Document:

exv10w1

Exhibit 10.1

ANADARKO PETROLEUM CORPORATION

2008 OMNIBUS INCENTIVE COMPENSATION PLAN

Effective as of May 20, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	SECTION 1 PURPOSE
	 	 	1	 
	SECTION 2 DEFINITIONS
	 	 	1	 
	2.1                Award
	 	 	1	 
	2.2                Award Agreement
	 	 	1	 
	2.3                Beneficiary
	 	 	1	 
	2.4                Board
	 	 	2	 
	2.5                Cash Awards
	 	 	2	 
	2.6               Cause
	 	 	2	 
	2.7               Change in Capitalization
	 	 	2	 
	2.8               Change of Control
	 	 	2	 
	2.9               Code
	 	 	4	 
	2.10             Common Stock
	 	 	4	 
	2.11             Company
	 	 	4	 
	2.12             Covered Employee
	 	 	4	 
	2.13             Effective Date
	 	 	4	 
	2.14             Employer
	 	 	4	 
	2.15             Exchange Act
	 	 	4	 
	2.16             Fair Market Value
	 	 	5	 
	2.17             Full Value Award
	 	 	5	 
	2.18             Incentive Award
	 	 	5	 
	2.19             Incentive Stock Option
	 	 	5	 
	2.20             Management Committee
	 	 	5	 
	2.21             Maximum Annual Employee Grant
	 	 	5	 
	2.22             Nonqualified Option
	 	 	5	 
	2.23             Option
	 	 	6	 
	2.24             Option Price
	 	 	6	 
	2.25             Other Stock-Based Award
	 	 	6	 
	2.26             Participant
	 	 	6	 
	2.27             Performance Goals
	 	 	6	 
	2.28             Performance Period
	 	 	7	 
	2.29             Performance Shares
	 	 	7	 
	2.30             Performance Units
	 	 	8	 
	2.31             Permitted Transferee
	 	 	8	 
	2.32             Plan
	 	 	8	 
	2.33             Plan Administrator
	 	 	8	 
	2.34             Prior Plans
	 	 	8	 
	2.35             Restricted Stock
	 	 	8	 
	2.36             Restricted Stock Units
	 	 	8	 
	2.37             Restriction Period
	 	 	8	 
	2.38             Rule 16b-3
	 	 	8	 
	2.39             Section 16 Insider
	 	 	9	 

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	2.40               Section 162(m)
	 	 	9	 
	2.41               Section 409A
	 	 	9	 
	2.42               Specified Employee
	 	 	9	 
	2.43               Stock Appreciation Right
	 	 	9	 
	2.44               Subsidiary
	 	 	9	 
	SECTION 3 ADMINISTRATION
	 	 	9	 
	3.1                Plan Administrator
	 	 	9	 
	3.2                Authority of Plan Administrator
	 	 	10	 
	3.3                Indemnification of Plan Administrator
	 	 	11	 
	3.4                Delegation to Management Committee
	 	 	11	 
	SECTION 4 ELIGIBILITY
	 	 	11	 
	SECTION 5 SHARES AVAILABLE FOR THE PLAN
	 	 	12	 
	5.1                Aggregate Shares
	 	 	12	 
	5.2                Limitations
	 	 	13	 
	5.3                Adjustments in Authorized Shares
	 	 	14	 
	5.4                Effect of Certain Transactions
	 	 	14	 
	SECTION 6 STOCK OPTIONS
	 	 	15	 
	6.1                Grant of Options
	 	 	15	 
	6.2                Special Provisions Applicable to Incentive Stock Options
	 	 	16	 
	6.3                Terms of Options
	 	 	17	 
	SECTION 7 STOCK APPRECIATION RIGHTS
	 	 	19	 
	7.1                Grant of Stock Appreciation Rights
	 	 	19	 
	7.2                Exercise of Stock Appreciation Rights
	 	 	20	 
	7.3                Special Provisions Applicable to Stock Appreciation Rights
	 	 	20	 
	7.4                No Repricing
	 	 	21	 
	SECTION 8 PERFORMANCE SHARES AND PERFORMANCE UNITS
	 	 	21	 
	8.1                Grant of Performance Shares and Performance Units
	 	 	21	 
	8.2                Value of Performance Shares and Performance Units
	 	 	21	 
	8.3                Payment of Performance Shares and Performance Units
	 	 	22	 
	8.4                Form and Timing of Payment
	 	 	22	 
	SECTION 9 RESTRICTED STOCK
	 	 	22	 
	9.1                Grant of Restricted Stock
	 	 	22	 
	9.2                Restriction Period
	 	 	23	 
	9.3                Other Restrictions
	 	 	23	 
	9.4                Voting Rights; Dividends and Other Distributions
	 	 	23	 
	9.5                Issuance of Shares; Settlement of Awards
	 	 	23	 
	SECTION 10 RESTRICTED STOCK UNITS
	 	 	24	 
	10.1                Grant of Restricted Stock Units
	 	 	24	 
	10.2                Restriction Period
	 	 	24	 
	10.3                Other Restrictions
	 	 	24	 
	10.4                Dividend Equivalents
	 	 	24	 
	10.5                Issuance of Shares; Settlement of Awards
	 	 	25	 
	SECTION 11 INCENTIVE AWARDS
	 	 	25	 
	11.1                Incentive Awards
	 	 	25	 
	11.2                Performance Goal Certification
	 	 	25	 
	11.3                Discretion to Reduce Awards; Participant’s Performance
	 	 	25	 

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	11.4                Required Payment of Incentive Awards
	 	 	26	 
	11.5                Restricted Stock Election
	 	 	26	 
	SECTION 12 CASH AWARDS AND OTHER STOCK-BASED AWARDS
	 	 	27	 
	12.1                Grant of Cash Awards
	 	 	27	 
	12.2                Other Stock-Based Awards
	 	 	27	 
	12.3                Value of Cash Awards and Other Stock-Based Awards
	 	 	27	 
	12.4                Payment of Cash Awards and Other Stock-Based Awards
	 	 	27	 
	SECTION 13 DEFERRAL ELECTIONS
	 	 	28	 
	SECTION 14 TERMINATION OF EMPLOYMENT
	 	 	28	 
	SECTION 15 EFFECT OF A CHANGE OF CONTROL
	 	 	28	 
	SECTION 16 REGULATORY APPROVALS AND LISTING
	 	 	29	 
	SECTION 17 GENERAL PROVISIONS
	 	 	30	 
	17.1                Forfeiture Events and Nontransferability
	 	 	30	 
	17.2                No Individual Rights
	 	 	31	 
	17.3                Other Compensation
	 	 	31	 
	17.4                Leaves of Absence
	 	 	31	 
	17.5                Transfers
	 	 	31	 
	17.6                Unfunded Obligations
	 	 	32	 
	17.7                Beneficiaries
	 	 	32	 
	17.8                Governing Law
	 	 	32	 
	17.9                Satisfaction of Tax Obligations
	 	 	32	 
	17.10              Participants in Foreign Jurisdictions
	 	 	33	 
	SECTION 18 REGULATORY COMPLIANCE
	 	 	33	 
	18.1                Rule 16b-3 of the Exchange Act and Section 162(m) of the Code
	 	 	33	 
	18.2                Section 409A of the Code
	 	 	34	 
	SECTION 19 ESTABLISHMENT AND TERM OF PLAN
	 	 	34	 
	SECTION 20 AMENDMENT, TERMINATION OR DISCONTNUANCE OF THE PLAN
	 	 	34	 
	20.1                Amendment of Plan
	 	 	34	 
	20.2                Termination or Suspension of Plan
	 	 	35	 
	20.3                Code Section 162(m) Approval
	 	 	35	 

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ANADARKO PETROLEUM CORPORATION

2008 OMNIBUS INCENTIVE COMPENSATION PLAN

SECTION 1

PURPOSES

     The purposes of the Anadarko Petroleum Corporation 2008 Omnibus Incentive Compensation Plan
(the “Plan”) are to promote the interests of Anadarko Petroleum Corporation (the “Company”) and its
stockholders by strengthening its ability to attract, retain and motivate salaried employees of the
Company and any Subsidiary by furnishing suitable recognition of their ability and experience, to
align their interests and efforts to the long-term interests of the Company’s stockholders, and to
provide them with a direct incentive to achieve the Company’s strategic and financial goals. In
furtherance of these purposes, the Plan provides for the grant of Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Incentive
Awards, Cash Awards, and Other Stock-Based Awards to Participants in accordance with the terms and
conditions set forth below.

SECTION 2

DEFINITIONS

     Unless otherwise required by the context, the following terms when used in the Plan shall have
the meanings set forth in this Section 2:

2.1 Award

     Any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance
Share, Performance Unit, Incentive Award, Cash Award or Other Stock-Based Award, in each case
payable in cash or in Common Stock as may be designated by the Plan Administrator.

2.2 Award Agreement

     The written agreement setting forth the terms and conditions applicable to an Award granted
under the Plan (which, in the discretion of the Plan Administrator, need not be countersigned by a
Participant). The Plan Administrator may, in its discretion, provide for the use of electronic,
internet or other non-paper Award Agreements.

2.3 Beneficiary

     The person or persons designated by the Participant pursuant to Section 6.3(f) or Section 17.7
of this Plan to whom payments are to be paid pursuant to the terms of the Plan in the event of the
Participant’s death.

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2.4 Board

     The Board of Directors of the Company.

2.5 Cash Awards

     As defined in Section 12.1.

2.6 Cause

     “Cause” shall have the meaning ascribed thereto in any employment or similar agreement between
a Participant and an Employer, or, in the absence of such agreement, a termination of a
Participant’s employment with the Company and its Subsidiaries resulting from (a) substandard work
performance or repeated unreliability that has not been cured to the Employer’s satisfaction; (b)
workplace misconduct; (c) excessive absenteeism; (d) violation of safety rules; (e) violation of
Employer’s policies, including without limitation, the Employer’s “Code of Business Conduct and
Ethics”; (f) fraud or other dishonesty against the Employer; (g) engagement in conduct that the
Participant knows or should know is materially injurious to the business or reputation of the
Employer; (h) falsifying Employer or employee records (including an employment application); (i)
on-the-job intoxication or being under the influence of alcohol or an illegal narcotic or a drug
not being used as prescribed; (j) unauthorized use of Employer equipment or confidential
information of an Employer or third party who has entrusted such information to the employer; or
(k) conviction of a felony or misdemeanor involving moral turpitude. Whether a Participant has
been terminated for Cause will be determined by the Employer in the exercise of its discretion.

2.7 Change in Capitalization

     Any increase or reduction in the number of shares of Common Stock, any change (including,
without limitation, in the case of a spin-off, dividend or other distribution in respect of shares,
a change in value) in the shares of Common Stock or any exchange of shares of Common Stock for a
different number or kind of shares of Common Stock or other securities of the Company or another
corporation, by reason of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants, rights or debentures, stock dividend,
stock split or reverse stock split, extraordinary cash dividend, property dividend, combination or
exchange of shares, repurchase of shares, change in corporate structure or otherwise.

2.8 Change of Control

     The occurrence of any of the following after the Effective Date:

(a) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (a “Person”) acquires beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding
shares of Common Stock of the Company (the “Outstanding

2

 

Company Common Stock”) or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of
this subsection (a), the following acquisitions shall not constitute a Change of Control:
(1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (4) any acquisition pursuant to a
transaction which complies with clauses (A), (B) and (C) of Section 2.8(c); or

(b) individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Company’s stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by or on behalf
of a person other than the Board; or

(c) consummation by the Company of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company or the
acquisition of assets of another entity (a “Business Combination”), in each case, unless,
following such Business Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of Common Stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no person (excluding any employee benefit plan
(or related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of Common Stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the Business
Combination, and (C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or

3

 

(d) approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.

Notwithstanding the foregoing, with respect to an Award that is (i) subject to Section 409A
and (ii) a Change of Control would accelerate the timing of payment thereunder, the term
“Change of Control” shall mean a change in the ownership or effective control of the
Company, or in the ownership of a substantial portion of the assets of the Company as
defined in Section 409A and the authoritative guidance issued thereunder, but only to the
extent inconsistent with the above definition, and only to the minimum extent necessary to
comply with Section 409A as determined by the Committee.

2.9 Code

     The Internal Revenue Code of 1986, as amended and in effect from time to time, and the
temporary or final regulations of the Secretary of the U.S. Treasury adopted pursuant to the Code.

2.10 Common Stock

     The Common Stock of the Company, $0.10 par value per share, or such other class of shares or
other securities as may be applicable pursuant to the provisions of Section 5.

2.11 Company

     As defined in Section 1.

2.12 Covered Employee

     With respect to any grant of an Award, a Participant who the Plan Administrator deems is or
may be or become a “covered employee” as defined in Section 162(m) of the Code for any year.

2.13 Effective Date

     The effective date of the Plan is May 20, 2008, the date on which it was approved by the
stockholders of the Company.

2.14 Employer

     As to any Participant on any date, the Company or a Subsidiary that employs the Participant on
such date.

2.15 Exchange Act

     The Securities Exchange Act of 1934, as amended and rules promulgated thereunder.

4

 

2.16 Fair Market Value

     As of any given date, the closing sales price at which Common Stock is sold on such date as
reported in the NYSE-Composite Transactions by The Wall Street Journal or any other comparable
service the Plan Administrator may determine is reliable for such date, or if no Common Stock was
traded on such date, on the next preceding day on which Common Stock was so traded. If the Fair
Market Value of the Common Stock cannot be determined pursuant to the preceding provisions, the
“Fair Market Value” of the Common Stock shall be determined by the Plan Administrator in such a
manner as it deems appropriate, consistent with the requirements of Section 409A.

2.17 Full Value Award

     An Award other than of Options or Stock Appreciation Rights, which is settled by the issuance
of Common Stock.

2.18 Incentive Award

     A percentage of base salary, a fixed dollar amount or other measure of compensation which
Participants are eligible to receive, in cash and/or other Awards under the Plan, at the end of a
Performance Period if certain performance measures are achieved.

2.19 Incentive Stock Option

     An option intended to meet the requirements of a “qualified stock option” as defined in
Section 422 of the Code, as in effect at the time of grant of such Option, or any statutory
provision that may hereafter replace such section.

2.20 Management Committee

     A committee designated by the Board (either by resolution or by provisions contained in this
Plan) and consisting of the Chief Executive Officer, provided that such officer is a member of the
Board, and such other members of the Board as the Board may determine from time to time.

2.21 Maximum Annual Employee Grant

     The Maximum Annual Employee Grant set forth in Section 5.2.

2.22 Nonqualified Option

     An Option which is not intended to meet the requirements of a “qualified stock option” as
defined in Section 422 of the Code.

5

 

2.23 Option

     An Incentive Stock Option or a Nonqualified Option.

2.24 Option Price

     The price per share of Common Stock at which an Option is exercisable.

2.25. Other Stock-Based Award

     As defined in Section 12.2.

2.26 Participant

     An eligible employee of an Employer to whom Awards are granted under the Plan as set forth in
Section 4.

2.27 Performance Goals

     The Plan Administrator may grant Awards subject to one or more Performance Goals set forth in
the table below (collectively the “Performance Goals”) to any Participant, including, without
limitation, to any Covered Employee. As to any such Awards, the Plan Administrator shall establish
one or more of the Performance Goals for each Performance Period in writing. Each Performance Goal
selected for a particular Performance Period shall include any one or more of the following, either
individually, alternatively or in any combination, applied to either the Company as a whole or to a
Subsidiary or a business unit of the Company or any Subsidiary, either individually, alternatively
or in any combination, and measured either annually or cumulatively over a period of time, on an
absolute basis or relative to the pre-established target, to previous years’ results or to a
designated comparison group, in each case as specified by the Plan Administrator:

	 	 	 	 	 	 	 
	Financial Goals

	 	•     Earnings

	 	•     Earnings per share

	 	•     Net income

	 

	 	•     Revenues
	 	•     Cash
flow from operations 
	 	•     Free
cash flow

	 

	 	•     Debt level
	 	•     Equity
ratios 
	 	•     Expenese

	 

	 	•     Cost
reduction targets
	 	•     Capital
expended
	 	•     Working
capital

	 

	 	•     Interest-sensitivity
gap levels
	 	•     Weighted
average cost of capital
	 	•     Operating
or profit margin

	 

	 	•     EBITDAX
	 	•     Return
on assets
	 	•     Return
on equity or capital employed

	 

	 	     
	 	•     Debt/proved
developed reserves (PDP)
	 	•     Debt/proved
reserves

	 
	Operating Goals

	 	•     Amount of the oil
and gas reserves

	 	•     Oil and gas reserve
additions 

•     Costs of finding oil
and gas reserves

	 	•     Oil and gas replacement ratios

•     Natural gas and/or
oil production

6

 

	 	 	 	 	 	 	 
	Corporate and Other
Goals

	 	 •     Total shareholder

return

•     Asset quality levels

•     Investments

•     Satisfactory
internal or
external audits

•     Achievement of
balance sheet or
income statement
objectives

	 	•     Market share

•     Assets

•     Asset sale targets

•     Value of assets

•     Employee
retention/attrition
rates

•     Improvement of
financial ratings

	 	•     Charge-offs

•      Non-performing assets

•     Fair Market Value 

of
Common Stock

•     Regulatory compliance

•     Safety targets

•     Economic value added

     The Plan Administrator may adjust the Performance Goals to include or exclude extraordinary
charges, gains or losses on the disposition of business units, losses from discontinued operations,
restatements and accounting changes and other unplanned special charges such as restructuring
expenses, acquisitions, acquisition expenses, including expenses related to goodwill and other
intangible assets, stock offerings, stock repurchases and loan loss provisions. The Plan
Administrator may also provide for the manner in which performance will be measured against the
Performance Goals (or may adjust the Performance Goals) to reflect the impact of specified
corporate transactions, a Change in Capitalization, special charges, accounting policy changes and
tax law changes. In addition, the Plan Administrator may make such adjustments to the Performance
Goals applicable to Participants who are not Covered Employees as it determines are appropriate.
Such adjustments may occur at the time of the granting of an Award, or at any time thereafter, but,
in the case of Covered Employees, only to the extent permitted by Section 162(m). Performance
Goals may include a threshold level of performance below which no Awards shall be earned, target
levels of performance at which specific Awards will be earned, and a maximum level of performance
at which the maximum level of Awards will be earned.

     In establishing Performance Goals with respect to Covered Employees, the Plan Administrator
shall ensure such Performance Goals (i) are established no later than the end of the first 90 days
of the Performance Period (or such other time permitted by the Internal Revenue Service), and (ii)
satisfy all other applicable requirements imposed by Section 162(m), including the requirement that
such Performance Goals be stated in terms of an objective formula or standard, and the Plan
Administrator may not in any event increase the amount of compensation payable to a Covered
Employee upon the satisfaction of any Performance Goal. Prior to the payment of any
“performance-based compensation” within the meaning of Section 162(m), the Plan Administrator shall
certify in writing the extent to which the applicable Performance Goals were, in fact, achieved and
the amounts to be paid, vested or delivered as a result thereof; provided, that the Plan
Administrator may reduce, but not increase, such amount.

2.28 Performance Period

     That period of time during which Performance Goals are evaluated to determine the vesting or
granting of Awards under the Plan, as the Plan Administrator may determine.

7

 

2.29 Performance Shares

     An Award granted under the Plan representing the right to receive a number of shares of Common
Stock for each Performance Share granted, as the Plan Administrator may determine.

2.30 Performance Units

     An Award granted under the Plan representing the right to receive a payment (either in cash or
Common Stock) equal to the value of a Performance Unit, as the Plan Administrator may determine.

2.31 Permitted Transferee

     As defined in Section 6.3(f).

2.32 Plan

     As defined in Section 1.

2.33 Plan Administrator

     Those committees appointed and authorized pursuant to Section 3 to administer the Plan.

2.34 Prior Plans

     The Anadarko Petroleum Corporation 1999 Stock Incentive Plan, as amended and the Anadarko
Petroleum Corporation Annual Incentive Plan, as amended.

2.35 Restricted Stock

     Common Stock granted under the Plan that is subject to the requirements of Section 9 and such
other restrictions as the Plan Administrator deems appropriate. References to Restricted Stock in
this Plan shall include Restricted Stock awarded in conjunction with Incentive Awards pursuant to
Section 11, unless the context otherwise requires.

2.36 Restricted Stock Units

     An Award granted under the Plan representing a right to receive a payment (either in cash or
Common Stock) equal to the value of a share of Common Stock.

2.37 Restriction Period

     As defined in Sections 9.2 and 10.2.

2.38 Rule 16b-3

     Rule 16b-3 of the General Rules and Regulations under the Exchange Act.

8

 

2.39 Section 16 Insider

     Any person who is selected by the Plan Administrator to receive an Award pursuant to the Plan
and who is or may be or become subject to the requirements of Section 16 of the Exchange Act, and
the rules and regulations promulgated thereunder.

2.40 Section 162(m)

     Section 162(m) of the Code, and regulations promulgated thereunder.

2.41 Section 409A

     Section 409A of the Code, and regulations promulgated thereunder.

2.42 Specified Employee

     As defined in Section 18.2.

2.43 Stock Appreciation Right

     Any right granted under Section 7.

2.44 Subsidiary

     An entity that is designated by the Plan Administrator as a subsidiary for purposes of the
Plan and that is a corporation, partnership, joint venture, limited liability company, limited
liability partnership, or other entity in which the Company owns directly or indirectly, fifty
percent (50%) or more of the voting power or profit interests, or as to which the Company or one of
its affiliates serves as general or managing partner or in a similar capacity. Notwithstanding the
foregoing, for purposes of Options intended to qualify as Incentive Stock Options, the term
“Subsidiary” shall mean a corporation (or other entity treated as a corporation for tax purposes)
in which the Company directly or indirectly holds more than fifty percent (50%) of the voting
power.

SECTION 3

ADMINISTRATION

3.1 Plan Administrator

     (a) The Compensation and Benefits Committee of the Board of Directors shall be the Plan
Administrator with respect to all Covered Employees and all Section 16 Insiders. As to these
officers, the Plan Administrator shall be constituted at all times so as to (i) be “independent” as
such term is defined pursuant to the rules of any stock exchange on which the Common Stock may then
be listed, and (ii) meet the non-employee director standards of Rule
16b-3 and the outside director requirements of Section 162(m), so long as any of the

9

 

Company’s
equity securities are registered pursuant to Section 12(b) or 12(g) of the Exchange Act.

     (b) Other than as set forth in Section 3.1(a) and subject to Section 3.4 (and subject to
applicable law), the Management Committee shall be the Plan Administrator. The Board may from time
to time remove members from, or add members to, the Management Committee.

     (c) Notwithstanding Sections 3.1(a) and 3.1(b), the Board of Directors may designate itself or
the Compensation and Benefits Committee of the Board of Directors as the Plan Administrator as to
any Participant or groups of Participants.

     (d) The above committees may rely on officers, employees or other agents of the Company to
handle the day-to-day administrative matters of the Plan.

3.2 Authority of Plan Administrator

     Subject to the express terms and conditions set forth herein, the Plan Administrator shall
have the power from time to time to:

     (a) determine those individuals to whom Awards shall be granted under the Plan and the
number of shares or amount of cash subject to such Awards and prescribe the terms and
conditions (which need not be identical) of each such Awards, including, in the case of
stock Options and Stock Appreciation Rights, the Option Price, vesting schedule and
duration;

     (b) set the terms and conditions of any Award consistent with the terms of the Plan
(which may be based on Performance Goals or other performance measures as the Plan
Administrator shall determine), and make any amendments, modifications or adjustments to
such Awards as are permitted by the Plan;

     (c) construe and interpret the Plan and the Awards granted hereunder and establish,
amend and revoke rules and regulations for the administration of the Plan, including,
without limitation, correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Award Agreement, in the manner and to the extent it
shall deem necessary or advisable, including so that the Plan and the operation of the Plan
comply with Rule 16b-3, the Code to the extent applicable and other applicable law, and
otherwise to make the Plan fully effective;

     (d) exercise its discretion with respect to the powers and rights granted to it as set
forth in the Plan; and

     (e) generally, exercise such powers and perform such acts as are deemed necessary or
advisable to promote the best interests of the Company with respect to the Plan.

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     All decisions and determinations by the Plan Administrator in the exercise of the above powers
shall be final, binding and conclusive upon the Company, a Subsidiary, the Participants and all
other persons having or claiming any interest therein. The Plan Administrator shall cause the
Company at the Company’s expense to take any action related to the Plan which may be necessary to
comply with the provisions of any federal, state or foreign law or any regulations issued
thereunder, which the Plan Administrator determines are intended to be complied with.

     Notwithstanding the foregoing, the Plan Administrator shall not be entitled to exercise any
discretion otherwise authorized hereunder with respect to any Awards held by Covered Employees if
the ability to exercise such discretion or the exercise of such discretion itself would cause the
compensation attributable to such Awards to fail to qualify as performance-based compensation under
Section 162(m).

3.3 Indemnification of Plan Administrator

     Each member of any committee acting as Plan Administrator, while serving as such, shall be
entitled, in good faith, to rely or act upon any advice of the Company’s independent auditors,
counsel or consultants hired by the committee, or other agents assisting in the administration of
the Plan. The Plan Administrator and any officers or employees of the Company acting at the
direction or on behalf of the Company shall not be personally liable for any action or
determination taken or made, or not taken or made, in good faith with respect to the Plan, and
shall, to the extent permitted by law, be fully indemnified and protected under the Company’s
charter or by-laws with respect to any such action or determination.

3.4 Delegation to Management Committee

     To the maximum extent permitted by applicable law, the Board of Directors and the Compensation
and Benefits Committee hereby delegates to the Management Committee the authority (i) to designate
the officers and employees who shall be Participants, (ii) to determine the Awards to be granted to
any such Participants or (iii) both (i) and (ii); provided, however, that the
Management Committee shall not have the authority to grant Awards to any member of the Management
Committee and shall be subject to such other limitations set forth in this Plan. This provision
shall be deemed to constitute a delegation from the Board to the Management Committee without
further action by the Board. However, the Board or the Compensation and Benefits Committee shall,
from time to time, limit the total number of shares Common Stock subject to such delegation.

SECTION 4

ELIGIBILITY

     To be eligible for selection by the Plan Administrator to participate in the Plan, an
individual must be an employee (other than an employee who is a member of a unit covered by a
collective bargaining agreement) of an Employer, as of the date on which the Plan Administrator
grants to such individual an Award under the Plan or any other employee who, in the judgment of the
Plan Administrator, holds a position of responsibility and is able to contribute substantially

11

 

to the Company’s continued success. Members of the Board of Directors who are full-time
employees shall be eligible to participate in the Plan. Members of the Board of Directors who are
not employees are not eligible to participate in the Plan. Each grant of an Award under the Plan
shall be evidenced by an Award Agreement.

SECTION 5

SHARES AVAILABLE FOR THE PLAN

5.1 Aggregate Shares

     (a) Share Authorization

     Subject to adjustment as provided in Section 5.3, the maximum number of shares of Common Stock
available for grant to Participants under this Plan on or after the Effective Date shall be
33,000,000 shares of Common Stock, which shall consist of (i) a number of shares of Common Stock
not previously authorized for issuance under any plan, plus (ii) the number of shares of Common
Stock remaining available for issuance under the Prior Plans but not subject to outstanding awards
as of the Effective Date, plus (iii) the number of shares of Common Stock subject to awards
outstanding under the Prior Plans as of the Effective Date, but only to the extent such outstanding
awards are forfeited, expire, or otherwise terminate without issuance of such shares of Common
Stock.

     (b) Limit on Full Value Awards — Flexible Share Pool

     To the extent that a share of Common Stock is issued pursuant to the grant or exercise of a
Full Value Award, it shall reduce the share authorization by 2.27 shares of Common Stock; and to
the extent that a share of Common Stock is issued pursuant to the grant or exercise of an Award
other than a Full Value Award, it shall reduce the share authorization by one (1) share of Common
Stock.

     (c) Share Usage

     Shares of Common Stock covered by an Award shall only be counted as used to the extent they
are actually issued. Any shares of Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation, or otherwise without the issuance of such shares of Common Stock, are
settled in cash in lieu of shares of Common Stock, or are exchanged with the Committee’s
permission, prior to the issuance of shares of Common Stock, for Awards not involving shares of
Common Stock, shall be available again for grant under this Plan. However, the full number of
Stock Appreciation Rights granted that are to be settled by the issuance of shares of Common Stock
shall be counted against the number of shares of Common Stock available for award under the Plan,
regardless of the number of shares of Common Stock actually issued upon settlement of such Stock
Appreciation Rights. Furthermore, any shares of Common Stock withheld to satisfy tax withholding
obligations on an Award issued under the Plan, shares of Common Stock tendered to pay the exercise
price of an Award under the Plan, and shares of Common Stock repurchased on the open market with
the proceeds of an Option exercise will no

12

 

longer be eligible to be again available for grant under this Plan. The shares of Common
Stock available for issuance under this Plan may be authorized and unissued shares of Common Stock
or treasury shares of Common Stock.

5.2 Limitations

     Subject to adjustment as provided in Section 5.3, the following limitations shall apply:

     (a) Options: The maximum aggregate number of shares subject to Options granted in any one
calendar year to any one Participant shall be 2,500,000.

     (b) Stock Appreciation Rights: The maximum number of shares subject to Stock Appreciation
Rights granted in any one calendar year to any one Participant shall be 2,500,000.

     (c) Performance Shares or Performance Units: The maximum aggregate grant with respect to
Performance Shares or Performance Units that a Participant may receive in any one calendar year
shall be 1,500,000 shares, or equal to the value of 1,500,000 shares, determined as of the date of
vesting or payout, as applicable.

     (d) Restricted Stock or Restricted Stock Units: The maximum aggregate grant with respect to
Awards of Restricted Stock or Restricted Stock Units in any one calendar year to any one
Participant shall be 1,500,000 shares, or equal to the value of 1,500,000 shares, determined as of
the date of vesting or payout, as applicable.

     (e) Incentive Awards: The maximum aggregate amount awarded or credited in any one calendar
year with respect to an Incentive Award shall be $10,000,000.

     (f) Cash Awards: The maximum aggregate amount awarded to or credited with respect to Cash
Awards to any one Participant in any one calendar year may not exceed the greater of $10,000,000
dollars or the value of 1,500,000 shares, determined as of the date of vesting or payout, as
applicable.

     (g) Other Stock-Based Awards: The maximum aggregate grant with respect to Other Stock-Based
Awards in any one calendar year to any one Participant shall be 1,500,000 shares.

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5.3 Adjustments in Authorized Shares

     (a) In the event of a Change in Capitalization, the Plan Administrator shall make such
adjustments, if any, as it determines are appropriate and equitable to (a) the maximum number and
class of shares of Common Stock or other stock or securities with respect to which Awards may be
granted under the Plan, (b) the maximum number and class of shares of Common Stock or other stock
or securities that may be issued upon exercise of Nonqualified Options and Incentive Stock Options,
(c) the Maximum Annual Employee Grants, (d) the number and class of shares of Common Stock or other
stock or securities which are subject to outstanding Awards granted under the Plan and the Option
Price or exercise price therefore, if applicable and (e) the Performance Goals; provided, however,
that in the case of an “equity restructuring” (within the meaning of the Financial Standards Board
Statement of Financial Accounting Standards No. 123 (revised 2004), the Board shall make an
equitable or appropriate adjustment to outstanding Awards to reflect such equity restructuring.
Any such adjustment shall be final, binding and conclusive on all persons claiming any right or
interest under the Plan.

     (b) Any such adjustment in the shares of Common Stock or other stock or securities (x) subject
to outstanding Incentive Stock Options (including any adjustments in the exercise price) shall be
made in such manner as not to constitute a modification as defined by Section 424(h)(3) of the Code
and only to the extent otherwise permitted by Sections 422 and 424 of the Code or (y) subject to
outstanding Awards that are intended to qualify as performance-based compensation under Section
162(m) shall be made in such a manner as not to adversely affect the treatment of the Awards as
performance-based compensation.

     (c) If, by reason of a Change in Capitalization, a Participant shall be entitled to, or shall
be entitled to exercise an Option or Stock Appreciation Right with respect to, new, additional or
different shares of stock or securities of the Company or any other corporation, such new,
additional or different shares shall thereupon be subject to all of the conditions, restrictions
and performance criteria which were applicable to the shares of Common Stock that such shares
replaced or to the Option or Stock Appreciation Right, as the case may be, prior to such Change in
Capitalization.

     (d) No adjustments made under this Section 5 shall be made if such adjustment would result in
adverse taxation to a Participant under Section 409A.

5.4 Effect of Certain Transactions

     Following (a) the liquidation or dissolution of the Company or (b) a merger or consolidation
of the Company (a “Transaction”), (i) each outstanding Award shall be treated as provided for in
the agreement entered into in connection with the Transaction (which treatment may be different as
among different types of Awards and different holders thereof) or (ii) if not so provided in such
agreement, each Participant shall be entitled to receive in respect of each share of Common Stock
subject to any outstanding Awards, upon exercise of any Option or Stock Appreciation Right or
payment or transfer in respect of any other Award, the same number and kind of stock, securities,
cash, property or other consideration that each holder of a share of Common Stock was entitled to
receive in the Transaction in respect of a share of Common

14

 

Stock; provided, however, that such stock, securities, cash, property, or other consideration
shall remain subject to all of the conditions, restrictions and performance criteria which were
applicable to Awards prior to such Transaction, but giving effect to any applicable provision of
this Plan or any Award Agreement if the Transaction is a Change of Control. Without limiting the
generality of the foregoing, the treatment of outstanding Options and Stock Appreciation Rights
pursuant to clause (i) of this Section 5.4 in connection with a Transaction in which the
consideration paid or distributed to the Company’s stockholders is not entirely shares of common
stock of the acquiring or resulting corporation may include the cancellation of outstanding Options
and Stock Appreciation Rights upon consummation of the Transaction provided either (x) the holders
of affected Options and Stock Appreciation rights have been given a period of at least fifteen (15)
days prior to the date of the consummation of the Transaction to exercise the Options and Stock
Appreciation Rights (whether or not they were otherwise exercisable) or (y) the holders of the
affected Options and Stock Appreciation Rights are paid (in cash or cash equivalents) in respect of
each share of Common Stock covered by the Options or Stock Appreciation Rights being cancelled an
amount equal to the excess, if any, of the per share price paid or distributed to stockholders in
the Transaction (the value of any non-cash consideration to be determined by the Plan Administrator
in its sole discretion) over the exercise price thereof. For avoidance of doubt, (1) the
cancellation of Options and Stock Appreciation Rights pursuant to clause (y) of the preceding
sentence may be effected notwithstanding anything to the contrary contained in this Plan or any
Award Agreement and (2) if the amount determined pursuant to clause (y) of the preceding sentence
is zero or less, the affected Options and Stock Appreciation Rights may be cancelled without any
payment therefore. The treatment of any Award as provided in this Section 5.4 shall be
conclusively presumed to be appropriate for purposes of Section 5.3.

SECTION 6

STOCK OPTIONS

6.1 Grant of Options

     Options may be granted to eligible employees in such number, and at such times during the term
of the Plan as the Plan Administrator shall determine, the Plan Administrator taking into account
the duties of the respective employees, their present and potential contributions to the success of
the Company or its Subsidiaries, and such other factors as the Plan Administrator shall deem
relevant in accomplishing the purposes of the Plan. The Plan Administrator may grant an Option or
provide for the grant of an Option, either from time to time in the discretion of the Plan
Administrator or automatically upon the occurrence of specified events, including, without
limitation, the achievement of Performance Goals or other performance measures, the satisfaction of
an event or condition within the control of the recipient of the Option or within the control of
others. The granting of an Option shall take place when the Plan Administrator by resolution,
written consent or other appropriate action determines to grant such an Option to a particular
Participant at the Option Price.

15

 

6.2 Special Provisions Applicable to Incentive Stock Options

     Each provision of the Plan and each Incentive Stock Option granted thereunder shall be
construed so that each such Option shall qualify as an Incentive Stock Option, and any provision
thereof that cannot be so construed shall be disregarded, unless the Participant agrees otherwise.
Incentive Stock Options, in addition to complying with the other provisions of the Plan relating to
Options generally, shall be subject to the following conditions:

(a) Ten Percent (10%) Stockholders

     A Participant must not, immediately before an Incentive Stock Option is granted to him
or her, own stock representing more than ten percent (10%) of the voting power or value of
all classes of stock of the Company or of a Subsidiary. This requirement is waived if (i)
the Option Price of the Incentive Stock Option to be granted is at least one hundred ten
percent (110%) of the Fair Market Value of the stock subject to the Option, determined at
the time the Option is granted, and (ii) the Option is not exercisable more than five (5)
years from the date the Option is granted.

(b) Annual Limitation

     To the extent that the aggregate Fair Market Value (determined at the time of the grant
of the option) of the stock with respect to which Incentive Stock Options are exercisable
for the first time by the Participant during any calendar year exceeds One Hundred Thousand
Dollars ($100,000), such Options shall be treated as Nonqualified Options. In applying the
limitation in the preceding sentence in the case of multiple Option grants, unless otherwise
required by applicable law, Options which were intended to be Incentive Stock Options shall
be treated as Nonqualified Options according to the order in which they were granted such
that the most recently granted Options are first treated as Nonqualified Options.

(c) Additional Terms

     Any other terms and conditions which the Plan Administrator determines, upon advice of
counsel, must be imposed for the Option to be an Incentive Stock Option.

(d) Notice of Disqualifying Disposition

     If a Participant shall make any disposition of shares of Common Stock issued pursuant
to an Incentive Stock Option under the circumstances described in Section 421(b) of the Code
(relating to disqualifying distributions), the Participant shall notify the Company of such
disposition within twenty (20) days thereof.

16

 

6.3 Terms of Options

     Except as otherwise provided in Section 6.2, all Incentive Stock Options and Nonqualified
Options under the Plan shall be granted subject to the following terms and conditions:

(a) Option Price

     The Option Price shall be determined by the Plan Administrator in any reasonable
manner, but shall not be less than the Fair Market Value of the Common Stock on the date the
Option is granted, except in the case of Options that are granted in assumption of, or in
substitution for, outstanding awards previously granted by (i) a company acquired by the
Company or a Subsidiary, or (ii) a company with which the Company or a Subsidiary combines.

(b) Duration of Options

     Options shall be exercisable at such time and under such conditions as set forth in the
Award Agreement, but in no event shall any stock option (whether a Nonqualified Option or an
Incentive Stock Option) be exercisable later than the tenth (10th) anniversary of the date
of its grant.

(c) Exercise of Options

     Common Stock covered by an Option may be purchased at one time or in such installments
over the option period as may be provided in the Award Agreement. Any Common Stock not
purchased on an applicable installment date may be purchased thereafter at any time prior to
the expiration of the Option in accordance with its terms. To the extent that the right to
purchase Common Stock has accrued thereunder, an Option may be exercised from time to time
by written notice to the Company setting forth the amount of Common Stock with respect to
which the Option is being exercised.

(d) Payment

     The purchase price of Common Stock purchased under Options shall be paid in full to the
Company upon the exercise of the Option by delivery of consideration equal to the product of
the Option Price and the Common Stock purchased (the “Purchase Price”). Such consideration
may be either (i) in cash or (ii) at the discretion of the Plan Administrator, in Common
Stock (by either actual delivery of Common Stock or by attestation presenting satisfactory
proof of beneficial ownership of such Common Stock) already owned by the Participant, or any
combination of cash and Common Stock. The Fair Market Value of such Common Stock as
delivered shall be valued as of the day of exercise. The Plan Administrator can determine
that additional forms of payment will be permitted. To the extent permitted by the Plan
Administrator and applicable laws and regulations (including, without limitation, federal
tax and securities laws, regulations and state corporate law), an Option may also be
exercised in a “cashless” exercise by delivery

17

 

of a properly executed exercise notice together with irrevocable instructions to a
broker approved by the Company to promptly deliver to the Company sufficient proceeds to pay
the Purchase Price. A Participant shall have none of the rights of a stockholder until the
Common Stock is issued to the Participant.

     The Plan Administrator may permit a Participant to pay all or a portion of the Purchase
Price by having Common Stock with a Fair Market Value equal to all or a portion of the
Purchase Price be withheld from the shares issuable to the Participant upon the exercise of
the Option. The Fair Market Value of such Common Stock as is withheld shall be determined
as of the same day as the exercise of the Option.

(e) Restrictions

     The Plan Administrator shall determine and reflect in the Award Agreement, with respect
to each Option, the nature and extent of the restrictions, if any, to be imposed on the
Common Stock which may be purchased thereunder, including, without limitation, restrictions
on the transferability of such Common Stock acquired through the exercise of such Options
for such periods as the Plan Administrator may determine and, further, that in the event a
Participant’s employment by the Company, or a Subsidiary, terminates during the period in
which such Common Stock is nontransferable, the Participant shall be required to sell such
Common Stock back to the Company at such prices as the Plan Administrator may specify. In
addition, to the extent permitted by applicable laws and regulations, the Plan Administrator
may require that a Participant who wants to effectuate a “cashless” exercise of Options be
required to sell the Common Stock acquired in the associated exercise to the Company, or in
the open market through the use of a broker selected by the Company, at such price and on
such terms as the Plan Administrator may determine at the time of grant, or otherwise.
Without limiting the foregoing, the Plan Administrator may impose such restrictions,
conditions or limitations as it determines appropriate as to the timing and manner of any
resales by the Participant or other subsequent transfers by the Participant of any Common
Stock issued as a result of the exercise of an Option, including without limitation (i)
restrictions under an insider trading policy, (ii) restrictions designed to delay and/or
coordinate the timing and manner of sales by one or more Participants and (iii) restrictions
as to the use of a specified brokerage firm for such resales or other transfers.

(f) Transferability of Options

     Notwithstanding Section 17.1 and only as provided by the Plan Administrator,
Nonqualified Options may be transferred to a Participant’s immediate family members,
directly or indirectly or by means of a trust, corporate entity or partnership (a person who
thus acquires this option by such transfer, a “Permitted Transferee”). A transfer of a
Nonqualified Option may only be effected by the Company at the request of the Participant
and shall become effective upon the Permitted Transferee agreeing to such terms as the Plan
Administrator may require and only when recorded in the Company’s record of outstanding
Options. In the event an Option is transferred as contemplated hereby, the Option may not
be subsequently transferred by the Permitted Transferee

18

 

except a transfer back to the Participant or by will or the laws of descent and
distribution. A transferred Option may be exercised by a Permitted Transferee to the same
extent as, and subject to the same terms and conditions as, the Participant (except as
otherwise provided herein), as if no transfer had taken place. As used herein, “immediate
family member” shall mean, with respect to any person, such person’s child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, sister-in-law, and shall include adoptive
relationships. In the event of exercise of a transferred Option by a Permitted Transferee,
any amounts due to (or to be withheld by) the Company upon exercise of the Option shall be
delivered by (or withheld from amounts due to) the Participant, the Participant’s estate or
the Permitted Transferee, in the reasonable discretion of the Company.

     In addition, to the extent permitted by applicable law and Rule 16b-3, the Plan
Administrator may permit a recipient of a Nonqualified Option to designate in writing during
the Participant’s lifetime a Beneficiary to receive and exercise the Participant’s
Nonqualified Options in the event of such Participant’s death.

(g) Purchase for Investment

     The Plan Administrator shall have the right to require that each Participant or other
person who shall exercise an Option under the Plan, and each person into whose name the
Common Stock shall be issued pursuant to the exercise of an Option, represent and agree that
any and all Common Stock purchased pursuant to such Option is being purchased for investment
only and not with a view to the distribution or resale thereof and that such Common Stock
will not be sold except in accordance with such restrictions or limitations as may be set
forth in the Option or by the Plan Administrator. This Section 6.3(g) shall be inoperative
during any period of time when the Company has obtained all necessary or advisable approvals
from governmental agencies and has completed all necessary or advisable registrations or
other qualifications of the Common Stock as to which Options may from time to time be
granted as contemplated in Section 16.

(h) No Repricing

     Except in connection with a Change in Capitalization or approval of the Company’s
stockholders, the Option Price shall not be reduced to less than the Fair Market Value on
the date such Stock Options were granted.

SECTION 7

STOCK APPRECIATION RIGHTS

7.1 Grant of Stock Appreciation Rights

     Stock Appreciation Rights may be granted to eligible employees in such number, and at such
times during the term of the Plan as the Plan Administrator shall determine, the Plan

19

 

Administrator taking into account the duties of the respective employees, their present and
potential contributions to the success of the Company or a Subsidiary, and such other factors as
the Plan Administrator shall deem relevant in accomplishing the purposes of the Plan. The Plan
Administrator may grant a Stock Appreciation Right or provide for the grant of a Stock Appreciation
Right, either from time to time in the discretion of the Plan Administrator or automatically upon
the occurrence of specified events, including, without limitation, the achievement of Performance
Goals or other performance measures, the satisfaction of an event or condition within the control
of the recipient of the Stock Appreciation Right or within the control of others. The granting of
a Stock Appreciation Right shall take place when the Plan Administrator by resolution, written
consent or other appropriate action determines to grant such a Stock Appreciation Right to a
particular Participant at a particular price. A Stock Appreciation Right may be granted
freestanding or in tandem or in combination with any other Award under the Plan.

7.2 Exercise of Stock Appreciation Rights

     A Stock Appreciation Right may be exercised upon such terms and conditions and for such term
as the Plan Administrator shall determine; provided, however, no Stock Appreciation
Right shall be exercisable later than the tenth (10th) anniversary of the date of its grant. Upon
exercise of a Stock Appreciation Right, a Participant shall be entitled to receive Common Stock
with an aggregate Fair Market Value determined by multiplying (i) the difference between the Fair
Market Value of a share of Common Stock on the date of exercise of the Stock Appreciation Right
over the price determined by the Plan Administrator on the date of grant (which price shall not be
less than 100% of the Fair Market Value of a share of Common Stock on the date of grant, except in
the case of Stock Appreciation Rights that are granted in assumption of, or in substitution for,
outstanding awards previously granted by (x) a company acquired by the Company or a Subsidiary, or
(y) a company with which the Company or a Subsidiary combines) times (ii) the number of shares of
Common Stock with respect to which the Stock Appreciation Right is exercised. The value of any
fractional shares shall be paid in cash.

7.3 Special Provisions Applicable to Stock Appreciation Rights

Stock Appreciation Rights are subject to the following restrictions:

(a) A Stock Appreciation Right granted in tandem with any other Award under the Plan shall
be exercisable at such time or times as the Award to which it relates shall be exercisable,
or at such other times as the Plan Administrator may determine.

(b) The right of a Participant to exercise a Stock Appreciation Right granted in tandem with
any other Award under the Plan shall be canceled if and to the extent the related Award is
exercised or canceled. To the extent that a Stock Appreciation Right is exercised, the
related Award shall be deemed to have been surrendered unexercised and canceled.

20

 

(c) A holder of Stock Appreciation Rights shall have none of the rights of a stockholder
until the Common Stock, if any, is issued to such holder pursuant to such holder’s exercise
of such rights.

(d) The acquisition of Common Stock pursuant to the exercise of a Stock Appreciation Right
shall be subject to the same restrictions as would apply to the acquisition of Common Stock
acquired upon exercise of an Option, as set forth in Section 6.3.

7.4 No Repricing

     Except in connection with a Change in Capitalization or approval of the Company’s
stockholders, the price at which Stock Appreciation Rights may be exercised shall not be reduced to
less than the Fair Market Value on the date such Stock Appreciation Rights were granted.

SECTION 8

PERFORMANCE SHARES AND PERFORMANCE UNITS

8.1 Grant of Performance Shares and Performance Units

     Subject to the limitations in Section 5.2, Performance Shares or Performance Units may be
granted to eligible employees at any time and from time to time as the Plan Administrator shall
determine. The Plan Administrator shall have complete discretion in determining the number of
Performance Shares or Performance Units granted to each Participant and the terms and conditions
thereof, taking into account the duties of the respective Participants, their present and potential
contributions to the success of the Company or a Subsidiary, and such other factors as the Plan
Administrator shall deem appropriate. Performance Shares and Performance Units may be granted
alone or in combination with any other Award under the Plan.

8.2 Value of Performance Shares and Performance Units

     The Plan Administrator shall establish Performance Goals for any specified Performance
Periods. Prior to each grant of Performance Shares or Performance Units, the Plan Administrator
shall establish an initial amount of Common Stock for each Performance Share and an initial value
for each Performance Unit granted to each Participant for that Performance Period. Prior to each
grant of Performance Shares or Performance Units, the Plan Administrator also shall set the
Performance Goals that will be used to determine the extent to which the Participant receives
Common Stock for the Performance Shares or payment of the value of the Performance Units awarded
for such Performance Period. With respect to each such Performance Goal utilized during a
Performance Period, the Plan Administrator may assign percentages or other relative values to
various levels of performance which shall be applied to determine the extent to which the
Participant shall receive a payout of the number of Performance Shares or value of Performance
Units awarded.

21

 

8.3 Payment of Performance Shares and Performance Units

     After a Performance Period has ended, the holder of a Performance Share or Performance Unit
shall be entitled to receive the value thereof as determined by the Plan Administrator. The Plan
Administrator shall make this determination by first determining the extent to which the
Performance Goals set pursuant to Section 8.2 have been met. The Plan Administrator shall then
determine the applicable percentage or other relative value to be applied to, and will apply such
percentage or other relative value to, the number of Performance Shares or value of Performance
Units to determine the payout to be received by the Participant. In addition, with respect to
Performance Shares and Performance Units granted to each Participant, no payout shall be made
hereunder except upon written certification by the Plan Administrator that the applicable
Performance Goals have been satisfied to a particular extent.

8.4 Form and Timing of Payment

     The payment described in Section 8.3 shall be made in Common Stock, or in cash, or partly in
Common Stock and partly in cash, at the discretion of the Plan Administrator and set forth in the
Award Agreement. The value of any fractional shares shall be paid in cash. Payment shall be made
in a lump sum or installments as prescribed by the Plan Administrator or the Award Agreement, as
applicable, and consistent with Section 409A. If Common Stock is to be converted into an amount of
cash on any date, or if an amount of cash is to be converted into Common Stock on any date, such
conversion shall be done at the then-current Fair Market Value of the Common Stock on such date.

SECTION 9

RESTRICTED STOCK

9.1 Grant of Restricted Stock

     Subject to the limitations in Section 5.2, Restricted Stock may be granted to eligible
employees in such number and at such times during the term of the Plan as the Plan Administrator
shall determine, the Plan Administrator taking into account the duties of the respective
Participants, their present and potential contributions to the success of the Company or a
Subsidiary, and such other factors as the Plan Administrator shall deem relevant in accomplishing
the purposes of the Plan. The Plan Administrator may grant Restricted Stock or provide for the
grant of Restricted Stock, either from time to time in the discretion of the Plan Administrator or
automatically upon the occurrence of specified events.

22

 

9.2 Restriction Period

     Except as permitted by the Plan Administrator and specified in the Award Agreement, during a
period following the date of grant, as determined by the Plan Administrator, which in no event
shall be less than three (3) years with respect to Restricted Stock subject to restrictions based
upon time and one (1) year with respect to Restricted Stock subject to restrictions based upon the
achievement of specific Performance Goals or other performance measures (the “Restriction Period”)
the Restricted Stock shall be subject to Section 17.1. During the Restriction Period, the Plan
Administrator shall evidence the restrictions on the shares of Restricted Stock in such a manner as
it determines is appropriate (including, without limitation, (i) by means of appropriate legends on
shares of Restricted Stock that have been certificated and (ii) by means of appropriate
stop-transfer orders on shares of Restricted Stock credited to book-entry accounts).

9.3 Other Restrictions

     The Plan Administrator shall impose such other restrictions on Restricted Stock granted
pursuant to the Plan as it may deem advisable, including Performance Goals or other performance
measures. The Plan Administrator may require, under such terms and conditions as it deems
appropriate or desirable, that the certificates for Restricted Stock delivered under the Plan may
be held in custody by a bank or other institution, or that the Company may itself hold such shares
in custody until the Restriction Period expires or until restrictions thereon otherwise lapse, and
may require, as a condition of any issuance of Restricted Stock that the Participant shall have
delivered a stock power endorsed in blank relating to the shares of Restricted Stock.

9.4 Voting Rights; Dividends and Other Distributions

     A Participant receiving a grant of Restricted Stock shall be recorded as a stockholder of the
Company. Each Participant who receives a grant of Restricted Stock shall have all the rights of a
stockholder with respect to such shares (except as provided in the restrictions on
transferability), including the right to vote the shares and receive dividends and other
distributions paid with respect to the underlying shares of Restricted Stock.

9.5 Issuance of Shares; Settlement of Awards

     When the restrictions imposed by Section 9.2 expire or otherwise lapse with respect to one or
more shares of Restricted Stock, the Participant shall be obligated to return to the Company any
certificate(s) representing shares of Restricted Stock (if applicable), and the Company shall
deliver to the Participant one (1) share of Common Stock (which may be delivered in book-entry or
certificated form) in satisfaction of each share of Restricted Stock, which shares so delivered
shall not contain any legend. The delivery of shares pursuant to this Section 9.5 shall be subject
to any required share withholding to satisfy tax withholding obligations pursuant to Section 17.9.
Any fractional shares subject to such Restricted Stock shall be paid to the Participant in cash.

23

 

SECTION 10

RESTRICTED STOCK UNITS

10.1 Grant of Restricted Stock Units

     Subject to the limitations in Section 5.2, Restricted Stock Units may be granted to eligible
employees in such number and at such times during the term of the Plan as the Plan Administrator
shall determine, the Plan Administrator taking into account the duties of the respective
Participants, their present and potential contributions to the success of the Company or a
Subsidiary, and such other factors as the Plan Administrator shall deem relevant in accomplishing
the purposes of the Plan. The Plan Administrator may grant Restricted Stock Units or provide for
the grant of Restricted Stock Units, either from time to time in the discretion of the Plan
Administrator or automatically upon the occurrence of specified events.

10.2 Restriction Period

     Except as permitted by the Plan Administrator and specified in the Award Agreement, during a
period following the date of grant, as determined by the Plan Administrator, which in no event
shall be less than three (3) years with respect to Restricted Stock Units subject to restrictions
based upon time and one (1) year with respect to Restricted Stock Units subject to restrictions
based upon the achievement of specific Performance Goals or other performance measures (the
“Restriction Period”) the Restricted Stock Units shall be subject to Section 17.1.

10.3 Other Restrictions

     The Plan Administrator shall impose such other restrictions on Restricted Stock Units granted
pursuant to the Plan as it may deem advisable, including the requirement that certain
pre-established Performance Goals be met. A Participant receiving a grant of Restricted Stock
Units shall not be recorded as a stockholder of the Company and shall not acquire any rights of a
stockholder unless or until the Participant is issued shares of Common Stock in settlement of such
Restricted Stock Units.

10.4 Dividend Equivalents

     The Plan Administrator may provide that Restricted Stock Units awarded under the Plan shall be
entitled to an amount per Restricted Stock Unit equal in value to the cash dividend, if any, paid
per share of Common Stock on issued and outstanding shares, on the dividend payment dates occurring
during the period between the date on which the Restricted Stock Units are granted to the
Participant and the date on which such Restricted Stock Units are settled, cancelled, forfeited,
waived, surrendered or terminated under the Plan. Such paid amounts called “dividend equivalents”
shall be (i) paid in cash or Common Stock or (ii) credited to the Participant as additional
Restricted Stock Units, or any combination thereof, as the Plan Administrator shall determine. A
Restricted Stock Unit credited to a Participant as a dividend equivalent shall vest and be settled
at such time as the Restricted Stock Unit to which it relates vests and is settled. In the event
the dividend equivalents are deferred, they shall be payable in accordance with the requirements of
Section 409A.

24

 

10.5 Issuance of Shares; Settlement of Awards

     When the restrictions imposed by Section 10.2 expire or otherwise lapse with respect to one or
more Restricted Stock Units, Restricted Stock Units shall be settled (i) in cash or (ii) by the
delivery to the Participant of the number of shares of Common Stock equal to the number of the
Participant’s Restricted Stock Units that are vested (less any units or value withheld to satisfy
applicable tax withholding obligations), or any combination thereof, as the Plan Administrator
shall determine and in accordance with Section 409A. The delivery of shares pursuant to this
Section 10.5 shall be subject to any required share withholding to satisfy tax withholding
obligations pursuant to Section 17.9. Any fractional shares subject to such Restricted Stock Units
shall be paid to the Participant in cash.

SECTION 11

INCENTIVE AWARDS

11.1 Incentive Awards

     Prior to the beginning of each Performance Period, or not later than ninety (90) days
following the commencement of the relevant fiscal year, the Plan Administrator shall establish
Performance Goals or other performance measures which must be achieved for any Participant to
receive an Incentive Award for that Performance Period. The Performance Goals or other performance
measures may be based on any combination of corporate and business unit Performance Goals or other
performance measures. The Plan Administrator may also establish one or more Company-wide
Performance Goals or other performance measures which must be achieved for any Participant to
receive an Incentive Award for that Performance Period. Such Performance Goals or other
performance measures may include a threshold level of performance below which no Incentive Award
shall be earned, target levels of performance at which specific Incentive Awards will be earned,
and a maximum level of performance at which the maximum level of Incentive Awards will be earned.
Each Incentive Award shall specify the amount of cash and the amount of any other Awards subject to
such Incentive Award.

11.2 Performance Goal Certification

     An Incentive Award shall become payable to the extent provided herein in the event that the
Plan Administrator certifies in writing prior to payment of the Incentive Award that the
Performance Goals or other performance measures selected for a particular Performance Period have
been attained. In no event will an Incentive Award be payable under this Plan if the threshold
level of performance set for each Performance Goal or other performance measure for the applicable
Performance Period is not attained.

11.3 Discretion to Reduce Awards; Participant’s Performance

     The Plan Administrator, in its sole and absolute discretion and only prior to a Change of
Control, may reduce the amount of any Incentive Award otherwise payable to a Participant upon

25

 

attainment of any Performance Goal or other performance measure for the applicable Performance
Period. A Participant’s individual performance must be satisfactory, regardless of the Company’s
performance and the attainment of Performance Goals or other performance measures, before he or she
may be paid an Incentive Award. In evaluating a Participant’s performance, the Plan Administrator
shall consider the Performance Goals or other performance measures, the Participant’s
responsibilities and accomplishments, and such other factors as it deems appropriate.

11.4 Required Payment of Incentive Awards

     The Plan Administrator shall make a determination as soon as administratively possible after
the information that is necessary to make such a determination is available for a particular
Performance Period whether the Performance Goals or other performance measures for the Performance
Period have been achieved and the amount of the Incentive Award for each Participant. The Plan
Administrator shall certify the foregoing determinations in writing. In the absence of an election
by the Participant pursuant to Section 11.5 and Section 13, the Incentive Award shall be paid as
soon as practicable after the end of the calendar year, but in no event later than March 15
following the end of the calendar year in which the foregoing determinations have been made as
follows:

     (a) Participants shall receive their Incentive Awards in any combination of cash and/or other
Awards under the Plan as determined by the Plan Administrator.

     (b) Because the Participant bears forfeiture, price fluctuation, and other attendant risks
during the Restriction Period associated with Restricted Stock and Restricted Stock Units, the Plan
Administrator may determine, as set forth in the Award Agreement, that Participants who are awarded
Restricted Stock or Restricted Stock Units as part of their Incentive Award shall be awarded
additional Restricted Stock or Restricted Stock Units up to the amount of Restricted Stock or
Restricted Stock Units which a Participant is awarded pursuant to Section 11.4(a). No additional
Restricted Stock or Restricted Stock Units are required to be awarded pursuant to this Section
11.4(b).

11.5 Restricted Stock Election

     To the extent permitted by applicable law, in lieu of receiving all or any portion of cash
awarded as part of a Participant’s Incentive Award pursuant to Section 11.4(a), the Plan
Administrator may determine, as set forth in the Award Agreement, that Participants may elect to
receive Restricted Stock or Restricted Stock Units with a value equal to the portion of the
Incentive Award which the Participant would otherwise have received in cash, but has elected to
receive in Restricted Stock or Restricted Stock Units (“Restricted Stock Election”). Participants
must make their Restricted Stock Election at such time and in such a manner as prescribed by the
Plan Administrator and in accordance with Section 409A of the Code. The Plan Administrator may
determine, if set forth in the Award Agreement, that each Participant who makes the Restricted
Stock Election shall be awarded additional shares of Restricted Stock or Restricted Stock Units
granted pursuant to Section 11.4(b) up to the amount of the Participant’s Restricted

26

 

Stock Election. Notwithstanding the foregoing, no additional Restricted Stock or Restricted
Stock Units are required to be awarded pursuant to this Section 11.5.

SECTION 12

CASH AWARDS AND OTHER STOCK-BASED AWARDS

12.1 Grant of Cash Awards

     Subject to the terms and provisions of this Plan, the Plan Administrator, at any time and from
time to time, may grant cash awards to Participants in such amounts and upon such terms, including
the achievement of Performance Goals or other specific performance measures, as the Plan
Administrator may determine (each, a “Cash Award”).

12.2 Other Stock-Based Awards

     The Plan Administrator may grant other types of equity-based or equity-related Awards not
otherwise described by the terms of this Plan (including the grant or offer for sale of
unrestricted shares of Common Stock) in such amounts and subject to such terms and conditions, as
the Plan Administrator shall determine (each, an “Other Stock-Based Award”). Such Other
Stock-Based Awards may involve the transfer of Common Stock to Participants, or payment in cash or
otherwise of amounts based on the value of Common Stock.

12.3 Value of Cash Awards and Other Stock-Based Awards

     Each Cash Award granted pursuant to this Section 12 shall specify a payment amount or payment
range as determined by the Plan Administrator. Each Other Stock-Based Award shall be expressed in
terms of Common Stock or units based on Common Stock, as determined by the Plan Administrator. The
Plan Administrator may establish performance measures applicable to such Awards in its discretion.
If the Plan Administrator exercises its discretion to establish performance measures, the number
and/or value of such cash awards or Other Stock-Based Awards that will be paid out to the
Participant will depend on the extent to which the performance measures are met.

12.4 Payment of Cash Awards and Other Stock-Based Awards

     Payment, if any, with respect to a Cash Award or an Other Stock-Based Award shall be made in
accordance with the terms of the Award, in cash or Common Stock as the Plan Administrator
determines and in accordance with Section 409A so as not to be treated as payment made pursuant to
a nonqualified deferred compensation plan. The value of any fractional shares shall be paid in
cash.

27

 

SECTION 13

DEFERRAL ELECTIONS

     The Plan Administrator may, to the extent permitted by applicable law, permit Participants to
defer Awards under the Plan. Any such deferrals shall be subject to such terms, conditions and
procedures that the Plan Administrator may establish from time to time in its sole discretion and
consistent with the advance and subsequent deferral election requirements of Section 409A.

SECTION 14

TERMINATION OF EMPLOYMENT

     The Award Agreement applicable to each Award shall set forth the effect of a termination of
the Participant’s employment upon such Award; provided, however, that, unless
explicitly set forth otherwise in an Award Agreement or as determined by the Plan Administrator,
(1) all of a Participant’s unvested and/or unexercisable Awards shall automatically be forfeited
upon termination of the Participant’s employment for any reason, and, as to Awards consisting of
stock Options or Stock Appreciation Rights, the Participant shall be permitted to exercise the
vested portion of the Option or Stock Appreciation Right for at least three months following
termination of his or her employment, and (2) all of a Participant’s Awards (whether vested or
unvested, exercisable or unexercisable) shall automatically be forfeited upon termination of the
Participant’s employment for Cause. Provisions relating to the effect of a termination of
employment upon an Award shall be determined in the sole discretion of the Plan Administrator and
need not be uniform among all Awards or among all Participants. Unless the Plan Administrator
determines otherwise in accordance with Section 409A, the transfer of employment of a Participant
as between the Company and a Subsidiary shall not constitute a termination of employment. The Plan
Administrator shall have the discretion to determine the effect, if any, that a sale or other
disposition of a Participant’s Employer will have on the Participant’s Awards.

SECTION 15

EFFECT OF A CHANGE OF CONTROL

     Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of
Control and as of the date such Change of Control is determined to have occurred:

	 	(a)	 	Any Options and Stock Appreciation Rights outstanding as of the date of the
Change of Control, and which are not then exercisable and vested, shall become fully
exercisable and vested.
	 
	 	(b)	 	The restrictions applicable to any Restricted Stock or Restricted Stock Unit
Award as of the date of the Change of Control which is not performance based shall
lapse and such Restricted Stock or Restricted Stock Unit shall become free of all
restrictions and become fully vested and transferable.

28

 

	 	(c)	 	Except as otherwise set forth in a Participant’s Award Agreement, as of the
date of the Change of Control, the restrictions applicable to any Performance Share or
Performance Unit Award and any performance-based Restricted Stock or Restricted Stock
Unit Award granted pursuant to Sections 8, 9, or 10 shall become free of all
restrictions and become fully vested and transferable.
	 
	 	(d)	 	Any restrictions applicable to Cash Awards and Other Stock-Based Awards shall
immediately lapse and become payable within twenty (20) days.

     In addition to the Board’s authority set forth in Sections 5.3, in order to maintain the
Participants’ rights in the event of any Change of Control, the Board, as constituted before such
Change of Control, is hereby authorized, and has sole discretion, as to any Award, either at the
time such Award is made hereunder or any time thereafter, to take any one or more of the following
actions: (i) provide for the purchase of any such Award for an amount of cash equal to the amount
that could have been attained upon the exercise of such Award or realization of the Participant’s
rights had such Award been currently exercisable or payable, as long as such purchase does not
result in taxation to the Participant under Section 409A; (ii) make such adjustment to any such
Award then outstanding as the Board deems appropriate to reflect such Change of Control; or (iii)
cause any such Award then outstanding to be assumed, or new rights substituted therefore, by the
acquiring or surviving corporation after such Change of Control. The Board may, in its discretion,
include such further provisions and limitations in any Award Agreement, as it may deem equitable
and in the best interests of the Company.

SECTION 16

REGULATORY APPROVALS AND LISTING

     The Company shall not be required to issue any certificate for shares of Common Stock under
the Plan prior to:

     (a) obtaining any approval or ruling from the Securities and Exchange Commission, the Internal
Revenue Service or any other governmental agency which the Company, in its sole discretion, shall
determine to be necessary or advisable;

     (b) listing of such shares on any stock exchange on which the Common Stock may then be listed;
and

     (c) completing any registration or other qualification of such shares under any federal or
state laws, rulings or regulations of any governmental body which the Company, in its sole
discretion, shall determine to be necessary or advisable.

     All certificates, or book-entry accounts, for shares of Common Stock delivered under the Plan
shall also be subject to such stop-transfer orders and other restrictions as the Plan Administrator
may deem advisable under the rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which Common Stock is then listed and any applicable
federal or state securities laws, and the Plan Administrator may cause a

29

 

legend or legends to be placed on any such certificates, or notations on such book-entry
accounts, to make appropriate reference to such restrictions. The foregoing provisions of this
paragraph shall not be effective if and to the extent that the shares of Common Stock delivered
under the Plan are covered by an effective and current registration statement under the Securities
Act of 1933, as amended, or if and so long as the Plan Administrator determines that application of
such provisions are no longer required or desirable. In making such determination, the Plan
Administrator may rely upon an opinion of counsel for the Company. Without limiting the foregoing,
the Plan Administrator may impose such restrictions, conditions or limitations as it determines
appropriate as to the timing and manner of any resales by a Participant or other subsequent
transfers by a Participant of any shares of Common Stock issued under this Plan, including without
limitation (i) restrictions under an insider trading policy, (ii) restrictions designed to delay
and/or coordinate the timing and manner of sales by one or more Participants and (iii) restrictions
as to the use of a specified brokerage firm for such resales or other transfers.

SECTION 17

GENERAL PROVISIONS

17.1 Forfeiture Events and Nontransferability

     (a) If the Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial reporting requirement
under the securities laws, and if a Participant knowingly engaged in the misconduct, was grossly
negligent with respect to such misconduct, or knowingly or grossly negligently failed to prevent
the misconduct (whether or not the Participant is one of the individuals subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002), the Plan Administrator may
determine that such Participant shall reimburse the Company the amount of any payment in settlement
of an Award earned or accrued during the twelve-month period following the first public issuance or
filing with the United States Securities and Exchange Commission (whichever first occurred) of the
financial document embodying such financial reporting requirement.

     (b) The Plan Administrator may specify in an Award Agreement or otherwise that a Participant’s
rights, payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in
addition to any otherwise applicable vesting or performance conditions of an Award. Such events
may include, without limitation, termination of employment for Cause, violation of material
policies that may apply to the Participant, breach of noncompetition, confidentiality, or other
restrictive covenants that may apply to the Participant, or other conduct by the Participant that
is detrimental to the business or reputation of the Company or a Subsidiary.

     (c) Unless otherwise provided in the Plan, the right of a Participant or Beneficiary to the
payment of any Award granted under the Plan and the rights and privileges conferred thereby shall
not be subject to execution, attachment or similar process and may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by will
or by the applicable laws of descent and distribution unless the Participant has

30

 

received the Plan Administrator’s prior written consent. Except as otherwise provided for
under the Plan, if any Participant attempts to transfer, assign, pledge, hypothecate or otherwise
dispose of any Award under the Plan or of any right or privilege conferred thereby, contrary to the
provisions of the Plan or such Award, or suffers the sale or levy or any attachment or similar
process upon the rights and privileges conferred hereby, all affected Awards held by such
Participant shall be immediately forfeited.

17.2 No Individual Rights

     Nothing contained in the Plan, or in any Award granted pursuant to the Plan, shall confer upon
any employee any right with respect to continuance of employment by the Company or a Subsidiary,
nor interfere in any way with the right of the Company or a Subsidiary to terminate the employment
of such employee at any time with or without assigning any reason therefor.

17.3 Other Compensation

     Unless determined otherwise by the Plan Administrator or required by contractual obligations,
the grant, vesting or payment of Awards under the Plan shall not be considered as part of a
Participant’s salary or used for the calculation of any other pay, allowance, pension or other
benefit unless otherwise permitted by other benefit plans provided by the Company or a Subsidiary,
or required by law or by contractual obligations of the Company or a Subsidiary.

17.4 Leaves of Absence

     Leaves of absence for such periods and purposes conforming to the personnel policy of the
Company, or of a Subsidiary, as applicable, shall not be deemed terminations or interruptions of
employment, unless a Participant commences a leave of absence from which he or she is not expected
to return to active employment with the Company or a Subsidiary. The foregoing notwithstanding,
with respect to Incentive Stock Options, employment shall not be deemed to continue beyond the
first ninety (90) days of such leave unless the Participant’s reemployment rights are guaranteed by
statute or contract. With respect to any Participant who, after the date an Award is granted under
this Plan, ceases to be employed by the Company or a Subsidiary on a full-time basis but remains
employed on a part-time basis, the Plan Administrator may make appropriate adjustments, as
determined in its sole discretion, as to the number of shares issuable under, the vesting schedule
of, or the amount payable under any unvested Awards held by such Participant.

17.5 Transfers

     In the event a Participant is transferred from the Company to a Subsidiary, or vice versa, or
is promoted or given different responsibilities, Awards granted to the Participant prior to such
date shall not be affected.

31

 

17.6 Unfunded Obligations

     Any amounts (deferred or otherwise) to be paid to Participants pursuant to the Plan are
unfunded obligations. Neither the Company nor any Subsidiary is required to segregate any monies
from its general funds, to create any trusts or to make any special deposits with respect to this
obligation. The Plan Administrator, in its sole discretion, may direct the Company to share with a
Subsidiary the costs of a portion of the Incentive Awards paid to Participants who are executives
of those companies. Beneficial ownership of any investments, including trust investments which the
Company may make to fulfill this obligation, shall at all times remain in the Company. Any
investments and the creation or maintenance of any trust or any Participant account shall not
create or constitute a trust or a fiduciary relationship between the Plan Administrator, the
Company or any Subsidiary and a Participant, or otherwise create any vested or beneficial interest
in any Participant or the Participant’s Beneficiary or the Participant’s creditors in any assets of
the Company or a Subsidiary whatsoever. The Participants shall have no claim against the Company
for any changes in the value of any assets which may be invested or reinvested by the Company with
respect to the Plan.

17.7 Beneficiaries

     The designation of a Beneficiary shall be on a form provided by the Company, executed by the
Participant (with the consent of the Participant’s spouse, if required by the Company for reasons
of community property or otherwise), and delivered to a designated representative of the Company.
A Participant may change his or her Beneficiary designation at any time. A designation by a
Participant under any predecessor plans shall remain in effect under the Plan unless such
designation is revoked or changed under the Plan. If no Beneficiary is designated, if the
designation is ineffective, or if the Beneficiary dies before the balance of a Participant’s
benefit is paid, the balance shall be paid to the Participant’s spouse, or if there is no surviving
spouse, to the Participant’s lineal descendants, pro rata, or if there is no surviving spouse or
any lineal descendant, to the Participant’s estate. Notwithstanding the foregoing, however, a
Participant’s Beneficiary shall be determined under applicable state law if such state law does not
recognize Beneficiary designations under plans of this sort and is not preempted by laws which
recognize the provisions of this Section 17.7.

17.8 Governing Law

     The Plan shall be construed and governed in accordance with the laws of the State of Texas.

17.9 Satisfaction of Tax Obligations

     Appropriate provision shall be made for all taxes required to be withheld in connection with
the exercise, grant, vesting or other taxable event of Awards under the applicable laws and
regulations of any governmental authority, whether federal, state or local and whether domestic or
foreign, including, without limitation, the required withholding of a sufficient amount of Common
Stock otherwise issuable to a Participant to satisfy the said required minimum tax withholding
obligations. To the extent provided by the Plan Administrator, a Participant is

32

 

permitted to deliver Common Stock (including shares acquired pursuant to the exercise of an
Option or Stock Appreciation Right other than the Option or Stock Appreciation Right currently
being exercised, to the extent permitted by applicable regulations) for payment of withholding
taxes on the exercise of an Option or Stock Appreciation Right, upon the grant or vesting of
Restricted Stock or Restricted Stock Units or upon the payout of Performance Shares, Performance
Units or Incentive Awards. Common Stock may be required to be withheld from the shares issuable to
the Participant upon the exercise of an Option or Stock Appreciation Right, upon the vesting of
Restricted Stock or Restricted Stock Units or upon the payout of Performance Shares or Performance
Units to satisfy such minimum required tax withholding obligations. The Fair Market Value of
Common Stock as delivered pursuant to this Section 17.9 shall be determined as of the day of
release, and shall be calculated in accordance with Section 2.16.

     Any Participant who makes a Section 83(b) election under the Code shall, within ten (10) days
of making such election, notify the Company in writing of such election and shall provide the
Company or such Participant’s Employer with a copy of such election form filed with the Internal
Revenue Service.

     A Participant is solely responsible for obtaining, or failing to obtain, tax advice with
respect to participation in the Plan prior to the Participant’s (i) entering into any transaction
under or with respect to the Plan, (ii) designating or choosing the times of distributions under
the Plan, or (iii) disposing of any Common Stock issued under the Plan.

17.10 Participants in Foreign Jurisdictions

     The Plan Administrator shall have the authority to adopt such modifications, procedures and
subplans as may be necessary or desirable to comply with provisions of the laws of any countries in
which the Company or any Subsidiary may operate to ensure the viability of the benefits from Awards
granted to Participants employed in such countries, to meet the requirements of local laws that
permit the Plan to operate in a qualified or tax-efficient manner, to comply with applicable
foreign laws and to meet the objectives of the Plan.

SECTION 18

REGULATORY COMPLIANCE

18.1 Rule 16b-3 of the Exchange Act and Section 162(m) of the Code

     The Company’s intention is that, so long as any of the Company’s equity securities are
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, the Plan shall comply in all
respects with the rules of any exchange on which the Common Stock is traded and with Rule 16b-3.
In addition, it is the Company’s intention that, as to Covered Employees, unless otherwise
indicated in an Award Agreement, stock Options, Stock Appreciation Rights, Performance Shares,
Performance Units and Incentive Awards shall qualify as performance-based compensation under
Section 162(m). If any Plan provision is determined not to be in

33

 

compliance with the foregoing intentions, that provision shall be deemed modified as necessary to
meet the requirements of any such exchange, Rule 16b-3 and Section 162(m).

18.2 Section 409A of the Code

     The Plan is intended to be administered, operated and construed in compliance with Section
409A and any guidance issued thereunder. Notwithstanding this or any other provision of the Plan
to the contrary, the Board may amend the Plan in any manner, or take any other action, that either
of them determines, in its sole discretion, is necessary, appropriate or advisable to cause the
Plan to comply with Section 409A and any guidance issued thereunder. Any such action, once taken,
shall be deemed to be effective from the earliest date necessary to avoid a violation of Section
409A and shall be final, binding and conclusive on all Participants and other individuals having or
claiming any right or interest under the Plan.

     Notwithstanding the provisions of the Plan or any Award Agreement, no payment pursuant to an
Award that is subject to Section 409A shall be made to a Participant as a result of such
Participant’s “separation from service” (within the meaning of such phrase in Section 409A), within
the six-month period following such separation from service (or, if earlier, the date of death of
the employee), if the Participant is a Specified Employee. For purposes of the previous sentence
the term “Specified Employee” is defined in Section 409A and the authoritative guidance thereunder.

SECTION 19

ESTABLISHMENT AND TERM OF PLAN

     The Plan was adopted by the Board of Directors on February 12, 2008, and is subject to
approval by the Company’s stockholders. If approved by the stockholders, this Plan will replace
the Prior Plans, and no further Awards will be made under the Prior Plans. This Plan shall become
effective on the Effective Date, and shall remain in effect, subject to the right of the Board of
Directors to terminate the Plan at any time pursuant to Section 20, until all Common Stock subject
to it shall have been purchased or acquired according to the provisions herein. However, in no
event may an Award be granted under the Plan on or after the tenth (10th) anniversary of the
Effective Date. After this Plan is terminated, no future Awards may be granted pursuant to the
Plan, but Awards previously granted shall remain outstanding in accordance with their applicable
terms and conditions and this Plan’s terms and conditions.

SECTION 20

AMENDMENT, TERMINATION OR DISCONTINUANCE OF THE PLAN

20.1 Amendment of Plan

     Subject to the Board of Directors, the Plan Administrator may from time to time make such
amendments to the Plan as it may deem proper and in the best interest of the Company, including,
without limitation, any amendment necessary to ensure that the Company may obtain

34

 

any regulatory approval referred to in Section 16; provided, however, that
(a) to the extent required by applicable law, regulation or stock exchange rule, stockholder
approval shall be required, and (b) except as otherwise provided in the Plan, no change in any
Award previously granted under the Plan may be made without the consent of the Participant if such
change would impair the right of the Participant under the Award to acquire or retain Common Stock
or cash that the Participant may have acquired as a result of the Plan.

20.2 Termination or Suspension of Plan

     The Board of Directors may at any time suspend the operation of or terminate the Plan with respect to any Common Stock or rights which are not at that time subject to any Award outstanding under the Plan.

20.3 Code Section 162(m) Approval

     If so determined by the Plan Administrator, the provisions of the Plan relating to Incentive
Awards (or any other Award subject to Code Section 162(m)) shall be disclosed to, and reapproved
by, the Company’s stockholders no later than the first stockholder meeting that occurs in the fifth
year following the year in which the Effective Date occurs in order for Incentive Awards (and other
Awards subject to Code Section 162(m)) granted after such time to be exempt from the deduction
limitations of Code Section 162(m).

     IN WITNESS WHEREOF, the Company has caused the Plan to be executed effective as of May 20,
2008.

	 	 	 	 	 
	 	ANADARKO PETROLEUM CORPORATION

 	 
	 	/s/ Robert G. Gwin
 	 
	 	Robert G. Gwin 	 
	 	Senior Vice President 	 

35exv10w2

	 	 	 	 	 

Exhibit 10.2

ANADARKO PETROLEUM CORPORATION

2008 DIRECTOR COMPENSATION PLAN

Effective as of May 20, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	SECTION 1	 	PURPOSE
	 	 	1	 
	1.1	 	Purpose
	 	 	1	 
	SECTION 2	 	DEFINITIONS
	 	 	1	 
	2.1	 	Award
	 	 	1	 
	2.2	 	Award Agreement
	 	 	1	 
	2.3	 	Beneficiary
	 	 	1	 
	2.4	 	Board
	 	 	2	 
	2.5	 	Cash Deferral
	 	 	2	 
	2.6	 	Change in Capitalization
	 	 	2	 
	2.7	 	Change of Control
	 	 	2	 
	2.8	 	Code
	 	 	4	 
	2.9	 	Committee
	 	 	4	 
	2.10	 	Common Stock
	 	 	4	 
	2.11	 	Company Stock Deferral
	 	 	4	 
	2.12	 	Company
	 	 	4	 
	2.13	 	Compensation
	 	 	4	 
	2.14	 	Conversion Premium
	 	 	4	 
	2.15	 	Effective Date
	 	 	4	 
	2.16	 	Eligible Director
	 	 	4	 
	2.17	 	Exchange Act
	 	 	5	 
	2.18	 	Fair Market Value
	 	 	5	 
	2.19	 	Full Value Award
	 	 	5	 
	2.20	 	Memorandum Deferred Account
	 	 	5	 
	2.21	 	Option Price
	 	 	5	 
	2.22	 	Other Stock-Based Award
	 	 	5	 
	2.23	 	Participant
	 	 	5	 
	2.24	 	Payment Date
	 	 	5	 
	2.25	 	Permanent Disability
	 	 	5	 
	2.26	 	Permitted Transferee
	 	 	6	 
	2.27	 	Plan
	 	 	6	 
	2.28	 	Plan Quarter
	 	 	6	 
	2.29	 	Purchase Price
	 	 	6	 
	2.30	 	Restricted Stock
	 	 	6	 
	2.31	 	Restricted Stock Units
	 	 	6	 
	2.32	 	Restriction Period
	 	 	6	 
	2.33	 	Rule 16b-3
	 	 	6	 
	2.34	 	Section 409A
	 	 	6	 
	2.35	 	Stock Appreciation Right
	 	 	6	 
	2.36	 	Stock Option
	 	 	6	 
	SECTION 3	 	ADMINISTRATION
	 	 	7	 
	3.1	 	Committee
	 	 	7	 
	3.2	 	Indemnification of Committee
	 	 	7	 
	SECTION 4	 	PARTICIPATION
	 	 	7	 
	4.1	 	Participants
	 	 	7	 
	SECTION 5	 	SHARES AVAILABLE FOR THE PLAN
	 	 	8	 
	5.1	 	Maximum Number of Shares
	 	 	8	 
	5.2	 	Adjustment in Authorized Shares
	 	 	8	 

i

 

	 	 	 	 	 	 	 
	SECTION 6	 	STOCK OPTIONS
	 	 	9	 
	6.1	 	Grant of Stock Options
	 	 	9	 
	6.2	 	Terms of Stock Options
	 	 	9	 
	SECTION 7	 	STOCK APPRECIATION RIGHTS
	 	 	12	 
	7.1	 	Grant of Stock Appreciation Rights
	 	 	12	 
	7.2	 	Exercise of Stock Appreciation Rights
	 	 	13	 
	7.3	 	Special Provisions Applicable to Stock Appreciation Rights
	 	 	13	 
	7.4	 	No Repricing
	 	 	13	 
	SECTION 8	 	RESTRICTED STOCK
	 	 	14	 
	8.1	 	Grant of Restricted Stock
	 	 	14	 
	8.2	 	Restriction Period
	 	 	14	 
	8.3	 	Voting Rights; Dividends and Other Distributions
	 	 	14	 
	8.4	 	Issuance of Shares; Settlement of Awards
	 	 	14	 
	SECTION 9	 	RESTRICTED STOCK UNITS
	 	 	15	 
	9.1	 	Grant of Restricted Stock Units
	 	 	15	 
	9.2	 	Restriction Period
	 	 	15	 
	9.3	 	Other Restrictions
	 	 	15	 
	9.4	 	Dividend Equivalents
	 	 	15	 
	9.5	 	Issuance of Shares; Settlement of Awards
	 	 	16	 
	SECTION 10	 	OTHER STOCK-BASED AWARDS
	 	 	16	 
	SECTION 11	 	COMPENSATION
	 	 	16	 
	11.1	 	Amount of Compensation
	 	 	16	 
	11.2	 	Compensation Election
	 	 	16	 
	SECTION 12	 	DEFERRED COMPENSATION
	 	 	17	 
	12.1	 	Deferred Cash
	 	 	17	 
	12.2	 	Deferred Common Stock
	 	 	17	 
	12.3	 	Memorandum Deferred Account
	 	 	18	 
	SECTION 13	 	CESSATION OF SERVICE
	 	 	18	 
	SECTION 14	 	EFFECT OF A CHANGE OF CONTROL
	 	 	19	 
	SECTION 15	 	PAYMENT OF DEFERRED COMPENSATION
	 	 	19	 
	15.1	 	Payment of Deferred Cash
	 	 	19	 
	15.2	 	Payment of Deferred Common Stock
	 	 	20	 
	15.3	 	Acceleration of Payment of Deferred Cash and Deferred Common Stock
	 	20	 
	SECTION 16	 	GENERAL PROVISIONS
	 	 	21	 
	16.1	 	Issuance of Common Stock
	 	 	21	 
	16.2	 	Unfunded Obligation
	 	 	22	 
	16.3	 	Beneficiary
	 	 	22	 
	16.4	 	Permanent Disability
	 	 	23	 
	16.5	 	Incapacity of Participant or Beneficiary
	 	 	23	 
	16.6	 	Nonassignment
	 	 	23	 
	16.7	 	Termination and Amendment
	 	 	23	 
	16.8	 	Applicable Law
	 	 	24	 
	16.9	 	Effective Date and Term of the Plan
	 	 	24	 
	16.10	 	Compliance With Section 16(b) of the Exchange Act
	 	 	24	 
	16.11	 	Section 409A
	 	 	24	 

ii

 

ANADARKO PETROLEUM CORPORATION

2008 DIRECTOR COMPENSATION PLAN

SECTION 1

PURPOSE

1.1 Purpose

     The purpose of the Anadarko Petroleum Corporation 2008 Director Compensation Plan (the “Plan”)
is to provide a compensation program for non-employee Directors of Anadarko Petroleum Corporation
(the “Company”) that will attract and retain experienced and knowledgeable non-employees to serve
as members of the Company’s Board of Directors. The Plan provides for (i) the payment of an annual
retainer, meeting fees (if any), committee assignment fees (if any), and other Board of Director
retainer fees in the form of cash, deferred cash, Common Stock, or deferred shares of Common Stock
or any combination of the foregoing; and (ii) the award of Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units and Other Stock-Based Awards.

SECTION 2

DEFINITIONS

     Unless otherwise required by the context, the following terms when used in the Plan shall have
the meanings set forth in this Section 2:

2.1 Award

     Any Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or any Other Stock-Based Award, in each case payable in cash or in shares of Common Stock as may be designated by the Committee.

2.2 Award Agreement

     The written agreement setting forth the terms and conditions applicable to an Award granted under the Plan (which, in the discretion of the Committee, need not be countersigned by a Participant). The Committee may, in its discretion, provide for the use of electronic, internet or other non-paper Award Agreements.

2.3 Beneficiary

     The person or persons designated by a Participant pursuant to Section 16.3 of this Plan to whom payments (either in cash or shares of Common Stock) are to be paid pursuant to the terms of this Plan in the event of the Participant’s death.

1

 

2.4 Board

     The Board of Directors of the Company.

2.5 Cash Deferral

     Any Compensation deferred by a Participant in the form of cash.

2.6 Change in Capitalization

     Any increase or reduction in the number of shares of Common Stock, any change (including,
without limitation, in the case of a spin-off, dividend or other distribution in respect of shares,
a change in value) in the shares of Common Stock or any exchange of shares of Common Stock for a
different number or kind of shares of Common Stock or other securities of the Company or another
corporation, by reason of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants, rights or debentures, stock dividend,
stock split or reverse stock split, extraordinary cash dividend, property dividend, combination or
exchange of shares, repurchase of shares, change in corporate structure or otherwise.

2.7 Change of Control

     The occurrence of any of the following after the Effective Date:

a) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (a “Person”) acquires beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding
shares of Common Stock of the Company (the “Outstanding Company Common Stock”) or (B) the
combined voting power of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (1) any acquisition directly from
the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any corporation controlled
by the Company or (4) any acquisition pursuant to a transaction which complies with clauses
(A), (B), and (C) of this Section 2.7(c); or

(b) individuals who, as of the Effective Date of the Plan, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
effective date of the Plan whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this

2

 

purpose, any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on behalf of a
person other than the Board; or

(c) consummation by the Company of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company or the
acquisition of assets of another entity (a “Business Combination”), in each case, unless,
following such Business Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of Common Stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no person (excluding any employee benefit plan
(or related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of Common Stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the Business
Combination, and (C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or

(d) approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.

Notwithstanding the foregoing, with respect to an Award that is (i) subject to Section 409A
and (ii) a Change of Control would accelerate the timing of payment thereunder, the term
“Change of Control” shall mean a change in the ownership or effective control of the
Company, or in the ownership of a substantial portion of the assets of the Company as
defined in Section 409A and the authoritative guidance issued thereunder, but only to the
extent inconsistent with the above definition, and only to the minimum extent necessary to
comply with Section 409A as determined by the Committee.

3

 

2.8 Code

     The Internal Revenue Code of 1986, as amended and in effect from time to time, and the temporary or final regulations of the Secretary of the U.S. Treasury adopted pursuant to the Code.

2.9 Committee

     A committee consisting of two or more Eligible Directors, as designated by the Board. In the absence of a specific Board designation to the contrary, the committee shall consist of the same members of the Board’s Compensation and Benefits Committee.

2.10 Common Stock

     The Common Stock of the Company, $0.10 par value per share, or such other class of shares or other securities as may be applicable pursuant to the provisions of Section 5.

2.11 Common Stock Deferral

     Any Compensation deferred by a Participant in the form of Common Stock.

2.12 Company

     As defined in Section 1.

2.13 Compensation

     The cash value of a Participant’s annual retainer, meeting fees (if any), committee assignment fees (if any) and other Board retainer fees related to a Participant’s service on the Board.

2.14 Conversion Premium

     As defined in Section 12.2(a).

2.15 Effective Date

     The effective date of the Plan is May 20, 2008, the date on which it was approved by the stockholders of the Company.

2.16 Eligible Director

     Each member of the Board, who is not an employee of the Company or any of its subsidiaries.

4

 

2.17 Exchange Act

     The Securities and Exchange Act of 1934, as amended, and rules promulgated thereunder.

2.18 Fair Market Value

     As of any given date, the closing sales price at which Common Stock is sold on such date as
reported in the NYSE-Composite Transactions by The Wall Street Journal or any other comparable
service the Committee may determine is reliable for such date, or if no Common Stock was traded on
such date, on the next preceding day on which Common Stock was so traded. If the Fair Market Value
of the Common Stock cannot be determined pursuant to the preceding provisions, the “Fair Market
Value” of the Common Stock shall be determined by the Committee in such a manner as it deems
appropriate, consistent with the requirements of Section 409A.

2.19 Full Value Award

     An Award other than of Stock Options or Stock Appreciation Rights, which is settled by the issuance of Common Stock.

2.20 Memorandum Deferred Account

     As defined in Section 12.3.

2.21 Option Price

     The price per share of Common Stock at which a Stock Option is exercisable.

2.22 Other Stock-Based Award

     As defined in Section 10.

2.23 Participant

     Each Eligible Director of the Board to whom Awards are granted or Compensation is paid under the Plan.

2.24 Payment Date

     As defined in Section 11.1.

2.25 Permanent Disability

     As defined in Section 16.4.

5

 

2.26 Permitted Transferee

     As defined in Section 6.2(f).

2.27 Plan

     As defined in Section 1.

2.28 Plan Quarter

     Each calendar quarter.

2.29 Purchase Price

     As defined in Section 6.2(d).

2.30 Restricted Stock

     Common Stock granted under the Plan that is subject to the requirements of Section 8 and such other restrictions as the Board or the Committee deems appropriate.

2.31 Restricted Stock Units

     An award granted under the Plan representing a right to receive a payment (either in cash or Common Stock) equal to the value of a share of Common Stock.

2.32 Restriction Period

     As defined in Sections 8.2 and 9.2.

2.33 Rule 16b-3

     Rule 16b-3 of the General Rules and Regulations under the Exchange Act.

2.34 Section 409A

     Section 409A of the Code, and regulations promulgated thereunder.

2.35 Stock Appreciation Right

     Any right granted under Section 7.

2.36 Stock Option

     A stock option which is not intended to meet the requirements of an incentive stock option as
defined in Section 422 of the Code.

6

 

SECTION 3

ADMINISTRATION

3.1 Committee

     Subject to Section 16.7, the Plan shall be administered by the Committee. The Committee shall
interpret the Plan, shall prescribe, amend and rescind rules relating to it from time to time as it
deems proper and in the best interests of the Company, and shall take any other action necessary
for the administration of the Plan. Any decision or interpretation adopted by the Committee shall
be final and conclusive and shall be binding upon all Participants. The Committee may rely on
officers, employees or other agents of the Company to handle the day-to-day administrative matters
of the Plan.

3.2 Indemnification of Committee

     Each member of the Committee, while serving as such, shall be entitled, in good faith, to rely
or act upon any advice of the Company’s independent auditors, counsel or consultants hired by the
Committee, or other agents assisting in the administration of the Plan. The Committee and any
officers or employees of the Company acting at the direction or on behalf of the Company shall not
be personally liable for any action or determination taken or made, or not taken or made, in good
faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and
protected under the Company’s restated certificate of incorporation or by-laws with respect to any
such action or determination.

SECTION 4

PARTICIPATION

4.1 Participants

     Each person who is an Eligible Director of the Company on the Effective Date of the Plan shall
become a Participant in the Plan on the Effective Date. Thereafter, each Eligible Director of the
Company shall become a Participant immediately upon election to the Board.

7

 

SECTION 5

SHARES AVAILABLE FOR THE PLAN

5.1 Maximum Number of Shares

     (a) Share Authorization

     Subject to adjustment as provided in Section 5.2, the maximum number of shares of Common Stock
available for grant to Participants under this Plan on or after the Effective Date shall be
1,500,000 shares.

     (b) Limit on Full Value Awards — Flexible Share Pool

     To the extent that a share of Common Stock is issued pursuant to the grant or exercise of a
Full Value Award, it shall reduce the share authorization by 2.27 shares of Common Stock; and to
the extent that a share of Common Stock is issued pursuant to the grant or exercise of an Award
other than a Full Value Award, it shall reduce the share authorization by one (1) share of Common
Stock.

     (c) Share Usage

     Shares of Common Stock covered by an Award shall only be counted as used to the extent they
are actually issued. Any shares of Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation, or otherwise without the issuance of such shares of Common Stock, are
settled in cash in lieu of shares of Common Stock, or are exchanged with the Committee’s
permission, prior to the issuance of shares of Common Stock, for Awards not involving shares of
Common Stock, shall be available again for grant under this Plan. However, the full number of
Stock Appreciation Rights granted that are to be settled by the issuance of shares of Common Stock
shall be counted against the number of shares of Common Stock available for award under the Plan,
regardless of the number of shares of Common Stock actually issued upon settlement of such Stock
Appreciation Rights. Furthermore, any shares of Common Stock withheld to satisfy tax withholding
obligations on an Award issued under the Plan, shares of Common Stock tendered to pay the exercise
price of an Award under the Plan, and shares of Common Stock repurchased on the open market with
the proceeds of an Option exercise will no longer be eligible to be again available for grant under
this Plan. The shares of Common Stock available for issuance under this Plan may be authorized and
unissued shares of Common Stock or treasury shares of Common Stock.

5.2 Adjustment in Authorized Shares

     In the event of recapitalization, stock split, stock dividend, exchange of shares, merger,
reorganization, change in corporate structure or shares of the Company or similar event, the Board
shall make such adjustments, if any, as it determines are appropriate and equitable to (i) the
number of shares authorized for issuance under the Plan, (ii) the number of shares allocated under
the Common Stock Deferral, and (iii) the number of

8

 

shares of Common Stock which is subject to outstanding Awards granted under the Plan and the
Option Price, if applicable. In the case of an “equity restructuring” (within the meaning of the
Financial Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004), the
Board shall make an equitable or appropriate adjustment to outstanding Awards to reflect such
equity restructuring. Any such adjustment shall be final, binding and conclusive on all persons
claiming any right or interest under the Plan. No adjustments made under this Section 5 shall be
made if such adjustment would result in adverse taxation to the Participant under Section 409A.

SECTION 6

STOCK OPTIONS

6.1 Grant of Stock Options

     (a) Stock Options may be granted to Eligible Directors in such number, and at such times
during the term of the Plan as the Committee may determine, and as evidenced by an Award Agreement.
The granting of a Stock Option shall take place when the Committee by resolution, written consent
or other appropriate action determines to grant such a Stock Option to a particular Participant on
a particular date for which the Fair Market Value shall be used for the Option Price.

6.2 Terms of Stock Options

     All Stock Options under the Plan shall be granted subject to the following terms and
conditions, as specifically set out in the Award Agreement:

     (a) Option Price

     The Option Price shall be determined by the Committee in any reasonable manner, but
shall not be less than the Fair Market Value of the Common Stock on the date the Stock
Option is granted, except in the case of Stock Options that are granted in assumption of, or
in substitution for, outstanding Awards previously granted by (i) a company acquired by the
Company or a subsidiary, or (ii) a company with which the Company or a subsidiary combines.

     (b) Duration of Stock Options

     Stock Options shall be exercisable at such time and under such conditions as set forth
in the Award Agreement, but in no event shall any Stock Option be exercisable later than the
tenth (10th) anniversary of the date of its grant.

9

 

     (c) Exercise of Stock Options

     Shares of Common Stock covered by a Stock Option may be purchased at one time or in
such installments over the term of the Stock Option, as may be provided in the Award
Agreement. Any shares not purchased on an applicable installment date may be purchased
thereafter at any time prior to the expiration of the Stock Option in accordance with its
terms. To the extent that the right to purchase shares has accrued thereunder, Stock
Options may be exercised from time to time by written notice to the Company setting forth
the number of shares with respect to which the Stock Option is being exercised.

     (d) Payment

     The Purchase Price of shares purchased under Stock Options shall be paid in full to the
Company upon the exercise of the Stock Option by delivery of consideration equal to the
product of the Option Price and the number of shares of Common Stock purchased (the
“Purchase Price”). Such consideration may be either (i) in cash or (ii) at the discretion
of the Committee, in Common Stock (by either actual delivery of Common Stock or by
attestation presenting satisfactory proof of beneficial ownership of such Common Stock)
already owned by the Participant, or any combination of cash and Common Stock. The Fair
Market Value of such Common Stock as delivered shall be valued as of the day of exercise.
The Committee can determine that additional forms of payment will be permitted. To the
extent permitted by the Committee and applicable laws and regulations (including, without
limitation, federal tax and securities laws, regulations and state corporate law), an option
may also be exercised in a “cashless” exercise by delivery of a properly executed exercise
notice together with irrevocable instructions to a broker approved by the Company to
promptly deliver to the Company sufficient proceeds to pay the Purchase Price. A
Participant shall have none of the rights of a stockholder until the shares of Common Stock
are issued to the Participant.

     The Committee may permit a Participant to pay all or a portion of the Purchase Price by
having shares of Common Stock with a Fair Market Value equal to all or a portion of the
Purchase Price be withheld from the shares issuable to the Participant upon the exercise of
the Stock Option. The Fair Market Value of such Common Stock as is withheld shall be
determined as of the same day as the exercise of the Stock Option.

     (e) Restrictions

     The Committee shall determine and reflect in the Award Agreement, with respect to each
Stock Option, the nature and extent of the restrictions, if any, to be imposed on the shares
of Common Stock which may be purchased thereunder, including, without limitation,
restrictions on the transferability of such shares acquired through the exercise of such
Stock Options for such periods as the

10

 

Committee may determine and, further, that in the event of a Participant’s cessation
from service as a member of the Board during the time period in which such Common Stock is
nontransferable, the Participant shall be required to sell such Common Stock back to the
Company at such prices as the Committee may specify. In addition, to the extent permitted
by applicable laws and regulations, the Committee may require that a Participant who wants
to effectuate a “cashless” exercise of Stock Options be required to sell the shares of
Common Stock acquired in the associated exercise to the Company, or in the open market
through the use of a broker selected by the Company, at such price and on such terms as the
Committee may determine at the time of grant, or otherwise. Without limiting the
foregoing, the Committee may impose such restrictions, conditions or limitations as it
determines appropriate as to the timing and manner of any resales by the Participant or
other subsequent transfers by the Participant of any shares issued as a result of the
exercise of a Stock Option, including without limitation (i) restrictions under an insider
trading policy, (ii) restrictions designed to delay and/or coordinate the timing and manner
of sales by one or more Participants and (iii) restrictions as to the use of a specified
brokerage firm for such resales or other transfers.

     (f) Transferability of Stock Options

     Notwithstanding Section 16.6, and only as provided by the Committee, Stock Options may
be transferred to a Participant’s immediate family members, directly or indirectly or by
means of a trust, corporate entity or partnership (a person who thus acquires Stock Options
by such transfer, a “Permitted Transferee”). A transfer of a Stock Option may only be
effected by the Company at the request of the Participant and shall become effective upon
the Permitted Transferee agreeing to such terms as the Committee may require and only when
recorded in the Company’s record of outstanding Stock Options. In the event a Stock Option
is transferred as contemplated hereby, the Stock Option may not be subsequently transferred
by the Permitted Transferee except a transfer back to the Participant or by will or the
laws of descent and distribution. A transferred Stock Option may be exercised by a
Permitted Transferee to the same extent as, and subject to the same terms and conditions
as, the Participant (except as otherwise provided herein), as if no transfer had taken
place. As used herein, “immediate family member” shall mean, with respect to any person,
such person’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
sister-in-law, and shall include adoptive relationships. In the event of exercise of a
transferred Stock Option by a Permitted Transferee, any amounts due to (or to be withheld
by) the Company upon exercise of the option shall be delivered by (or withheld from amounts
due to) the Participant, the Participant’s estate or the Permitted Transferee, in the
reasonable discretion of the Company.

     In addition, to the extent permitted by applicable law and Rule 16b-3, and
notwithstanding Section 16.6, the Committee may permit a recipient of a Stock

11

 

Option to designate in writing during the Participant’s lifetime a Beneficiary to
receive and exercise the Participant’s Stock Options in the event of such Participant’s
death.

     (g) Purchase for Investment

     The Committee shall have the right to require that each Participant or other person
who shall exercise a Stock Option under the Plan, and each person into whose name shares of
Common Stock shall be issued pursuant to the exercise of a Stock Option, represent and
agree that any and all shares of Common Stock purchased pursuant to such Stock Option are
being purchased for investment only and not with a view to the distribution or resale
thereof and that such shares will not be sold except in accordance with such restrictions
or limitations as may be set forth in the Stock Option or by the Committee. This
Section 6.2(g) shall be inoperative during any period of time when the Company has obtained
all necessary or advisable approvals from governmental agencies and has completed all
necessary or advisable registrations or other qualifications of shares of Common Stock as
to which Stock Options may from time to time be granted as contemplated in Section 16.

     (h) No Repricing

     Except in connection with a Change in Capitalization or approval of the Company’s
stockholders, the Option Price shall not be reduced to less than the Fair Market Value on
the date such Stock Options were granted.

SECTION 7

STOCK APPRECIATION RIGHTS

7.1 Grant of Stock Appreciation Rights

     Stock Appreciation Rights may be granted to Eligible Directors in such number, and at such
times during the term of the Plan as the Committee shall determine, and as evidenced by the Award
Agreement. The Committee may grant a Stock Appreciation Right or provide for the grant of a Stock
Appreciation Right, either from time to time in the discretion of the Committee or automatically
upon the occurrence of specified events. The granting of a Stock Appreciation Right shall take
place when the Committee by resolution, written consent or other appropriate action determines to
grant such a Stock Appreciation Right to a particular Participant at a particular price. A Stock
Appreciation Right may be granted freestanding or in tandem or in combination with any other Award
under the Plan.

12

 

7.2 Exercise of Stock Appreciation Rights

     A Stock Appreciation Right may be exercised upon such terms and conditions and for such term
as the Committee shall determine; provided, however, no Stock Appreciation Right
shall be exercisable later than the tenth (10th) anniversary of the date of its grant. Upon
exercise of a Stock Appreciation Right, a Participant shall be entitled to receive Common Stock
with an aggregate Fair Market Value determined by multiplying (i) the difference between the Fair
Market Value of a share of Common Stock on the date of exercise of the Stock Appreciation Right
over the price determined by the Committee on the date of grant (which price shall not be less than
100% of the Fair Market Value of a share of Common Stock on the date of grant, except in the case
of Stock Appreciation Rights that are granted in assumption of, or in substitution for, outstanding
awards previously granted by (x) a company acquired by the Company or a subsidiary, or (y) a
company with which the Company or a subsidiary combines) multiplied by (ii) the number of shares of
Common Stock with respect to which the Stock Appreciation Right is exercised. The value of any
fractional shares shall be paid in cash.

7.3 Special Provisions Applicable to Stock Appreciation Rights

Stock Appreciation Rights are subject to the following restrictions:

(a) A Stock Appreciation Right granted in tandem with any other Award under the Plan shall
be exercisable at such time or times as the Award to which it relates shall be exercisable,
or at such other times as the Committee may determine.

(b) The right of a Participant to exercise a Stock Appreciation Right granted in tandem
with any other Award under the Plan shall be canceled if and to the extent the related
Award is exercised or canceled. To the extent that a Stock Appreciation Right is
exercised, the related Award shall be deemed to have been surrendered unexercised and
canceled.

(c) A holder of Stock Appreciation Rights shall have none of the rights of a stockholder
until the Common Stock, if any, is issued to such holder pursuant to such holder’s exercise
of such rights.

(d) The acquisition of Common Stock pursuant to the exercise of a Stock Appreciation Right
shall be subject to the same restrictions as would apply to the acquisition of Common Stock
acquired upon exercise of a Stock Option, as set forth in Section 6.2.

7.4 No Repricing

     Except in connection with a Change in Capitalization or approval of the Company’s
stockholders, the price at which Stock Appreciation Rights may be exercised

13

 

shall not be reduced to less than the Fair Market Value on the date such Stock Appreciation
Rights were granted.

SECTION 8

RESTRICTED STOCK

8.1 Grant of Restricted Stock

     Restricted Stock may be granted to Participants in such number and at such times during the
term of the Plan as the Committee shall determine and as evidenced by an Award Agreement. The
granting of Restricted Stock shall take place when the Committee by resolution, written consent or
other appropriate action determines to grant such Restricted Stock to a particular Participant.

8.2 Restriction Period

     Except as otherwise provided in this Plan, determined by the Committee or specified in the
Award Agreement, Restricted Stock shall be subject to a time vesting period of no less than one (1)
year from the date of grant (the “Restriction Period”). During the Restriction Period, the
Restricted Stock is subject to Section 16.6. During the Restriction Period, the Committee shall
evidence the restrictions on the shares of Restricted Stock in such a manner as it determines is
appropriate (including, without limitation, (i) by means of appropriate legends on shares of
Restricted Stock that have been certificated and (ii) by means of appropriate stop-transfer orders
on shares of Restricted Stock credited to book-entry accounts).

8.3 Voting Rights; Dividends and Other Distributions

     A Participant receiving a grant of Restricted Stock shall be recorded as a stockholder of the
Company. Each Participant who receives a grant of Restricted Stock shall have all the rights of a
stockholder with respect to such shares (except as provided in the restrictions on
transferability), including the right to vote the shares and receive dividends and other
distributions paid with respect to the underlying shares of Restricted Stock; provided,
however, that no Participant awarded Restricted Stock shall have any right as a stockholder
with respect to any shares subject to the Participant’s Restricted Stock grant prior to the date of
issuance to the Participant of a certificate or certificates, or the establishment of a book-entry
account, for such shares.

8.4 Issuance of Shares; Settlement of Awards

     When the restrictions imposed by Section 8.2 expire or otherwise lapse with respect to one or
more shares of Restricted Stock, the Company shall deliver to the Participant one (1) share of
Common Stock in satisfaction of each share of Restricted Stock, which shares so delivered shall not
contain any legend. Such delivery of shares may be in the form of either a physical stock
certificate or certificates or the

14

 

establishment of a book-entry account on behalf of such Participant. Any fractional shares
subject to such Restricted Stock shall be paid to the Participant in cash.

SECTION 9

RESTRICTED STOCK UNITS

9.1 Grant of Restricted Stock Units

     Restricted Stock Units may be granted to Participants in such number and at such times during
the term of the Plan as the Committee shall determine and as evidenced by an Award Agreement. The
granting of Restricted Stock Units shall take place when the Committee by resolution, written
consent or other appropriate action determines to grant such Restricted Stock Units to a particular
Participant.

9.2 Restriction Period

     Except as otherwise provided in this Plan, determined by the Committee or specified in the
Award Agreement, Restricted Stock Units shall be subject to a time vesting period of no less than
one (1) year from the date of grant (the “Restriction Period”). During the Restriction Period, the
Restricted Stock Units are subject to Section 16.6.

9.3 Other Restrictions

     The Committee may impose such other restrictions on Restricted Stock Units granted pursuant to
the Plan as it deems necessary or appropriate. A Participant receiving a grant of Restricted Stock
Units shall not be recorded as a stockholder of the Company and shall not acquire any rights of a
stockholder unless or until the Participant is issued shares of Common Stock in settlement of such
Restricted Stock Units.

9.4 Dividend Equivalents

     The Board or the Committee may provide that Restricted Stock Units awarded under the Plan
shall be entitled to an amount per Restricted Stock Unit equal in value to the cash dividend, if
any, paid per share of Common Stock on issued and outstanding shares, on the dividend payment dates
occurring during the period between the date on which the Restricted Stock Units are granted to the
Participant and the date on which such Restricted Stock Units are settled, cancelled, forfeited,
waived, surrendered or terminated under the Plan. Such paid amounts called “dividend equivalents”
shall be (i) paid in cash or Common Stock or (ii) credited to the Participant as additional
Restricted Stock Units, or any combination thereof, as the Board or the Committee, as appropriate,
shall determine. A Restricted Stock Unit credited to a Participant as a dividend equivalent shall
vest and be settled at such time as the Restricted Stock Unit to which it relates vests and is
settled.

15

 

9.5 Issuance of Shares; Settlement of Awards

     When the restrictions imposed by Sections 9.2 and 9.3 expire or otherwise lapse with respect
to one or more Restricted Stock Units, Restricted Stock Units shall be settled (i) in cash or
(ii) by the delivery to the Participant of the number of shares of Common Stock equal to the number
of the Participant’s Restricted Stock Units that are vested, or any combination thereof, as set
forth in the Award Agreement. Any fractional shares subject to such Restricted Stock Units shall
be paid to the Participant in cash.

SECTION 10

OTHER STOCK-BASED AWARDS

     The Board or Committee is hereby authorized to grant to an Eligible Director an “Other
Stock-Based Award”, which shall consist of a right (i) which is not an Award or right described in
Sections 6, 7, 8 or 9 and (ii) which is denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Common Stock (including without limitation,
securities convertible into Common Stock), as are deemed by the Board or Committee to be consistent
with the purposes of the Plan; provided, that any such rights must comply, with applicable law.
Subject to the terms of the Plan and any applicable Award Agreement, the Board or Committee shall
determine the terms and conditions of any such Other Stock-Based Award, including but not limited
to dividend equivalents.

SECTION 11

COMPENSATION

11.1 Amount of Compensation

     Each Participant’s Compensation shall be determined by the Committee and shall be paid, unless
deferred pursuant to Section 12, within thirty (30) day after the end of each Plan Quarter in which
it is earned (the “Payment Date”). The Committee, if necessary, may determine prior to the
beginning of the applicable Plan Quarter for which Compensation is to be paid whether payment of
Compensation shall be made at a date later than the Payment Date.

11.2 Compensation Election

     (a) By December 31 of a calendar year, or at such later time as may be provided by
Section 409A, each Participant may elect to receive his or her Compensation for the following year
in the form of cash, deferred cash, Common Stock, deferred Common Stock or any combination of the
foregoing, by submitting a written notice to the Company in the manner prescribed by the Committee.
In the case of a newly-elected Eligible Director, such election may be made within thirty
(30) days of the Director’s election to the Board with respect to Compensation for services
performed during the

16

 

portion of the applicable calendar year that is subsequent to the election. Any combination
of the alternatives may be elected, provided the aggregate of the alternatives elected may not
exceed one hundred percent (100%) of the Participant’s Compensation, except as provided in
Section 12.2(a). Unless otherwise provided under the terms of the Compensation, if no election is
received by the Company, the Participant shall be deemed to have made an election to receive his or
her Compensation in undeferred cash. An election under this Section 11.2 shall be irrevocable and
shall apply to the Compensation earned during the calendar year for which the election is
effective.

     (b) Notwithstanding any other provision to the contrary, deferred cash elections are only
available pursuant to this Plan if an Eligible Director is not otherwise eligible to participate in
one of the Company’s other deferred compensation plans or programs with respect to their cash
Compensation.

SECTION 12

DEFERRED COMPENSATION

12.1 Deferred Cash

     If a Participant elects pursuant to Section 11.2 to make a Cash Deferral, such Cash Deferral
shall be recorded in a Memorandum Deferred Account as of the date the Compensation otherwise would
have been paid.

12.2 Deferred Common Stock

     (a) If a Participant elects pursuant to Section 11.2 to have all or a specified percentage of
his or her cash Compensation deferred in Common Stock, then an amount shall be recorded in a
Memorandum Deferred Account, in the form of shares of Common Stock, as determined in
subsection (b) below, as of the date the Compensation otherwise would have been paid. The Common
Stock Deferral credited to the Participant’s Memorandum Deferred Account in such case shall be
equal to the amount actually deferred plus a premium (the “Conversion Premium”). The Conversion
Premium shall be a percentage of the Compensation actually deferred as determined by the Committee.

     (b) The number of shares of Common Stock credited to a Participant’s Memorandum Deferred
Account shall equal the Common Stock Deferral divided by the Fair Market Value of the Common Stock
on the applicable Payment Date.

     (c) Subject to Section 16.1, each Participant who elects deferred Common Stock shall, once the
shares of Common Stock have been credited to his or her Memorandum Deferred Account, receive
dividend equivalents and other distributions on such shares, subject to applicable laws. The Board
or Committee may determine that dividend equivalents and other distributions shall be paid in cash
on a current basis or reinvested promptly in additional shares of Common Stock and such additional
shares shall be credited to the Memorandum Deferred Account.

17

 

     (d) The deferred Common Stock balance in the Memorandum Deferred Account shall be payable to
the Participant in Common Stock.

12.3 Memorandum Deferred Account

     The Company shall establish a ledger account (the “Memorandum Deferred Account”) for each
Participant for the purpose of recording the Company’s obligation to pay the Compensation as
provided in Sections 15.1 and 15.2.

  (a) The Committee shall determine the rate of interest or earnings/losses credited to the
Memorandum Deferred Account periodically and in so doing may take into account such factors it
deems appropriate.

  (b) The Company shall promptly credit each Participant’s Memorandum Deferred Account with the
number of shares of Common Stock calculated in accordance with Section 12.2(b) and (c).

SECTION 13

CESSATION OF SERVICE

     The Award Agreement applicable to each Award shall set forth the effect of a Participant’s
cessation of service as a member of the Board. However, unless explicitly set forth otherwise in
an Award Agreement to the contrary, all of a Participant’s unvested and/or unexercisable Awards
shall automatically be forfeited when a Participant’s ceases to serve as a director of the Board;
provided that such Participant shall be permitted to exercise the vested portion of any Stock
Options for at least three months following such cessation date. Upon a Participant’s cessation of
service as a member of the Board, Compensation attributed to the Plan Quarter during which
cessation occurred shall be earned by the Participant in an amount equal to the meeting fees earned
and a pro rata amount for the quarterly retainer and shall be paid or deferred pursuant to a valid
election for the year during which such cessation has occurred. The Committee may, when it finds
that a waiver would be in the best interests of the Company, waive in whole or in part any or all
remaining restrictions with respect to such Participant’s Awards. Unrestricted Shares, evidenced
in such manner as the Committee shall deem appropriate, shall be issued to the holder of Restricted
Stock, Restricted Stock Units or Other-Stock Based Awards, as applicable, promptly after the
applicable restrictions have lapsed or otherwise been satisfied.

18

 

SECTION 14

EFFECT OF A CHANGE OF CONTROL

     In the event of a Change of Control:

     (a) all Stock Options and Stock Appreciation Rights then held by the Participant shall become
fully vested and/or exercisable;

     (b) the Restriction Periods applicable to all shares of Restricted Stock and all Restricted
Stock Units then held by the Participant shall immediately lapse; and

     (c) all Stock-Based Awards, Cash Deferrals and Common Stock Deferrals under this Plan
(irrespective of payment elections at the time of such deferrals) shall be paid to a Participant
(or his or her Beneficiary in the case of his or her death) within thirty (30) days after the date
of the Change of Control, or at such later time as may be required to enable the Eligible Director
to avoid liability under Section 16(b) of the Exchange Act.

     Notwithstanding Sections 14(b) and (c) above, no such Awards shall be paid to a Participant
who continues to serve as a member of the Board of the Company or upon the board of directors of
the Company’s successor, until such time said Awards would otherwise be paid.

SECTION 15

PAYMENT OF DEFERRED COMPENSATION

15.1 Payment of Deferred Cash

     When a Participant ceases to be a member of the Board, the Company shall pay to the
Participant (or the Participant’s Beneficiary in the case of the Participant’s death) an amount
equal to the deferred cash balance of his or her Memorandum Deferred Account, plus interest (at a
rate determined pursuant to Section 12.3) on the outstanding deferred cash account balance to the
date of distribution, as follows:

  (a) a lump sum cash payment (payable within 30 days),

  (b) a lump sum cash payment made at a date certain in the future as determined at the time the
deferral election is made pursuant to Section 11.2, or

  (c) in periodic installments over a period of years as determined at the time the deferral
election is made under Section 11.2.

Payment of deferred cash shall be made or, in the case of installments over a period of years,
shall begin to be made, in the month following the date on which a Participant ceases to be a
member of the Board.

19

 

15.2 Payment of Deferred Common Stock

     When a Participant ceases to be a member of the Board, the Company shall distribute Common
Stock to the Participant (or the Participant’s Beneficiary in the case of the Participant’s death)
in an amount equal to the number of whole shares of Common Stock in a Participant’s Memorandum
Deferred Account, as follows:

  (a) a lump sum distribution (payable within 30 days),

  (b) a lump sum cash payment made at a date certain in the future as determined at the time the
deferral election is made pursuant to Section 11.2, or

  (c) in annual installments over a period of years as determined at the time the deferral
election is made under Section 11.2.

Any fractional shares of Common Stock held in the Participant’s account shall be paid to the
Participant (or the Participant’s Beneficiary in the case of the Participant’s death) in a lump sum
cash payment based on the Common Stock’s Fair Market Value on the day preceding the date of such
payment.

     Payment of deferred Common Stock shall be made or, in the case of installments over a period
of years, shall begin to be made, in the month following the date on which a Participant ceases to
be a member of the Board, or such later date as may be necessary to comply with Section 16(b) of
the Exchange Act.

15.3 Acceleration of Payment of Deferred Cash and Deferred Common Stock

     (a) In the event of a Participant’s death or Permanent Disability, notwithstanding the
Participant’s elections made with respect to form of distribution under Section 15.1 and 15.2, the
balance of the Participant’s Memorandum Deferred Account shall be distributed in full as soon as
practicable (but in no event later than thirty (30) days) following the Participant’s death or
Permanent Disability.

     (b) Subject to Section 409A, in case of an unforeseeable emergency, a Participant may request
a distribution from the Participant’s Memorandum Deferred Account earlier than the date to which it
was deferred.

     For purposes of this Section 15.3(b), an “unforeseeable emergency” shall be limited to a
severe financial hardship to the Participant resulting from an illness or accident of the
Participant, the Participant’s spouse, or a dependent (as defined in Section 152(a) of the Code) of
the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond the control of the
Participant. The circumstances that will constitute an unforeseeable emergency will depend upon
the facts of each case, but, in any case, amounts distributed with respect to an unforeseeable
emergency may not exceed amounts necessary to satisfy such emergency, plus amounts necessary to pay

20

 

taxes reasonably anticipated as a result of the distribution, after taking into account the
extent to which such hardship is or may be relieved: (i) through reimbursement or compensation by
insurance or otherwise or (ii) by liquidation of the Participant’s assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship.

     The Committee shall consider any requests for payment on the basis of an unforeseeable
emergency under this Section 15.3(b) on a uniform and nondiscriminatory basis and in accordance
with the standards of interpretation described in Section 457 of the Code and the regulations
thereunder.

SECTION 16

GENERAL PROVISIONS

16.1 Issuance of Common Stock

     The Company shall not be required to issue any certificate for shares of Common Stock under
the Plan prior to:

     (a) obtaining any approval or ruling from the Securities and Exchange Commission, the Internal
Revenue Service or any other governmental agency which the Company, in its sole discretion, shall
determine to be necessary or advisable;

     (b) listing of such shares on any stock exchange on which the Common Stock may then be
listed; and

     (c) completing any registration or other qualification of such shares under any federal or
state laws, rulings or regulations of any governmental body which the Company, in its sole
discretion, shall determine to be necessary or advisable.

     All certificates, or book-entry accounts, for shares of Common Stock delivered under the Plan
shall also be subject to such stop-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which Common Stock is then listed and any applicable federal or
state securities laws, and the Committee may cause a legend or legends to be placed on any such
certificates, or notations on such book-entry accounts, to make appropriate reference to such
restrictions. The foregoing provisions of this paragraph shall not be effective if and to the
extent that the shares of Common Stock delivered under the Plan are covered by an effective and
current registration statement under the Securities Act of 1933, as amended, or if and so long as
the Committee determines that application of such provisions are no longer required or desirable.
In making such determination, the Committee may rely upon an opinion of counsel for the Company.
Without limiting the foregoing, the Committee may impose such restrictions, conditions or
limitations as it determines appropriate as to the timing and manner of any resales by a
Participant or other subsequent transfers by a Participant

21

 

of any shares issued under this Plan, including without limitation (i) restrictions under an
insider trading policy, (ii) restrictions designed to delay and/or coordinate the timing and manner
of sales by one or more Participants and (iii) restrictions as to the use of a specified brokerage
firm for such resales or other transfers.

16.2 Unfunded Obligation

     Any amounts (deferred or otherwise) to be paid to Participants pursuant to the Plan are
unfunded obligations. The Company is not required to segregate any monies from its general funds,
to create any trusts or to make any special deposits with respect to this obligation. Beneficial
ownership of any investments, including trust investments which the Company may make to fulfill
this obligation, shall at all times remain in the Company. Any investments and the creation or
maintenance of any trust or any Participant account shall not create or constitute a trust or a
fiduciary relationship between the Committee or the Company and a Participant, or otherwise create
any vested or beneficial interest in any Participant or the Participant’s Beneficiary or the
Participant’s creditors in any assets of the Company whatsoever. The Participants shall have no
claim against the Company for any changes in the value of any assets which may be invested or
reinvested by the Company with respect to the Plan.

16.3 Beneficiary

     The designation of a Beneficiary shall be on a form provided by the Company, executed by the
Participant (with the consent of the Participant’s spouse, if required by the Company for reasons
of community property or otherwise), and delivered to a designated representative of the Company.
A Participant may change his or her Beneficiary designation at any time. A designation by a
Participant under a predecessor plan shall remain in effect under this Plan unless it is revoked or
changed under this Plan. If no Beneficiary is designated, if the designation is ineffective, or in
the event the Beneficiary dies before the balance of the Memorandum Deferred Account is paid, the
balance shall be paid to the Participant’s spouse, or if there is no surviving spouse, to his or
her lineal descendants, pro rata, or if there is no surviving spouse or lineal descendants, to the
Participant’s legal representatives, the Participant’s estate or the person or persons to whom the
deceased’s rights under the Plan shall have passed by will or the laws of descent and distribution
(unless the Committee for a given year has designated investment in an annuity, in which case the
payment options selected by the Participant with respect thereto shall govern).

16.4 Permanent Disability

     A Participant shall be deemed to have become “Permanently Disabled” if the Participant (i) is
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 (ii) 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

22

 

continuous period of not less than twelve (12) months, receiving income replacement benefits
for a period of not less than three (3) months under an accident and health plan of the Company.

16.5 Incapacity of Participant or Beneficiary

     If the Committee finds that any Participant or Beneficiary to whom a payment is payable under
the Plan is unable to care for his or her affairs because of illness or accident or is under a
legal disability, any payment due (unless a prior claim therefor shall have been made by a duly
appointed legal representative), at the discretion of the Committee, may be paid to the spouse,
child, parent, brother or sister of such Participant or Beneficiary or to any person whom the
Committee has determined has incurred expense for such Participant or Beneficiary. Any such
payment shall be a complete discharge of the obligations of the Company under the provisions of the
Plan.

16.6 Nonassignment

     Unless otherwise provided in the Plan, the right of a Participant or Beneficiary to the
payment of any Award granted under the Plan and the rights and privileges conferred thereby shall
not be subject to execution, attachment or similar process and may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by will
or by the applicable laws of descent and distribution unless the Participant has received the
Company’s prior written consent. Except as otherwise provided for under the Plan, if any
Participant attempts to transfer, assign, pledge, hypothecate or otherwise dispose of any Award
under the Plan or of any right or privilege conferred thereby, contrary to the provisions of the
Plan or such Award, or suffers the sale or levy or any attachment or similar process upon the
rights and privileges conferred hereby, all affected Awards held by such Participant shall be
immediately forfeited.

16.7 Termination and Amendment

     Except as otherwise determined by the Board, the Committee may from time to time make such
amendments to the Plan as it may deem proper and in the best interest of the Company, including,
but not limited to, any amendment necessary to ensure that the Company may obtain any regulatory
approval referred to above; provided, however, that to the extent required by applicable law,
regulation or stock exchange rule, stockholder approval shall be required. Subject to
Section 409A, the Board may at any time suspend the operation of or terminate the Plan. No
amendment, suspension or termination may impair the right of a Participant or the Participant’s
designated Beneficiary to receive benefits accrued prior to the effective date of such amendment,
suspension or termination.

23

 

16.8 Applicable Law

     The Plan shall be construed and governed in accordance with the laws of the State of Texas.

16.9 Effective Date and Term of the Plan

     The Plan was adopted by the Board on February 12, 2008, and is subject to approval by the
Company’s stockholders. If approved by the stockholders, this Plan will replace the 1998 Director
Stock Plan (as amended) and no further awards will be made under that plan. This Plan shall become
effective on the Effective Date, and shall remain in effect, subject to the right of the Board to
terminate the Plan at any time pursuant to Section 16.7, until the date immediately preceding the
tenth (10th) anniversary of the Effective Date of the Plan. No Awards shall be granted under this
Plan after such date.

16.10 Compliance With Section 16(b) of the Exchange Act

     The Company’s intention is that, so long as any of the Company’s equity securities are
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, with respect to awards of Common
Stock, the Plan shall comply in all respects with any exemption pursuant to Section 16(b)
promulgated under Section 16 of the Exchange Act. If any Plan provision is later found not to be
in compliance with such exemptions available pursuant to Section 16(b) of the Exchange Act, that
provision shall be deemed modified as necessary to meet the requirements of Section 16(b).

16.11 Section 409A

     The Plan is intended to be administered, operated and construed in compliance with Section
409A and any guidance issued thereunder. Notwithstanding this or any other provision of the Plan
to the contrary, the Board and the Committee may amend the Plan in any manner, or take any other
action, that either of them determines, in its sole discretion, is necessary, appropriate or
advisable to cause the Plan to comply with Section 409A and any guidance issued thereunder. Any
such action, once taken, shall be deemed to be effective from the earliest date necessary to avoid
a violation of Section 409A and shall be final, binding and conclusive on all Participants and
other individuals having or claiming any right or interest under the Plan. With respect to any
Award granted under the Plan that is subject to Section 409A, “cessation of service” or “ceasing to
be a member of the Board” shall mean the Eligible Director’s “separation from service”, as defined
in Section 1.409A-1(h) of the Final Treasury Regulations promulgated under Section 409A, including
the default presumptions thereunder.

24

 

     IN WITNESS WHEREOF, the Company has caused the Plan to be executed effective as of May 20,
2008.

	 	 	 	 	 
	 

	 	ANADARKO PETROLEUM CORPORATION
	 	 
	 
	 	 	 	 
	 

	 	/s/ James T. Hackett	 	 
	 

	 	 	 	 
	 

	 	James T. Hackett	 	 
	 

	 	Chairman, President and Chief Executive Officer	 	 

25

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