Document:

EXHIBIT 4.1

 

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN

(Amended and restated February 24, 2011)

 

1.            Purposes of the Plan.  The purposes of this Plan are:

	
to attract and retain the best available personnel for positions of substantial responsibility,

	
to provide additional incentive to Employees, Directors and Consultants, and

	
to promote the success of the Company’s business.

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Shares and/or Deferred Stock Units.

2.            Definitions.  As used herein, the following definitions will apply:

 

                                                   (a)      “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.

                           (b)     “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Awards are, or will be, granted under the Plan or a sub-plan or addendum hereto. 

                           (c)     “Award” means, individually or collectively, a grant under the Plan of Options, SARs, Restricted Stock, Restricted Stock Units, Performance Shares or Deferred Stock Units.

                           (d)     “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan.  The Award Agreement is subject to the terms and conditions of the Plan.  

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

                           (f)      “Change in Control” means:

 

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(i)             for Awards granted prior to November 12, 2008 the occurrence of any of the following events:

 

                                        (1)             Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or  

 

                                        (2)             The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;

 

                                        (3)             A change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” means directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or

 

                                        (4)            The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 

                          (ii)                  Notwithstanding the foregoing, for Awards granted on or after November 12, 2008, Change in Control means the occurrence of any of the following events:

 

                                        (1)            Change in Ownership of the Company.  A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection 2(f)(ii)(1), the acquisition of additional stock by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not be considered a Change in Control; or

 

                                        (2)            Change in Effective Control of the Company.  If the Company has a class of securities registered pursuant to Section 12 of the Exchange Act, a change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.  For purposes of this clause (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

 

 

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                         (3)            Change in Ownership of a Substantial Portion of the Company’s Assets.  A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection 2(f)(ii)(3), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection 2(f)(ii)(3)(B)(3).  For purposes of this subsection 2(f)(ii)(3), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. 

                          For purposes of this Section 2(f)(ii), persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

                          Notwithstanding the foregoing, a transaction shall not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed, temporary or final Treasury Regulations and Internal Revenue Service guidance thereunder that has been promulgated or may be promulgated thereunder from time to time.

                          Further and for the avoidance of doubt, a transaction shall not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that shall be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

                                                                   (g)    “Code” means the Internal Revenue Code of 1986, as amended.  Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.  

                                                                   (h)    “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.

	 
	
                 (i)     “Common Stock” means the common stock of the company.

	
                 (j)     “Company” means Aruba Networks, Inc., a Delaware corporation, or any successor thereto.      

	
 

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                             (k)     “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

                             (l)     “Deferred Stock Unit” means a deferred stock unit Award granted to a Participant pursuant to Section 11.

                           (m)    “Director” means a member of the Board.  

                           (n)     “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time. 

                           (o)     “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company.  Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.  

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

                           (q)     “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is reduced.  The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion.

                           (r)     “Fair Market Value” means, as of any date, the value of Common Stock deter­mined as follows:  

           (i)          If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Select Market, Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination (or, if the day of determination is not a market trading day, on the first market trading day following the day of determination), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

           (ii)            If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between 

 

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the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

                          (iii)                For purposes of any Awards granted on the Registration Date, the Fair Market Value will be the initial price to the public as set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Company’s Common Stock; or

 

                          (iv)                 In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.

 

                                                                   (s)     “Fiscal Year” means the fiscal year of the Company.

                             (t)      “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder and which is expressly designated by the Administrator at the time of grant as an incentive stock option. 

                             (u)     “Inside Director” means a Director who is an Employee. 

                             (v)     “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

                           (w)    “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

                           (x)     “Option” means a stock option granted pursuant to the Plan.

                             (y)     “Optioned Stock” means the Common Stock subject to an Award.  

                             (z)     “Outside Director” means a Director who is not an Employee.

                           (aa)   “Outside Director Compensation Policy” means the Company’s Outside Director Compensation Policy, as may be amended from time to time.

                           (bb)   “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code and the regulations thereunder. 

                           (cc)   “Participant” means the holder of an outstanding Award.

 

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                                                                  (dd)   “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine pursuant to Section 10.

                                                                  (ee)   “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture.  Such restrictions may be based on the passage of time (including the continuation of employment or service), the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.

            (ff)    “Plan” means this 2007 Equity Incentive Plan.

            (gg)   “Registration Date” means the effective date of the first registration statement that is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Company’s securities.

            (hh)   “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan, or issued pursuant to the early exercise of an Option.

 

                                                                  (ii)     “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 8.  Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.

 

                                                                   (jj)    “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.  

                                                   (kk)   “Section 16(b)” means Section 16(b) of the Exchange Act.  

            (ll)    “Service Provider” means an Employee, Director or Consultant.   

           (mm) “Share” means a share of the Common Stock, as adjusted in accordance with Section 15 of the Plan. 

                           (nn)   “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with an Option, that pursuant to Section 9 is designated as a SAR.   

 

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            (oo)   “Subsidiary” means a “subsidiary corporation,” whether now or hereafter exist­ing, as defined in Section 424(f) of the Code and the regulations thereunder.  

 

3.            Stock Subject to the Plan.  

                            (a)    Stock Subject to the Plan.  Subject to the provisions of Section 15 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is (i) the number of Shares which have been reserved but not issued under the Company’s 2002 Stock Plan (the “2002 Plan”) as of the Registration Date, up to a maximum of seven million (7,000,000) Shares, (ii) any Shares returned to the 2002 Plan as a result of termination of options or repurchase of Shares issued under such plan, up to a maximum of ten million (10,000,000) Shares, and (iii) an annual increase to be added on the first day of the Company’s fiscal year beginning with the Company’s 2008 fiscal year, equal to the lesser of (A) fifteen million (15,000,000) Shares, or (B) five percent (5%) of the outstanding Shares on the last day of the immediately preceding Company fiscal year.  The Shares may be authorized, but unissued, or reacquired Common Stock.  

                           (b)     Lapsed Awards.  If an Award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted Stock, Restricted Stock Units, Performance Shares or Deferred Stock Units, is forfeited to or repurchased by the Company due to failure to vest, the unpurchased Shares (or for Awards other than Options or SARs the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated).  With respect to SARs, only Shares actually issued pursuant to an SAR will cease to be available under the Plan; all remaining Shares under SARs will remain available for future grant or sale under the Plan (unless the Plan has terminated).  Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to awards of Restricted Stock, Restricted Stock Units, Performance Shares or Deferred Stock Units are repurchased by the Company or are forfeited to the Company due to their failure to vest, such Shares will become available for future grant under the Plan.  Shares used to pay the exercise price of an Award or to satisfy the minimum statutory withholding obligations related to an Award will become available for future grant or sale under the Plan.  Notwithstanding the foregoing and, subject to adjustment as provided in Section 15, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code 

 

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and the regulations thereunder, any Shares that become available for issuance under the Plan under this Section 3(b).

                                                                   (c)     Share Reserve.  The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.   

 

4.            Administration of the Plan.  

                           (a)     Procedure.

 

           (i)             Multiple Administrative Bodies.  Different Committees with respect to different groups of Service Providers may administer the Plan.

 

           (ii)                  Section 162(m).  To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two (2) or more “outside directors” within the meaning of Section 162(m) of the Code.

 

           (iii)               Rule 16b-3.  To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.

 

           (iv)                 Other Administration.  Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.

 

              (b)     Powers of the Administrator.  Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discre­tion:  

 

                          (i)             to determine the Fair Market Value;

 

                          (ii)                 to select the Service Providers to whom Awards may be granted hereunder;

 

                          (iii)       to determine the number of Shares or equivalent units to be covered by each Award granted hereunder

           (iv)                to approve forms of Award Agreement for use under the Plan;

           (v)                   to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder.  Such terms and conditions include, but are not limited to, the grant date, the exercise price, the time or times when Awards may be exercised or earned (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture or repurchase restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;  

 

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           (vi)                 to institute an Exchange Program; 

           (vii)               to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;  

           (viii)            to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or qualifying for preferred tax treatment under applicable  foreign tax laws;  

           (ix)                to modify or amend each Award (subject to Section 20(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Awards longer than is otherwise provided for in the Plan (subject to compliance with Code Section 409A);  

           (x)                   to allow Participants to satisfy withholding tax obligations in such manner as prescribed in Section 16; 

           (xi)                to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;  

           (xii)              to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award; and  

           (xiii)            to make all other determinations deemed necessary or advisable for administering the Plan.

 

               (c)    Effect of Administrator’s Decision.  The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.

 

5.            Eligibility.  Awards may be granted to Service Providers; provided, however that Incentive Stock Options may be granted only to Employees. 

 

6.      Stock Options.

                           (a)     Limitations.  The Administrator will have complete discretion to determine the number of Shares that will be subject to an Option granted to any Service Provider.  Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.  However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Stock Options.  For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted.  The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.

 

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                           (b)     Term of Option.  The term of each Option will be stated in the Award Agreement.  In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement.  Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.

                           (c)     Option Exercise Price and Consideration. 

 

                          (i)             Exercise Price.  The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:

 

                                        (1)            In the case of an Incentive Stock Option

 

           a)           granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant. 

          

           b)           granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. 

 

           c)     Notwithstanding the foregoing, Incentive Stock Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.

                         (2)            In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.                 

 

                          (ii)                  Waiting Period and Exercise Dates.  At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

 

                          (iii)               Form of Consideration.  The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment.  In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant.  Such consideration may consist entirely of: (1) cash; (2) check; (3) other Shares, provided Shares acquired directly or indirectly from the Company, (A) have been owned by the Participant and not subject to substantial risk of forfeiture for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the 

 

 

 

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aggregate exercise price of the Shares as to which said Option will be exercised; (4) consideration received by the Company under a broker-assisted or other cashless exercise program; (5) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (6) any combination of the foregoing methods of payment.  

                           (d)     Exercise of Option.

 

                          (i)              Procedure for Exercise; Rights as a Stockholder.  Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement.  An Option may not be exercised for a fraction of a Share.

 

                                         An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Administrator specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes).  Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan.  Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse.  Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Optioned Stock, notwithstanding the exercise of the Option.  The Company will issue or cause to be issued (and which issuance may be in electronic form) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 15 of the Plan.

 

                                         Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

 

                          (ii)                   Termination of Relationship as a Service Provider.  If a Participant ceases to be a Service Provider, other than upon the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination.  Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan.  If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

                          (iii)                Disability of Participant.  If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set 

 

 

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forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination.  Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan.  If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

                         (iv)                  Death of Participant.  If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator.  If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution.  In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death.  Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan.  If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

7.            Restricted Stock.

 

                                                   (a)      Grant of Restricted Stock.  Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

                           (b)      Restricted Stock Agreement.  Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine.  Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed.

                           (c)      Transferability.  Except as provided in this Section 7, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.

                           (d)      Other Restrictions.  The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.  The Administrator may set 

 

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restrictions based upon the achievement of Company-wide, departmental, business unit, or individual goals (including, but not limited to, continued employment or service) or any other basis determined by the Administrator in its discretion.

                           (e)      Removal of Restrictions.  Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine.  The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.

                             (f)      Voting Rights.  During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.

                           (g)      Dividends and Other Distributions.  During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares unless the Administrator provides otherwise.  If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.  

                           (h)      Return of Restricted Stock to Company.  On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan.

 

8.            Restricted Stock Units. 

                           (a)      Grant.  Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator.  After the Administrator determines that it will grant Restricted Stock Units under the Plan, it shall advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units.

 

                                                   (b)      Vesting Criteria and Other Terms.  The Administrator shall set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant.  The Administrator may set vesting criteria based upon the achievement of Company-wide, departmental, business unit, or individual goals (including, but not limited  

 

 

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to, continued employment or service), or any other basis determined by the Administrator in its discretion.

                           (c)     Earning Restricted Stock Units.  Upon meeting the applicable vesting criteria, the Participant shall be entitled to receive a payout as specified in the Restricted Stock Unit Award Agreement.  Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

                           (d)     Form and Timing of Payment.  Payment of earned Restricted Stock Units shall be made as soon as practicable after the date(s) set forth in the Restricted Stock Unit Award Agreement.  The Administrator may only settle earned Restricted Stock Units in Shares.

                           (e)     Cancellation.  On the date set forth in the Restricted Stock Unit Award Agreement, all unearned Restricted Stock Units shall be forfeited to the Company. 

               9.     Stock Appreciation Rights.

                             (a)     Grant of SARs.  Subject to the terms and conditions of the Plan, a SAR may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.

                           (b)     Number of Shares.  The Administrator will have complete discretion to determine the number of SARs granted to any Service Provider.

                           (c)    Exercise Price and Other Terms.  The per share exercise price for the Shares to be issued pursuant to exercise of an SAR shall be determined by the Administrator and shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant, except that Stock Appreciation Rights may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code and the regulations thereunder.  Otherwise the Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of SARs granted under the Plan; provided, however, that no SAR may have a term of more than ten (10) years from the date of grant.

                             (d)     SAR Agreement.  Each SAR grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.  

 

-14-

                              

                             (e)      Expiration of SARs.  An SAR granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement.  Notwithstanding the foregoing, the rules of Section 6(d) also will apply to SARs.

                           (f)      Payment of SAR Amount.  Upon exercise of an SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

                          (i)             The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

 

                          (ii)                  The number of Shares with respect to which the SAR is exercised.

The payment upon SAR exercise may only be in Shares of equivalent value (rounded down to the nearest whole Share).

10.    Performance Shares.

                             (a)      Grant of Performance Shares.  Subject to the terms and conditions of the Plan, Performance Shares may be granted to Service Providers at any time as shall be determined by the Administrator, in its sole discretion.  The Administrator shall have complete discretion to determine (i) the number of Shares subject to a Performance Share award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based principally or solely on achievement of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Shares.  Performance Shares shall be granted in the form of units to acquire Shares.  Each such unit shall be the equivalent of one Share for purposes of determining the number of Shares subject to an Award.  Until the Shares are issued, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the units to acquire Shares.

                             (b)     Other Terms.  The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance Shares granted under the Plan.  Performance Share grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the stock is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator.  The Administrator may require the recipient to sign a Performance Shares Award Agreement as a condition of the award.  Any certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator.  

                            (c)     Performance Share Award Agreement.  Each Performance Share grant shall be evidenced by an Award Agreement that shall specify such other terms and conditions as the Administrator, in its sole discretion, shall determine.

 

-15-

 

                             (d)     Cancellation.  On the date set forth in the Performance Share Award Agreement, all unearned Performance Shares shall be forfeited to the Company.

 

11.        Deferred Stock Units.  Deferred Stock Units shall consist of a Restricted Stock, Restricted Stock Unit or Performance Share Award that the Administrator, in its sole discretion permits to be paid out in installments or on a deferred basis, in accordance with rules and procedures established by the Administrator.  Deferred Stock Units shall remain subject to the claims of the Company’s general creditors until distributed to the Participant.  

 

12.    Awards to Outside Directors.  Outside Directors will be entitled to receive all types of Awards (except Incentive Stock Options) under this Plan, including automatic and nondiscretionary Awards granted pursuant to the Outside Director Compensation Policy and nondiscretionary Awards not covered under the Outside Director Compensation Policy.

 

13          Leaves of Absence/Transfers Between Locations.  Unless the Administrator provides otherwise or except as otherwise required by Applicable Laws, vesting of Awards granted hereunder shall cease commencing on the first day of any unpaid leave of absence and shall only recommence upon return to active service.  A Service Provider will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary.  For purposes of Incentive Stock Options, no such leave may exceed three (3) months (the “Maximum Leave Period”), unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the day after the end of the Maximum Leave Period any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.

 

14.        Transferability of Awards.  Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant.  If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.

 

15.        Adjustments; Dissolution or Liquidation; Merger or Change in Control.

 

                                                   (a)      Adjustments.  In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, 

 

 

 

-16-

 

 

 

shall adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits in Section 3 of the Plan and the number of Shares issuable pursuant to Options to be granted under Section 12 of the Plan.

 

                                                   (b)      Dissolution or Liquidation.  In the event of the proposed dissolution or liquida­tion of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction.  To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.

                          (c)      Change in Control.  In the event of a merger or Change in Control, each outstanding Award will be treated as the Administrator determines, including, without limitation, that each Award be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.  The Administrator shall not be required to treat all Awards similarly in the transaction.  

               In the event that the successor corporation does not assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock, Restricted Stock Units, Performance Shares and Deferred Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) on-target levels and all other terms and conditions met.  In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.

               For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Share or Deferred Stock Unit, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.  

 

-17-

 

               Notwithstanding anything in this Section 15(c) to the contrary, an Award that vests is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

                                                   (d)      Outside Director Awards.  With respect to Awards granted to an Outside Director that are assumed or substituted for, if on the date of or following such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant (unless such resignation is at the request of the acquirer), then the Participant will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Optioned Stock, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Performance Shares, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) on-target levels and all other terms and conditions met.

16.         Tax Withholding.

 

                                                   (a)      Withholding Requirements.  Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).  

                          (b)      Withholding Arrangements.  The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, (c) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or (d) a combination of the foregoing.  The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

 

17.            No Effect on Employment or Service.  Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.  

 

 

 

-18-

 

 

 

18.        Date of Grant.  The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator.  Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.  

19.    Term of Plan.  Subject to Section 23 of the Plan, the Plan will become effective upon its adoption by the Board.  It will continue in effect for a term of ten (10) years unless terminated earlier under Section 20 of the Plan.

 

20.        Amendment and Termination of the Plan.  

                           (a)     Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.  

                           (b)     Stockholder Approval.  The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

                           (c)     Effect of Amendment or Termination.  No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company.  Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

21.        Conditions Upon Issuance of Shares.

 

                                                   (a)      Legal Compliance.  Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.

 

                                                   (b)      Investment Representations.  As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.  

 

 

 

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22.        Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.  

 

23.        Stockholder Approval.  The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board.  Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.

-20-Form of Note for the Company's  4.400% Subordinated Notes due June 10, 2025

 Exhibit 4.01 

This Subordinated Note is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of the
Depository named below or a nominee of the Depository. This Subordinated Note is not exchangeable for Subordinated Notes registered in the name of a Person other than the Depository or its nominee except in the limited circumstances described herein
and in the Indenture, and no transfer of this Subordinated Note (other than a transfer of this Subordinated Note as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of
the Depository) may be registered except in the limited circumstances described herein. 
 Unless this certificate is presented by an
authorized representative of The Depository Trust Company, a New York corporation (the “Depository”), to Citigroup Inc. or its agent for registration of transfer, exchange, or payment, and any certificate issued in respect thereof is
registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of the Depository (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of the Depository), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 

The Subordinated Notes are not savings accounts or deposits but are unsecured obligations of Citigroup Inc. The Subordinated Notes are not
insured by the Federal Deposit Insurance Corporation or by any other federal agency or instrumentality. 
 CITIGROUP INC. 

4.400% Subordinated Notes due June 10, 2025 
  

			
	REGISTERED		REGISTERED
		
			 CUSIP: 172967JT9

ISIN: US172967JT97
 Common Code:
124541425

		
	No. R-0001		$500,000,000

 CITIGROUP INC., a Delaware corporation (the “Company”, which term includes any successor Person
under the Indenture), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of $500,000,000 on June 10, 2025 and to pay interest thereon from and including June 10, 2015 or from the
most recent Interest Payment Date (as defined herein) to which interest has been paid or duly provided for, semi-annually, on June 10 and December 10 of each year, commencing December 10, 2015, at the rate of 4.400% per annum,
until the principal hereof is paid or made available for payment (each such payment date, an “Interest Payment Date”). The Subordinated Notes may be redeemed in whole, but not in part, at any time if changes involving United States
taxation occur which could require Citigroup to pay additional amounts. 

 The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture, be paid pursuant to the instructions of the Person in whose name this Subordinated Note is registered at the close of business on the Record Date for such interest, which shall be the Business Day immediately
preceding such Interest Payment Date. 
 Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to
the holder on such Record Date and may either be paid pursuant to the instructions of the Person in whose name this Subordinated Note is registered at the close of business on a subsequent Record Date, such subsequent Record Date to be not less than
five days prior to the date of payment of such defaulted interest, notice whereof shall be given to holders of Subordinated Notes of this series not less than 15 days prior to such subsequent Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on which the Subordinated Notes of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. 

Interest hereon will be calculated on the basis of a 360-day year comprised of twelve 30-day months or, in the case of an incomplete month,
the number of days elapsed. In the event the Subordinated Notes do not continue to remain in book-entry only form, Citigroup shall have the right to select record dates, which shall be more than 14 days but less than 60 days prior to an Interest
Payment Date. 
 If an Interest Payment Date falls on a day that is not a Business Day, such Interest Payment Date will be the next
succeeding Business Day. If the Maturity of the Subordinated Notes falls on a day that is not a Business Day, the payment due on Maturity will be postponed to the next succeeding Business Day, and no further interest will accrue in respect of such
postponement. If a date for payment of interest or principal on the Subordinated Notes falls on a day that is not a business day in the place of payment, such payment will be made on the next succeeding business day in such place of payment as if
made on the date the payment was due. No interest will accrue on any amounts payable for the period from and after the due date for payment of such principal or interest. 

For these purposes, “Business Day” means any day on which commercial banks settle payments and are open for general business in The
City of New York. 
 Payment of the principal of and interest on this Subordinated Note will be made at the office or agency of the Trustee
maintained for that purpose in The City of New York. 
 Reference is hereby made to the further provisions of this Subordinated Note set
forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. 
 Unless
the certificate of authentication hereon has been executed by the Trustee or by an authenticating agent on behalf of the Trustee by manual signature, this Subordinated Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose. 

  
 2 

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal. 
 Dated: June 10, 2015 
  

			
	CITIGROUP INC.
		
	By:		  

	Title:		Deputy Treasurer

  

			
	ATTEST:
		
	By:		  

	Title:		Assistant Secretary

  
 3 

 This is one of the Notes of the series issued under the within-mentioned Indenture. 

Dated: June 10, 2015 
  

			
	THE BANK OF NEW YORK MELLON,
	as Trustee
		
	By:		  

			Name:
			Title:
	
	-or-
	
	 CITIBANK, N.A.,
 as Authenticating
Agent

		
	By:		  

			Name:
			Title:

  
 4 

 This Subordinated Note is one of a duly authorized issue of Securities of the Company (the
“Subordinated Notes”), issued and to be issued in one or more series under the Indenture, dated as of April 12, 2001, as supplemented August 2, 2004 (as so supplemented, the “Indenture”), between the Company and The
Bank of New York Mellon (successor to J.P. Morgan Trust Company, N.A. and Bank One Trust Company, N.A.), as Trustee (the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the holders of the Subordinated Notes and of the terms upon which the
Subordinated Notes are, and are to be, authenticated and delivered. This Subordinated Note is one of the series designated on the face hereof, initially limited in aggregate principal to $2,500,000,000. 

The Company covenants and agrees that the indebtedness evidenced by the Subordinated Notes is subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) to the extent provided in the Indenture, and each holder of Subordinated Notes, by his or her acceptance thereof, likewise covenants and agrees to the subordination provided in the Indenture
(including Article Fourteen thereof) and shall be bound by the provisions thereof. 
 In the event that the Company shall default in the
payment of any principal of (or premium, if any) or interest on any Senior Indebtedness when the same becomes due and payable after any applicable grace period, whether at maturity or at a date fixed for prepayment or by declaration or otherwise,
then, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal
of, or premium, if any, or interest on the indebtedness evidenced by the Subordinated Notes, or in respect of any redemption, retirement or other acquisition of any of the Subordinated Notes, except that holders of Subordinated Notes may receive and
retain (x) securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Subordinated Notes, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment and (y) payments made from
a defeasance trust created pursuant to Article Eleven of the Indenture. 
 In the event of: 

(i) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceeding relating to
the Company, its creditors or its property, 
 (ii) any proceeding for liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings, 

  
 5 

 (iii) any assignment by the Company for the benefit of creditors, or 

(iv) any other marshalling of the assets of the Company, 

all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any
payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Subordinated Notes on account thereof (except as provided in the next sentence). Any payment or distribution, whether in cash,
securities or other property (other than (x) securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Subordinated Notes, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment
and (y) payments made from a defeasance trust created pursuant to Article Eleven of the Indenture), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Subordinated Notes shall be paid or
delivered directly to the holders of Senior Indebtedness in accordance with the priorities then existing among such holders until all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) shall
have been paid in full. 
 If an event of default (as defined in the Indenture) with respect to Subordinated Notes of this series shall
occur and be continuing, the principal of the Subordinated Notes of this series may be declared due and payable in the manner and with the effect provided in the Indenture. 

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Subordinated Note upon compliance by the
Company with certain conditions set forth in Article Eleven thereof, which provisions apply to this Subordinated Note. 
 The Indenture
contains provisions permitting the Company and the Trustee, without the consent of the holders of Securities, to establish, among other things, the form and terms of any series of Securities issuable thereunder by one or more supplemental
indentures, and, with the consent of the holders of not less than a majority of the principal amount of Securities at the time Outstanding which are affected thereby, to modify the Indenture or any supplemental indenture or the rights of the holders
of Securities of such series to be affected, provided that no such modification shall, without the consent of the holder of each Outstanding Security so affected, (x) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium thereon, or change any place of payment where, or the coin or currency in which any Security or any premium or interest
thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption on or after the Redemption Date) or modify the provisions of the Indenture with
respect to the subordination of the Securities in a manner adverse to the Securityholders or (y) reduce the aforesaid percentage in principal amount of the Outstanding Securities of any series, the consent of the holders of which is required
for any supplemental indenture, or the consent of whose holders is required for any waiver provided for in the Indenture, or (z) modify certain other provisions of the Indenture, as set forth in Section 13.02 of the Indenture. 

  
 6 

 No reference herein to the Indenture and no provision of this Subordinated Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Subordinated Note at the times, place and rate, and in the coin or currency, herein prescribed. 

This Subordinated Note is a Global Security registered in the name of a nominee of the Depository. This Subordinated Note is exchangeable for
Subordinated Notes registered in the name of a person other than the Depository or its nominee only in the limited circumstances hereinafter described. Unless and until it is exchanged in whole or in part for definitive Subordinated Notes in
certificated form, this Subordinated Note may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository. 

The Subordinated Notes represented by this Global Security are exchangeable for definitive Subordinated Notes in certificated form of like
tenor as such Subordinated Notes in denominations of $1,000 and whole multiples of $1,000 in excess thereof only if (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for the Subordinated Notes or
(ii) the Depository ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, or (iii) the Company in its sole discretion decides to allow the Subordinated Notes to be exchanged for definitive
Subordinated Notes in registered form. Any Subordinated Notes that are exchangeable pursuant to the preceding sentence are exchangeable for certificated Subordinated Notes issuable in authorized denominations and registered in such names as the
Depository shall direct. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of definitive Subordinated Notes in certificated form is registrable in the register maintained by the Company in The City of
New York for such purpose, upon surrender of the definitive Subordinated Note for registration of transfer at the office or agency of the registrar, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the
Company and the registrar duly executed by, the holder thereof or his attorney duly authorized in writing, and thereupon one or more new Subordinated Notes of this series and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees. Subject to the foregoing, this Subordinated Note is not exchangeable, except for a Global Security or Global Securities of this issue of the same principal amount to be
registered in the name of the Depository or its nominee. 
 No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 

Prior to due presentment of this Subordinated Note for registration of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Subordinated Note is registered as the owner hereof for all purposes, whether or not this Subordinated Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary. 

  
 7 

 The Company will pay additional amounts (“Additional Amounts”) to the beneficial owner
of any Subordinated Note that is a non-United States person in order to ensure that every net payment on such Subordinated Note will not be less, due to payment of U.S. withholding tax, than the amount then
due and payable. For this purpose, a “net payment” on a Subordinated Note means a payment by the Company or a paying agent, including payment of principal and interest, after deduction for any present or future tax, assessment or other
governmental charge of the United States. These Additional Amounts will constitute additional interest on the Subordinated Note. 
 The
Company will not be required to pay Additional Amounts, however, in any of the circumstances described in items (1) through (13) below. 
  

	 	(1)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld solely by reason of the beneficial owner:

  

	 	(a)	having a relationship with the United States as a citizen, resident or otherwise; 

  

	 	(b)	having had such a relationship in the past or 

  

	 	(c)	being considered as having had such a relationship. 

  

	 	(2)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld solely by reason of the beneficial owner:

  

	 	(a)	being treated as present in or engaged in a trade or business in the United States; 

  

	 	(b)	being treated as having been present in or engaged in a trade or business in the United States in the past or 

  

	 	(c)	having or having had a permanent establishment in the United States. 

  

	 	(3)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld in whole or in part by reason of the
beneficial owner being or having been any of the following (as such terms are defined in the Internal Revenue Code of 1986, as amended): 

  

	 	(a)	personal holding company; 

  

	 	(b)	foreign personal holding company; 

  

	 	(c)	foreign private foundation or other foreign tax-exempt organization; 

  

	 	(d)	passive foreign investment company; 

  

	 	(e)	controlled foreign corporation or 

  

	 	(f)	corporation which has accumulated earnings to avoid United States federal income tax. 

  

	 	(4)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld solely by reason of the beneficial owner
owning or having owned, actually or constructively, 10 percent or more of the total combined voting power of all classes of stock of the Company entitled to vote or by reason of the beneficial owner being a bank that has invested in a Subordinated
Note as an extension of credit in the ordinary course of its trade or business. 

  
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 For purposes of items (1) through (4) above, “beneficial owner” means a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an estate, trust, partnership, limited liability company, corporation or other entity, or a person holding a power over an estate or trust administered by a fiduciary holder. 

 

	 	(5)	Additional Amounts will not be payable to any beneficial owner of a Subordinated Note that is a: 

  

	 	(a)	fiduciary; 

  

	 	(b)	partnership; 

  

	 	(c)	limited liability company or 

  

	 	(d)	other fiscally transparent entity 

 or that is not the sole beneficial owner of the Subordinated
Note, or any portion of the Subordinated Note. However, this exception to the obligation to pay Additional Amounts will only apply to the extent that a beneficiary or settlor in relation to the fiduciary, or a beneficial owner or member of the
partnership, limited liability company or other fiscally transparent entity, would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or
distributive share of the payment. 
  

	 	(6)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld solely by reason of the failure of the
beneficial owner or any other person to comply with applicable certification, identification, documentation or other information reporting requirements. This exception to the obligation to pay Additional Amounts will only apply if compliance with
such reporting requirements is required by statute or regulation of the United States or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge.

  

	 	(7)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any tax, assessment or other governmental charge that is collected or imposed by any method other than by withholding
from a payment on a Subordinated Note by the Company or a paying agent. 

  
 9 

	 	(8)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld by reason of a change in law, regulation,
or administrative or judicial interpretation that becomes effective more than 15 days after the payment becomes due or is duly provided for, whichever occurs later. 

 

	 	(9)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld by reason of the presentation by the
beneficial owner of a Subordinated Note for payment more than 30 days after the date on which such payment becomes due or is duly provided for, whichever occurs later. 

 

	 	(10)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any: 

  

	 	(a)	estate tax; 

  

	 	(b)	inheritance tax; 

  

	 	(c)	gift tax; 

  

	 	(d)	sales tax; 

  

	 	(e)	excise tax; 

  

	 	(f)	transfer tax; 

  

	 	(g)	wealth tax; 

  

	 	(h)	personal property tax or 

  

	 	(i)	any similar tax, assessment, withholding, deduction or other governmental charge. 

  

	 	(11)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any tax, assessment, or other governmental charge required to be withheld by any paying agent from a payment of
principal or interest on a Subordinated Note if such payment can be made without such withholding by any other paying agent. 

  

	 	(12)	Additional amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any tax, assessment or other governmental charge that is required to be made pursuant to any European Union directive
on the taxation of savings income or any law implementing or complying with, or introduced to conform to, any such directive. 

  

	 	(13)	 Additional amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any withholding, deduction, tax, duty assessment
or other governmental charge that would not have been imposed but for a failure by the holder or beneficial owner of a Subordinated Note (or any financial institution 

  
 10 

	 	
through which the holder or beneficial owner holds the Subordinated Note or through which payment on the Subordinated Note is made) to take any action (including entering into an agreement with
the Internal Revenue Service, or a governmental authority of another jurisdiction if the holder is entitled to the benefits of an intergovernmental agreement between that jurisdiction and the United States) or to comply with any applicable
certification, documentation, information or other reporting requirement or agreement concerning accounts maintained by the holder or beneficial owner (or any such financial institution), or concerning ownership of the holder or beneficial owner, or
any substantially similar requirement or agreement. 

  

	 	(14)	Additional Amounts will not be payable if a payment on a Subordinated Note is reduced as a result of any combination of items (1) through (14) above. 

Except as specifically provided herein, the Company will not be required to make any payment of any tax, assessment or other governmental
charge imposed by any government or a political subdivision or taxing authority of such government. 
 As used in this Subordinated Note,
“United States person” means: 
  

	 	(a)	any individual who is a citizen or resident of the United States; 

  

	 	(b)	any corporation, partnership or other entity created or organized in or under the laws of the United States; 

  

	 	(c)	any estate if the income of such estate falls within the federal income tax jurisdiction of the United States regardless of the source of such income and 

 

	 	(d)	any trust if a United States court is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of the substantial decisions of the trust.

 Additionally, “non-United States person” means a person who is not a
United States person, and “United States” means the states of the United States of America and the District of Columbia, but excluding its territories and its possessions. 

Except as provided below, the Subordinated Notes may not be redeemed prior to maturity. 

 

	 	(1)	The Company may, at its option, redeem the Subordinated Notes if: 

  

	 	(a)	the Company becomes or will become obligated to pay Additional Amounts as described above; 

  

	 	(b)	the obligation to pay Additional Amounts arises as a result of any change in the laws, regulations or rulings of the United States, or an official position regarding the application or interpretation of such laws,
regulations or rulings, which change is announced or becomes effective on or after June 3, 2015 and 

  

	 	(c)	the Company determines, in its business judgment, that the obligation to pay such Additional Amounts cannot be avoided by the use of reasonable measures available to it, other than substituting the obligor under the
Subordinated Notes or taking any action that would entail a material cost to the Company. 

  
 11 

	 	(2)	The Company may also redeem the Subordinated Notes, at its option, if: 

  

	 	(a)	any act is taken by a taxing authority of the United States on or after June 3, 2015, whether or not such act is taken in relation to the Company or any affiliate, that results in a substantial probability that the
Company will or may be required to pay Additional Amounts as described above; 

  

	 	(b)	the Company determines, in its business judgment, that the obligation to pay such Additional Amounts cannot be avoided by the use of reasonable measures available to it, other than substituting the obligor under the
Subordinated Notes or taking any action that would entail a material cost to the Company and 

  

	 	(c)	the Company receives an opinion of independent counsel to the effect that an act taken by a taxing authority of the United States results in a substantial probability that the Company will or may be required to pay the
Additional Amounts described above, and delivers to the Trustee a certificate, signed by a duly authorized officer, stating that based on such opinion the Company is entitled to redeem the Subordinated Notes pursuant to their terms.

 Any redemption of the Subordinated Notes as set forth in clauses (1) or (2) above shall be in whole, and not in part, and will be
made at a redemption price equal to 100% of the principal amount of the Subordinated Notes Outstanding plus accrued interest thereon to the date of redemption. Holders shall be given not less than 30 days nor more than 60 days’ prior notice by
the Trustee of the date fixed for such redemption. 
 All terms used in this Subordinated Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture. The Subordinated Notes are governed by the laws of the State of New York. 

  
 12

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