disability hereunder.

(B) No Termination Due to Retirement shall be treated as a Voluntary

Termination for purposes of this Section 6.

(C) Notwithstanding any provision in this Agreement to the contrary, in the
event of a Change of Control as described in clause (iii) or clause (iv) of
the definition of the term Change of Control in Section 6(d) of this
Agreement, if the employment of Executive involuntarily terminates on or after
the date of a shareholder approval described in either of such clauses but
before the date of a consummation described in either of such clauses, the
date of termination of Executive’s employment shall be deemed for purposes of
this Agreement to be the day following the date of the applicable
consummation.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	}
	BENEFITS PAYABLE CHANGE OF CONTROL
	 	 	 	 	 	 	 	 	 	 	 	 	Vested Benefits	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Enhancement (only	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	applicable in the	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	event that	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Executive’s	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	employment by the	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Company terminates	 	 
	 	 	 	 	Pro Rata Target	 	 	 	 	 	 	 	prior to July 1,	 	Welfare
	BENEFIT	 	Accrued Salary	 	Bonus	 	Severance Payment	 	Equity Awards	 	Vested Benefits	 	2009)	 	Benefits Continuation
	FORM OF PAYMENT

	 	Lump Sum
	 	Lump Sum
	 	Lump Sum
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	Lump Sum
	 	Determined Under the

Applicable Plan
	Termination For

Cause

	 	Payable
	 	Not Payable
	 	Not Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	

Not Payable
	 	

Not Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Termination Without

Cause

	 	Payable
	 	Payable
	 	Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	

Payable
	 	

Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Voluntary

Termination

	 	Payable
	 	Not Payable
	 	Not Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	

Not Payable
	 	

Not Available
	Termination For

Good Reason

	 	Payable
	 	Payable
	 	Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	

Payable
	 	

Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Termination Due to

Retirement

	 	Payable
	 	Determined Under

the Applicable Plan
	 	Not Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	

Not Payable
	 	

Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Termination Due to

Disability

	 	Payable
	 	Payable
	 	Not Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable Plan
	 	

Not Payable
	 	

Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Termination Due to

Death

	 	Payable
	 	Payable
	 	Not Payable
	 	Determined Under

the Applicable Plan
	 	Determined Under

the Applicable

Plan
	 	

Not Payable
	 	

Not Available
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

(d) Definitions.

“Beneficial Owner” means any Person who, directly or indirectly, has the right to vote or
dispose of or has “beneficial ownership” (within the meaning of Rule 13d-3 under the Securities
and Exchange Act of 1934, as amended (the “Act”)) of any securities of a company, including any
such right pursuant to any agreement, arrangement or understanding (whether or not in writing),
provided that: (i) a Person shall not be deemed the Beneficial Owner of any security as
a result of an agreement, arrangement or understanding to vote such security (A) arising solely
from a revocable proxy or consent given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the Exchange Act and the applicable rules and
regulations thereunder, or (B) made in connection with, or to otherwise participate in, a proxy
or consent solicitation made, or to be made, pursuant to, and in accordance with, the
applicable provisions of the Exchange Act and the applicable rules and regulations thereunder,
in either case described in clause (A) or (B) above, whether or not such agreement, arrangement
or understanding is also then reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report); and (ii) a Person engaged in business as an
underwriter of securities shall not be deemed to be the Beneficial Owner of any security
acquired through such Person’s participation in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such acquisition.

“Change of Control” means:

(i) a report on Schedule 13D shall be filed with the Securities and Exchange Commission
pursuant to Section 13(d) of the Act disclosing that any Person, other than the Company
or a subsidiary of the Company or any employee benefit plan sponsored by the Company or
a subsidiary of the Company is the Beneficial Owner of twenty percent or more of the
outstanding stock of the Company entitled to vote in the election of directors of the
Company;

(ii) any Person, other than the Company or a subsidiary of the Company or any employee
benefit plan sponsored by the Company or a subsidiary of the Company shall purchase
            shares pursuant to a tender offer or exchange offer to acquire any stock of the Company
(or securities convertible into stock) entitled to vote in the election of directors of
the Company for cash, securities or any other consideration, provided that after
consummation of the offer, the Person in question is the Beneficial Owner of fifteen
percent or more of the outstanding stock of the Company entitled to vote in the
election of directors of the Company (calculated as provided in paragraph (d) of Rule
13d-3 under the Act in the case of rights to acquire stock);

(iii) any merger, consolidation, recapitalization or reorganization of the Company
approved by the stockholders of the Company shall be consummated, other than any such
transaction immediately following which the persons who were the Beneficial Owners of
the outstanding securities of the Company entitled to vote in the election of directors
of the Company immediately prior to such transaction are the Beneficial Owners of at
least 55% of the total voting power represented by the securities of the entity
surviving such transaction entitled to vote in the election of directors of such entity
(or the ultimate parent of such entity) in substantially the same relative proportions
as their ownership of the securities of the Company entitled to vote in the election of
directors of the Company immediately prior to such transaction; provided that, such
continuity of ownership (and preservation of relative voting power) shall be deemed to
be satisfied if the failure to meet such threshold (or to preserve such relative voting
power) is due solely to the acquisition of voting securities by an employee benefit
plan of the Company, such surviving entity or any subsidiary of such surviving entity:

(iv) any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company approved by
the stockholders of the Company shall be consummated; or

(v) within any 24 month period, the persons who were directors of the Company
immediately before the beginning of such period (the “Incumbent Directors”) shall cease
(for any reason other than death) to constitute at least a majority of the Board or the
board of directors of any successor to the Company, provided that any director who was
not a director at the beginning of such period shall be deemed to be an Incumbent
Director if such director (A) was elected to the Board by, or on the recommendation of
or with the approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this clause (v), and (B)
was not designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (iii) or (iv) of this definition of the term
Change of Control in Section 6(d) of this Agreement.

“Date of Termination” means (i) in the case of a termination of the Employment Period for which
a Notice of Termination is required, the date of receipt of such Notice of Termination or, if
later, the date specified therein, as the case may be, or (ii) in all other cases, the actual
date on which Executive’s employment terminates during the Employment Period.

“Not Payable” means that a particular benefit shall not be paid or otherwise provided to
Executive.

“Notice of Termination” means (i) in the case of a Termination For Cause, a written notice
given by the Company to Executive, within 30 calendar days of the Company’s having actual
knowledge of the events giving rise to such termination, (ii) in the case of a Termination
Without Cause, a written notice given by the Company to Executive at least 30 calendar days
before the effective date of such Termination Without Cause, (iii) in the case of a Voluntary
Termination, a written notice given by Executive to the Company at least 90 calendar days
before the effective date of such termination, and (iv) in the case of a Termination For Good
Reason, a written notice given by Executive to the Company within 180 days of Executive’s
having actual knowledge of the events giving rise to such Termination For Good Reason, and
which (A) indicates the specific termination provision in this Agreement relied upon, (B) sets
forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated, and (C) if the
termination date is other than the date of receipt of such notice, specifies the termination
date of this Agreement (which date shall be not more than 15 days after the giving of such
notice). The failure by Executive to set forth in such Notice of Termination any fact or
circumstance that contributes to a showing of Good Reason shall not waive any right of
Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing
his/her rights hereunder.

“Payable” means that a particular benefit shall be paid to Executive in the amount, at the
time, and in the form specified herein.

“Person” has the meaning ascribed to such term in Section 3(a)(9) of the Act, as supplemented
by Section 13(d)(3) of the Act; provided, however, that Person shall not include (i) the
Company, any subsidiary of the Company or any other Person controlled by the Company, (ii) any
trustee or other fiduciary holding securities under any employee benefit plan of the Company or
of any subsidiary of the Company, or (iii) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their ownership of
securities of the Company.

“Severance Payment” means a cash amount equal to three times the sum of (i) Executive’s Base
Salary at the rate in effect as of the date on which the Employment Period terminates, and (ii)
Executive’s Target Bonus for such year.

“Termination For Cause” means the Company’s termination of Executive’s employment due to (i)
Executive’s conviction of a felony; (ii) an act or acts of extreme dishonesty or gross
misconduct on Executive’s part which result or are intended to result in material damage to the
Company’s business or reputation; or (iii) repeated material violations by Executive of his/her
obligations under Section 2 of this Agreement, which violations are demonstrably willful and
deliberate on Executive’s part and which result in material damage to the Company’s business or
reputation. Executive shall be permitted to respond and defend himself/herself before the
Board within 30 days after delivery to Executive of written notification of any proposed
Termination for Cause which specifies in detail the reasons for such termination. If the
majority of the members of the Board (excluding Executive) do not confirm that the Company had
grounds for a Termination For Cause within 30 days after Executive has had his/her hearing
before the Board, Executive shall have the option of treating his/her employment as not having
terminated or as having been terminated pursuant to a Termination Without Cause.

“Termination For Good Reason” means the occurrence of any of the following after the occurrence
of a Change of Control:

(i) (A) the assignment to Executive of any duties inconsistent in any material adverse
respect with Executive’s position, duties, authority or responsibilities as
contemplated by Section 2 of this Agreement, or (B) any other material adverse change
in such position, including titles, authority or responsibilities;

(ii) any failure by the Company to comply with any of the provisions of Sections 3 and
4 of this Agreement at a level of least equal to that in effect immediately preceding
the Change of Control, other than an insubstantial or inadvertent failure remedied by
the Company promptly after receipt of notice thereof given by Executive;

(iii) the Company’s requiring Executive to be based at any office or location more than
25 miles from the location at which he/she performed his/her services specified under
Section 2 hereof immediately prior to the Change of Control, except for travel
reasonably required in the performance of Executive’s responsibilities;

(iv) any failure by the Company to obtain the assumption and agreement to perform this
Agreement by a successor as contemplated by Section 10(d) hereof; or

(v) any attempt by the Company to terminate the Executive’s employment in a Termination
For Cause that is determined by the Board pursuant to Section 5(c) hereof, or in a
proceeding pursuant to Section 9 or Section 10 hereof, not to constitute a Termination
For Cause.

Notwithstanding the foregoing, a termination of Executive’s employment shall not be treated as
a Termination For Good Reason (I) if Executive shall have consented in writing to the
occurrence of the event giving rise to the claim of Termination For

Good Reason, or (II) if Executive shall have delivered a Notice of Termination to the Company,
and the facts and circumstances specified therein as providing a basis for such Termination For
Good Reason are cured by the Company within 10 days of its receipt of such Notice of
Termination.

“Vested Benefits Enhancement” means (i) a cash amount equal to the present value, calculated
using a discount rate equal to the then prevailing applicable Federal rate as determined under
Section 1274(d) of the Internal Revenue Code of 1986, as amended (the “Code”), of the
additional retirement benefits that would have been payable or available to Executive under any
ERPs, based on (A) the age and service Executive would have attained or completed had Executive
continued in the Company’s employ until the third anniversary of the occurrence of the Change
of Control, and (B) where compensation is a relevant factor, his/her pensionable compensation
as of the Date of Termination, such compensation to include, on the same terms as apply to
other executives, any Severance Payment made to Executive, (ii) solely for purposes of vesting
in any benefits under any ESPs, Executive shall be treated as having continued in the Company’s
employ until the third anniversary of the occurrence of such Change of Control, and (iii)
solely for purposes of determining eligibility for retiree medical benefits under any
retirement plan or any retiree welfare benefit plan, policy or program of the Company or its
affiliates, and any ERPs related thereto, Executive shall be treated as having continued in the
Company’s employ until the third anniversary of the occurrence of such Change of Control and to
have retired on the last day of such period. A Vested Benefits Enhancement shall only be
applicable in the event that Executive’s employment by the Company terminates prior to July 1,
2009.

“Voluntary Termination” means a termination of employment by Executive other than a Termination
For Good Reason, a Termination Due to Disability by Executive, or a Termination Due to Death.

“Welfare Benefits Continuation” shall have the same meaning as that described in Section 5
hereof, except that the entitlement of Executive and/or his/her dependents to participation in
the Welfare Benefit Plans shall continue until the third anniversary of the Date of
Termination.

(e) Out-Placement Services. If the Employment Period terminates because of a Termination
Without Cause or a Termination For Good Reason, Executive shall be entitled to out-placement
services, provided by the Company or its designee at the Company’s expense, for 12 months following
the Date of Termination, or such lesser period as the Executive may require such services.

(f) Certain Further Payments by Company.

(i) Tax Reimbursement Payment. In the event that any amount or benefit paid or
distributed to Executive pursuant to this Agreement, taken together with any amounts or
benefits otherwise paid or distributed to Executive by the Company or any affiliate
(collectively, the “Covered Payments”), are or become subject to the tax (the “Excise Tax”)
imposed under Section 4999 of the Internal Revenue Code of 1986, as amended, or any similar tax
that may hereafter be imposed, the Company shall pay to the Executive at the time specified in
this Section an additional amount (the “Tax Reimbursement Payment”) such that the net amount
retained by the Executive with respect to such Covered Payments, after deduction of any Excise
Tax on the Covered Payments and any Federal, state and local income tax and other tax on the
Tax Reimbursement Payment provided for by this Section, but before deduction for any Federal,
state or local income or employment tax withholding on such Covered Payments, shall be equal to
the amount of the Covered Payments.

(ii) Applicable Rules. For purposes of determining whether any of the Covered
Payments will be subject to the Excise Tax and the amount of such Excise Tax,

(A) such Covered Payments will be treated as “parachute payments” within the meaning
of Section 280G of the Code, and all “parachute payments” in excess of the “base
amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as subject
to the Excise Tax, unless, and except to the extent that, in the good faith judgment of
the Company’s independent certified public accountants appointed prior to the Effective
Date or tax counsel selected by such accountants (the “Accountants”), the Company has a
reasonable basis to conclude that such Covered Payments (in whole or in part) either do
not constitute “parachute payments” or represent reasonable compensation for personal
services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in
excess of the “base amount,” or such “parachute payments” are otherwise not subject to
such Excise Tax, and

(B) the value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Accountants in accordance with the principles of Section 280G of the
Code.

(iii) Additional Rules. For purposes of determining the amount of the Tax
Reimbursement Payment, the Executive shall be deemed to pay: (A) Federal income taxes at the
highest applicable marginal rate of Federal income taxation for the calendar year in which the
Tax Reimbursement Payment is to be made, and (B) any applicable state and local income and
other taxes at the highest applicable marginal rate of taxation for the calendar year in which
the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal incomes
taxes which could be obtained from the deduction of such state or local taxes if paid in such
year.

(iv) Repayment or Additional Payment in Certain Circumstances.

(A) Repayment. In the event that the Excise Tax is subsequently determined by
the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue
Service to be less than the amount taken into account hereunder in calculating the Tax
Reimbursement Payment made, Executive shall repay to the Company, at the time that the
amount of such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such lesser Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment.
Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement
Payment to be repaid to the Company has been paid to any Federal, state or local tax
authority, repayment thereof shall not be required until actual refund or credit of
such portion has been made to Executive by the applicable tax authority. Executive and
the Company shall mutually agree upon the course of action to be pursued (and the
method of allocating the expenses thereof) if Executive’s good faith claim for refund
or credit is denied.

(B) Additional Tax Reimbursement Payment. In the event that the Excise Tax is
later determined by the Accountants or pursuant to any proceeding or negotiations with
the Internal Revenue Service to exceed the amount taken into account hereunder at the
time the Tax Reimbursement Payment is made (including, but not limited to, by reason of
any payment the existence or amount of which cannot be determined at the time of the
Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement
Payment in respect of such excess (plus any interest or penalty payable with respect to
such excess) at the time that the amount of such excess is finally determined.

(v) Timing for Tax Reimbursement Payment. The Tax Reimbursement Payment (or portion
thereof) provided for in this Section 6 shall be paid to Executive not later than 10 business
days following the payment of the Covered Payments; provided, however, that if the amount of
such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before
the date on which payment is due, the Company shall pay to Executive by such date an amount
estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement
Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined, but in no event later than 45 calendar days after payment of the related Covered
Payment. To the extent that the amount of the estimated Tax Reimbursement Payment exceeds the
amount subsequently determined to have been due, Executive shall repay such excess to the
Company on the fifth business day after written demand by the Company for payment.

7. Timing of Payments.

Accrued Salary shall be paid no later than 10 days following the termination of the Employment
Period. Severance Payments and Vested Benefits Enhancements, together with interest thereon based
on prevailing short term rates for the period between the date of payment and the termination of
the Employment Period, shall be paid during the 10 day period following the six month anniversary
of the termination of the Employment Period, unless earlier payment is permitted in accordance with
guidance provided under Section 409A of the Code. Pro-Rata Target Bonus shall be paid as follows:
(a) if the Employment Period terminates in the first, second or third calendar quarter of any
particular calendar year, then the Pro-Rata Target Bonus shall be paid no later than 10 days
following the termination of the Employment Period; or (b) if the Employment Period terminates in
the fourth calendar quarter of any particular calendar year, then the Pro-Rata Target Bonus shall
be paid no later than the same time as similar awards are paid to other executives participating in
the plans or programs under which the awards are paid, but in no event later than March 31 of the
calendar year following the end of such fourth calendar quarter. Vested Benefits and Equity Awards
shall be paid no later than the time for payment Determined Under the Applicable Plan except as
otherwise expressly superseded or modified by this Agreement. Tax Reimbursement Payments shall be
paid at the time specified in Section 6 hereof. Notwithstanding the foregoing, solely for purposes
of amounts payable pursuant to Section 5 hereof, if any amount payable to Executive pursuant to
Section 5 would be nondeductible by the Company under Section 162(m) of the Code if paid in the
year of Executive’s termination, the Company shall have the option of paying such nondeductible
amount, with interest at the one-year treasury bill rate as in effect on the date of such
termination as reported in the Wall Street Journal, on the first day of the second calendar quarter
in the year following such termination.

8. Full Discharge of Company Obligations.

Except as expressly provided in the last sentence of this Section 8, the amounts payable to
Executive pursuant to Section 5 following termination of his/her employment (including amounts
payable with respect to Vested Benefits) shall be in full and complete satisfaction of Executive’s
rights under Section 5 of this Agreement and any other claims he/she may have in respect of his/her
employment by the Company or any of its affiliates. Such amounts shall constitute liquidated
damages with respect to any and all such rights and claims and, upon Executive’s receipt of such
amounts, the Company shall be released and discharged from any and all liability to Executive in
connection with Section 5 of this Agreement or otherwise in connection with Executive’s employment
with the Company and its affiliates. Nothing in this Section 8 shall be construed to release the
Company from its obligation to indemnify Executive as provided in Section 4(e) hereof.

9. Noncompetition, Confidentiality and Other Covenants.

By and in consideration of the compensation and benefits to be provided by the Company hereunder,
including the severance arrangements set forth herein, Executive agrees to the following:

(a) Noncompetition. During the Employment Period and until the last day of the one
year period following any Voluntary Termination of the Employment Period by Executive pursuant
to Section 5 or Section 6 hereof, (the “Restriction Period”), Executive shall not become
associated with any entity, whether as a principal, partner, employee, agent, consultant,
shareholder (other than as a holder, or a member of a group which is a holder, of not in excess
of 1% of the outstanding voting shares of any publicly traded company) or in any other
relationship or capacity, paid or unpaid, that is actively engaged in any geographic area in
any business which is in competition with the business of the Company. The Company shall, in
its sole discretion, have the right to enforce or waive the terms of this provision in
connection with the Restriction Period. If the Company exercises its right to enforce this
provision for the Restriction Period, the Company, no later than 60 days following the
Company’s receipt of the Executive’s written notice of Voluntary Termination, will provide
Executive with written notice of its intent to enforce, and will pay Executive one year of
Executive’s then current Base Salary and one year of Executive’s then current Target Bonus as
compensation for the Restriction Period. Such amount shall be paid to Executive in equal
monthly installments during the Restriction Period. Executive agrees that the terms of the
Restriction Period are reasonable and that this compensation is above and beyond any amounts
necessary to support the terms of the Restriction Period as set forth herein.

(b) Confidentiality. Without the prior written consent of the Company, except to the
extent required by an order of a court having competent jurisdiction or under subpoena from an
appropriate government agency, Executive shall not disclose to any third person, or permit the
use of for the benefit of any person or any entity other than The Company or its affiliates,
any trade secrets, customer lists, information regarding product development, marketing plans,
sales plans, management organization information (including data and other information relating
to members of the Board and management), operating policies or manuals, business plans,
financial records, or other financial, organizational, commercial, business, sales, marketing,
technical, product or employee information relating to the Company or its affiliates or
information designated as confidential, proprietary, and/or a trade secret, or any other
information relating to the Company or its affiliates that Executive knows from the
circumstances, in good faith and good conscience, should be treated as confidential, or any
information that the Company or its affiliates may receive belonging to customers, agents or
others who do business with the Company or its affiliates, except to the extent that any such
information previously has been disclosed to the public by the Company or is in the public
domain (other than by reason of Executive’s violation of this Section 9(b)).

(c) Non-Solicitation of Employees. During the Employment Period and until the last day
of the one year period following any Voluntary Termination of the Employment Period by
Executive pursuant to Section 5 or Section 6 hereof, Executive shall not directly or indirectly
solicit, encourage or induce any employee of the Company or its affiliates to terminate
employment with such entity, and shall not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ or offer employment to any person who
is or was employed by the Company or an affiliate thereof unless such person shall have ceased
to be employed by such entity for a period of at least six months.

(d) Company Property. Except as expressly provided herein, promptly following any
termination of the Employment Period, Executive shall return to the Company all property of the
Company, and all copies thereof in Executive’s possession or under his/her control.

(e) Injunctive Relief and Other Remedies with Respect to Covenants. Executive
acknowledges and agrees that the covenants and obligations of Executive with respect to
noncompetition, confidentiality, nonsolicitation, and Company property relate to special,
unique and extraordinary matters and that a violation of any of the terms of such covenants and
obligations will cause the Company irreparable injury for which adequate remedies are not
available at law. Therefore, Executive agrees that the Company (i) shall be entitled to an
injunction, restraining order or such other equitable relief (without the requirement to post
bond) restraining Executive from committing any violation of the covenants and obligations
contained in this Section 9, and (ii) shall have no further obligation to pay unearned
compensation, incentive awards, unvested awards, or bonus payments to Executive hereunder
following any material violation of the covenants and obligations contained in this Section 9.
These remedies are cumulative and are in addition to any other rights and remedies the Company
may have at law or in equity. In connection with the foregoing provisions of this Section 9,
Executive represents that his/her economic means and circumstances are such that such
provisions will not prevent him/her from providing for himself/herself and his/her family on a
basis satisfactory to him/her. Notwithstanding the foregoing, in no event shall an asserted
violation of the provisions of this Section constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement following a Change of Control.

10. Miscellaneous.

(a) Survival. All of the provisions of Sections 5 (relating to termination of the
Employment Period prior to a Change of Control), 6 (relating to termination of the Employment
Period following a Change of Control, 9 (relating to noncompetition, confidentiality,
nonsolicitation and Company property), 10(b) (relating to arbitration), 10(c) (relating to
legal fees) and 10(n) (relating to governing law) of this Agreement shall survive the
termination of this Agreement.

(b) Arbitration. Except as provided in Section 9, any dispute or controversy arising
under or in connection with this Agreement shall be resolved by binding arbitration. Such
arbitration shall be held in the city of Hartford, Connecticut and except to the extent
inconsistent with this Agreement, shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in effect at the time of the
arbitration, and otherwise in accordance with the principles that would be applied by a court
of law or equity. The arbitrator shall be acceptable to both the Company and Executive. If
the parties cannot agree on an acceptable arbitrator, the dispute or controversy shall be heard
by a panel of three arbitrators; one appointed by each of the parties and the third appointed
by the other two arbitrators. The Company and Executive further agree that they will abide by
and perform any award or awards rendered by the arbitrators and that a judgment may be entered
on any award or awards rendered by any state or federal court having jurisdiction over the
Company or Executive or any of their respective property.

(c) Legal Fees and Expenses. In any contest (whether initiated by Executive or by the
Company) as to the validity, enforceability or interpretation of any provision of this
Agreement, the Company shall pay Executive’s legal expenses (or cause such expenses to be paid)
including, without limitation, his/her reasonable attorney’s fees, on a quarterly basis, upon
presentation of proof of such expenses in a form acceptable to the Company, provided
that Executive shall reimburse the Company for such amounts, plus simple interest thereon
at the 90-day United States Treasury Bill rate as in effect from time to time, compounded
annually, if Executive shall not prevail, in whole or in part, as to any material issue as to
the validity, enforceability or interpretation of any provision of this Agreement.

(d) Successors; Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. The Company shall require any successor to all or
substantially all of the business and/or assets of the Company, whether direct or indirect, by
purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form
and substance satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be required to perform
the Agreement if no such succession had taken place. This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be assignable by
Executive otherwise than by will or the law of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by Executive’s legal representatives.

(e) Assignment. Except as provided in Section 10(d), neither this Agreement nor any of
the rights or obligations hereunder shall be assigned or delegated by any party hereto without
the prior written consent of the other party.

(f) Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto with respect to the matters referred to herein. This Agreement supersedes and
replaces any prior employment or severance agreement or arrangement between the Company and
Executive. No other agreement relating to the terms of Executive’s employment by the Company,
oral or otherwise, shall be binding between the parties unless it is in writing and signed by
the party against whom enforcement is sought. There are no promises, representations,
inducements or statements between the parties other than those that are expressly contained
herein. Executive acknowledges that he/she is entering into this Agreement of his/her own free
will and accord, and with no duress, and that he/she has read this Agreement and that he/she
understands it and its legal consequences.

(g) Severability; Reformation. In the event that one or more of the provisions of
this Agreement shall become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall not be affected
thereby. In the event of a determination that any of the provisions of Section 9(a), Section
9(b) or Section 9(c) are not enforceable in accordance with their terms, Executive and the
Company agree that such Section shall be reformed to make such Section enforceable in a manner
that provides the Company the maximum rights permitted at law.

(h) Waiver. Waiver by any party hereto of any breach or default by the other party of
any of the terms of this Agreement shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or default waived. No waiver of any
provision of this Agreement shall be implied from any course of dealing between the parties
hereto or from any failure by either party hereto to assert its or his/her rights hereunder on
any occasion or series of occasions.

(i) Notices. Any notice required or desired to be delivered under this Agreement
shall be in writing and shall be delivered personally, by courier service, by registered mail,
return receipt requested, or by telecopy and shall be effective upon actual receipt by the
party to which such notice shall be directed, and shall be addressed as follows (or to such
other address as the party entitled to notice shall hereafter designate in accordance with the
terms hereof):

	 	 	 	 	 
	If to the Company:
	 	The Hartford Financial Services Group, Inc.
	 
	 	Law Department, HO-1-09
	 
	 	Hartford Plaza
	 
	 	Hartford, CT  06115
	 
	 	Attention:  Corporate Secretary
	with a copy to:
	 	Debevoise & Plimpton

875 Third Avenue

New York, NY 10022

Attn: Lawrence K. Cagney, Esq.

If to Executive: The home address of Executive shown on the records of the Company

(j) Amendments. This Agreement may not be altered, modified or amended except by a
written instrument signed by each of the parties hereto, provided, however, that the Company
may unilaterally amend this Agreement at any time as may be necessary, in its reasonable
judgment, to comply with law, to avoid payments to the Executive under the Agreement being
subject to an additional tax under Section 409A of the Code or to avoid compensation paid prior
to a Change of Control being nondeductible to the Company under Revenue Ruling 2008-13. This
Agreement is intended to comply with Section 409A of the Code, and no action taken by the
Company shall be construed in a manner that would result in the imposition of an additional tax
on Executive under Section 409A of the Code.

(k) Headings. Headings to provisions of this Agreement are for the convenience of the
parties only and are not intended to be part of or to affect the meaning or interpretation
hereof.

(l) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the same instrument.

(m) Withholding. Any payments provided for herein shall be reduced by any amounts
required to be withheld by the Company from time to time under applicable Federal, State or
local income or employment tax laws or similar statutes or other provisions of law then in
effect.

(n) Governing Law. This Agreement shall be governed by the laws of the State of
Connecticut, without reference to principles of conflicts or choice of law under which the law
of any other jurisdiction would apply.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and Executive has hereunto set his/her hand, as of the day and year first above
written.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

	 	 	 
	/s/ Eileen G. Whelley

	 

	By: Eileen G. Whelley

	Title:

	 	Executive Vice President,

Human Resources

WITNESSED:

 /s/ Kathryn M. Cheon

EXECUTIVE:

 /s/ John C. Walters

John C. Walters

WITNESSED:

/s/ Diane King

3

AMENDMENT TO EMPLOYMENT AGREEMENT

Whereas John C. Walters (“Executive”) and The Hartford Financial Services Group, Inc. (the
“Company”) are parties to an Employment Agreement effective as of May 1, 2008 (the “Agreement”),
and

Whereas Executive and Company desire to amend the Agreement in a number of respects,

Now, therefore, in consideration of the mutual covenants herein contained and Executive’s continued
participation in certain incentive compensation plans pursuant to which the level, if any, of
participation is determined by the administrators of such plans, the Company and Executive hereby
agree that the Agreement is amended as follows, effective as of November 14, 2008:

I. Change of Control Definition

Clause (i) of the “Change of Control” definition of Section 6(d) is amended by substituting “forty
percent” for “twenty percent” where appearing therein.

II. Compliance with Tax Code Sections 162(m) and 409A

The definition of “Payable” in Section 5(d), and Section 7, Timing of Payments, are amended
to read as set forth on Exhibit A hereto.

All other provisions of the Agreement shall continue in full force and effect. Executive and the
Company agree to continue to be bound by the Agreement, as herein amended. Executive acknowledges
that he has had a reasonable time to review this amendment to the Agreement, and that he is
knowingly and voluntarily entering into this amendment as of the date set forth above.

	 	 	 
	John C. Walters	 	The Hartford Financial Services Group, Inc.
	/s/ John C. Walters

	 	/s/ Eileen G. Whelley
	 

	 	 
	
 
	 	By: Eileen G. Whelley

Title: Executive Vice President, Human

Resources
	/s/ Diane King

	 	/s/ Kathryn M. Cheon
	 

	 	 
	Witness

	 	Witness

4

Exhibit A – Revised Provisions to Comply with

 Tax Code Sections 162(m) and 409A

(provisions containing revised wording are underlined)

	I.	 	Revised Definition of “Payable” in Section 5(d):

"Payable” means (i) with respect to benefits other than those described in clause (ii) of this
paragraph, such benefits shall be paid to Executive in the amount, at the time, and in the form
specified herein, and (ii) with respect to benefits described in this clause (ii), the following
shall apply solely in the event of a Termination Without Cause, notwithstanding anything in the
applicable plan or program to the contrary: (A) with respect to any outstanding stock options
not yet expired as of the date of termination of the Employment Period, Executive shall be
treated as though he/she remained in the employ of the Company for the two year period following
such date, and except to the extent that any such options first expire during such period under
the applicable plan or program, (I) any such options that would have become vested over such two
year period solely by reason of Executive remaining in the employ of the Company during such
period shall become immediately vested and nonforfeitable, (II) with respect to any options that
by their terms would vest if the stock of the Company or an affiliate were to reach a specified
market price, such options shall become vested and nonforfeitable if and when such stock reaches
such price during such two year period, and (III) Executive shall have an additional two years
beyond the time to exercise such options permitted under the applicable plan or program, but
not beyond the originally stated expiration date of any such option (e.g., if a termination
occurs in the ninth year following the grant of a ten year term option, Executive shall have only
until the tenth anniversary of the date of grant to exercise such option), (B) with respect
to any restricted stock subject to restrictions that have not yet lapsed as of the date of
termination of the Employment Period, such restrictions shall be deemed to have lapsed and such
restricted stock shall become immediately vested and nonforfeitable as of such date, and (C)
with respect to a Pro-Rata Target Bonus that relates to a calendar year beginning on or after
January 1, 2010, such Pro-Rata Target Bonus shall be paid to Executive in the amount, at the time
and in the form specified herein, provided that, if Executive would have been a “covered
employee” as defined in Section 162(m) of the Internal Revenue Code (the “Code”) for such
calendar year but for the termination of the Employment Period, such Pro-Rata Target Bonus shall
only be payable to Executive if, when and to the extent that the Compensation and Personnel
Committee of the Board certifies that the performance goals applicable to the Target Bonus, as
preestablished by such Committee in accordance with Section 162(m) of the Code, have been
attained .

	II.	 	Revised Section 7:

	7.	 	Timing of Payments.

Accrued Salary shall be paid no later than 10 days following the termination of the Employment
Period. Any Severance Payment and Vested Benefits Enhancement, together with interest thereon
based on prevailing short term rates for the period between the date of payment and the termination
of the Employment Period, shall be paid during the 10 day period following the six month
anniversary of the termination of the Employment Period. Except as provided in the definition of
“Payable” in Section 5(d), a Pro-Rata Target Bonus, which payment is attributable to
services performed by Executive during the calendar year in which the Performance Period
terminates, shall be paid as follows: (a) if the Employment Period terminates in the first,
second or third calendar quarter of any particular calendar year, then the Pro-Rata Target Bonus
shall be paid no later than 10 days following the termination of the Employment Period; or (b) if
the Employment Period terminates in the fourth calendar quarter of any particular calendar year,
then the Pro-Rata Target Bonus shall be paid no later than the same time as similar awards are paid
to other executives participating in the plans or programs under which the awards are paid, but in
no event later than March 15 of the calendar year following the end of such fourth calendar
quarter. Vested Benefits and Equity Awards shall be paid no later than the time for payment
Determined Under the Applicable Plan except as otherwise expressly superseded or modified by this
Agreement. Tax Reimbursement Payments shall be paid at the time specified in Section 6 hereof.

In applying the provisions of Sections 5 and 6, continued participation in the health insurance
benefit plans shall be in two parts: (i) the first part shall continue from the date of termination
to the end of the 18-month period during which Executive would have been eligible for continuation
coverage under Section 601 et. seq. of the Employee Retirement Income Security Act of 1974, as
amended, and (ii) the second part shall commence on the first day after the end of the period
described in subclause (i) and shall end on the last day of the applicable Welfare Benefits
Continuation period. Continued participation in Welfare Benefits Continuation provided under
Section 6 other than with respect to health benefits shall also be provided in two parts: (i) the
first part shall continue from the Date of Termination until the second anniversary of Executive’s
Date of Termination, and (ii) the second part shall commence on the day immediately following such
second anniversary and continuing until the end of the applicable Continuation period. To the
extent Welfare Benefits Continuation consists of reimbursement of expenses, such reimbursement
shall be paid within 60 days of the submission of reasonably satisfactory evidence of such
expenses, in accordance with the generally applicable requirements under the applicable
arrangement, but in no event later than the end of the calendar year following the calendar year in
which such expenses are incurred. Any amount of expenses eligible for reimbursement of welfare
benefits or in-kind benefits provided during any calendar year shall not affect the expenses
eligible for reimbursement or in-kind benefits to be provided in any other calendar year.

Notwithstanding anything else in this Agreement to the contrary, for purposes of Sections 5 and
6, Executive shall not be deemed to have had a termination of employment unless Executive shall
have also had a separation from service, as determined in accordance with any policies or practices
that the Company shall adopt in accordance with, or as otherwise determined pursuant to, Section
409A of the Code and the regulations and guidance promulgated thereunder.

5EXHIBIT 4

EXHIBIT 4.1

2004 EQUITY INCENTIVE PLAN

 

OF

 

DUSKA THERAPEUTICS, INC.

 

 

 

1. 

PURPOSES OF THE PLAN

 

The purposes of the 2004 Equity Incentive Plan (“Plan”) of DUSKA THERAPEUTICS, INC., a Nevada corporation (the “Company”), are to:

 

1.1  Encourage selected employees, directors, consultants and advisers to improve operations and increase the profitability of the Company;

 

1.2  Encourage selected employees, directors, consultants and advisers to accept or continue employment or association with the Company or its Affiliates; and

 

1.3  Increase the interest of selected employees, directors, consultants and advisers in the Company’s welfare through participation in the growth in value of the common stock of the Company, par value $.001 per share (the “Common Stock”).

 

2. 

TYPES OF AWARDS; ELIGIBLE PERSONS

 

2.1  The Administrator (as defined below) may, from time to time, take the following action, separately or in combination, under the Plan: (i) grant “incentive stock options” (“ISOs”) intended to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”); (ii) grant “non-qualified options” (“NQOs,” and together with ISOs, “Options”); (iii) grant or sell Common Stock subject to restrictions (“restricted stock”) and (iv) grant stock appreciation rights (in general, the right to receive the excess of the fair market value of Common Stock on the exercise date over its fair market value on the grant date (“SARs”)), either in tandem with Options or as separate and independent grants. Any such awards may be made to employees, including employees who are officers or directors, and to individuals described in Section 1 of this Plan who the Administrator believes have made or will make a contribution to the Company or any Affiliate (as defined below); provided, however, that only a person who is an employee of the Company or any Affiliate at the date of the grant of an Option is eligible to receive ISOs under the plan. The term “Affiliate” as used in this Plan means a parent or subsidiary corporation as defined in the applicable provisions (currently Sections 424(e) and (f), respectively) of the Code. The term “employee” includes an officer or director who is an employee of the Company. The term “consultant” includes persons employed by, or otherwise affiliated with, a consultant. The term “adviser” includes persons employed by, or otherwise affiliated with, an adviser.

 

2.2  Except as otherwise expressly set forth in this Plan, no right or benefit under this Plan shall be subject in any manner to anticipation, alienation, hypothecation, or charge, and any such attempted action shall be void. No right or benefit under this Plan shall in any manner be   liable for or subject to debts, contracts, liabilities, or torts of any option holder or any other person except as otherwise may be expressly required by applicable law.

 

3.

STOCK SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF GRANTS

 

Subject to the provisions of Sections 6.1.1 and 8.2 of this Plan, the total number of shares of Common Stock which may be offered, or issued as restricted stock or on the exercise of Options or SARs under the Plan shall not exceed six million five hundred thousand (6,500,000) shares of Common Stock. The shares subject to an Option or SAR granted under the Plan which expire, terminate or are cancelled unexercised shall become available again for grants under this Plan. If shares of restricted stock awarded under the Plan are forfeited to the Company or repurchased by the Company, the number of shares forfeited or repurchased shall again be available under the Plan. Where the exercise price of an Option is paid by means of the optionee’s surrender of previously owned shares of Common Stock or the Company’s withholding of shares otherwise issuable upon exercise of the Option as may be 

permitted herein, only the net number of shares issued and which remain outstanding in connection with such exercise shall be deemed “issued” and no longer available for issuance under this Plan.

 

 4.

ADMINISTRATION

 

4.1  This Plan shall be administered by the Board of Directors of the Company (the “Board”) or by a committee (the “Committee”) to which administration of this Plan, or of part of this Plan, is delegated by the Board (in either case, the “Administrator”). The Board shall appoint and remove members of the Committee in its discretion in accordance with applicable laws. At the Board’s discretion, the Committee may be comprised solely of “non-employee directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or “outside directors” within the meaning of Section 162(m) of the Code. The Administrator may delegate non-discretionary administrative duties to such employees of the Company as the Administrator deems proper and the Board, in its absolute discretion, may at any time and from time to time exercise any and all rights and duties of the Administrator under this Plan.

 

4.2  Subject to the other provisions of this Plan, the Administrator shall have the authority, in its discretion: (i) to grant Options and SARs and grant or sell restricted stock; (ii) to determine the fair market value of the Common Stock subject to Options or other awards; (iii) to determine the exercise price of Options granted, the economic terms of SARs granted, or the offering price of restricted stock; (iv) to determine the persons to whom, and the time or times at which, Options or SARs shall be granted or restricted stock granted or sold, and the number of shares subject to each Option or SAR or the number of shares of restricted stock granted or sold; (v) to construe and interpret the terms and provisions of this Plan, of any applicable agreement and all Options and SARs granted under this Plan, and of any restricted stock award under this Plan; (vi) to prescribe, amend, and rescind rules and regulations relating to this Plan; (vii) to determine the terms and provisions of each Option and SAR granted and award of restricted stock (which need not be identical), including but not limited to, the time or times at which Options and SARs shall be exercisable or the time at which the restrictions on restricted stock shall lapse; (viii) with the consent of the grantee, to rescind any award or exercise of an Option or SAR and to modify or amend the terms of any Option, SAR or restricted stock; (ix) to reduce the exercise price of any Option, the base value from which appreciation is to be determined with respect to an SAR or the purchase price of restricted stock; (x) to accelerate or defer (with the consent of the grantee) the exercise date of any Option or SAR or the date on which the restrictions on restricted stock lapse; (xi) to issue shares of restricted stock to an optionee in connection with the accelerated exercise of an Option by such optionee; (xii) to authorize any person to execute on behalf of the Company any instrument evidencing the grant of an Option. SAR or award of restricted stock; (xiii) to determine the duration and purposes of leaves of absence which may be granted to participants without constituting a termination of their employment for the purposes of the Plan; and (xiv) to make all other determinations deemed necessary or advisable for the administration of this Plan, any applicable agreement, Option, SAR or award of restricted stock.

 

4.3  All questions of interpretation, implementation, and application of this Plan or any agreement or Option, SAR or award of restricted stock shall be determined by the Administrator, which determination shall be final and binding on all persons.

 

5. 

GRANTING OF OPTIONS AND SARS; AGREEMENTS

 

5.1  No Options or SARs shall be granted under this Plan after ten (10) years from the date of adoption of this Plan by the Board.

 

5.2  Each Option and SAR shall be evidenced by a written agreement, in form satisfactory to the Administrator, executed by the Company and the person to whom such grant is made. In the event of a conflict between the terms or conditions of an agreement and the terms and conditions of this Plan, the terms and conditions of this Plan shall govern.

 

5.3  Each agreement shall specify whether the Option it evidences is an NQO or an ISO, provided, however, all Options granted under this Plan to non-employee directors, consultants and advisers of the Company are intended to be NQOs.

  

5.4  Subject to Section 6.3.3 with respect to ISOs, the Administrator may approve the grant of Options or SARs under this Plan to persons who are expected to become employees, directors, consultants or advisers of the Company, but are not employees, directors, consultants or advisers at the date of approval.

 

6. 

TERMS AND CONDITIONS OF OPTIONS AND SARS

 

Each Option and SAR granted under this Plan shall be subject to the terms and conditions set forth in Section 6.1. NQOs and SARs shall also be subject to the terms and conditions set forth in Section 6.2, but not those set forth in Section 6.3. ISOs shall also be subject to the terms and conditions set forth in Section 6.3, but not those set forth in Section 6.2. SARs shall be subject to the terms and conditions of Section 6.4.

 

6.1  Terms and Conditions to Which All Options and SARs Are Subject. All Options and SARs granted under this Plan shall be subject to the following terms and conditions:

 

6.1.1  Changes in Capital Structure. Subject to Section 6.1.2, if the stock of the Company is changed by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification, or if the Company effects a spin-off of the Company’s subsidiary, appropriate adjustments shall be made by the Administrator, in its sole discretion, in (a) the number and class of shares of stock subject to this Plan and each Option and SAR outstanding under this Plan, and (b) the exercise price of each outstanding Option; provided, that the Company shall not be required to issue fractional shares as a result of any such adjustments. Any adjustment, however, in an outstanding Option shall be made without change in the total price applicable to the unexercised portion of the Option but with a corresponding adjustment in the price for each share covered by the unexercised portion of the Option. Adjustments under this Section 6.1.1 shall be made by the Administrator, whose determination as to the nature of the adjustments that shall be made, and the extent thereof, shall be final, binding, and conclusive. If an adjustment under this Section 6.1.1 would result in a fractional share interest under an option or any installment, the Administrator’s decision as to inclusion or exclusion of that fractional share interest shall be final, but no fractional shares of stock shall be issued under the Plan on account of any such adjustment.

 

6.1.2  Corporate Transactions. Except as otherwise provided in the applicable agreement, in the event of a Corporate Transaction (as defined below), the Administrator shall notify each holder of an Option or SAR at least thirty (30) days prior thereto or as soon as may be practicable. To the extent not then exercised all Options and SARs shall terminate immediately prior to the consummation of such Corporate Transaction unless the Administrator determines otherwise in its sole discretion; provided. however, that the Administrator, in its sole discretion, may (i) permit exercise of any Options or SARs prior to their termination, even if such Options or SARs would not otherwise have been exercisable, and/or (ii) provide that all or certain of the outstanding Options and SARs shall be assumed or an equivalent Option or SAR substituted by an applicable successor corporation or entity or any Affiliate of the successor corporation or entity. A “Corporate Transaction” means (i) a liquidation or dissolution of the Company; (ii) a merger or consolidation of the Company with or into another corporation or entity (other than a merger with a wholly-owned subsidiary); (iii) a sale of all or substantially all of the assets of the Company; or (iv) a purchase or other acquisition of more than 50% of the outstanding stock of the Company by one person or by more than one person acting in concert.

 

6.1.3  Time of Option or SAR Exercise. Subject to Section 5 and Section 6.3.4, an Option or SAR granted under the Plan shall be exercisable (a) immediately as of the effective date of the of the applicable agreement or (b) in accordance with a schedule or performance criteria as may be set by the Administrator and specified in the applicable agreement. However, in no case may an Option or SAR be exercisable until a written agreement in form and substance satisfactory to the Company is executed by the Company and the grantee.

 

6.1.4  Grant Date. The date of grant of an Option or SAR under the Plan shall be the effective date of the applicable agreement.

 

6.1.5  Non-Transferability of Rights. Except with the express written approval of the Administrator, which approval the Administrator is authorized to give only with respect to NQOs and SARs, no Option or SAR granted under this Plan shall be assignable or otherwise transferable by the grantee except by will or by 

the laws of descent and distribution. During the life of the grantee, an Option or SAR shall be exercisable only by the grantee.

 

6.1.6  Payment. Except as provided below, payment in full, in cash, shall be made for all stock purchased at the time written notice of exercise of an Option is given to the Company and the proceeds of any payment shall be considered general funds of the Company. The Administrator, in the exercise of its absolute discretion after considering any tax, accounting and financial consequences, may authorize any one or more of the following additional methods of payment:

 

(a)  Subject to the Sarbanes-Oxley Act of 2002, acceptance of the optionee’s full recourse promissory note for all or part of the Option price, payable on such terms and bearing such interest rate as determined by the Administrator (but in no event less than the minimum interest rate specified under the Code at which no additional interest or original issue discount would be imputed), which promissory note may be either secured or unsecured in such manner as the Administrator shall approve (including, without limitation, by a security interest in the shares of the Company);

 

(b)  Subject to the discretion of the Administrator and the terms of the stock option agreement granting the Option, delivery by the optionee of shares of Common Stock already owned by the optionee for all or part of the Option price, provided the fair market value (determined as set forth in Section 6.1.9) of such shares of Common Stock is equal on the date of exercise to the Option price, or such portion thereof as the optionee is authorized to pay by delivery of such stock;

 

(c)  Subject to the discretion of the Administrator, through the surrender of shares of Common Stock then issuable upon exercise of the Option, provided the fair market value (determined as set forth in Section 6.1.9) of such shares of Common Stock is equal on the date of exercise to the Option price, or such portion thereof as the optionee is authorized to pay by surrender of such stock; and

 

(d)  By means of so-called cashless exercises as permitted under applicable rules and regulations of the Securities and Exchange Commission and the Federal Reserve Board.

 

6.1.7  Withholding and Employment Taxes. At the time of exercise and as a condition thereto, or at such other time as the amount of such obligation becomes determinable, the grantee of an Option or SAR shall remit to the Company in cash all applicable federal and state withholding and employment taxes. Such obligation to remit may be satisfied, if authorized by the Administrator in its sole discretion, after considering any tax, accounting and financial consequences, by the holder’s (i) delivery of a promissory note in the required amount on such terms as the Administrator deems appropriate, (ii) tendering to the Company previously owned shares of Common Stock or other securities of the Company with a fair market value equal to the required amount, or (iii) agreeing to have shares of Common Stock (with a fair market value equal to the required amount), which are acquired upon exercise of the Option or SAR, withheld by the Company.

 

6.1.8  Other Provisions. Each Option and SAR granted under this Plan may contain such other terms, provisions, and conditions not inconsistent with this Plan as may be determined by the Administrator, and each ISO granted under this Plan shall include such provisions and conditions as are necessary to qualify the Option as an “incentive stock option” within the meaning of Section 422 of the Code.

 

6.1.9  Determination of Value. For purposes of this Plan, the fair market value of Common Stock or other securities of the Company shall be determined as follows:

 

(a)  If the stock of the Company is listed on a securities exchange or is regularly quoted by a recognized securities dealer, and selling prices are reported, its fair market value shall be the closing price of such stock on the date the value is to be determined, but if selling prices are not reported, its fair market value shall be the mean between the high bid and low asked prices for such stock on the date the value is to be determined (or if there are no quoted prices for the date of grant, then for the last preceding business day on which there were quoted prices).

 

  

(b)  In the absence of an established market for the stock, the fair market value thereof shall be determined in good faith by the Administrator, with reference to the Company’s net worth, prospective earning power, dividend-paying capacity, and other relevant factors, including the goodwill of the Company, the economic outlook in the Company’s industry, the Company’s position in the industry, the Company’s management, and the values of stock of other corporations in the same or a similar line of business.

 

6.1.10  Option and SAR Term. No Option or SAR shall be exercisable more than 10 years after the date of grant, or such lesser period of time as is set forth in the applicable agreement (the end of the maximum exercise period stated in the agreement is referred to in this Plan as the “Expiration Date”).

 

6.2  Terms and Conditions to Which Only NQOs Are Subject. Options granted under this Plan which are designated as NQOs shall be subject to the following terms and conditions:

 

6.2.1  Exercise Price. The exercise price of an NQO shall be the amount determined by the Administrator as specified in the option agreement.

 

6.2.2  Termination of Employment. Except as otherwise provided in the applicable agreement, if for any reason a grantee ceases to be employed by the Company or any of its Affiliates, Options that are NQOs and SARs held at the date of termination (to the extent then exercisable) may be exercised in whole or in part at any time within ninety (90) days of the date of such termination (but in no event after the Expiration Date). For purposes of this Section 6.2.2, “employment” includes service as a director, consultant or adviser. For purposes of this Section 6.2.2, a grantee’s employment shall not be deemed to terminate by reason of the grantee’s transfer from the Company to an Affiliate, or vice versa, or sick leave, military leave or other leave of absence approved by the Administrator, if the period of any such leave does not exceed ninety (90) days or, if longer, if the grantee’s right to reemployment by the Company or any Affiliate is guaranteed either contractually or by statute.

 

6.3  Terms and Conditions to Which Only ISOs Are Subject. Options granted under this Plan which are designated as ISOs shall be subject to the following terms and conditions:

 

6.3.1  Exercise Price. The exercise price of an ISO shall not be less than the fair market value (determined in accordance with Section 6.1.9) of the stock covered by the Option at the time the Option is granted. The exercise price of an ISO granted to any person who owns, directly or by attribution under the Code (currently Section 424(d)), stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Affiliate (a “Ten Percent Stockholder”) shall in no event be less than one hundred ten percent (110%) of the fair market value (determined in accordance with Section 6.1.9) of the stock covered by the Option at the time the Option is granted.

 

6.3.2  Disqualifying Dispositions. If stock acquired by exercise of an ISO granted pursuant to this Plan is disposed of in a “disqualifying disposition” within the meaning of Section 422 of the Code (a disposition within two (2) years from the date of grant of the Option or within one year after the issuance of such stock on exercise of the Option), the holder of the stock immediately before the disposition shall promptly notify the Company in writing of the date and terms of the disposition and shall provide such other information regarding the Option as the Company may reasonably require.

 

6.3.3  Grant Date. If an ISO is granted in anticipation of employment as provided in Section 5.4, the Option shall be deemed granted, without further approval, on the date the grantee assumes the employment relationship forming the basis for such grant, and, in addition, satisfies all requirements of this Plan for Options granted on that date.

  

6.3.4  Term. Notwithstanding Section 6.1.10, no ISO granted to any Ten Percent Stockholder shall be exercisable more than five (5) years after the date of grant.

 

6.3.5  Termination of Employment. Except as otherwise provided in the stock option agreement, if for any reason an optionee ceases to be employed by the Company or any of its Affiliates, Options that are ISOs held at the date of termination (to the extent then exercisable) may be exercised in whole or in part at any 

time within ninety (90) days of the date of such termination (but in no event after the Expiration Date). For purposes of this Section 6.3.5, an optionee’s employment shall not be deemed to terminate by reason of the optionee’s transfer from the Company to an Affiliate, or vice versa, or sick leave, military leave or other leave of absence approved by the Administrator, if the period of any such leave does not exceed ninety (90) days or, if longer, if the optionee’s right to reemployment by the Company or any Affiliate is guaranteed either contractually or by statute.

 

6.4  Terms and Conditions Applicable Solely to SARs. In addition to the other terms and conditions applicable to SARs in this Section 6, the holder shall be entitled to receive on exercise of an SAR only Common Stock at a fair market value equal to the benefit to be received by the exercise. At the request of the holder, and with the approval of the Administrator (which approval may be granted or withheld in the sole and absolute discretion of the Administrator), the benefit may be payable in cash or partly in Common Stock and partly in cash.

 

7. 

MANNER OF EXERCISE

 

7.1  An optionee wishing to exercise an Option or SAR shall give written notice to the Company at its principal executive office, to the attention of the officer of the Company designated by the Administrator, accompanied by payment of the exercise price and/or withholding taxes as provided in Sections 6.1.6 and 6.1.7. The date the Company receives written notice of an exercise hereunder accompanied by the applicable payment will be considered as the date such Option or SAR was exercised.

 

7.2  Promptly after receipt of written notice of exercise and the applicable payments called for by Section 7.1, the Company shall, without stock issue or transfer taxes to the holder or other person entitled to exercise the Option or SAR, deliver to the holder or such other person a certificate or certificates for the requisite number of shares of Common Stock. A holder or permitted transferee of an Option or SAR shall not have any privileges as a stockholder with respect to any shares of Common Stock to be issued until the date of issuance (as evidenced by the appropriate entry on the books of the Company or a duly authorized transfer agent) of such shares.

 

8. 

RESTRICTED STOCK

 

8.1  Grant or Sale of Restricted Stock.

 

8.1.1  No awards of restricted stock shall be granted under this Plan after ten (10) years from the date of adoption of this Plan by the Board.

 

8.1.2  The Administrator may issue shares under the Plan as a grant or for such consideration (including services, and, subject to the Sarbanes-Oxley Act of 2002, promissory notes) as determined by the Administrator. Shares issued under the Plan shall be subject to the terms, conditions and restrictions determined by the Administrator. The restrictions may include restrictions concerning transferability, repurchase by the Company and forfeiture of the shares issued, together with such other restrictions as may be determined by the Administrator. If shares are subject to forfeiture or repurchase by the Company, all dividends or other distributions paid by the Company with respect to the shares may be retained by the Company until the shares are no longer subject to forfeiture or repurchase, at which time all accumulated amounts shall be paid to the recipient. All Common Stock issued pursuant to this Section 8 shall be subject to a purchase or grant agreement, which shall be executed by the Company and the prospective recipient of the shares prior to the delivery of certificates representing such shares to the recipient.

 

The purchase or grant agreement may contain any terms, conditions, restrictions, representations and warranties required by the Administrator. The certificates representing the shares shall bear any legends required by the Administrator. The Administrator may require any purchaser of restricted stock to pay to the Company in cash upon demand amounts necessary to satisfy any applicable federal, state or local tax withholding requirements. If the purchaser fails to pay the amount demanded, the Administrator may withhold that amount from other amounts payable by the Company to the purchaser, including salary, subject to applicable law. With the consent of the Administrator in its sole discretion, a purchaser may deliver Common Stock to the Company to satisfy this withholding obligation. Upon the issuance of restricted stock, the number of shares reserved for issuance under the Plan shall be reduced by the number of shares issued.

 

8.2  Changes in Capital Structure. In the event of a change in the Company’s capital structure, as described in Section 6.1.1, appropriate adjustments shall be made by the Administrator, in its sole discretion, in the number and class of restricted stock subject to this Plan and the restricted stock outstanding under this Plan; provided, however, that the Company shall not be required to issue fractional shares as a result of any such adjustments.

 

8.3  Corporate Transactions. In the event of a Corporate Transaction, as defined in Section 6.1.2 hereof, to the extent not previously forfeited, all restricted stock shall be forfeited immediately prior to the consummation of such Corporate Transaction unless the Administrator determines otherwise in its sole discretion; provided, however, that the Administrator, in its sole discretion, may remove any restrictions as to any restricted stock. The Administrator may, in its sole discretion, provide that all outstanding restricted stock participate in the Corporate Transaction with an equivalent stock substituted by an applicable successor corporation subject to the restriction.

 

9. 

EMPLOYMENT OR CONSULTING RELATIONSHIP

 

Nothing in this Plan or any Option granted hereunder shall interfere with or limit in any way the right of the Company or of any of its Affiliates to terminate the employment, consulting or advising of any optionee or restricted stock holder at any time, nor confer upon any optionee or restricted stock holder any right to continue in the employ of, or consult or advise with, the Company or any of its Affiliates.

 

10. 

CONDITIONS UPON ISSUANCE OF SHARES

 

10.1  Securities Act. Shares of Common Stock shall not be issued pursuant to the exercise of an Option or the receipt of restricted stock unless the exercise of such Option or such receipt of restricted stock and the issuance and delivery of such shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended (the “Securities Act”).

 

10.2  Non-Compete Agreement. As a further condition to the receipt of Common Stock pursuant to the exercise of an Option or the receipt of restricted stock, the optionee or recipient of restricted stock may be required not to render services for any organization, or engage directly or indirectly in any business, competitive with the Company at any time during which (i) an Option is outstanding to such Optionee and for six (6) months after any exercise of an Option or the receipt of Common Stock pursuant to the exercise of an Option and (ii) restricted stock is owned by such recipient and for six (6) months after the restrictions on such restricted stock lapse. Failure to comply with this condition shall cause such Option and the exercise or issuance of shares thereunder and/or the award of restricted stock to be rescinded and the benefit of such exercise, issuance or award to be repaid to the Company.

 

11.

NON-EXCLUSIVITY OF THIS PLAN

 

The adoption of this Plan shall not be construed as creating any limitations on the power of the Company to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options other than under this Plan.

 

12. 

MARKET STAND-OFF

 

Each optionee, holder of an SAR or recipient of restricted stock, if so requested by the Company or any representative of the underwriters in connection with any registration of the offering of any securities of the Company under the Securities Act, shall not sell or otherwise transfer any shares of Common Stock acquired upon exercise of Options, SARs or receipt of restricted stock during the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that such restriction shall apply only to a registration statement of the Company which includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act and the restriction period shall not exceed 90 days after the registration statement becomes effective.

 

13. 

AMENDMENTS TO PLAN

 

The Board may at any time amend, alter, suspend or discontinue this Plan. Without the consent of an optionee, holder of an SAR or holder of restricted stock, no amendment, alteration, suspension or discontinuance may adversely affect such person’s outstanding Option(s), SAR(s) or the terms applicable to restricted stock except to conform this Plan and ISOs granted under this Plan to the requirements of federal or other tax laws relating to incentive stock options. No amendment, alteration, suspension or discontinuance shall require stockholder approval unless (a) stockholder approval is required to preserve incentive stock option treatment for federal income tax purposes or (b) the Board otherwise concludes that stockholder approval is advisable.

 

14.

EFFECTIVE DATE OF PLAN; TERMINATION

 

This Plan shall become effective upon adoption by the Board; provided, however, that no Option or SAR shall be exercisable unless and until written consent of the stockholders of the Company, or approval of stockholders of the Company voting at a validly called stockholders’ meeting, is obtained within twelve (12) months after adoption by the Board. If any Options or SARs are so granted and stockholder approval shall not have been obtained within twelve (12) months of the date of adoption of this Plan by the Board, such Options and SARs shall terminate retroactively as of the date they were granted. Awards may be made under this Plan and exercise of Options and SARs shall occur only after there has been compliance with all applicable federal and state securities laws. This Plan (but not Options and SARs previously granted under this Plan) shall terminate within ten (10) years from the date of its adoption by the Board. Termination shall not affect any outstanding Options or SARs or the terms applicable to previously awarded restricted stock.

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