Document:

Exhibit

EXHIBIT 10.1

FHLBANK SAN FRANCISCO

EXECUTIVE INCENTIVE PLAN

as Amended and Restated March 29, 2019

FEDERAL HOME LOAN BANK OF SAN FRANCISCO
EXECUTIVE INCENTIVE PLAN
TABLE OF CONTENTS

	
				
	 
	 
	PAGE
	

	Article I
	INTRODUCTION
	1
	

	 
	 
	 

	Section 1.1
	Purpose
	1
	

	Section 1.2
	Effective Date
	1
	

	Section 1.3
	Supplements
	1
	

	 
	 
	 

	Article II
	ELIGIBILITY AND PARTICIPATION
	1
	

	 
	 
	 

	Section 2.1
	Eligibility
	1
	

	Section 2.2
	Participation
	1
	

	 
	 
	 

	Article III
	AWARDS
	2
	

	 
	 
	 

	Section 3.1
	Awards
	2
	

	Section 3.2
	Performance Goals and Qualifiers
	2
	

	Section 3.3
	Vesting of Awards for Participants
	3
	

	Section 3.4
	Gap Year Awards for Participants
	4
	

	Section 3.5
	Effect of Termination of Employment
	5
	

	Section 3.6
	Effect of Change in Control
	8
	

	Section 3.7
	Payment of Awards
	8
	

	Section 3.8
	Reduction or Forfeiture of Awards
	9
	

	 
	 
	 

	Article IV
	ADMINISTRATION
	10
	

	 
	 
	 

	Section 4.1
	Appointment of the President and CEO
	10
	

	Section 4.2
	Powers and Responsibilities of the Administrator
	10
	

	Section 4.3
	Income and Employment Tax Withholding
	11
	

	Section 4.4
	Plan Expenses
	11
	

	 
	 
	 

	Article V
	BENEFIT CLAIMS
	11
	

	 
	 
	 

	Article VI 
	AMENDMENT AND TERMINATION OF THE PLAN
	11
	

	 
	 
	 

	Section 6.1
	Amendment of the Plan
	11
	

	Section 6.2
	Termination of the Plan
	11
	

	 
	 
	 

	Article VII
	MISCELLANEOUS
	12
	

	
			
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	Section 7.1
	Governing Law
	12
	

	Section 7.2
	Headings and Gender
	12
	

	Section 7.3
	Spendthrift Clause
	12
	

	Section 7.4
	Counterparts
	12
	

	Section 7.5
	No Enlargement of Employment Rights
	12
	

	Section 7.6
	Limitations on Liability
	12
	

	Section 7.7
	Incapacity of Participant
	13
	

	Section 7.8
	Evidence
	13
	

	Section 7.9
	Action by Bank
	13
	

	Section 7.10
	Severability
	13
	

	Section 7.11
	Information to be Furnished by a Participant
	13
	

	Section 7.12
	Attorneys’ Fees
	13
	

	Section 7.13
	Binding on Successors
	14
	

	 
	 
	 

	APPENDIX I: 2017 Performance Period Goals & Qualifiers & Awards Scale/Awards

	APPENDIX II: Awards and Goals Applicable to 2020 Gap Year (2017-2019 LTIP)

	APPENDIX III: Form of Non-Solicitation and Non-Disclosure Agreement

	
			
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ARTICLE I
INTRODUCTION
Section 1.1    Purpose.  The purpose of the Federal Home Loan Bank of San Francisco Executive Incentive Plan (the “Plan”) is to attract and retain key executives of the Federal Home Loan Bank of San Francisco (the “Bank”) and to motivate and focus their efforts on achieving the Bank’s business plan and accomplish its goals and objectives while maintaining the safety and soundness of the Bank.  The Plan is a cash-based incentive plan that provides award opportunities based on achievement of performance goals.
Section 1.2    Effective Date.  The “Effective Date” of the Plan is January 1, 2017.
Section 1.3    Supplements.  The provisions of the Plan may be modified by supplements to the Plan that are approved by the Board or a committee delegated by the Board.  The terms and provisions of each supplement are a part of the Plan and supersede any other provisions of the Plan to the extent necessary to eliminate any inconsistencies between the supplement and any other Plan provisions.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
Section 2.1    Eligibility.  Any senior executive officer (specifically, the President and CEO, each Executive Vice President as of April 15, 2019, and eachany Senior Vice President who was eligible as of December 31, 2018,) of the Bank, hired/employed as a regular full-time employee before October 1st of the calendar year, will become a “Participant” in the Plan on a prorated basis for that calendar year, excluding the SeniorExecutive Vice President and Director of Internal Audit, who, subject to approval of the Board, participates in the Federal Home Loan Bank of San Francisco Executive Internal Audit Incentive Plan.  Participants must have an executed agreement on file with the Bank containing non-disclosure, non-disparagement, and non-solicitation provisions in a form similar to the form provided in Appendix III to the Plan (“Non-Solicitation Agreement”).
Section 2.2    Participation.  A senior executive officer will become a Participant as of the later of the Effective Date, the senior executive officer’s date of hire/employment, or the date on or after the Effective Date the senior executive officer satisfies the automatic eligibility provisions described in Section 2.1.  Any Participant may be removed as an active Participant by the Board effective as of any date.

	
			
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ARTICLE III
AWARDS
Section 3.1    Awards.  No later than the beginning of each Performance Period, the Board will establish Award Levels (as defined in Section 3.1(b) for eligible Participants.  For each Performance Period, the Award Levels established by the Board will be set forth in Appendices to the Plan, each of which shall be incorporated into the Plan.  As described in this Article, Awards may be Annual Awards (as defined in subsection 3.3(a)), Deferred Awards (as defined in subsection 3.3(b)), or Gap Year Awards (as defined in subsection 3.4(a)).  Each Award will be equal to a percentage of the Participant’s annual Compensation.  “Compensation” means the Participant’s average annual base salary as of February 1 offor the first calendar year in each Performance Period; provided, however, for the Performance Period commencing January 1, 2019, the average will be based on the eleven month-period commencing February 1, 2019. 
(a)    Performance Periods.  A “Performance Period” is the one-calendar year period over which an Annual Award can be earned and vested pursuant to subsection 3.3(a).  A “Deferral Performance Period” is the three-calendar year period over which a Deferred Award can be vested pursuant to subsection 3.3(b).  A Deferral Performance Period begins on the January 1st immediately following the applicable Performance Period.
(b)    Award Levels.  Participants are eligible to receive Awards for each Performance Period, subject to deferral of fifty percent (50%) of the Annual Award (the Deferred Award) over the Deferral Performance Period.
(c)    Final Award.  The “Final Award” is the amount of an earned and vested Annual Award, Deferred Award, and Gap Year Award, as may be adjusted based upon the level at which the Performance Goals and Qualifiers have been achieved, that is ultimately paid to a Participant under the Plan.  The amount of a Final Award may be modified at the Board’s discretion to account for performance that is not captured in the relevant Performance Goals and Qualifiers for the applicable Award.  The Board, in its discretion, may also consider Extraordinary Occurrences when assessing performance results and determining Final Awards.  “Extraordinary Occurrences” mean those events that, in the opinion and discretion of the Board, are outside the significant influence of the Participant or the Bank and are likely to have a significant unanticipated effect, whether positive or negative, on the Bank’s operating and/or financial results.

Section 3.2    Performance Goals and Qualifiers.  “Performance Goals and Qualifiers” are the factors established by the Board for each Performance Period, Deferral Performance Period and Gap Year Performance Period, as set forth in the applicable Appendices to the Plan, which are taken into consideration in determining the amount of an Annual Award, Deferred Award or Gap Year Award.  The Board may adjust the Performance Goals and Qualifiers for a Performance Period, Deferral Performance Period or Gap Year Performance Period to ensure the purposes of the Plan are served.

	
			
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(a)    Establishment of Performance Goals and Qualifiers.  Performance Goals and Qualifiers for Performance Periods, Deferral Performance Periods and the Gap Year Performance Period commencing on and after January 1, 2017, will be communicated to Participants following approval by the Board.
(b)    Achievement Levels.  Four achievement levels will be defined for each Performance Goal in determining how much of an Award is earned.
(i)    Threshold (75% of Target).  Minimum level of performance that must be achieved for awards to be paid.
(ii)    Meets (Target – 100% of Plan).  Performance that is expected under the Bank’s Plan.
(iii)    Exceeds (125% of Target). An optimistic achievement level that exceeds expected performance.
(iv)    Far Exceeds (150% of Target).  The most optimistic achievement level that far exceeds expected performance.
(c)    Interpolation.  Achievement levels between Threshold – Target; Target – Exceeds; and, Exceeds – Far Exceeds will be interpolated in a manner as determined at the sole discretion of the Board.
(d)    Considerations in Establishing Performance Goals and Qualifiers.  In determining appropriate Performance Goals and Qualifiers and the relative weight of each Performance Goal, the Board will:
(i)    Balance risk and financial results in a manner that does not encourage Participants to expose the Bank to imprudent risks;
(ii)    Make such determination in a manner designed to ensure that a Participant’s overall compensation is balanced and not excessive in amount and that the Annual Awards, Deferred Awards and Gap Year Awards are consistent with the Bank’s policies regarding such compensation arrangements; and
(iii)    Monitor the success of the Performance Goals and Qualifiers and weighting established in prior years, alone and in combination with other incentive compensation awarded to the same Participants, and make appropriate adjustments in future calendar years as needed so that payments appropriately incentivize Participants, appropriately reflect risk and align with regulatory guidance.

	
			
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Section 3.3    Vesting of Awards for Participants.
(a)    Vesting of Annual Awards.  For each Performance Period, except the Gap Performance Period, fifty percent (50%) of an Annual Award to a Participant will become vested on the last day of the Performance Period, provided the Board determines the following requirements are met (an “Annual Award”):
(i)    The applicable Performance Goals and Qualifiers for the Performance Period are achieved;
(ii)    The Participant received a satisfactory (at least meets expectations) performance rating for the Performance Period; and,
(iii)    The Participant is actively employed on the last day of the Performance Period, except as otherwise provided in subsection 3.5(b) or 3.5(c) or Section 3.6.
(b)    Vesting of Deferred Awards.  The remaining fifty percent (50%) of an Award to a Participant will become vested on the last day of the Deferral Performance Period, provided the Board determines that the following requirements are met (a “Deferred Award”):
(i)    The applicable Qualifiers for the Deferral Performance Period are satisfied;
(ii)    The Participant received a satisfactory (at least meets expectations) performance rating for the Deferral Performance Period, and
(iii)    The Participant is actively employed on the last day of the Deferral Performance Period, unless otherwise provided in subsection 3.5(b) or 3.5(c) or Section 3.6.
(c)    Calculation of Awards.  The amount of Awards to Participants will be determined at the sole discretion of the Board in accordance with the applicable Appendix to the Plan.  If the Qualifiers are achieved an annual compounding interest rate of 6% is applied to Deferred Awards.
Section 3.4    Gap Year Awards for Participants.
(a)    Background.  The Board has determined it is appropriate to establish a Gap Year Award for Participants for long-term performance during the calendar years 2017 through 2019 (a “Gap Year Award”) to address a gap in payment of deferred incentive compensation during calendar year 2020 which arises as a result of the discontinuation in 2017 of the Executive Performance Unit Plan (the “Long-Term Incentive Plan”) and the implementation of this Plan.
(b)    Vesting of Gap Year Award.  A Gap Year Award will become vested over a three-year period beginning on January 1, 2017 and ending on December 31, 2019 (the “Gap Year Performance Period”) to the extent the Board determines that:

	
			
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(i)    The Performance Goals and Qualifiers for the Gap Year Performance Period, as set forth in the applicable Appendix to the Plan, are satisfied;
(ii)    The Participant received a satisfactory (meets expectations) performance rating for the Gap Year Performance Period, and
(iii)    The Participant is actively employed on the last day of the Gap Year Performance Period, except as otherwise provided in subsection 3.5(b) or 3.5(c) or Section 3.6.
(c)    Calculation of Awards.  The amount of Gap Year Awards will be calculated in the sole discretion of the Board in accordance with the applicable Appendix to the Plan.

Section 3.5    Effect of Termination of Employment.
(a)    In General.  If a Participant incurs a Termination of Employment for any reason other than a reason set forth in subsection 3.5(b) or 3.5(c) or Section 3.6, the Participant’s unvested Awards will be forfeited effective as of the date of such Termination of Employment and the Bank will have no obligation to pay the Participant any portion of such forfeited, unvested Award amount.
(b)    Termination Due to Death or Disability.
(i)    Notwithstanding the provisions of Sections 3.3 and 3.4 and subsection 3.5(a), if a Participant incurs a Termination of Employment due to death or Disability during a Deferral Performance Period, then the Participant’s Deferred Awards will be treated as vested and shall be paid pursuant to Section 3.7(a)(i).
(ii)    Notwithstanding the provisions of Sections 3.3 and 3.4 and subsection 3.5(a), if a Participant incurs a Termination of Employment during a Performance Period or Gap Year Performance Period due to death or Disability, any Annual Award or Gap Year Award which has not been vested for the year of the Participant’s Termination of Employment due to death or Disability, will be treated as vested for the portion of the Performance Period or Gap Year Performance Period during which the Participant was employed based on the assumption the Bank would have achieved the Performance Goals and Qualifiers at the Target achievement level for the Performance Period or Gap Year Performance Period.
(c)    Termination Due to Other Events.
(i)    Subject to Section 3.7(a)(ii), but notwithstanding the provisions of Sections 3.3 and 3.4 and subsection 3.5(a), if a Participant incurs a Termination of Employment during a Performance Period, Deferral Performance Period or Gap Year Performance Period due to:
(A)    Retirement;

	
			
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(B)    a termination by Participant for Good Reason;
(C)    a termination by the Bank without Cause due to the elimination of an individual job or position;
(D)    the elimination of one or more jobs or positions as a result of a reduction in force or department reorganization; or
(E)    a substantial job modification resulting in the incumbent being, in the judgment of the Bank, unqualified for or unable to perform the revised job;
then the relevant pro rata portion of an Annual Award or Gap Year Award will be treated as vested for the portion of the Performance Period or Gap Year Performance Period during which the Participant was employed to the extent determined by the Board that the Performance Goals and Qualifiers for the Performance Period or Gap Year Performance Period are satisfied and a Deferred Award will be treated as fully vested as of the date of Termination of Employment.  Any Payment of any Award pursuant to this Section 3.5(c) will be made according to the normal scheduled date under Section 3.7(b).
(d)    Definitions.
(i)    “Cause” means (A) continued failure of a Participant to perform his or her duties with the Bank (other than any such failure resulting from Disability), (B) personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, or willful violation of any law, rule or regulation (other than -traffic infractions or similar non-violent infractions), or (C) removal of the Participant for cause by the Federal Housing Finance Agency (“FHFA”) or at the direction of the FHFA pursuant to 12 U.S.C. 1422b(a)(2), or by any successor agency to the FHFA pursuant to a similar statute.
(ii)    “Disability” means the Participant is: (A) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (B) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under the Bank’s long-term disability plan.  Medical determination of Disability under (A) shall be made by the Social Security Administration.  The Participants may be required to submit proof of the determination by the Social Security Administration or the Bank’s insurer, as applicable, upon the request of the Bank.
		
	(iii)
	“Good Reason” means a Termination of Employment by a Participant under any of the following circumstances:

	
			
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(A)    a material change in the Participant’s status, position and job title or principal duties and responsibilities as a key employee of the Bank which does not represent a promotion from the Participant’s status and position as in effect as of the date hereof (“Position”);
(B)    the assignment to the Participant of any duties or responsibilities (or removal of any duties or responsibilities), which assignment or removal is materially inconsistent with such Position;
(C)    any removal of the Participant from such Position (including, without limitation, all demotions), except in connection with the termination of the Participant’s employment for Cause or Disability, or as a result of the Participant’s death; or
(D)    any material breach by the Bank of any provisions of this Plan or any agreement under which the Participant provides services to the Bank.
Notwithstanding the foregoing in this Section 3.5(d)(iii), a Participant shall not be considered to have a Termination of Employment for Good Reason unless the Participant provides the Bank with written notice no later than 90 days after the first occurrence of an event listed above and the Bank has a period of 30 days to cure such event.
(iv)    “Reduction in Force” means an involuntary Termination of Employment of a Participant by the Bank in connection with a financial and/or strategic decision by the Bank to reduce the number of Bank employees and not due to the Participant’s performance.
(v)    “Retirement” means the Participant’s planned and voluntary termination of employment on or after the Participant has either: (A) attained age 55 with 10 years of service or (B) attained age 65 with 5 years of service.
(vi)     “Termination of Employment or Terminates Employment” Participant’s separation from service within the meaning of Treasury Regulation Section 1.409A-1(h).  Whether a Termination of Employment has occurred is based on whether the facts and circumstances indicate that the Participant and the Bank reasonably anticipated that no further services would be performed after a certain date.  A Termination of Employment will not be deemed to have occurred if a Participant continues to provide services to the Bank as an employee, independent contractor or otherwise, and if the Participant is providing such services at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediate preceding 36 months with the Bank (or if less, such lesser period); provided, however, that a Termination of Employment will be deemed to have occurred if a Participant’s service with the Bank is reduced to an annual rate that is equal to or less than twenty percent (20%) of the services rendered, on average, during the immediately preceding 36 months with the Bank (or if less, such lesser period).  In addition to the foregoing, the employment of a Participant shall not be deemed to be terminated while the Participant is on military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six 

	
			
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(6) months, or if longer, so long as the Participant’s right to reemployment with the Bank is provided by either statute or contract.  If the period of leave exceeds six (6) months and the Participant’s right to reemployment is not provided by either statute or contract, then the Participant is deemed to have a Termination of Employment on the first day immediately following such six-month period.

Section 3.6    Effect of Change in Control.
(a)    Notwithstanding the provisions of Sections 3.3 and 3.5, if a Change in Control of the Bank occurs prior to the date of vesting of an Award, then an Annual Award or Gap Year Award will be paid on a pro-rated basis based on the assumption the Bank would have achieved the Performance Goals and Qualifiers at the Target achievement level for the Performance Period and/or the Gap Year Performance Period, while any Deferred Award which has not otherwise become vested as of the date of the Change in Control will be treated as one hundred percent (100%) vested effective as of the date of the Change in Control. Any interest accrued on the Deferred Award through the Change in Control date will be added to the Final Award.
(b)    “Change in Control” of the Bank will mean the occurrence at any time of any of the following events:
(i)    The merger, reorganization, or consolidation of the Bank with or into another Federal Home Loan Bank or other entity;

(ii)    The sale or transfer of all or substantially all of the business or assets of the Bank to another Federal Home Loan Bank or other entity;
(iii)    The purchase by the Bank or transfer to the Bank of all or substantially all of the business or assets of another Federal Home Loan Bank; or
(iv)    The liquidation of the Bank.
The term “reorganization” shall not include any reorganization that is mandated by federal statute, rule, regulation, or directive, including 12 U.S.C. § 1421, et seq., as amended, and 12 U.S.C. § 4501 et seq., as amended, and which the Director of the FHFA (or successor agency) has determined should not be a basis for making payment under this Plan, by reason of the capital condition of the Bank or because of unsafe or unsound acts, practices, or condition ascertained in the course of the Agency's supervision of the Bank or because any of the conditions identified in 12 U.S.C. § 4617(a)(3) are met with respect to the Bank (which conditions do not result solely from the mandated reorganization itself, or from action that the Agency has required the Bank to take under 12 U.S.C. § 1431(d)).

Section 3.7    Payment of Awards.

	
			
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(a)    Payments Related to Termination of Employment.  The following provisions apply to Final Awards payable as a result of a Termination of Employment.
(i)    In the event of a Termination of Employment due to death or Disability, one hundred percent (100%) of a Final Award will be paid in a single sum within 74 days of the date of Termination of Employment.
(ii)    In the event of a Termination of Employment Due to Other Events, payment of a Final Award will be made in a single sum within 74 days following the end of the Performance Period, Deferral Performance Period or Gap Year Performance Period, as applicable.  Notwithstanding the foregoing, in the event of an elimination of an individual job or position, a reduction in force or department reorganization, or a substantial job modification resulting in the incumbent being unqualified for or unable to perform the revised job, a Participant must execute the severance agreement offered by the Bank in order to be eligible to receive payment.
(b)    Payments Not Related to a Termination of Employment.  Final Awards which become vested for reasons other than a Termination of Employment will be paid in a single sum within 74 days following the end of the Performance Period, Deferral Performance Period or Gap Year Performance Period, as applicable.
(c)    Notwithstanding the foregoing provisions of this Section, Final Awards will be paid upon approval by the Board.  However, in the event of a Change in Control, payment of a Final Award will be made in a single sum on the date on which the Change in Control occurs; provided however, if a Participant is eligible for Retirement as of the date of a Change in Control, then the Final Award of such Participant shall be made no sooner than the earliest to occur of (i) a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as defined under Treasury Regulation Section 1.409A-3(i)(5); (ii) the Participant’s Termination of Employment; or (iii) the payment date under Section 3.7(b) of this Plan.
Section 3.8    Reduction or Forfeiture of Awards.
(a)    By resolution, the Board may reduce or eliminate any Award not yet paid, if the Board finds that a serious, material safety-soundness problem, or a serious, material risk-management deficiency exists at the Bank, or if: (i) errors or omissions result in material revisions to the Bank’s financial results, information submitted to a regulatory or a reporting agency, or information used to determine incentive compensation payouts; (ii) information submitted to a regulatory or a reporting agency is untimely; or, (iii) the Bank does not make appropriate progress, as determined by the Board, in the timely remediation of examination, monitoring, or other supervisory findings and matters requiring attention.
(b)    If during the Deferral Performance Period actual losses or other measures or aspects of performance related to the Performance Period or Deferral Performance Period are realized which would have caused a reduction in amount of the Final Award calculated for the Performance Period or Deferral Performance 

	
			
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Period, then the remaining amount of the Final Award to be paid at the end of the Deferral Performance Period may be reduced to reflect this additional information.
(c)    Notwithstanding any other provision of the Plan, if a Participant breaches the terms of a Non-Solicitation Agreement, all of his/her unpaid vested and unvested Awards may be forfeited as of the effective date of the Board’s determination that such breach has occurred, which effective date shall be no sooner than the expiration of the cure period under Section 3.8(e) below.  Any future payments for a vested Award will cease and the Bank will have no further obligation to make such payments.
(d)    Notwithstanding any other provision of the Plan, if during the most recent examination of the Bank by the FHFA, the FHFA identified an unsafe or unsound practice or condition that is material to the financial operation of the Bank within the Participant’s area(s) of responsibility and such unsafe or unsound practice or condition is not subsequently resolved to the satisfaction of the Board, then upon expiration of the cure period under Section 3.8(e) below all or a portion of a Participant’s vested and unvested Awards may be forfeited as determined in the sole discretion of the Board.  Any future payments for a vested Award will cease and the Bank will have no further obligation to make such payments.
(e)    Notwithstanding any provision of this Section 3.8 to the contrary, prior to any reduction, elimination or forfeiture of any Participant Award, the applicable Participant shall be given notice of the determination under this Section 3.8 to reduce, eliminate or forfeit the Award and such Participant shall have a period of no less than 30 days to present information contrary to such decision or information showing that the issue or event causing the reduction, elimination or forfeiture has been cured to the satisfaction of the Board.
ARTICLE IV
ADMINISTRATION
Section 4.1    Appointment of the President and CEO.  Except for those powers expressly reserved to the Board, including determinations regarding eligibility and the amount of all Awards, under the Plan, the President and CEO, or a duly authorized officer of the Bank delegated by the President and CEO to act on his or her behalf, is hereby appointed to administer the Plan (the “Administrator”), and the President and the Administrator will be charged with the full power and the responsibility for administering the Plan in all its details.
Section 4.2    Powers and Responsibilities of the Administrator.  The Administrator will have all powers necessary to administer the Plan, including the power to construe and interpret the Plan document; to determine the manner and timing of any distribution of benefits under the Plan; to resolve any claim for benefits in accordance with Article V, and to appoint or engage advisors, including legal counsel, to render advice with respect to any of the Administrator’s responsibilities under the Plan.  Any construction, interpretation, or application of the Plan by the Administrator will be final, conclusive and binding.

	
			
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(a)    Records and Reports.  The Bank will be responsible for maintaining sufficient records to determine each Participant’s eligibility to participate in the Plan.
(b)    Rules and Decisions.  The Bank may adopt such rules as it deems necessary, desirable, or appropriate in the administration of the Plan.  All rules and decisions of the Bank will be applied uniformly and consistently to all Participants in similar circumstances.  When making a determination or calculation, the Board and the Bank will be entitled to rely upon information furnished by a Participant, the Bank or the legal counsel of the Bank.
(c)    Application for Benefits.  The Bank may require a Participant to complete and file with it an application for a benefit, and to furnish all pertinent information requested by it.  The Bank may rely upon all such information so furnished to it, including the Participant’s current mailing address.  Any notice or document required to be given or filed with the Bank will be properly given or filed if delivered to or mailed by registered mail, postage paid, to the Director of Human Resources, Federal Home Loan Bank of San Francisco, P.O. Box 7948, San Francisco, CA 94120.
Section 4.3    Income and Employment Tax Withholding.  The Bank will withhold from payments to Participants of their Awards, to the extent required by law, all applicable federal, state, city and local taxes.

Section 4.4    Plan Expenses.  The expenses incurred for the administration and maintenance of the Plan will be paid by the Bank.
ARTICLE V
BENEFIT CLAIMS
While a Participant need not file a claim to receive his or her Award under the Plan, if he/she wishes to do so, a claim must be made in writing and filed with the Administrator (a claim by the President and CEO shall be filed with the Board).  If a claim is denied, the Administrator will furnish the claimant with written notice of its decision.  A claimant may request a full and fair review of the denial of a claim for awards by filing a written request with the Administrator.
ARTICLE VI
AMENDMENT AND TERMINATION OF THE PLAN
Section 6.1    Amendment of the Plan.  The Bank, acting through the Board, may amend the Plan at any time in its sole discretion.  Notwithstanding the foregoing, the Bank may not amend the Plan to reduce a Participant’s vested Award as determined on the day preceding the effective date of the amendment or to otherwise retroactively impair or adversely affect the rights of a Participant.

	
			
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Section 6.2    Termination of the Plan.  The Bank, acting through the Board, may terminate the Plan at any time in its sole discretion.  Absent an amendment to the contrary, Plan benefits that were earned and vested prior to the termination will be paid at the times and in the manner provided for by the Plan at the time of the termination.
ARTICLE VII
MISCELLANEOUS
Section 7.1    Governing Law.  Except to the extent superseded by laws of the United States, the laws of California will be controlling in all matters relating to the Plan without regard to the choice of law principles therein.
The Plan shall be construed in a manner that is consistent and compliant with, or exempt from, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and any regulations promulgated thereunder.  Any provision that is noncompliant with Section 409A of the Code is void or deemed amended to comply with Section 409A of the Code.  The Plan is to be construed as a totally discretionary plan.  This Plan shall be administered and interpreted to maximize the short-term deferral exemption to Code Section 409A, and a Participant shall not, directly or indirectly, designate the taxable year of an award payment under this Plan.  The portion of any payment under this Plan that is paid within the short-term deferral period (within the meaning of Code Section 409A) shall be treated as a short-term deferral and not aggregated with other payments.  To the extent applicable, any payment dates or events provided for in this Plan shall be deemed to incorporate any “grace periods” within the meaning of Code Section 409A.  The Bank does not guarantee or warrant the tax consequences of the Plan, and the Participants shall in all cases be liable for any taxes due with respect to the Plan.
Section 7.2    Headings and Gender. The headings and subheadings in the Plan have been inserted for convenience of reference only and will not affect the construction of the Plan provisions.  In any necessary construction, the masculine will include the feminine and the singular the plural, and vice versa.
Section 7.3    Spendthrift Clause.  No benefit or interest available under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or attachment by creditors of a Participant, either voluntarily or involuntarily.
Section 7.4    Counterparts.  This Plan may be executed in any number of counterparts, each one constituting but one and the same instrument, and may be sufficiently evidenced by any one counterpart.
Section 7.5    No Enlargement of Employment Rights.  Nothing contained in the Plan is intended to alter a Participant’s “at will” employment and is not to be construed as a contract of employment between the Bank and any person, nor may the Plan be deemed to give any person the right to be retained in the employ of the Bank or limit the right of the Bank to employ or discharge any person with or without cause.

	
			
	3/29/2019
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Section 7.6    Limitations on Liability.  The individual members of the Board will, in accordance with the Bank’s by-laws, be indemnified and held harmless by the Bank with respect to any alleged breach of responsibilities performed or to be performed hereunder.  In addition, notwithstanding any other provision of the Plan, neither the Bank nor any individual acting as an employee or agent of the Bank will be liable to a Participant for any claim, loss, liability or expense incurred in connection with the Plan, except when the same has been affirmatively determined by a court order or by the affirmative and binding determination of an arbitrator, to be due to the gross negligence or willful misconduct of that person.
Section 7.7    Incapacity of Participant.  If any person entitled to receive a distribution under the Plan is physically or mentally incapable of personally receiving and giving a valid receipt for any payment due (unless a prior claim for the distribution has been made by a duly qualified guardian or other legal representative), then, unless and until a claim for the distribution has been made by a duly appointed guardian or other legal representative of the person, the distribution may be made to any other individual or institution then contributing toward or providing for the care and maintenance of the person.  Any payment made for the benefit of the person under this Section will be a payment for the account of such person and a complete discharge of any liability of the Bank and the Plan.
Section 7.8    Evidence.  Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person relying on the evidence considers pertinent and reliable, and signed, made or presented by the proper party or parties.
Section 7.9    Action by Bank.  Any action required of or permitted by the Bank under the Plan will be by resolution of the Board or by a person or persons authorized by resolution of the Board.
Section 7.10    Severability.  In the event any provisions of the Plan are held to be illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and endorsed as if the illegal or invalid provisions had never been contained in the Plan.
Section 7.11    Information to be Furnished by a Participant.  A Participant, or any other person entitled to benefits under the Plan, must furnish the Bank with any and all documents, evidence, data or other information the Bank considers necessary or desirable for the purpose of overseeing and administering the Plan.  Benefit payments under the Plan are conditioned on a Participant (or other person who is entitled to benefits) furnishing full, true and complete data, evidence or other information to the Bank, and on the prompt execution of any document reasonably related to the administration of the Plan requested by the Bank.
Section 7.12    Attorneys’ Fees.  If any action is commenced to enforce the provisions of the Plan, payment of attorneys’ fees will be governed by the terms set forth in the “Agreement to Arbitrate” entered into between the Bank and the Participant.

	
			
	3/29/2019
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Section 7.13    Binding on Successors.  The Plan will be binding upon and inure to the benefit of the Bank and its successors and assigns, and the successors, assigns, designees and estates of a Participant.  The Plan will also be binding upon and inure to the benefit of any successor organization succeeding to substantially all of the assets and business of the Bank, but nothing in the Plan will preclude the Bank from merging or consolidating into or with, or transferring all or substantially all of its assets to, another organization which assumes the Plan and all obligations of the Bank hereunder.  The Bank agrees that it will make appropriate provision for the preservation of a Participant’s rights under the Plan in any agreement or plan which it may enter into to effect any merger, consolidation, reorganization or transfer of assets.  Upon such a merger, consolidation, reorganization or transfer of assets and assumption of Plan obligations of the Bank, the term “Bank” will refer to such other organization and the Plan will continue in full force and effect.

	
			
	3/29/2019
	14
	 

	
								
	APPENDIX I

2017 PERFORMANCE PERIOD GOALS & QUALIFIERS & AWARDS SCALE/AWARDS

	2017 Goals
	2017 Goal Components
	Goal Weight
	Goal Component Weight
	2017 Goal Measures

	1) RISK MANAGEMENT
	 
	20%
	 
	In the event of a Significant Deficiency or Material Weakness in internal control over financial reporting, a significant operations loss, or a significant noncompliance with Bank policy as described in the Bank’s Risk Management Policy, the Board of Directors will assess the impact and appropriate adjustment to the Risk Management goal achievement level, if any.

	 
	A) Technology Resiliency
	 
	50%
	  75%:  Complete the End User Computing Modernization initiative, which moves 
            Microsoft Windows and Office platforms to the cloud (Office 365) to increase
            resiliency as well as productivity
100%:  Certify that the build of the data center infrastructure servicing the Bank has been
             completed
125%:  Migrate 50% of the Bank’s environment to the new data center
150%:  Migrate 100% of the Bank’s environment to the new data center

	

	B) Business Continuity /
     Crisis Management
	 
	50%
	  75%: 1 Crisis Mgmt. Team Tabletop (1 external threat scenario) 
100%: 2 Crisis Mgmt. Team Tabletops (1 Cyber & 1 external threat scenario) 
125%: 3 Crisis Mgmt. Team Tabletops (1 Cyber & 2 external threats) and 1 Cyber 
            Incident Response Team Tabletop scenario                                           
150%: 3 Crisis Mgmt. Team Tabletops (1 Cyber & 2 external threats) and 2 Cyber
            Incident Response Team Tabletop scenarios            

	2) FRANCHISE ENHANCEMENT
	 
	40%
	 
	 

	 
	A) Financial Performance
	 
	25%
	Adjusted Return on Capital Spread (AROC)

	 
	 
	75%
	100%
	125%
	150%

	 
	 
	2.81%
	3.06%
	3.31%
	3.56%

	 
	 
	[Achievement level targets and measured performance exclude OTTI charges]

	

	B) Operating Cost
     Efficiency Initiative
	 
	25%
	  75%:  
100%:                
125%:                
150%:           
	} Subjective assessment by the Board of Directors

	 
	C) Member Business 
	 
	25%
	Member Advances and Letters of Credit (LC) Volume

	75%
	100%
	125%
	150%

	$53.7
	$60.0
	$62.0
	$64.0

	

25%
	Member Engagement

	 
	 
	 
	75%
	100%
	125%
	150%

	 
	 
	 
	40%
	45%
	50%
	55%

	3) COMMUNITY INVESTMENT
	 
	20%
	 
	 

	 
	A) CIP/ACE/HPA
     Advances, Letters of
     Credit & AHEAD
      (# of Members)
	 
	

100%

	(# of Members)

	75%
	100%
	125%
	150%

	38
	41
	44
	47

	4) ORG. HEALTH / DIVERSITY & INCLUSION
	 
	20%
	 
	 

	 
	A) Diversity &
     Inclusion
	 
	100%
	  75%:  Provide two (semi-annual) Bank-wide D&I training events [e.g., workplace,
            supplier/contracting diversity]   
100%:  Develop and implement a formal supplier diversity program
125%:  Present Leadership Series for key groups of women and minorities in Bank leadership
             positions
•    Women in Leadership Series and Minorities in Leadership Series
           Provide 2 events in each series for a total of 4 events
150%: Develop and implement a formal MWD internship program

	
			
	Approved 12/23/2016
	1
	 

Incentive Award Opportunities 
	
													
	 
	Total Incentive Award as % of Compensation (Base Salary)
	Year-End Incentive Award as % of Compensation (Base Salary)
	Deferred Incentive Award as % of Compensation (Base Salary)

	 
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds

	CEO/EVP/SVPs
	40%
	80%
	96%
	100%
	20%
	40%
	48%
	50%
	20%
	40%
	48%
	50%

Goal Weights
	
					
	 
	CEO/EVP/SVPs
	SVP, Chief Risk Officer

	 
	Corporate Goal Weights
	Goal Weight (includes individual goals)
	Corporate Goal Weights
	Goal Weight (includes individual goals)

	Individual
	N/A
	10.0%
	N/A
	10.0%

	Risk Management
	20.0%
	18.0%
	50.0%
	45.0%

	Franchise Enhancement
	40.0%
	36.0%
	30.0%
	27.0%

	Community Investment
	20.0%
	18.0%
	10.0%
	9.0%

	Organizational Health / Diversity and Inclusion
	20.0%
	18.0%
	10.0%
	9.0%

	Total
	100.0%
	100.0%
	100.0%
	100.0%

Qualifiers
The following are the performance qualifiers for any Award: (i) no submission of material information to a regulatory or a reporting agency is significantly past due; (ii) the Bank makes sufficient progress, as determined by the Board, in the timely remediation of significant examination, monitoring and other supervisory findings; (iii) no material risk-management deficiency exists at the Bank; (iv) no operational errors or omissions result in material revisions to the financial results, information submitted to the FHFA, or data used to determine incentive payouts; (v) the Bank has sufficient capital to pay dividends and the ability to repurchase member stock.

	
			
	Approved 12/23/2016
	2
	 

APPENDIX II 
AWARDS AND GOALS APPLICABLE TO 2020 GAP YEAR (2017-2019 LTIP)
Incentive Award Opportunities
	
					
	 
	

Long-Term Incentive Award as a % of Compensation (Base Salary effective February 1, 2017)

	Position
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds

	

CEO/EVP/SVPs
	20%
	40%
	48%
	

50%

Awards are based on the level at which the following three-year performance goals and metrics have been achieved. 
Goals
		
	1.
	3-Year Average Adjusted Return on Capital Spread: Adjusted Return on Capital Spread (AROCS) is the primary measure the Bank uses to determine total rate of return to shareholders. The Meets (Target) AROCS achievement level has been set at 2.43% and represents the projected average for the performance period (January 1, 2017 through December 31, 2019) and is consistent with the Bank’s Strategic Plan forecast.  Threshold AROCS has been set at 2.18%, Exceeds achievement level has been set at 2.68% and Far Exceeds achievement level has been set at 2.93%.

		
	2.
	3-Year Average Risk Management: Risk Management is based on the 3-year average of the actual Risk Management goal achievement levels for 2017, 2018, and 2019, and will be set at the end of the performance period.

Goals / Weights / Measures
	
						
	Goals
	Goal Weight
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds

	

AROCS Goal (3-Year Average Spread Over Benchmark 

	

30%
	

2.18%
	

2.43%
	

2.68%
	

2.93%

	

Risk Management

	

70%
	Based on the 3-year average of the actual Risk Management goal achievement levels for 2017, 2018, and 2019

	
			
	Approved 12/23/2016
	 
	 

APPENDIX III
FORM OF NON-SOLICITATION AND NON-DISCLOSURE AGREEMENT
This Agreement is entered into as of the ____ day of _____________, 201_, by and between the FEDERAL HOME LOAN BANK OF SAN FRANCISCO, a corporation organized under the laws of the United States (the “Bank”) and ____________________ (the “Executive”).
WHEREAS, the Bank sponsors the Federal Home Loan Bank of San Francisco Executive Incentive Plan (the “Plan”); and
WHEREAS, as a condition of participation in the Plan, the Bank requires that the Executive agree to the terms and conditions found within this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual promises and agreements contained herein and other good and valuable consideration, the receipt, legal adequacy and sufficiency of which are hereby acknowledged, the parties agree as follows:
1.Non-Disclosure; Return of Confidential Information and Other Property.
(a)    Access to Confidential Information.  The Executive understands, acknowledges and agrees that during the course of his or her employment with the Bank he or she has gained or will gain information regarding, knowledge of, and familiarity with, the Confidential Information of the Bank (as defined in subsection (c)) that would cause irreparable damage and harm to the Bank if it was disclosed.  The Executive understands, acknowledges and agrees that the Confidential Information has substantial economic value because it is not known or readily ascertainable by proper means by others who could obtain economic value from it.  The Executive also acknowledges and agrees that the Bank uses reasonable means to maintain the secrecy and confidentiality of the Confidential Information.
(b)    Non-Disclosure.  At all times while the Executive is employed by the Bank, and at all times thereafter, the Executive will not (i) directly or indirectly disclose, provide or discuss any Confidential Information with or to any Person (as defined in subsection (d)) other than those directors, officers, employees, representatives and agents of the Bank who need to know such Confidential Information for a proper corporate purpose, and (ii) directly or indirectly use any Confidential Information (A) to compete against the Bank, or (B) for the Executive’s own benefit, or for the benefit of any Person other than the Bank.
(c)    Confidential Information Defined.  For purposes of this Agreement, the term “Confidential Information” means any and all:
(i)    materials, records, data, documents, lists, writings and information (in each case, whether in writing, printed, verbal, electronic, computerized or otherwise) (A) relating or referring in any manner to the business, operations, affairs, financial condition, results of operation, cash flow, assets, liabilities, sales, revenues, income, estimates, projections, policies, strategies, techniques, methods, products, developments, suppliers, regulators, members, relationships and/or customers of the Bank that are confidential, proprietary or not otherwise publicly available, in any event not without a breach of this Agreement, or (B) that the Bank has deemed confidential, proprietary, nonpublic or not otherwise publicly available without breaching this Agreement;
(ii)    trade secrets of the Bank, as defined in California Civil Code Section 3426.1(d), as amended, or any successor statute; and

	
			
	Approved 12/23/2016
	1
	 

(iii)    any and all copies, summaries, analyses and extracts which relate or refer to or reflect any of the items set forth in (i) or (ii) above.  The Executive agrees that all Confidential Information is confidential and is and at all times will remain the property of the Bank.
(d)    Person Defined.  For purposes of this Agreement, the term “Person” will mean any natural person, proprietorship, partnership, corporation, limited liability company, bank, organization, firm, business, joint venture, association, trust or other entity and any government agency, body or authority.
(e)    Return of Confidential Information and Other Property.  The Executive covenants and agrees:
(i)    to keep all Confidential Information subject to the Bank’s custody and control and to promptly return to the Bank all Confidential Information that is still in the Executive’s possession or control at the termination of the Executive’s employment with the Bank; and
(ii)    promptly upon termination of the Executive’s employment with the Bank, to return to the Bank, at the Bank’s principal office, all vehicles, equipment, computers, credit cards and other property of the Bank and to cease using any of the foregoing.
(f)    Exceptions from Confidentiality Obligations.  Section 1 shall not be deemed to prevent the Executive from making disclosures required or made permissible by applicable statute or regulation. Section 1 shall also not be deemed to prevent the Executive from making disclosure required by agency or court order, to the extent that prior to disclosure, the Executive provides the Bank with timely written notice of order , to the extent such prior notice is not prohibited, so as to allow the Bank to contest the order.
2.    Non-Disparagement.  The Executive agrees to not communicate disparaging remarks to third parties about the Bank, its directors, officers or employees.  Likewise, the Bank agrees not to disparage the Executive or his or her skills or job performance to third parties.  However, nothing in this paragraph shall prohibit the Bank or the Executive from testifying truthfully under oath.  In addition, Section 2 shall not be deemed to prevent the Executive from making disclosures required or made permissible by applicable statute or regulation. Section 2 shall also not be deemed to prevent the Executive from making disclosure required by agency or court order, to the extent that prior to disclosure, the Executive provides the Bank with timely written notice of order, to the extent such prior notice is not prohibited, so as to allow the Bank to contest the order.
3.    Non-Solicitation.  The Executive hereby understands, acknowledges and agrees that, by virtue of his or her position with the Bank, the Executive has and will have advantageous familiarity and personal contacts with the employees of the Bank and has and will have advantageous familiarity with the business, operations and affairs of the Bank.  In addition, the Executive understands, acknowledges and agrees that the business of the Bank is highly competitive.  Accordingly, at all times while the Executive is employed by the Bank and for a twelve-month period following termination of employment, the Executive will not, directly or indirectly, or individually or together with any other Person, as owner, shareholder, investor, member, partner, proprietor, principal, director, officer, Executive, manager, agent, representative, independent contractor, consultant or otherwise induce, request or attempt to influence any Bank employee who was employed by the Bank during the twelve-month period prior to termination of employment, to terminate his or her employment with the Bank.  
4.    Periods of Noncompliance and Reasonableness of Periods.  The restrictions and covenants contained in Section 3 will not run during all periods of noncompliance and will apply during the Term of this Agreement and for the full periods specified in Section 3.  The Bank and the Executive understand, acknowledge and agree that the restrictions and covenants contained in Section 3 are reasonable in view of the nature of the business in which the Bank is engaged, the Executive’s position with the Bank and the Executive’s advantageous knowledge and familiarity with, the Bank’s employees, business, operations, affairs and customers.

	
			
	Approved 12/23/2016
	2
	 

The Bank’s obligation to pay an award to the Executive pursuant to the Federal Home Loan Bank of San Francisco Incentive Plan will immediately terminate in the event the Executive breaches any of the provisions of Section 1 or 3 and all outstanding awards will be forfeited.  Notwithstanding the foregoing:
(a)    the Executive’s covenants set forth in Sections 1 or 3 will continue in full force and effect and be binding upon the Executive;
(b)    the Bank will be entitled to the remedies specified in Section 6; and
(c)    the Bank will be entitled to its damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) resulting from or relating to the successful prosecution of the Executive’s breach of any of the provisions of Section 1 or 3.
5.    Survival of Certain Provisions.  Upon any termination of the Executive’s employment with the Bank, the Executive and the Bank hereby expressly agree that the provisions of Sections 1, 3, 4 and 6 will continue to be in full force and effect and binding upon the Executive and the Bank in accordance with the applicable respective provisions of such Sections.
6.    Remedies.  The Executive agrees that the Bank will suffer irreparable damage and injury and will not have an adequate remedy at law in the event of any actual, threatened or attempted breach by the Executive of any provision of Section 1 or 3.  Accordingly, in the event of a threatened, attempted or actual breach by the Executive of any provision of Section 1 or 3, in addition to all other remedies to which the Bank is entitled at law, in equity or otherwise, the Bank may be entitled to a temporary restraining order and a permanent injunction or a decree of specific performance of any provision of Section 1 or 3.  The foregoing remedies will not be deemed to be the exclusive rights or remedies of the Bank for any breach of or noncompliance with this Agreement by the Executive but will be in addition to all other rights and remedies available to the Bank at law, in equity or otherwise.
7.    Severability.  In case any one or more of the provisions (or any portion thereof) contained herein will, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provision of this Agreement, but this Agreement will be construed as if such invalid, illegal or unenforceable provision or provisions (or portion thereof) had never been contained herein.  If any provision of this Agreement will be determined by a court of competent jurisdiction to be unenforceable because of the provision’s scope, duration or other factor, then such provision will be considered divisible and the court making such determination will have the power to reduce or limit (but not increase or make greater) such scope, duration or other factor or to reform (but not increase or make greater) such provision to make it enforceable to the maximum extent permitted by law, and such provision will then be enforceable against the appropriate party hereto in its reformed, reduced or limited form; provided, however, that a provision will be enforceable in its reformed, reduced or limited form only in the particular jurisdiction in which a court of competent jurisdiction makes such determination.
8.    Entire Agreement.  This Agreement sets forth the entire understanding of the parties hereto with respect to its subject matter, merges and supersedes all prior and contemporaneous understandings with respect to its subject matter, and may not be waived or modified, in whole or in part, except in writing signed by each of the parties hereto.  No waiver of any provision of this Agreement in any instance will be deemed to be a waiver of the same or any other provision in any other instance.  The recitals set forth above are incorporated herein by this reference.
9.    Effect and Modification.  No statement or promise, except as set forth herein, has been made with respect to the subject matter of this Agreement. No modification or amendment will be effective unless in writing and signed by the Executive and an officer of the Bank (other than the Executive).

	
			
	Approved 12/23/2016
	3
	 

10.    Non-Waiver.  The Bank’s or the Executive’s failure or refusal to enforce all or any part of, or the Bank’s or the Executive’s waiver of any breach of this Agreement, will not be a waiver of the Bank’s or the Executive’s continuing or subsequent rights under this Agreement, nor will such failure or refusal or waiver have any effect on the subsequent enforceability of this Agreement.
11.    Non-Assignability.  This Agreement contemplates that the Executive will personally provide the services described herein, and accordingly, the Executive may not assign the Executive’s rights or obligations hereunder, whether by operation of law or otherwise, in whole or in part, without the prior written consent of the Bank.
12.    Notice.  Any notice, request, instruction or other document to be given hereunder to any party will be in writing and delivered by hand, telegram, registered or certified United States mail return receipt requested, or other form of receipted delivery, with all expenses of delivery prepaid, as follows:
	
		
	If to the Executive
	 

	 
	 

	 
	 

	 
	 

	 
	 

	 
	 

	If to the Bank
	 

	 
	Federal Home Loan Bank of San Francisco

	 
	c/o General Counsel and Corporate Secretary

	 
	P.O. Box 7948

	 
	San Francisco, CA 94120

13.    Governing Law.  This Agreement is being delivered in and will be governed by the laws of the State of California without regard to the choice of law principles thereof.  Any dispute regarding this Agreement will be brought in any California state or federal court having jurisdiction in the matter and the Executive expressly consents to the jurisdiction of such courts.
14.    Prior Agreements.  The Executive represents and warrants to the Bank that the Executive is not a party to or otherwise bound by any agreement that would restrict in any way the performance by the Executive of the Executive’s duties, services and obligations under this Agreement, that the Executive has disclosed to the Bank all employment type agreements to which the Executive has been bound, including without limitation employment agreements, consulting agreements, non-compete agreements or covenants, confidentiality or non-disclosure agreements or covenants, and intellectual property assignment agreements, and that the Bank will not have any liability to any third party arising out of the Executive entering into this Agreement or performing hereunder.
15.    Effect of Headings.  The descriptive headings of the Sections and, where applicable, subsections, of this Agreement are inserted for convenience and identification only and do not constitute a part of this Agreement for purposes of interpretation.
16.    Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which collectively will constitute one and the same instrument.
17.    Miscellaneous.  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Plan.

	
			
	Approved 12/23/2016
	4
	 

IN WITNESS WHEREOF, the Bank, by its officer thereunder duly authorized, and the Executive, have caused this Non-Solicitation and Non-Disclosure Agreement to be executed as of the day and year first above written.
	
				
	FEDERAL HOME LOAN BANK
	 
	 

	OF SAN FRANCISCO
	 
	EXECUTIVE

	 
	 
	 
	 

	By:
	 
	 
	 

	 
	 
	 
	 

	Its:
	 
	 
	 

	 
	 
	 
	 

	By:
	 
	 
	 

	 
	 
	 
	 

	Its:
	 
	 
	 

	
			
	Approved 12/23/2016
	5
	 

	
								
	FEDERAL HOME LOAN BANK OF SAN FRANCISCO

Executive Incentive Plan
APPENDIX IV

2018 Performance Period Goals, Qualifiers, and Awards Scale

	2018 Goals
	2018 Goal Components
	Goal Weight
	Goal Component Weight
	2018 Goal Measures

	1) Risk Management
	20%
	 
	In the event of a significant deficiency or material weakness in internal control over financial reporting, a significant operational loss, or a significant noncompliance with Bank policy as described in the Bank’s Risk Management Policy, the Board of Directors will assess the impact and will make appropriate adjustments to the Risk Management goal achievement level.

	 
	Cyber-security Threat Management
	 
	100%
	  75%:  Enhance cyber-security threat metrics
100%:  Threshold plus conduct one internal and one external cyber-security threat table top exercise
125%:  Meets plus operationalize system hardening
150%:  Exceeds plus meet SLA for critical vulnerabilities with public exploits, and reduce backlog of critical vulnerabilities by 80%

	2) Franchise Enhancement
	40%
	 
	 

	 
	A) Financial Performance
	 
	25%
	Adjusted Return on Capital Spread

	75%
	100%
	125%
	150%

	2.13%
	2.43%
	2.73%
	3.03%

	 
	B) Operating Expense Efficiency
	 
	25%
	Actual 2018 Core Operating Expenses ($Mils.)

	75%
	100%
	125%
	150%

	$128.4
	$127.4
	$126.4
	$125.4

	 
	C) Advances and Letters of Credit
	 
	25%
	Member Advances and Letters of Credit (Average Daily Balance ($Bils.)

	75%
	100%
	125%
	150%

	$69.1
	$77.5
	$80.0
	$82.5

	 
	D) Member Engagement (RMS and Specialists - Total)
	 
	12.5%
	Count

	75%
	100%
	125%
	150%

	132
	149
	165
	182

	(Specialists-15% of Total)
	12.5%
	20
	22
	25
	27

	3) Community Investment
	20%
	 
	 

	 
	CIP/ACE/HPA Advances, Letters of Credit & AHEAD
	 
	

100%

	Number of Members

	75%
	100%
	125%
	150%

	39
	47
	50
	55

	4) Diversity & Inclusion
	20%
	 
	 

	 
	Diversity and Inclusion Strategic Plan
	 
	100%
	  75%:  Develop 2018-2020 Diversity and Inclusion (D&I Strategic Plan)
100%:  Threshold plus target (100%) level of achievement against D&I initiatives
125%:  Meets plus Exceed level of achievement against D&I initiatives
150%:  Exceeds plus deliver Capital markets hosted outreach seminar for diverse broker/dealers and complete one diverse supplier incubator partnership

	
			
	Approved 12/1/2017
	 
	Page 1

Incentive Award Opportunities 
	
													
	 
	Total Incentive Award as % of Compensation (Base Salary)
	Year-End Incentive Award as % of Compensation (Base Salary)
	Deferred Incentive Award as % of Compensation (Base Salary)

	 
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds

	CEO/EVP/SVPs
	40%
	80%
	96%
	100%
	20%
	40%
	48%
	50%
	20%
	40%
	48%
	50%

Goal Weights
	
					
	 
	CEO/SVPs
	SVP, Chief Risk Officer

	 
	Corporate Goal Weights
	Goal Weight (includes individual goals)
	Corporate Goal Weights
	Goal Weight (includes individual goals)

	Individual
	N/A
	20.0%*
	N/A
	20.0%*

	Risk Management
	20.0%
	16.0%
	50.0%
	40.0%

	Franchise Enhancement
	40.0%
	32.0%
	25.0%
	20.0%

	Community Investment
	20.0%
	16.0%
	10.0%
	8.0%

	Diversity and Inclusion
	20.0%
	16.0%
	15.0%
	12.0%

	Total
	100.0%
	100.0%
	100.0%
	100.0%

Qualifiers
The following are the performance qualifiers for any Award: (i) no submission of material information to a regulatory or a reporting agency is significantly past due; (ii) the Bank makes sufficient progress, as determined by the Board, in the timely remediation of significant examination, monitoring and other supervisory findings; (iii) no material risk-management deficiency exists at the Bank; (iv) no operational errors or omissions result in material revisions to the financial results, information submitted to the FHFA, or data used to determine incentive payouts; (v) the Bank has sufficient capital to pay dividends and the ability to repurchase member stock.
* In support of the 20 percent goal weights, management is developing individual goal descriptions and quantifying measures for EIP participants, which will be presented to the Board for review and approval in January 2018, subject to Finance Agency review.

	
			
	Approved 12/1/2017
	 
	Page 2

FEDERAL HOME LOAN BANK OF SAN FRANCISCO

Executive Incentive Plan
APPENDIX V

2019 Performance Period Goals, Qualifiers & Awards Scale	
								
	2019 Goals
	2019 Goal Components
	Goal Weight
	Goal Component Weight
	2019 Goal Measures

	1) Risk Management
	20%
	 
	In the event of a significant deficiency or material weakness in internal control over financial reporting, a significant operational loss, or a significant noncompliance with Bank policy as described in the Bank’s Risk Management Policy, the Board of Directors will assess the impact and will make appropriate adjustments to the Risk Management goal achievement level.

	 
	A) Cyber-Security Threat Management
	 
	 
	Threshold (75%): Enhance standard cyber security awareness program to include at least four (4) topical sessions for users that address current security trends and threats.

	 
	50%
	Meets (100%): Threshold Plus Define/implement methodology for identifying/documenting negative operational trends that require escalation and remediation. Further mature security posture, establish an all IT standard, adopt innovative techniques of machine learning, and advance incident response plan.

	 
	 
	Exceeds (125%): Meets Plus Operational security compliance management enhancements. Disposition of all outstanding compliance gaps (as of 1/1/19) such that each item has a documented action plan with a reasonable target date, a risk acceptance request, or a waiver.

	 
	 
	Far Exceeds (150%): Exceeds Plus Business Continuity enhancements that focuses on use of business impact analysis of disruption to refine Business Continuity Plan (BCPs) to address critical business processes. Test BCPs against failover of the applications and servers business process is dependent upon. Focus on fail over triggers and critical vendors.

	B) Risk Management Practices and Credit Underwriting Framework
	 
	50%
	Threshold: Expand the Governance-Risk-Control ("GRC") tool to manage bank-wide policies.

	 
	Meets: Threshold Plus Implement prepay/default model (QRM) for market risk analytics.

	 
	Exceeds: Meets Plus Transition the OTTI PLRMBS model validation to in-house.

	 
	Far Exceeds: Exceeds plus Refresh credit and collateral framework.

	2) Franchise Enhancement
	40%
	 
	 

	 
	A) Financial
Performance
	 
	40%
	Adjusted Return on Capital Spread

	 
	75%
	100%
	125%
	150%

	 
	1.70%
	2.00%
	2.30%
	2.60%

	B) Bank-wide Prioritization and Process Improvement
	 
	10%
	Threshold: Bank-wide prioritization process implemented, voting members meet a minimum of six times and lean change agents trained on the pitch process.

	 
	Meets: Threshold Plus Lean change agents trained in Lean Foundations. One cross-bank end to end process analyzed, mapped, and evaluated under lean framework. Corresponding cross team brainstorming and problem-solving event held to deliver improvements.

	 
	Exceeds: Meets Plus Additional set of Bank team members trained (Pitch or Lean Foundations) and a second brainstorming and problem-solving event held to deliver improvements.

	 
	Far Exceeds: Exceeds Plus Each business unit (defined by ELT level) delivers on quantifiable process improvement.

	C) Advances and Letters of Credit
	 
	25%
	Member Advances and Letters of Credit (Average Daily Balance ($Bils.)

	 
	75%
	100%
	125%
	150%

	 
	$76.5
	$85.0
	$87.5
	$90.0

	D) Member Engagement
 - RMS and Specialists - Total
	 
	12.5%
	Number of Engagements

	 
	75%
	100%
	125%
	150%

	 
	99
	110
	116
	122

	- Member Engagement Events
	 
	12.5%
	10
	12
	14
	16

	
			
	Approved 12/7/2018
	 
	Page 1

2019 Performance Period Goals, Qualifiers & Awards Scale (con’t)

	
								
	2019 Goals
	2019 Goal Components
	Goal Weight
	Goal Component Weight
	2019 Goal Measures

	3) Community Investment
	20%
	 
	 

	 
	CIP/ACE Advances, Letters of Credit, & AHEAD
	 
	

100%

	Number of Members

	75%
	100%
	125%
	150%

	42
	47
	50
	55

	4) Diversity & Inclusion
	20%
	 
	 

	 
	Implement: 2019 D&I Strategic Initiatives, Supplier Diversity Training and Program Enhancements, Value Differences Training, and Increase Diverse Dealer Utilization.
	 
	100%
	Threshold: Implement 2019 D&I Strategic Initiatives as approved by the Board of Directors within the 2018-2020 D&I Strategic Plan.

	Meets: Threshold plus the Supplier Diversity program to conduct business unit level training, develop diverse supplier scorecards and set quarterly diverse spend targets, resulting in 15%-20% diverse spend.

	Exceeds: Target plus Human Resources to provide leadership competency training, includes Values Differences competency, for at least 75% of employees.

	Far Exceeds: Exceeds plus Capital Markets to increase diverse dealer utilization to 75% with the Bank's current sixteen (16) approved MWI firms.

	
																	
	Incentive Award Opportunities

	 
	Total Incentive Award as % of Compensation (Base Salary)
	Year-End Incentive Award as % of Compensation (Base Salary)
	Deferred Incentive Award as % of Compensation (Base Salary)

	Title
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds

	CEO/
EVP/
SVP
	40%
	80%
	96%
	100%
	20%
	40%
	48%
	50%
	20%
	40%
	48%
	50%

	
					
	Goal Weights

	 
	CEO/EVP/SVP
	SVP, Chief Risk Officer

	 
	Corporate Goal Weights
	Goal Weight
(incl. individual goals)
	Corporate Goal Weights
	Goal Weight 
(incl. individual goals)

	Individual
	N/A
	20.0%
	N/A
	20.0%

	Risk Management
	20.0%
	16.0%
	50.0%
	40.0%

	Franchise Enhancement
	40.0%
	32.0%
	25.0%
	20.0%

	Community Investment
	20.0%
	16.0%
	10.0%
	8.0%

	Diversity and Inclusion
	20.0%
	16.0%
	15.0%
	12.0%

	Total
	100.0%
	100.0%
	100.0%
	100.0%

Qualifiers
The following are the performance qualifiers for any Award: (i) no submission of material information to a regulatory or a reporting agency is significantly past due; (ii) the Bank makes sufficient progress, as determined by the Board, in the timely remediation of significant examination, monitoring and other supervisory findings; (iii) no material risk-management deficiency exists at the Bank; (iv) no operational errors or omissions result in material revisions to the financial results, information submitted to the FHFA, or data used to determine incentive payouts; (v) the Bank has sufficient capital to pay dividends and the ability to repurchase member stock. 

	
			
	Approved 12/7/2018
	 
	Page 2Exhibit 10.1

 

SILICON LABORATORIES INC.

2009 STOCK INCENTIVE PLAN

 

MARKET STOCK UNITS GRANT NOTICE AND 
 GLOBAL MARKET STOCK UNITS AWARD AGREEMENT

 

Silicon Laboratories Inc., a Delaware corporation (the “Company”), pursuant to its 2009 Stock Incentive Plan, as amended and restated (the “Plan”), hereby grants to the holder listed below (the “Participant”), an award (the “Award”) of Market Stock Units (the “Units”), each of which is a bookkeeping entry representing the equivalent in value of one (1) Share, on the terms and conditions set forth herein and in the Global Market Stock Units Award Agreement attached hereto (the “Award Agreement”), including any country-specific terms and conditions set forth in an addendum to such agreement (the “Addendum”) the Plan, which are incorporated herein by reference.  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Award Agreement.

 

	
Participant:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Grant Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Target Number of Units:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Maximum Number of Units:
    	
 
    	
200% of the Target Number of Units, subject to   adjustment as provided by the Award Agreement.
    
	
 
    	
 
    	
 
    
	
Start Date:
    	
 
    	
[Insert First Date of First Fiscal Year of   Performance Period]
    
	
 
    	
 
    	
 
    
	
End Date:
    	
 
    	
[Insert Last Date of Third Fiscal Year of   Performance Period]
    
	
 
    	
 
    	
 
    
	
Performance Period:
    	
 
    	
The three fiscal years of the Company beginning on   the Start Date and ending on the End Date, subject to Section 9.1 of the   Award Agreement.
    
	
 
    	
 
    	
 
    
	
Performance Criteria:
    	
 
    	
The Relative TSR Percentile, determined in   accordance with Section 2 of the Award Agreement.
    
	
 
    	
 
    	
 
    
	
Relative Return Factor:
    	
 
    	
For each Performance Period, a percentage equal to   (i) 0% if the Relative TSR Percentile is less than 25%, (ii) 50% if   the Relative TSR Percentile is equal to 25% or (iii) if the Relative TSR   Percentile is greater than 25%, then the sum of 50% plus the product of   (a) 2 multiplied by (b) the difference of (x) the Relative TSR   Percentile minus (y) 25%, as illustrated by Appendix A.
    
	
 
    	
 
    	
 
    
	
Earned Units:
    	
 
    	
The number of Earned Units, if any (not to exceed   the Maximum Number of Units), shall equal the product of (i) the Target   Number of Units and (ii) the Relative Return Factor determined for the   Performance Period, as illustrated by Appendix A.
    

 

 

	
Vesting Date:
    	
 
    	
[INSERT DATE — January 31 following the End   Date], except as otherwise provided by the Award Agreement.
    
	
 
    	
 
    	
 
    
	
Vested Units:
    	
 
    	
Provided that the Participant’s Service (as defined   in Section 5.1 of the Award Agreement) has not terminated prior to the   Vesting Date (except as otherwise provided by the Award Agreement), the   Earned Units, if any, shall become Vested Units on the Vesting Date.
    
	
 
    	
 
    	
 
    
	
Settlement Date:
    	
 
    	
For each Vested Unit, except as otherwise provided   by the Award Agreement, a date occurring no later than ten (10) days   following the Vesting Date.
    

 

By his or her signature below or by electronic acceptance or authentication in a form authorized by the Company, the Participant agrees to be bound by the terms and conditions of the Plan, the Award Agreement, including the Addendum, and this Grant Notice.  The Participant has reviewed the Award Agreement, the Addendum, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Award Agreement, the Addendum and the Plan.  The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or relating to the Units.

 

	
SILICON   LABORATORIES INC.
    	
 
    	
PARTICIPANT
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By: 
    	
 
    	
 
    	
By: 
    	
 
    	
 
    
	
Print Name: 
    	
 
    	
 
    	
Print Name: 
    	
 
    	
 
    
	
Title: 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Address: 
    	
 
    	
 
    	
Address: 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

APPENDIX A

 

ILLUSTRATION OF RELATIVE RETURN FACTOR AND RESULTING NUMBER OF EARNED UNITS

 

	
Relative TSR Percentile
    	
 
    	
Relative Return
   Factor
    	
 
    	
Earned Units
   (Per 1,000 Target Units)
    	
 
    
	
100%
    	
 
    	
200.0
    	
%
    	
2,000
    	
 
    
	
90%
    	
 
    	
180.0
    	
%
    	
1,800
    	
 
    
	
80%
    	
 
    	
160.0
    	
%
    	
1,600
    	
 
    
	
70%
    	
 
    	
140.0
    	
%
    	
1,400
    	
 
    
	
60%
    	
 
    	
120.0
    	
%
    	
1,200
    	
 
    
	
50%
    	
 
    	
100.0
    	
%
    	
1,000
    	
 
    
	
40%
    	
 
    	
80.0
    	
%
    	
800
    	
 
    
	
30%
    	
 
    	
60.0
    	
%
    	
600
    	
 
    
	
25%
    	
 
    	
50.0
    	
%
    	
500
    	
 
    
	
Less than 25%
    	
 
    	
0.0
    	
%
    	
0
    	
 
    

 

 

APPENDIX A CONTINUED

 

ILLUSTRATIONS OF CALCULATION OF TSR FOR THE COMPANY OR A GIVEN BENCHMARK COMPANY

 

	
Assumptions:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Average Per   Share Closing Price (beginning)
    	
 
    	
 
    	
 
    	
$
    	
36.87
    	
 
    
	
Average Per   Share Closing Price (ending)
    	
 
    	
 
    	
 
    	
$
    	
46.02
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Computations:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TSR
    	
 
    	
((46.02 / 36.87) - 1) x   100
    	
 
    	
24.82
    	
%
    

 

2

 

APPENDIX B

 

ILLUSTRATION OF ADJUSTMENT TO AVERAGE PER SHARE CLOSING PRICE
 TO REFLECT ASSUMED REINVESTMENT OF CASH DIVIDENDS AND DISTRIBUTIONS

 

1.                                      Assumptions:

 

·                  For the purposes of this illustration only, the averaging periods for determination of the Average Per Share Closing Price and the Average Closing Index Value are assumed to be the 30-day periods ending on the first day of the Performance Period and the last day of the Performance Period.

 

·                  The company declares and pays a quarterly cash dividend of $0.20 per share throughout all periods relevant to this illustration, with ex-dividend dates occurring each year on or about March 28, June 28, September 28 and December 28.

 

·                  On the ex-dividend date, the dividend paid is reinvested to purchase an additional fractional share.

 

·                  The Performance Period begins on January 1, 2XX1 and ends on December 31, 2XX3

 

2.                                      Calculate Average Per Share Closing Price at the beginning of the Performance Period.

 

On the ex-dividend date occurring on December 28, 2XX0, assume that the dividend of $0.20 paid on one share is reinvested.  Compute an adjusted Average Per Share Closing Price.  Assume only for simplicity of illustration that there are only five trading days during the 30-day period ending 01/01/2XX1.

 

	
Trading Day
    	
 
    	
Closing Price
    	
 
    	
Dividend Paid
    	
 
    	
Shares
   Purchased
    	
 
    	
Accumulated
   Shares
    	
 
    	
Total
   Accumulated
   Value
    	
 
    
	
12/24/2XX0
    	
 
    	
$
    	
37.26
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1.000
    	
 
    	
$
    	
37.26
    	
 
    
	
12/26/2XX0
    	
 
    	
$
    	
37.32
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1.000
    	
 
    	
$
    	
37.32
    	
 
    
	
12/27/2XX0
    	
 
    	
$
    	
37.44
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1.000
    	
 
    	
$
    	
37.44
    	
 
    
	
12/28/2XX0
    	
 
    	
$
    	
37.67
    	
 
    	
$
    	
0.20
    	
 
    	
.0053
    	
 
    	
1.0053
    	
 
    	
$
    	
37.87
    	
 
    
	
12/31/2XX0
    	
 
    	
$
    	
37.43
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1.0053
    	
 
    	
$
    	
37.63
    	
 
    
	
 
    	
 
    	
 
    	
Average   Per Share Closing Price with Dividends Reinvested
    	
 
    	
$
    	
37.50
    	
 
    
															

 

3.                                      Calculate Accumulated Shares During the Performance Period.

 

On each ex-dividend date during the Performance Period, assume that the dividend of $0.20 paid on one share is reinvested, and the fractional share is added to the 1.0053 accumulated shares determined during the initial averaging period.

 

	
Ex-Dividend Date
    	
 
    	
Closing Price
    	
 
    	
Dividend Paid
    	
 
    	
Shares Purchased
    	
 
    	
Accumulated Shares
    	
 
    
	
03/28/2XX1
    	
 
    	
$
    	
31.13
    	
 
    	
$
    	
0.20
    	
 
    	
.0064
    	
 
    	
1.0117
    	
 
    
	
06/28/2XX1
    	
 
    	
$
    	
36.46
    	
 
    	
$
    	
0.20
    	
 
    	
.0055
    	
 
    	
1.0172
    	
 
    
	
09/28/2XX1
    	
 
    	
$
    	
31.08
    	
 
    	
$
    	
0.20
    	
 
    	
.0064
    	
 
    	
1.0236
    	
 
    
	
12/28/2XX1
    	
 
    	
$
    	
23.67
    	
 
    	
$
    	
0.20
    	
 
    	
.0084
    	
 
    	
1.0320
    	
 
    
	
03/28/2XX2
    	
 
    	
$
    	
26.96
    	
 
    	
$
    	
0.20
    	
 
    	
.0074
    	
 
    	
1.0394
    	
 
    
	
06/28/2XX2
    	
 
    	
$
    	
38.75
    	
 
    	
$
    	
0.20
    	
 
    	
.0052
    	
 
    	
1.0446
    	
 
    
	
09/28/2XX2
    	
 
    	
$
    	
46.49
    	
 
    	
$
    	
0.20
    	
 
    	
.0043
    	
 
    	
1.0489
    	
 
    
	
12/28/2XX2
    	
 
    	
$
    	
47.97
    	
 
    	
$
    	
0.20
    	
 
    	
.0042
    	
 
    	
1.0531
    	
 
    
	
03/28/2XX3
    	
 
    	
$
    	
47.72
    	
 
    	
$
    	
0.20
    	
 
    	
.0042
    	
 
    	
1.0573
    	
 
    
	
06/28/2XX3
    	
 
    	
$
    	
43.50
    	
 
    	
$
    	
0.20
    	
 
    	
.0046
    	
 
    	
1.0619
    	
 
    
	
09/28/2XX3
    	
 
    	
$
    	
37.55
    	
 
    	
$
    	
0.20
    	
 
    	
.0053
    	
 
    	
1.0672
    	
 
    
	
12/28/2XX3
    	
 
    	
$
    	
46.13
    	
 
    	
$
    	
0.20
    	
 
    	
.0043
    	
 
    	
1.0715
    	
 
    

 

 

4.                                      Calculate Average Per Share Closing Price at the end of the Performance Period.

 

On the ex-dividend date occurring on December 28, 2XX3, assume that the dividend of $0.20 paid on one share is reinvested, and the fractional share is added to the 1.0672 accumulated shares determined through the last ex-dividend date prior to the final averaging period.  Compute an adjusted Average Per Share Closing Price.  Assume only for simplicity of illustration that there are only seven trading days during the 30-day period ending 12/31/2XX3.

 

	
Trading Day
    	
 
    	
Closing Price
    	
 
    	
Dividend Paid
    	
 
    	
Shares
   Purchased
    	
 
    	
Accumulated
   Shares
    	
 
    	
Total
   Accumulated
   Value
    	
 
    
	
12/22/2XX3
    	
 
    	
$
    	
46.93
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1.0672
    	
 
    	
$
    	
50.08
    	
 
    
	
12/23/2XX3
    	
 
    	
$
    	
46.45
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1.0672
    	
 
    	
$
    	
49.57
    	
 
    
	
12/27/2XX3
    	
 
    	
$
    	
46.55
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1.0672
    	
 
    	
$
    	
49.68
    	
 
    
	
12/28/2XX3
    	
 
    	
$
    	
46.13
    	
 
    	
$
    	
0.20
    	
 
    	
.0043
    	
 
    	
1.0715
    	
 
    	
$
    	
49.43
    	
 
    
	
12/29/2XX3
    	
 
    	
$
    	
46.11
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1.0715
    	
 
    	
$
    	
49.41
    	
 
    
	
12/30/2XX3
    	
 
    	
$
    	
46.28
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1.0715
    	
 
    	
$
    	
49.59
    	
 
    
	
12/31/2XX3
    	
 
    	
$
    	
46.02
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1.0715
    	
 
    	
$
    	
49.31
    	
 
    
	
 
    	
 
    	
Average   Per Share Closing Price with Dividends Reinvested
    	
 
    	
$
    	
49.58
    	
 
    
															

 

2

 

SILICON LABORATORIES INC.

2009 STOCK INCENTIVE PLAN

 

GLOBAL MARKET STOCK UNITS AWARD AGREEMENT

 

Silicon Laboratories Inc. (the “Company”) has granted to the Participant named in the Market Stock Units Grant Notice (the “Grant Notice”) to which this Market Stock Units Award Agreement (this “Award Agreement”) is attached an Award consisting of Market Stock Units (the “Units”) subject to the terms and conditions set forth in the Grant Notice and this Award Agreement, including any country-specific terms and conditions set forth in an addendum to such agreement (the “Addendum”).  The Award has been granted pursuant to the Silicon Laboratories Inc. 2009 Stock Incentive Plan, as amended and restated (the “Plan”), as amended to the Grant Date, the provisions of which are incorporated herein by reference.

 

Unless otherwise defined herein or in the Grant Notice, capitalized terms shall have the meanings assigned under the Plan.

 

1.             THE AWARD.

 

The Company hereby awards to the Participant the Target Number of Units set forth in the Grant Notice, which, depending on the extent to which a Performance Goal (as described by Plan) is attained during the Performance Period, may result in the Participant earning as little as zero (0) Units or as many as the Maximum Number of Units.  Subject to the terms of this Award Agreement and the Plan, each Unit, to the extent it is earned and becomes a Vested Unit, represents a right to receive one (1) share of Common Stock (a “Share”) on the Settlement Date.  Unless and until a Unit has been determined to be an Earned Unit and has vested and become a Vested Unit as set forth in the Grant Notice, the Participant will have no right to settlement of such Units.  Prior to settlement of any Units, such Units will represent an unfunded and unsecured obligation of the Company.

 

2.             MEASUREMENT OF PERFORMANCE CRITERIA.

 

The components of Performance Criteria shall be determined for the Performance Period in accordance with the following:

 

2.1          “Benchmark Companies” mean, other than the Company, (x) the companies included in the Philadelphia Semiconductor Sector Total Return Index (NASDAQ OMX: XSOX) (the “Index”) as of the Start Date and (y) any additional companies not included in the Index that are designated as peer companies by the Committee in connection with setting the compensation of the Company’s executives for the first fiscal year of the Performance Period.  Benchmark Companies shall exclude any companies that are not publicly-traded (whether due to completed acquisition, dissolution or other event) for the entire Performance Period.  In the event of a completed merger between two Benchmark Companies during the Performance Period, the Benchmark Company with the higher reported revenue for the four fiscal quarters preceding the closing of such acquisition shall be included as a Benchmark Company and the other company shall not be a Benchmark Company.  The Committee shall retain the discretion to make adjustments to the Benchmark Companies, including without limitation, to address any fundamental change that takes place with respect to a Benchmark Company.

 

2.2          “Relative TSR Percentile” means the percentile (rounded to the nearest whole percentile) reflecting the Company’s rank by comparing the Company’s TSR relative to the TSR of the Benchmark Companies as set forth below:

 

 

Relative TSR Percentile = 1 – [(R-1)/(N-1)]

 

where

 

“R” represents the Company’s ranking when the TSR of the Company and the Benchmark Companies are ranked from highest to lowest TSR.

 

“N” represents the number of Benchmark Companies, plus the Company.

 

For example, if there are 24 Benchmark Companies, and the Company ranked 7th highest, the Relative TSR Percentile would be 75%.  The calculation would be 0.75=1-[(7-1)/(25-1)].

 

2.3          “TSR” with respect to any company means the percentage point increase or decrease in (a) the Average Per Share Closing Price for such company for the 30-day period ending on the last day of the Performance Period over (b) the Average Per Share Closing Price for such company for the 30-day period ending on the first day of the Performance Period.

 

2.4          “Average Per Share Closing Price” with respect to any company means the average of the daily closing prices per share as reported on the company’s primary stock market for all trading days falling within an applicable 30-day period described in Section 2.1.  The Average Per Share Closing Price shall be adjusted in each case to reflect an assumed reinvestment, as of the applicable ex-dividend date, of all cash dividends and other cash distributions (excluding cash distributions resulting from share repurchases or redemptions by the company) paid to stockholders, as applicable, during the 30-day period ending on the first day of the Performance Period and during the Performance Period.  The method of adjustment of the Average Per Share Closing Price to reflect the assumed reinvestment of cash dividends and other cash distributions to stockholders is illustrated in Appendix B to the Grant Notice.  In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution of assets to stockholders, or any other change affecting the shares or the price of the shares, the Committee shall make such adjustments to the Average Per Share Closing Price, if any, as the Committee in its discretion may deem appropriate to reflect such change.

 

3.             COMMITTEE CERTIFICATION OF EARNED UNITS.

 

3.1          Level of Performance Criteria Attained.  On or before the Vesting Date following completion of the Performance Period, the Committee shall determine and certify in writing for the Performance Period (i) the level of attainment of the Performance Criteria during such Performance Period, (ii) the resulting Relative Return Factor for such Performance Period and (iii) the number of Units which have become Earned Units for such Performance Period, and (b) the total number of Units which have become Earned Units for the entire Performance Period.  Except as set forth herein, the Committee may not increase the number of Units that may be eligible to become Earned Units to a number that is greater than the number of Earned Units determined in accordance with the foregoing sentence.  The Committee retains the sole discretion to reduce the number of Units that would otherwise be eligible to become Earned Units based on the attainment level of the Performance Criteria.

 

3.2          Adjustment for Leave of Absence or Part-Time Work.  Unless otherwise required by law or Company policy, if the Participant takes a leave of absence or commences working on a part-time basis during the Performance Period, the Committee may, in its discretion, reduce on a pro rata basis (reflecting the portion of the Performance Period worked by the Participant on a full-time equivalent basis) the number of Units which would otherwise become Earned Units, or provide that the number of Units which would otherwise become Earned Units shall be reduced as provided by the terms of an agreement between the Participant and the Company pertaining to the Participant’s leave of absence or part-time schedule.

 

2

 

4.             VESTING OF EARNED UNITS.

 

4.1          Normal Vesting.  Except as otherwise provided by this Award Agreement, Earned Units shall vest and become Vested Units as provided in the Grant Notice.

 

4.2          Vesting Upon a Change in Control.

 

(a)           In the event of a Change in Control before the end of the Performance Period as set forth in the Grant Notice, the vesting of Earned Units shall be determined in accordance with Section 9.1.

 

(b)           In the event of a Change in Control after the end of the Performance Period as set forth in the Grant Notice but before the Vesting Date as set forth in the Grant Notice, the vesting of Earned Units shall be determined in accordance with Section 9.2.

 

4.3          Vesting Upon Involuntary Termination Following a Change in Control.  In the event that upon or within eighteen (18) months following the effective date of a Change in Control, the Participant’s Service (as defined in Section 5.1 below) terminates due to Involuntary Termination, the vesting of Earned Units shall be determined in accordance with Section 9.3.

 

5.             TERMINATION OF SERVICE.

 

5.1          General Rule.  In the event that prior to the Vesting Date the Participant ceases to provide services to the Company (or any Subsidiary or Affiliate) in the capacity of an Employee, Director or Consultant (collectively referred to herein as “Service”) for any reason, with or without cause, other than by reason of the Participant’s termination of Service described in Section 4.3, the Participant shall forfeit all Units which are not, as of the time of such termination, Vested Units, and the Participant shall not be entitled to any payment therefor.

 

5.2          Determination of Termination Date.  For purposes of this Award Agreement, the date of termination of the Participant’s Service shall be the date upon which the Participant ceases active performance of services for the Company, a Subsidiary or Affiliate, as determined by the Company following the provision of such notification of termination or resignation from Service and shall be determined solely by this Award Agreement and without reference to any other agreement, written or oral, including the Participant’s contract of employment (if any).  Thus, in the event of termination of the Participant’s Service (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment contract, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the Units under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., the Participant’s period of Service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment contract, if any).  The Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of this Award Agreement (including whether the Participant may still be considered to be providing services while on a leave of absence).

 

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6.             SETTLEMENT OF THE AWARD.

 

6.1          Issuance of Shares of Common Stock.  Subject to the provisions of Section 6.3, Section 7 and Section 9.2 below, the Company shall issue to the Participant on the Settlement Date with respect to each Vested Unit to be settled on such date one (1) Share.  Shares issued in settlement of Vested Units shall not be subject to any restriction on transfer other than any such restriction as may be required pursuant to Section 6.3.

 

6.2          Beneficial Ownership of Shares; Certificate Registration.  The Participant hereby authorizes the Company, in its sole discretion, to deposit for the benefit of the Participant with a Company-designated brokerage firm or, at the Company’s discretion, any other broker with which the Participant has an account relationship of which the Company has notice any or all Shares acquired by the Participant pursuant to the settlement of the Award.  Except as provided by the preceding sentence, a certificate for the Shares as to which the Award is settled shall be registered in the name of the Participant.

 

6.3          Restrictions on Grant of the Award and Issuance of Shares.  The grant of the Award and issuance of shares of Common Stock upon settlement of the Award shall be subject to compliance with all applicable requirements of U.S. federal, state or foreign law with respect to such securities.  No Shares may be issued hereunder if the issuance of such Shares would constitute a violation of any applicable U.S. federal, state or foreign securities laws or other laws or regulations or the requirements of any stock exchange or market system upon which the Common Stock may then be listed.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance of any Shares subject to the Award shall relieve the Company of any liability in respect of the failure to issue such Shares as to which such requisite authority shall not have been obtained.  As a condition to the settlement of the Award, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.  Further, regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any State, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any State, or any other law.

 

6.4          Fractional Shares.  The Company shall not be required to issue fractional Shares upon the settlement of the Award.

 

7.             TAX WITHHOLDING AND ADVICE.

 

7.1          In General.  The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Participant’s employer (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant or deemed by the Company or the Employer in its discretion to be an appropriate charge to the Participant even if legally applicable to the Company or the Employer (“Tax-Related Items”), is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer.  The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, vesting or settlement of the Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

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7.2          Withholding of Taxes.  Prior to any relevant taxable or tax withholding event, as applicable, the Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items (including hypothetical withholding tax amounts if the Participant is covered under a Company tax equalization policy).  In this regard, the Participant authorizes the Company or its agent to satisfy the obligations with regard to all Tax-Related Items by withholding in Shares to be issued upon settlement of the Units.  In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by the Participant’s acceptance of the Units, the Participant authorizes and directs the Company and any brokerage firm determined acceptable to the Company to sell on the Participant’s behalf a whole number of Shares from those Shares issued to the Participant as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items.

 

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stock equivalent.  If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items .

 

If the Participant is covered by a Company tax equalization policy, the Participant agrees to pay to the Company any additional hypothetical tax obligation calculated and paid under the terms and conditions of such tax equalization policy.  Finally, the Participant agrees to pay to the Company or the Employer, including through direct payment from the Participant and/or withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company and/or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.

 

7.3          Tax Advice.  The Participant represents, warrants and acknowledges that the Company has made no warranties or representations to the Participant with respect to the income tax, social contributions or other tax consequences of the transactions contemplated by this Award Agreement, and the Participant is in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences.  THE PARTICIPANT UNDERSTANDS THAT THE TAX AND SOCIAL SECURITY LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  THE PARTICIPANT IS HEREBY ADVISED TO CONSULT WITH HIS OR HER OWN PERSONAL TAX, LEGAL AND FINANCIAL ADVISORS REGARDING THE PARTICIPANT’S PARTICIPATION IN THE PLAN BEFORE TAKING ANY ACTION RELATED TO THE PLAN. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

 

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8.             AUTHORIZATION TO RELEASE NECESSARY PERSONAL INFORMATION.

 

The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Award Agreement, the Appendix and any other Award grant materials (“Data”) by and among, as applicable, the Employer, the Company and its Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.

 

The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the exclusive purpose of implementing, administering and managing the Plan.

 

The Company’s equity compensation plan recordkeeper is Fidelity Stock Plan Services, LLC (the “Recordkeeper”).  The Participant understands that Data will be transferred to the Recordkeeper or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan.  The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country.  The Participant understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the Company’s stock administration department.  The Participant authorizes the Company, the Recordkeeper and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan.  The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan.  The Participant understands if he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Company’s stock administration department.  Further, the Participant understands that he or she is providing the consents herein on a purely voluntary basis.  If the Participant  does not consent, or if the Participant later seeks to revoke his or her consent, his or her employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing the Participant’s consent is that the Company would not be able to grant the Participant Units or other equity awards or administer or maintain such awards.  Therefore, the Participant understands that refusing or withdrawing his or her consent may affect the Participant’s ability to participate in the Plan.  For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact the Company’s stock administration department.

 

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9.             CHANGE IN CONTROL.

 

9.1          Effect on Award of Change in Control Before End of Performance Period.  In the event of a Change in Control before the end of the Performance Period as set forth in the Grant Notice, the Performance Period shall end on the day immediately preceding the Change in Control (the “Adjusted Performance Period”).  The number of Earned Units and the vesting of those Units shall be determined for the Adjusted Performance Period in accordance with the following:

 

(a)           Earned Units.  In the Committee’s determination of the number of Earned Units for the Adjusted Performance Period, the following modifications shall be made to the components of the Relative Return Factor:

 

(i)            The Company’s TSR shall be determined as provided by Section 2.1, except that the Company’s Average Per Share Closing Price for the 30-day period ending on the last day of the Adjusted Performance Period shall be replaced with the price per Share to be paid to the holder thereof in accordance with the definitive agreement governing the transaction constituting the Change in Control (or, in the absence of such agreement, the closing price per Share as reported on the NASDAQ Stock Market for the last trading day of the Adjusted Performance Period), adjusted to reflect an assumed reinvestment, as of the applicable ex-dividend date, of all cash dividends and other cash distributions (excluding cash distributions resulting from share repurchases or redemptions by the Company) paid to stockholders during the Adjusted Performance Period, as illustrated in Appendix B to the Grant Notice.

 

(ii)           The TSR for each Benchmark Company shall be determined as provided by Section 2.3, except that for the purposes of clause (a) thereof, the Average Closing Index Value shall be determined for the 30-day period ending on the last day of the Adjusted Performance Period.

 

(b)           Vested Units if Award Assumed.  In the event of a Change in Control before the end of the Performance Period in connection with which the Award will be assumed or replaced with a substitute Award, as described in Section 11 of the Plan, then, as of the last day of the Adjusted Performance Period and provided that the Participant’s Service has not terminated prior to such date, a portion of the Earned Units determined in accordance with Section 9.1(a) shall become Vested Units (the “Accelerated Units”), with such portion determined by multiplying the total number of Earned Units by a fraction, the numerator of which equals the number of days contained in the Adjusted Performance Period and the denominator of which equals the number of days contained in the original Performance Period determined without regard to this Section.  The Accelerated Units shall be settled in accordance Section 6 immediately prior to the consummation of the Change in Control.  Except as otherwise provided by Section 9.3, that portion of the Earned Units determined in accordance with Section 9.1(a) in excess of the number of Accelerated Units shall become Vested Units on the Vesting Date of the original Performance Period determined without regard to this Section, provided that the Participant’s Service has not terminated prior to such Vesting Date.  Such Vested Units shall be settled on the Settlement Date in accordance with Section 6, provided that payment for each Vested Unit shall be made in the amount and in the form of the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a Share on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares).

 

(c)           Vested Units if Award Not Assumed.  In the event of a Change in Control before the end of the Performance Period in connection with which the Award will not be assumed or replaced with a substitute Award, as described in Section 11 of the Plan, then, as of the last day of the Adjusted Performance Period and provided that the Participant’s Service has not terminated prior to such date, all of the Earned Units determined in accordance with Section 9.1(a) shall become Vested Units and shall be settled in accordance Section 6 immediately prior to the consummation of the Change in Control.

 

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9.2          Effect on Award of Change in Control After End of Performance Period But Before Vesting Date.  In the event of a Change in Control upon or after the end of the Performance Period but before the Vesting Date, each as set forth in the Grant Notice, the number of Earned Units determined in accordance with the Grant Notice shall become Vested Units and shall be settled in accordance Section 6 immediately prior to the consummation of the Change in Control, provided that the Participant’s Service has not previously terminated.

 

9.3          Involuntary Termination Following Change in Control.  In the event that upon or within eighteen (18) months following the effective date of the Change in Control, the Participant’s Service terminates due to Involuntary Termination, then all Earned Units that have not previously become Vested Units, if any, shall be deemed Vested Units effective as of the effective date of the Participant’s Involuntary Termination (as determined in accordance with Section 9.4) and shall be settled in accordance with Section 6, treating the date of the Participant’s termination of Service as the Vesting Date, and provided that payment for each Vested Unit shall be made in the amount and in the form of the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a Share on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares).  Vested Units vested as a result of the Participant’s Involuntary Termination shall be settled in accordance with Section 6 on the 60th day following the date of the Participant’s termination of employment or service provided that the Participant has signed a full general release in a form prepared by or otherwise acceptable to Company, releasing all claims, known or unknown, that the Participant may have against Company and its officers, directors, employees and affiliated companies, arising out of or in any way related to the Participant’s employment or service or termination of employment or service with Company and the period for revocation, if any, of such release has lapsed on or before such 60th day without the release having been revoked.  In the event that such release does not become effective in accordance with its terms on or before the 60th day following the date of the Participant’s termination of employment or service, the Participant shall forfeit, without compensation therefor, any Earned Units that were deemed vested as a result of the Participant’s Involuntary Termination.

 

9.4          “Involuntary Termination” shall mean the termination of the employment or service of any Participant which occurs by reason of:

 

(a)           such Participant’s involuntary dismissal or discharge by the Company or a Subsidiary or Affiliate for reasons other than Misconduct, or

 

(b)           such Participant’s voluntary resignation following the initial existence of any of the following conditions: (A) a material diminution in the Participant’s authority, duties or responsibilities, (B) a material diminution in the Participant’s (i) base salary (including, without limitation, a reduction of base salary by more than 10%) or (ii) total cash compensation (including base salary and target bonus potential (including, without limitation, a reduction of total target cash compensation by more than 10%), (C) a material change in the geographic location at which the Participant must perform the services (including, without limitation, a change in the Participant’s assigned workplace that increases the Participant’s one-way commute by more than 35 miles), provided and only if such diminution or change is effected by the Company without the Participant’s written consent.  No voluntary resignation by the Participant shall be treated as an Involuntary Termination pursuant to this Section 9.3(b) unless the Participant gives written notice to the Committee advising the Company of such intended resignation (along with the facts and circumstances constituting the condition asserted as the reason for such resignation) within 30 days after the time the Participant becomes aware of the existence of such condition and provides the Company a cure period of 30 days following such date that notice is delivered. If the Committee determines that the asserted condition exists and the Company does not cure such condition within the 30-day cure period, the Participant’s termination of employment or service shall be effective on such 30th day of the cure period.

 

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10.          ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.

 

The number of Units awarded pursuant to this Award Agreement (both the Target Number of Units and Maximum Number of Units) is subject to adjustment as provided in Article 11 of the Plan.  Upon the occurrence of an event described in Article 11 of the Plan, any and all new, substituted or additional securities or other property to which a holder of a Share issuable in settlement of the Award would be entitled shall be immediately subject to the Award Agreement and included within the meaning of the term “Shares” for all purposes of the Award.  The Participant shall be notified of such adjustments and such adjustments shall be binding upon the Company and the Participant.

 

11.          NO ENTITLEMENT OR CLAIMS FOR COMPENSATION.

 

11.1        Nature of the Grant.  In accepting the Award, the Participant acknowledges, understands and agrees that:

 

(a)           the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

 

(b)           the grant of the Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Units, or benefits in lieu of Units, even if Units have been granted in the past;

 

(c)           all decisions with respect to future Units or other grants, if any, will be at the sole discretion of the Company;

 

(d)           the Units grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company, the Employer or any Subsidiary or Affiliate and shall not interfere with the ability of the Company, the Employer or any Subsidiary or Affiliate, as applicable, to terminate the Participant’s employment or service relationship (if any);

 

(e)           the Participant is voluntarily participating in the Plan;

 

(f)            the Units and the Shares subject to the Units are not intended to replace any pension rights or compensation;

 

(g)           the Units and the Shares subject to the Units, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

 

(h)           the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

 

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(i)            no claim or entitlement to compensation or damages shall arise from forfeiture of the Units resulting from the termination of the Participant’s employment or other service relationship (for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment contract, if any), and in consideration of the grant of the Units to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company, any of its Subsidiaries or Affiliates or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company, its Subsidiaries and Affiliates and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;

 

(j)            unless otherwise provided in the Plan or determined by the Company in its discretion, the Units and the benefits evidenced by this Award Agreement do not create any entitlement to have the Units or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of the Company; and

 

(k)           the following provisions apply only if the Participant is providing services outside the United States:

 

(i)    the Units and the Shares subject to the Units are not part of normal or expected compensation or salary for any purpose; and

 

(ii)   the Participant acknowledges and agrees that neither the Company, the Employer nor any Subsidiary or Affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Units or of any amounts due to the Participant pursuant to the settlement of the Units or the subsequent sale of any Shares acquired upon settlement.

 

12.          RIGHTS AS A STOCKHOLDER.

 

The Participant shall have no rights as a stockholder with respect to any Shares which may be issued in settlement of this Award until the date of the issuance of a certificate for such Shares or the deposit of such Shares in a brokerage account (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the Shares are issued, except as provided in Section 10.

 

13.          MISCELLANEOUS PROVISIONS.

 

13.1        Amendment.  The Committee may amend this Award Agreement at any time; provided, however, that no such amendment may adversely affect the Participant’s rights under this Award Agreement without the consent of the Participant, except to the extent such amendment is desirable or necessary to comply with applicable law, including, but not limited to, Code Section 409A as further provided in the Plan.  No amendment or addition to this Award Agreement shall be effective unless in writing.

 

13.2        Nontransferability of the Award.  Prior to the issuance of Shares on the applicable Settlement Date, no right or interest of the Participant in the Award nor any Shares issuable on settlement of the Award shall be in any manner pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary or Affiliate or shall become subject to any lien, obligation, or liability of such Participant to any other party other than the Company, or a Subsidiary or Affiliate. Except as otherwise provided by the Committee, no Award shall be assigned, transferred or otherwise disposed of other than by will or the laws of descent and distribution.  All rights with respect to the Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

 

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13.3        Further Instruments and Imposition of Other Requirements.  The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Award Agreement.  The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan.  Furthermore, the Participant acknowledges that the laws of the country in which the Participant is working at the time of grant, vesting and settlement of the Units or the sale of Shares received pursuant to this Award Agreement (including any rules or regulations governing securities, foreign exchange, tax, labor, or other matters) may subject the Participant to additional procedural or regulatory requirements that the Participant is and will be solely responsible for and must fulfill.

 

13.4        Binding Effect.  This Award Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

 

13.5        Notices.  Any notice required to be given or delivered to the Company under the terms of this Award Agreement shall be in writing and addressed to the Company at its principal corporate offices.  Any notice required to be given or delivered to the Participant shall be in writing and addressed to the Participant at the address maintained for the Participant in the Company’s records or at the address of the local office of the Company or of a Subsidiary or Affiliate at which the Participant works.

 

13.6        Construction of Award Agreement.  The Grant Notice, this Award Agreement, and the Units evidenced hereby (i) are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan, and (ii) constitute the entire agreement between the Participant and the Company on the subject matter hereof and supersede all proposals, written or oral, and all other communications between the parties related to the subject matter.  Notwithstanding the foregoing, the terms of any Change in Control Agreement (or similar written, fully-executed agreement) between the Company and Participant shall continue to be effective until the termination thereof (and may, for example, provide for alternative treatment than is set forth in Section 9 of this Award Agreement).  All decisions of the Committee with respect to any question or issue arising under the Grant Notice, this Award Agreement or the Plan shall be conclusive and binding on all persons having an interest in the Units.

 

13.7        Governing Law and Venue.  The interpretation, performance and enforcement of this Award Agreement shall be governed by the laws of the State of Texas, U.S.A. without regard to the conflict-of-laws rules thereof or of any other jurisdiction.  For purposes of litigating any dispute that arises under this grant or this Award Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Texas, agree that such litigation shall be conducted in the courts of Travis County, Texas, or the federal courts for the United States for the Western District of Texas, where this grant is made and/or to be performed.

 

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13.8        Section 409A.

 

(a)           Compliance with Code Section 409A.  Notwithstanding any other provision of the Plan, this Award Agreement or the Grant Notice, the Plan, this Award Agreement and the Grant Notice shall be interpreted in accordance with, and incorporate the terms and conditions required by, Code Section 409A (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof).  The vesting and settlement of Units awarded pursuant to this Award Agreement are intended to qualify for the “short-term deferral” exemption from Section 409A of the Code and the terms of this Award Agreement shall be interpreted in compliance with this intention.  The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Award Agreement or the Grant Notice or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, including amendments or actions that would result in a reduction in benefits payable under the Award, as the Committee determines are necessary or appropriate to ensure that the Units qualify for exemption from or comply with Code Section 409A or mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Section 409A of the Code; provided, however, that the Company makes no representations that the Units will be exempt from Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to the Units.

 

(b)           Separation from Service; Required Delay in Payment to Specified Employee.  Notwithstanding anything set forth herein to the contrary, if the Participant is a U.S. taxpayer, no amount payable pursuant to this Agreement on account of the Participant’s termination of Service which constitutes a “deferral of compensation” within the meaning of Code Section 409A shall be paid unless and until the Participant has incurred a “separation from service” within the meaning of Code Section 409A.  Furthermore, to the extent that the Participant is a “specified employee” within the meaning of Code Section 409A as of the date of the Participant’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of the Participant’s separation from service shall paid to the Participant before the date (the “Delayed Payment Date”) which is the first day of the seventh month after the date of the Participant’s separation from service or, if earlier, the date of the Participant’s death following such separation from service.  All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

 

13.9        Administration.  The Committee shall have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules.  All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Participant, the Company and all other interested persons.  No member of the Committee or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Award Agreement or the Units.

 

13.10      Counterparts.  The Grant Notice 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.

 

13.11      Severability.  If any provision of this Award Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible.  In any event, all other provisions of this Award Agreement shall be deemed valid and enforceable to the full extent possible.

 

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13.12      Language.  If the Participant has received this Award Agreement or any other document related to the Plan in a language other than English and the meaning of the translated version is different from the English version, the English version will control.

 

13.13      Electronic Delivery and Acceptance.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

 

13.14      Waiver.  The Participant acknowledges that a waiver by the Company of breach of any provision of this Award Agreement shall not operate or be construed as a waiver of any other provision of this Award Agreement, or of any subsequent breach by the Participant or any other award recipient.

 

13.15      Addendum.  Notwithstanding any provisions in this Award Agreement, the grant of Units shall be subject to any special terms and conditions set forth in any Addendum to this Award Agreement for the Participant’s country of residence.  Moreover, if the Participant relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons and, in such event, the Company reserves the right to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Addendum is hereby incorporated by reference as part of this Award Agreement.

 

13.16      Clawback/Recovery.  The Units and any Shares, cash or other property issued in settlement of the Units will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law.  In addition, the Committee may impose such other clawback, recovery or recoupment provisions on an Award as the Committee determines necessary or appropriate, including, but not limited to, a reacquisition right in respect of previously acquired Shares or other cash or property upon the occurrence of cause (as determined by the Committee).

 

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SILICON LABORATORIES INC.

2009 STOCK INCENTIVE PLAN

 

ADDENDUM TO

GLOBAL MARKET STOCK UNITS AWARD AGREEMENT

 

Terms and Conditions

 

This Addendum includes additional terms and conditions that govern the award of market stock units (“Units”) to the Participant by Silicon Laboratories Inc. (the “Company”) under the Silicon Laboratories Inc. 2009 Stock Incentive Plan, as amended and restated (the “Plan”) if the Participant resides in one of the countries listed below.  Capitalized terms not explicitly defined in this Addendum but defined in the Plan or the Global Market Stock Units Award Agreement (the “Award Agreement”) shall have the same definitions as in the Plan, the Grant Notice and/or the Award Agreement, as applicable.

 

Notifications

 

This Addendum also includes information regarding exchange control and other issues of which the Participant should be aware with respect to the Participant’s participation in the Plan.  The information is based on the exchange control, securities and other laws in effect in the respective countries as of October 2013.  Such laws are often complex and change frequently.  As a result, the Company strongly recommends that the Participant not rely on the information herein as the only source of information relating to the consequences of participation in the Plan because the information may be out of date at the time that the Units vest or the shares of the common stock (“Shares”) are sold.

 

In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of a particular result.  Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to the Participant’s situation.

 

Finally, the Participant understands that if he or she is a citizen or resident of a country other than the one in which the Participant is currently working, transfers employment after the Grant Date, or is considered a resident of another country for local law purposes, the information contained herein may not apply to the Participant, and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply.

 

UNITED STATES

 

Terms and Conditions

 

Death of the Participant.  Notwithstanding Sections 5.1 and 5.2 of the Award Agreement, if the Participant ceases Service prior to the Vesting Date by reason of his or her death prior to the Vesting Date, the Participant shall not forfeit the Award.  In such case, the number of Earned Units shall be determined as of the end of the Performance Period in accordance with Section 3, and all such Earned Units shall be deemed Vested Units upon the Committee’s certification in accordance with Section 3.1 and settled in accordance with Section 6 as if the Participant’s Service had continued through the Vesting Date.  The Shares due in settlement of such Vested Units shall be issued to the personal representative of the Participant’s estate, the person or persons to whom the Award is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution (collectively referred to herein as the “Participant’s Heirs”). If the Participant dies prior to the end of an Adjusted Performance Period (as described in Section 9.1), which becomes applicable as a result of a Change in Control occurring before the end of the Performance Period as set forth in the Grant Notice, then the number of Earned Units will be determined as of the end of the Adjusted Performance Period in accordance with Section 9.1(a), and all such Earned Units shall be deemed Vested Units upon the Committee’s certification in accordance with Section 3.1 and settled in accordance with Section 6 immediately prior to the consummation of the Change in Control.

 

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Issuance of Shares of Common Stock.  The following sentence replaces the first sentence in Section 6.1 of the Award Agreement.

 

Subject to the provisions of Section 6.3, Section 7 and Section 9.2 below, the Company shall issue to the Participant (or, if applicable, the Participant’s Heirs), on the Settlement Date with respect to each Vested Unit to be settled on such date one (1) Share.

 

Beneficial Ownership of Shares; Certificate Registration.  The following sentence replaces the last sentence in Section 6.2 of the Award Agreement.

 

Except as provided by the preceding sentence, a certificate for the Shares as to which the Award is settled shall be registered in the name of the Participant, or, if applicable, in the names of the Participant’s Heirs.

 

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