Document:

exv4w4

EXHIBIT 4.4

ADOPTION AGREEMENT

	 	 	 	 	 	 	 
	1.01	 	PREAMBLE
	 
	 	 	 	 	 	 
	 	 	By the execution of this Adoption Agreement the Plan Sponsor
hereby [complete (a) or (b)]
	 
	 	 	 	 	 	 
	 

	 	(a)
	 	þ
	 	adopts a new plan as of July 1, 2008 [month, day, year]
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	o
	 	amends and restates its existing
plan as of                     
[month, day, year] which is the Amendment Restatement Date. Except as otherwise
provided in Appendix A, all amounts deferred under the Plan prior to the Amendment
Restatement Date shall be governed by the terms of the Plan as in effect on the day
before the Amendment Restatement Date.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Original Effective Date:                      [month, day, year]
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Pre-409A Grandfathering: o Yes o No
	 
	 	 	 	 	 	 
	1.02	 	PLAN
	 
	 	 	 	 	 	 
	 	 	Plan Name:	 	Juniper Networks, Inc. Deferred Compensation Plan
	 
	 	 	 	 	 	 
	 	 	Plan Year:	 	January 1 — December 31, initial Plan Year is July 1, 2008 — December 31, 2008
	 
	 	 	 	 	 	 
	1.03	 	PLAN SPONSOR
	 
	 	 	 	 	 	 
	 	 	Name:	 	Juniper Networks, Inc.
	 	 	Address:	 	1194 North Mathilda Ave., Sunnyvale, CA 94089
	 	 	Phone # :	 	(408) 745-2000
	 	 	EIN:	 	77-0422528
	 	 	Fiscal Yr:	 	December 31
	 
	 	 	 	 	 	 
	 	 	Is stock of the Plan Sponsor, any Employer or any Related Employer publicly traded on an
established securities market?
	 
	 	 	 	 	 	 
	 	 	þ Yes       o No

- 1 -

 

	1.04	 	EMPLOYER
	 
	 	 	The following entities have been authorized by the Plan Sponsor to participate in and have
adopted the Plan (insert “Not Applicable” if none have been authorized):

	 	 	 	 	 
	Entity	 	Publicly Traded on Est. Securities Market
	 	 	Yes	 	No
	 
	 	 	 	 
	Juniper Networks (US) Inc.

	 	þ
	 	o
	 

	 	o
	 	o
	 

	 	o
	 	o
	 

	 	o
	 	o
	 

	 	o
	 	o
	 

	 	o
	 	o

	1.05	 	ADMINISTRATOR
	 
	 	 	The Plan Sponsor has designated the following party or parties to be responsible for the
administration of the Plan:
	 
	 	 	Name: Investment Committee
	 
	 	 	Address: 1194 North Mathilda Ave., Sunnyvale, CA 94089

			
	          Note:	 	The Administrator is the person or persons designated by the Plan Sponsor to
be responsible for the administration of the Plan. Neither Fidelity Employer Services
Company nor any other Fidelity affiliate can be the Administrator.

- 2 -

 

	 	 	 	 	 	 	 	 	 
	2.01	 	PARTICIPATION
	 
	 	 	 	 	 	 	 	 
	 	 	(a)	 	þ	 	Employees [complete (i), (ii) or (iii)]
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	o
	 	Eligible Employees are selected by the Employer.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	þ
	 	Eligible Employees are those employees of the Employer who satisfy the following criteria:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Senior Director level (including the equivalent level) and above as
selected by the Employer 

	 

	 	 	 	 	 	 	 	
 

	 

	 	 	 	 	 	 	 	
 

	 

	 	 	 	 	 	 	 	
 

	 

	 	 	 	 	 	 	 	
 

	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(iii)
	 	o
	 	Employees are not eligible to participate.
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	þ	 	Directors [complete (i), (ii) or (iii)]
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	o
	 	All Directors are eligible to participate.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	o
	 	Only Directors selected by the Employer are eligible to participate.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(iii)
	 	þ
	 	Directors are not eligible to participate.

- 3 -

 

	 	 	 	 	 	 	 
	3.01	 	COMPENSATION
	 
	 	 	 	 	 	 
	 	 	For purposes of determining Participant contributions under Article 4 and Employer
contributions under Article 5, Compensation shall be defined in the following manner
[complete (a) or (b) and select (c) and/or (d), if applicable]:
	 
	 	 	 	 	 	 
	 

	 	(a)
	 	þ
	 	Compensation is defined as:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Base pay, commissions, and bonus (Company Performance Bonus Program
and Executive Annual Incentive Bonus Plan) 

	 

	 	 	 	 	 	
 

	 

	 	 	 	 	 	
 

	 

	 	 	 	 	 	
 

	 

	 	 	 	 	 	
 

	 

	 	 	 	 	 	
 

	 
	 	 	 	 	 	 
	 

	 	(b)
	 	o
	 	Compensation as defined in [insert name of qualified plan] without
regard to the limitation in Section 401(a)(17) of the Code for such
Plan Year.
	 
	 	 	 	 	 	 
	 

	 	(c)
	 	o
	 	Director Compensation is defined as:
	 

	 	 	 	 	 	
 

	 

	 	 	 	 	 	
 

	 

	 	 	 	 	 	
 

	 
	 	 	 	 	 	 
	 

	 	(d)
	 	o
	 	Compensation shall, for all Plan purposes, be limited to $     .
	 
	 	 	 	 	 	 
	 

	 	(e)
	 	o
	 	Not Applicable.
	 
	 	 	 	 	 	 
	3.02	 	BONUSES
	 
	 	 	 	 	 	 
	 	 	Compensation, as defined in Section 3.01 of the Adoption Agreement, includes the following
type of bonuses:

	 	 	 	 	 
	 	 	Will be treated as Performance
	Type	 	Based Compensation
	 	 	Yes	 	No
	Company Performance Bonus Program

	 	o
	 	þ
	Executive Annual Incentive Bonus Plan

	 	o
	 	þ
	 

	 	o
	 	o
	 

	 	o
	 	o
	 

	 	o
	 	o

			
	o	 	Not Applicable.

- 4 -

 

	4.01	 	PARTICIPANT CONTRIBUTIONS
	 
	 	 	If Participant contributions are permitted, complete (a),
(b), and (c). Otherwise complete (d).

	 	(a)	 	Amount of Deferrals
	 
	 	 	 	A Participant may elect within the period specified in Section 4.01(b) of the
Adoption Agreement to defer the following amounts of remuneration. For each type of
remuneration listed, complete “dollar amount” and / or “percentage amount”.

	 	(i)	 	Compensation Other than Bonuses [do not complete if you
complete (iii)]

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Dollar Amount	 	% Amount	 	 
	Type of Remuneration	 	Min	 	Max	 	Min	 	Max	 	Increment
	(a) Base Compensation
	 	 	 	 	 	 	 	 	 	 	1	%	 	 	50	%	 	 	1	%
	(b) Commissions
	 	 	 	 	 	 	 	 	 	 	1	%	 	 	100	%	 	 	1	%
	(c)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	Note: The increment is required to determine the permissible deferral amounts. For
example, a minimum of 0% and maximum of 20% with a 5% increment would allow an
individual to defer 0%, 5%, 10%, 15% or 20%.

	 	(ii)	 	Bonuses [do not complete if you complete (iii)]

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Dollar Amount	 	% Amount	 	 
	Type of Bonus	 	Min	 	Max	 	Min	 	Max	 	Increment
	(a) Company
Performance Bonus
Program
	 	 	 	 	 	 	 	 	 	 	1	%	 	 	100	%	 	 	1	%
	(b) Executive
Annual Incentive
Bonus Plan
	 	 	 	 	 	 	 	 	 	 	1	%	 	 	100	%	 	 	1	%

	 	(iii)	 	Compensation [do not complete if you completed (i) and (ii)]

	 	 	 	 	 	 	 	 	 
	Dollar Amount	 	% Amount	 	 
	Min	 	Max	 	Min	 	Max	 	Increment
	 
	 	 	 	 	 	 	 	 

	 	(iv)	 	Director Compensation

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Dollar Amount	 	% Amount	 	 
	Type of Compensation	 	Min	 	Max	 	Min	 	Max	 	Increment
	Annual Retainer
	 	 	 	 	 	 	 	 	 	 
	Meeting Fees
	 	 	 	 	 	 	 	 	 	 
	Other:
	 	 	 	 	 	 	 	 	 	 
	Other:
	 	 	 	 	 	 	 	 	 	 

- 5 -

 

	 	(b)	 	Election Period

	 	(i)	 	Performance Based Compensation
	 
	 	 	 	A special election period
	 
	 	 	 	o Does þ Does Not
	 
	 	 	 	apply to each eligible type of performance based compensation referenced in
Section 3.02 of the Adoption Agreement.
	 
	 	 	 	The special election period, if applicable, will be determined by the Employer.
	 
	 	(ii)	 	Newly Eligible Participants
	 
	 	 	 	An employee who is classified or designated as an Eligible Employee during a
Plan Year
	 
	 	 	 	þ May o May Not
	 
	 	 	 	elect to defer Compensation earned during the remainder of the Plan Year by
completing a deferral agreement within the 30 day period beginning on the date
he is eligible to participate in the Plan.

	 	(c)	 	Revocation of Deferral Agreement
	 
	 	 	 	A Participant’s deferral agreement
	 
	 	 	 	þ Will
	 
	 	 	 	o Will Not
	 
	 	 	 	be cancelled for the remainder of any Plan Year during which he receives a hardship
distribution of elective deferrals from a qualified cash or deferred arrangement
maintained by the Employer. If cancellation occurs, the Participant may resume
participation in accordance with Article 4 of the Plan.
	 
	 	(d)	 	No Participant Contributions
	 
	 	 	 	o Participant contributions are not permitted under the Plan.

- 6 -

 

	5.01	 	EMPLOYER CONTRIBUTIONS
	 
	 	 	If Employer contributions are permitted, complete (a) and/or (b). Otherwise

complete (c).

	 	(a)	 	Matching Contributions

	 	(i)	 	Amount
	 
	 	 	 	For each Plan Year, the Employer shall make a Matching Contribution on behalf of
each Participant who defers Compensation for the Plan Year and satisfies the
requirements of Section 5.01(a)(ii) of the Adoption Agreement equal to [complete
the ones that are applicable]:

	 	 	 	 	 	 	 
	 

	 	(A)
	 	o
	 	           [insert percentage] of the Compensation the Participant has elected to defer for the Plan Year
	 
	 	 	 	 	 	 
	 

	 	(B)
	 	o
	 	An amount determined by the Employer in its sole discretion
	 
	 	 	 	 	 	 
	 

	 	(C)
	 	o
	 	Matching Contributions for each Participant shall be limited to $           and/or           % of Compensation.
	 
	 	 	 	 	 	 
	 

	 	(D)
	 	o
	 	Other:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	(E)
	 	þ
	 	Not Applicable [Proceed to Section 5.01(b)]

	 	(ii)	 	Eligibility for Matching Contribution
	 
	 	 	 	A Participant who defers Compensation for the Plan Year shall receive an
allocation of Matching Contributions determined in accordance with Section
5.01(a)(i) provided he satisfies the following requirements [complete the ones
that are applicable]:

	 	 	 	 	 	 	 
	 

	 	(A)
	 	o
	 	Describe requirements:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	(B)
	 	o
	 	Is selected by the Employer in its sole discretion to receive an allocation of Matching Contributions
	 
	 	 	 	 	 	 
	 

	 	(C)
	 	o
	 	No requirements

- 7 -

 

	 	(iii)	 	Time of Allocation
	 
	 	 	 	Matching Contributions, if made, shall be treated as allocated [select one]:

	 	 	 	 	 	 	 
	 

	 	(A)
	 	o
	 	As of the last day of the Plan Year
	 
	 	 	 	 	 	 
	 

	 	(B)
	 	o
	 	At such times as the Employer shall determine in it sole discretion
	 
	 	 	 	 	 	 
	 

	 	(C)
	 	o
	 	At the time the Compensation on account of which the Matching Contribution is being made would otherwise have been paid to the Participant
	 
	 	 	 	 	 	 
	 

	 	(D)
	 	o
	 	Other:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

	 	(b)	 	Other Contributions

	 	(i)	 	Amount
	 
	 	 	 	The Employer shall make a contribution on behalf of each Participant who
satisfies the requirements of Section 5.01(b)(ii) equal to [complete the ones
that are applicable]:

	 	 	 	 	 	 	 
	 

	 	(A)
	 	o
	 	An amount equal to            [insert number] % of the Participant’s Compensation
	 
	 	 	 	 	 	 
	 

	 	(B)
	 	þ
	 	An amount determined by the Employer in its sole discretion
	 
	 	 	 	 	 	 
	 

	 	(C)
	 	o
	 	Contributions for each Participant shall be limited to $                    
	 
	 	 	 	 	 	 
	 

	 	(D)
	 	o
	 	Other:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	(E)
	 	o
	 	Not Applicable [Proceed to Section 6.01]

- 8 -

 

	 	(ii)	 	Eligibility for Other Contributions
	 
	 	 	 	A Participant shall receive an allocation of other Employer contributions
determined in accordance with Section 5.01(b)(i) for the Plan Year if he
satisfies the following requirements [complete the one that is applicable]:

	 	 	 	 	 	 	 
	 

	 	(A)
	 	o
	 	Describe requirements:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	(B)
	 	þ
	 	Is selected by the Employer in its sole discretion to receive an allocation of other Employer contributions
	 
	 	 	 	 	 	 
	 

	 	(C)
	 	o
	 	No requirements

	 	(iii)	 	Time of Allocation
	 
	 	 	 	Employer contributions, if made, shall be treated as allocated [select one]:

	 	 	 	 	 	 	 
	 

	 	(A)
	 	o
	 	As of the last day of the Plan Year
	 
	 	 	 	 	 	 
	 

	 	(B)
	 	þ
	 	At such time or times as the Employer shall determine in its sole discretion
	 
	 	 	 	 	 	 
	 

	 	(C)
	 	o
	 	Other:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

	 	(c)	 	No Employer Contributions
	 
	 	 	 	o Employer contributions are not permitted under the Plan.

- 9 -

 

	6.01	 	DISTRIBUTIONS
	 
	 	 	The timing and form of payment of distributions made from the Participant’s vested Account
shall be made in accordance with the elections made in this Section 6.01 of the Adoption
Agreement except when Section 9.6 of the Plan requires a six month delay for certain
distributions to Key Employees of publicly traded companies.

	 	(a)	 	Timing of Distributions

	 	(i)	 	All distributions shall commence in accordance with the following [choose one]:

	 	 	 	 	 	 	 
	 

	 	(A)
	 	þ
	 	As soon as administratively feasible following the distribution event
	 
	 	 	 	 	 	 
	 

	 	(B)
	 	o
	 	Monthly on specified day            [insert day]
	 
	 	 	 	 	 	 
	 

	 	(C)
	 	o
	 	Annually on specified month and day            [insert month and day]
	 
	 	 	 	 	 	 
	 

	 	(D)
	 	o
	 	Calendar quarter on specified month and day [          month of quarter (insert 1,2 or 3);            day (insert day)]

	 	(ii)	 	The timing of distributions as determined in Section 6.01(a)(i) shall
be modified by the adoption of:

	 	 	 	 	 	 	 
	 

	 	(A)
	 	þ
	 	Event Delay — Distribution events other than those
based on (i) a distribution event specified in
Section 6.01(b), or (ii) a payment made due to death
or disability made under Section 6.01(d) will be
treated as not having occurred for 6 months .
	 
	 	 	 	 	 	 
	 

	 	(B)
	 	o
	 	Hold Until Next Year — Distribution events other
than those based on Specified Date or Specified Age
will be treated as not having occurred for twelve
months from the date of the event if payment pursuant
to Section 6.01(a)(i) will thereby occur in the next
calendar year or on the first payment date in the
next calendar year in all other cases.
	 
	 	 	 	 	 	 
	 

	 	(C)
	 	o
	 	Immediate Processing — The timing method selected by
the Plan Sponsor under Section 6.01(a)(i) shall be
overridden for the following distribution events
[insert events]:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	(D)
	 	o
	 	Not applicable.

- 10 -

 

	 	(b)	 	Distribution Events
	 
	 	 	 	Participants may elect the following payment events and the associated form or forms of
payment. If multiple events are selected, the earliest to occur will trigger payment.
For installments, insert the range of available periods (e.g., 5-15) or insert the
periods available (e.g., 5,7,9).

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Lump Sum	 	Installments
	 
	 	 	 	 	 	 	 	 
	(i)

	 	þ
	 	Specified Date
	 	þ
	 	2 — 15 years
	 
	 	 	 	 	 	 	 	 
	(ii)

	 	o
	 	Specified Age
	 	     
	 	      years
	 
	 	 	 	 	 	 	 	 
	(iii)

	 	o
	 	Separation from Service
	 	o
	 	years
	 
	 	 	 	 	 	 	 	 
	(iv)

	 	þ
	 	Separation from Service plus 6 months
	 	þ
	 	2 — 15 years
	 
	 	 	 	 	 	 	 	 
	(v)

	 	o
	 	Separation from Service plus      
months [not to exceed       months]
	 	     
	 	      years
	 
	 	 	 	 	 	 	 	 
	(vi)

	 	o
	 	Retirement
	 	     
	 	      years
	 
	 	 	 	 	 	 	 	 
	(vii)

	 	o
	 	Retirement plus 6 months
	 	     
	 	      years
	 
	 	 	 	 	 	 	 	 
	(viii)

	 	o
	 	Retirement plus       months [not to
exceed       months]
	 	     
	 	      years
	 
	 	 	 	 	 	 	 	 
	(ix)

	 	o
	 	Later of Separation from Service or
Specified Age
	 	     
	 	      years
	 
	 	 	 	 	 	 	 	 
	(x)

	 	o
	 	Later of Separation from Service or
Specified Date
	 	     
	 	      years
	 
	 	 	 	 	 	 	 	 
	(xi)

	 	o
	 	Disability
	 	     
	 	      years
	 
	 	 	 	 	 	 	 	 
	(xii)

	 	o
	 	Death
	 	     
	 	      years
	 
	 	 	 	 	 	 	 	 
	(xiii)

	 	o
	 	Change in Control
	 	     
	 	      years

	 	 	 	The minimum deferral period for Specified Date or Specified Age event shall be
two years.
	 
	 	 	 	Installments may be paid [select each that applies]

	 	 	 
	o

	 	Monthly
	o

	 	Quarterly
	þ

	 	Annually

	 	(c)	 	Specified Date and Specified Age elections may not extend beyond age Not
Applicable [insert age or “Not Applicable” if no maximum age applies].

- 11 -

 

	 	(d)	 	Payment Election Override
	 
	 	 	 	Payment of the remaining vested balance of the Participant’s Account will automatically
occur at the time specified in Section 6.01(a) of the Adoption Agreement in the form
indicated upon the earliest to occur of the following events [check each event that
applies and for each event include only a single form of payment]:

	 	 	 	 	 	 	 	 	 
	 	 	EVENTS	 	 	 	FORM OF PAYMENT
	þ

	 	Separation from Service
provided that the Participant
has earned less than 4 Years
of Service
	 	þ
	 	Lump sum
	 	      Installments
	o

	 	Separation from

Service before Retirement
	 	     
	 	Lump sum
	 	      Installments
	þ

	 	Death
	 	þ
	 	Lump sum
	 	      Installments
	þ

	 	Disability (LTD only)
	 	þ
	 	Lump sum
	 	      Installments
	o

	 	Not Applicable	 	 	 	 	 	 

	 	(e)	 	Involuntary Cashouts

	 	 	 
	þ

	 	If the Participant’s vested Account and any Other Accounts at the time of his
Separation from Service does not exceed $15,000, then distribution of the
vested Account and the Other Accounts shall automatically be made in the form
of a single lump sum in accordance with Section 9.5 of the Plan.
	 
	 	 
	o

	 	There are no involuntary cashouts.

	 	(f)	 	Retirement

	 	 	 
	o

	 	Retirement shall be defined as a Separation from Service that occurs on or
after the Participant [insert description of requirements]:
	 
	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	þ

	 	No special definition of Retirement applies.

- 12 -

 

	 	(g)	 	Distribution Election Change
	 
	 	 	 	A Participant

	 	 	 
	þ

	 	Shall
	o

	 	Shall Not

	 	 	 	be permitted to modify a scheduled distribution date and/or payment option in
accordance with Section 9.2 of the Plan.
	 
	 	 	 	A Participant shall generally be permitted to elect such modification an
unlimited number of times as permitted by applicable law.
	 
	 	 	 	Administratively, allowable distribution events will be modified to reflect all
options necessary to fulfill the distribution change election provision.
	 
	 	(h)	 	Frequency of Elections
	 
	 	 	 	The Plan Sponsor

	 	 	 
	þ

	 	Has
	o

	 	Has Not

	 	 	 	Elected to permit annual elections of a time and form of payment for amounts deferred
under the Plan.

- 13 -

 

	7.01	 	VESTING

	 	(a)	 	Matching Contributions
	 
	 	 	 	The Participant’s vested interest in the amount credited to his Account attributable to
Matching Contributions shall be based on the following schedule:

	 	 	 	 	 	 	 	 	 
	o

	 	Years of Service
	 	Vesting %	 	 
	 

	 	 	0	 	 	     
	 	(insert ‘100’ if there is immediate vesting)
	 

	 	 	1	 	 	     	 	 
	 

	 	 	2	 	 	     	 	 
	 

	 	 	3	 	 	     	 	 
	 

	 	 	4	 	 	     	 	 
	 

	 	 	5	 	 	     	 	 
	 

	 	 	6	 	 	     	 	 
	 

	 	 	7	 	 	     	 	 
	 

	 	 	8	 	 	     	 	 
	 

	 	 	9	 	 	     	 	 

	 	 	 
	o

	 	Other:
	 

	 	                    
	 

	 	                    
	 
	 	 
	o

	 	Class year vesting applies.
	 

	 	                    
	 
	 	 
	þ

	 	Not applicable.

	 	(b)	 	Other Employer Contributions
	 
	 	 	 	The Participant’s vested interest in the amount credited to his Account attributable to
Employer contributions other than Matching Contributions shall be based on the following
schedule:

	 	 	 	 	 	 	 	 	 
	þ

	 	Years of Service
	 	Vesting %	 	 
	 

	 	 	0	 	 	100*
	 	(insert ‘100’ if there is immediate vesting)
	 

	 	 	1	 	 	     	 	 
	 

	 	 	2	 	 	     	 	 
	 

	 	 	3	 	 	     	 	 
	 

	 	 	4	 	 	     	 	 
	 

	 	 	5	 	 	     	 	 
	 

	 	 	6	 	 	     	 	 
	 

	 	 	7	 	 	     	 	 
	 

	 	 	8	 	 	     	 	 
	 

	 	 	9	 	 	     	 	 

	 	 	 
	o

	 	Other:
	 

	 	                    
	 

	 	                    
	 
	 	 
	o

	 	Class year vesting applies.
	 

	 	                    
	 
	 	 
	o

	 	Not applicable.

- 14 -

 

	(c)	 	Acceleration of Vesting
	 
	 	 	A Participant’s vested interest in his Account will automatically be 100% upon the
occurrence of the following events: [select the ones that are applicable]:

	 	 	 	 	 
	(i)

	 	o
	 	Death
	 
	 	 	 	 
	(ii)

	 	o
	 	Disability
	 
	 	 	 	 
	(iii)

	 	o
	 	Change in Control
	 
	 	 	 	 
	(iv)

	 	o
	 	Eligibility for Retirement
	 
	 	 	 	 
	(v)

	 	o
	 	Other:                     
	 

	 	 	 	                              
	 
	 	 	 	 
	(vi)

	 	þ
	 	Not applicable.

	 	(d)	 	Years of Service

	 	(i)	 	A Participant’s Years of Service shall include all service performed
for the Employer and

	 	 	 
	þ

	 	Shall
	o

	 	Shall Not

	 	 	 	include service performed for the Related Employer.
	 
	 	(ii)	 	Years of Service shall also include service performed for the following
entities:
	 
	 	 	 	                    
	 
	 	 	 	                    
	 
	 	 	 	                    
	 
	 	 	 	                    
	 
	 	 	 	                    
	 
	 	 	 	                    
	 
	 	(iii)	 	Years of Service shall be determined in accordance with (select one)

	 	 	 	 	 
	     (A)

	 	o
	 	The elapsed time method in Treas. Reg. Sec. 1.410(a)-7
	 
	 	 	 	 
	     (B)

	 	o
	 	The general method in DOL Reg. Sec. 2530.200b-1 through b-4
	 
	 	 	 	 
	     (C)

	 	þ
	 	The Participant’s Years of Service credited under [insert name of
plan] Juniper Networks, Inc. 401(k) Plan
	 

	 	 	 	                    
	 
	 	 	 	 
	     (D)

	 	o
	 	Other:                     
	 

	 	 	 	                              
	 

	 	 	 	                              

	 	 	 	 	 
	(iv)

	 	o
	 	Not applicable.

- 15 -

 

	8.01	 	UNFORESEEABLE EMERGENCY

	 	(a)	 	A withdrawal due to an Unforeseeable Emergency as defined in Section 2.24:
	 
	 	 	 	þ Will
	 
	 	 	 	o Will Not [if Unforeseeable Emergency withdrawals are not permitted, proceed to
Section 9.01]

	 	 	 	be allowed.
	 
	 	(b)	 	Upon a withdrawal due to an Unforeseeable Emergency, a Participant’s deferral
election for the remainder of the Plan Year:
	 
	 	 	 	þ Will
	 
	 	 	 	o Will Not

	 	 	 	be cancelled. If cancellation occurs, the Participant may resume participation in
accordance with Article 4 of the Plan.

- 16 -

 

	9.01	 	INVESTMENT DECISIONS
	 
	 	 	Investment decisions regarding the hypothetical amounts credited to a Participant’s Account
shall be made by [select one]:

	 	(a)	 	þ The Participant or his Beneficiary
	 
	 	(b)	 	o The Employer

- 17 -

 

	10.01	 	GRANTOR TRUST
	 
	 	 	The Employer [select one]:
	 
	 	 	þ Does
	 
	 	 	o Does Not
	 
	 	 	intend to establish a grantor trust in connection with the Plan.

- 18 -

 

	11.01	 	TERMINATION UPON CHANGE IN CONTROL
	 
	 	 	The Plan Sponsor
	 
	 	 	o Reserves
	 
	 	 	þ Does Not Reserve
	 
	 	 	the right to terminate the Plan and distribute all vested amounts credited to Participant
Accounts upon a Change in Control as described in Section 9.7.
	 
	11.02	 	AUTOMATIC DISTRIBUTION UPON CHANGE IN CONTROL
	 
	 	 	Distribution of the remaining vested balance of each Participant’s Account
	 
	 	 	o Shall
	 
	 	 	þ Shall Not
	 
	 	 	automatically be paid as a lump sum payment upon the occurrence of a Change in Control as
provided in Section 9.7.
	 
	11.03	 	CHANGE IN CONTROL
	 
	 	 	A Change in Control for Plan purposes includes the following [select each definition that
applies]:

	 	(a)	 	o A change in the ownership of the Employer as described in Section 9.7(c) of the
Plan.
	 
	 	(b)	 	o A change in the effective control of the Employer as described in Section
9.7(d) of the Plan.
	 
	 	(c)	 	o A change in the ownership of a substantial portion of the assets of the
Employer as described in Section 9.7(e) of the Plan.
	 
	 	(d)	 	þ Not Applicable.

- 19 -

 

	12.01	 	GOVERNING STATE LAW
	 
	 	 	The laws of California shall apply in the administration of the Plan to the extent
not preempted by ERISA.

- 20 -

 

EXECUTION PAGE

The Plan Sponsor has caused this Adoption Agreement to be executed this 13th day of June,
2008.

	 	 	 	 	 
	 

	 	PLAN SPONSOR:
	 	Juniper Networks, Inc.
	 

	 	 	 	 
	 

	 	By:
	 	/s/ Steven Rice
	 

	 	 	 	 
	 

	 	Title:
	 	Executive Vice President, Human Resources
	 

	 	 	 	 

- 21 -

 

Juniper Networks, Inc.

IMPORTANT NOTE

This document has not been approved by the Department of Labor, Internal Revenue Service or any
other governmental entity. An adopting Employer must determine whether the Plan is subject to the
Federal securities laws and the securities laws of the various states. An adopting Employer may
not rely on this document to ensure any particular tax consequences or to ensure that the Plan is
“unfunded and maintained primarily for the purpose of providing deferred compensation to a select
group of management or highly compensated employees” under Title I of the Employee Retirement
Income Security Act of 1974, as amended, with respect to the Employer’s particular situation.
Fidelity Employer Services Company, its affiliates and employees cannot provide you with legal
advice in connection with the execution of this document. This document should be reviewed by the
Employer’s attorney prior to execution.

January 2008

 

 

TABLE OF CONTENTS

	 	 	 
	PREAMBLE
	 
	 	 
	ARTICLE 1 — GENERAL
	1.1

	 	Plan
	1.2

	 	Effective Dates
	1.3

	 	Amounts Not Subject to Code Section 409A
	 
	 	 
	ARTICLE 2 — DEFINITIONS
	2.1

	 	Account
	2.2

	 	Administrator
	2.3

	 	Adoption Agreement
	2.4

	 	Beneficiary
	2.5

	 	Board or Board of Directors
	2.6

	 	Bonus
	2.7

	 	Change in Control
	2.8

	 	Code
	2.9

	 	Compensation
	2.10

	 	Director
	2.11

	 	Disabled
	2.12

	 	Eligible Employee
	2.13

	 	Employer
	2.14

	 	ERISA
	2.15

	 	Key Employee
	2.16

	 	Other Accounts
	2.17

	 	Participant
	2.18

	 	Plan
	2.19

	 	Plan Sponsor
	2.20

	 	Plan Year
	2.21

	 	Related Employer
	2.22

	 	Retirement
	2.23

	 	Separation from Service
	2.24

	 	Unforeseeable Emergency
	2.25

	 	Valuation Date
	2.26

	 	Years of Service
	 
	 	 
	ARTICLE 3 — PARTICIPATION
	3.1

	 	Participation
	3.2

	 	Termination of Participation

i

 

	 	 	 
	ARTICLE 4 — PARTICIPANT ELECTIONS
	4.1

	 	Deferral Agreement
	4.2

	 	Amount of Deferral
	4.3

	 	Timing of Election to Defer
	4.4

	 	Election of Payment Schedule and Form of Payment
	 
	 	 
	ARTICLE 5 — EMPLOYER CONTRIBUTIONS
	5.1

	 	Matching Contributions
	5.2

	 	Other Contributions
	 
	 	 
	ARTICLE 6 — ACCOUNTS AND CREDITS
	6.1

	 	Establishment of Account
	6.2

	 	Credits to Account
	 
	 	 
	ARTICLE 7 — INVESTMENT OF CONTRIBUTIONS
	7.1

	 	Investment Options
	7.2

	 	Adjustment of Accounts
	 
	 	 
	ARTICLE 8 — RIGHT TO BENEFITS
	8.1

	 	Vesting
	8.2

	 	Death
	8.3

	 	Disability
	 
	 	 
	ARTICLE 9 — DISTRIBUTION OF BENEFITS
	9.1

	 	Amount of Benefits
	9.2

	 	Method and Timing of Distributions
	9.3

	 	Unforeseeable Emergency
	9.4

	 	Payment Election Overrides
	9.5

	 	Cashouts of Amounts Not Exceeding Stated Limit
	9.6

	 	Required Delay in Payment to Key Employees
	9.7

	 	Change in Control
	9.8

	 	Permissible Delays in Payment
	9.9

	 	Permitted Acceleration of Payment

ii

 

	 	 	 
	ARTICLE 10 — AMENDMENT AND TERMINATION
	10.1

	 	Amendment by Plan Sponsor
	10.2

	 	Plan Termination Following Change in Control or Corporate Dissolution
	10.3

	 	Other Plan Terminations
	 
	 	 
	ARTICLE 11 — THE TRUST
	11.1

	 	Establishment of Trust
	11.2

	 	Grantor Trust
	11.3

	 	Investment of Trust Funds
	 
	 	 
	ARTICLE 12 — PLAN ADMINISTRATION
	12.1

	 	Powers and Responsibilities of the Administrator
	12.2

	 	Claims and Review Procedures
	12.3

	 	Plan Administrative Costs
	 
	 	 
	ARTICLE 13 — MISCELLANEOUS
	13.1

	 	Unsecured General Creditor of the Employer
	13.2

	 	Employer’s Liability
	13.3

	 	Limitation of Rights
	13.4

	 	Anti-Assignment
	13.5

	 	Facility of Payment
	13.6

	 	Notices
	13.7

	 	Tax Withholding
	13.8

	 	Indemnification
	13.9

	 	Successors
	13.10

	 	Disclaimer
	13.11

	 	Governing Law

iii

 

PREAMBLE

The Plan is intended to be a “plan which is unfunded and is maintained by an employer primarily for
the purpose of providing deferred compensation for a select group of management or highly
compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the
Employee Retirement Income Security Act of 1974, as amended, or an “excess benefit plan” within the
meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended, or a
combination of both. The Plan is further intended to conform with the requirements of Internal
Revenue Code Section 409A and the final regulations issued thereunder and shall be interpreted,
implemented and administered in a manner consistent therewith.

 

 

ARTICLE 1 — GENERAL

	1.1	 	Plan. The Plan will be referred to by the name specified in the Adoption Agreement.
	 
	1.2	 	Effective Dates.

	 	(a)	 	Original Effective Date. The Original Effective Date is the date as
of which the Plan was initially adopted.
	 
	 	(b)	 	Amendment Effective Date. The Amendment Effective Date is the date
specified in the Adoption Agreement as of which the Plan is amended and restated.
Except to the extent otherwise provided herein or in the Adoption Agreement, the Plan
shall apply to amounts deferred and benefit payments made on or after the Amendment
Effective Date.
	 
	 	(c)	 	Special Effective Date. A Special Effective Date may apply to any
given provision if so specified in Appendix A of the Adoption Agreement. A Special
Effective Date will control over the Original Effective Date or Amendment Effective
Date, whichever is applicable, with respect to such provision of the Plan.

	1.3	 	Amounts Not Subject to Code Section 409A
	 
	 	 	Except as otherwise indicated by the Plan Sponsor in Section 1.01 of the Adoption
Agreement, amounts deferred before January 1, 2005 that are earned and vested on December
31, 2004 will be separately accounted for and administered in accordance with the terms of
the Plan as in effect on December 31, 2004.

1-1

 

ARTICLE 2 — DEFINITIONS

Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the
context clearly indicates otherwise. Wherever used herein, the following terms have the meanings
set forth below, unless a different meaning is clearly required by the context:

	2.1	 	“Account” means an account established for the purpose of recording amounts credited on
behalf of a Participant and any income, expenses, gains, losses or distributions included
thereon. The Account shall be a bookkeeping entry only and shall be utilized solely as a
device for the measurement and determination of the amounts to be paid to a Participant or to
the Participant’s Beneficiary pursuant to the Plan.
	 
	2.2	 	“Administrator” means the person or persons designated by the Plan Sponsor in Section 1.05 of
the Adoption Agreement to be responsible for the administration of the Plan. If no
Administrator is designated in the Adoption Agreement, the Administrator is the Plan Sponsor.
	 
	2.3	 	“Adoption Agreement” means the agreement adopted by the Plan Sponsor that establishes the
Plan.
	 
	2.4	 	“Beneficiary” means the persons, trusts, estates or other entities entitled under Section 8.2
to receive benefits under the Plan upon the death of a Participant.
	 
	2.5	 	“Board” or “Board of Directors” means the Board of Directors of the Plan Sponsor.
	 
	2.6	 	“Bonus” means an amount of incentive remuneration payable by the Employer to a Participant.
	 
	2.7	 	“Change in Control” means the occurrence of an event involving the Plan Sponsor that is
described in Section 9.7.
	 
	2.8	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	2.9	 	“Compensation” has the meaning specified in Section 3.01 of the Adoption Agreement.
	 
	2.10	 	“Director” means a non-employee member of the Board who has been designated by the Employer
as eligible to participate in the Plan.

2-1

 

	2.11	 	“Disabled” means a determination by the Administrator that the Participant is either (a)
unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (b) is, by reason of any medically
determinable physical or mental impairment which can be expected to result in death or last
for a continuous period of not less than twelve months, receiving income replacement benefits
for a period of not less than three months under an accident and health plan covering
employees of the Employer. A Participant will be considered Disabled if he is determined to
be totally disabled by the Social Security Administration or the Railroad Retirement Board.
	 
	2.12	 	“Eligible Employee” means an employee of the Employer who satisfies the requirements in
Section 2.01 of the Adoption Agreement.
	 
	2.13	 	“Employer” means the Plan Sponsor and any other entity which is authorized by the Plan
Sponsor to participate in and, in fact, does adopt the Plan.
	 
	2.14	 	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
	 
	2.15	 	“Key Employee” means all Participants.
	 
	2.16	 	“Other Accounts” means any accounts under any other non-qualified deferred compensation plan
required to be aggregated with the Plan pursuant to Treasury Regulation §1.409A-1(c)(2).
	 
	2.17	 	“Participant” means an Eligible Employee or Director who commences participation in the Plan
in accordance with Article 3.
	 
	2.18	 	“Plan” means the unfunded plan of deferred compensation set forth herein, including the
Adoption Agreement and any trust agreement, as adopted by the Plan Sponsor and as amended from
time to time.
	 
	2.19	 	“Plan Sponsor” means the entity identified in Section 1.03 of the Adoption Agreement or any
successor by merger, consolidation or otherwise.
	 
	2.20	 	“Plan Year” means the period identified in Section 1.02 of the Adoption Agreement.
	 
	2.21	 	“Related Employer” means the Employer and (a) any corporation that is a member of a
controlled group of corporations as defined in Code Section 414(b) that includes the Employer
and (b) any trade or business that is under common control as defined in Code Section 414(c)
that includes the Employer.

2-2

 

	2.22	 	“Retirement” has the meaning specified in 6.01(f) of the Adoption Agreement.
	 
	2.23	 	“Separation from Service” means the date that the Participant dies, retires or otherwise has
a termination of employment with respect to all entities comprising the Related Employer. A
Separation from Service does not occur if the Participant is on military leave, sick leave or
other bona fide leave of absence if the period of leave does not exceed six months or such
longer period during which the Participant’s right to re-employment is provided by statute or
contract. If the period of leave exceeds six months and the Participant’s right to
re-employment is not provided either by statute or contract, a Separation from Service will be
deemed to have occurred on the first day following the six-month period. If the period of
leave is due to any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than six
months, where the impairment causes the Participant to be unable to perform the duties of his
or her position of employment or any substantially similar position of employment, a 29 month
period of absence may be substituted for the six month period.
	 
	 	 	Whether a termination of employment has occurred is based on whether the facts and
circumstances indicate that the Related Employer and the Participant reasonably anticipated
that no further services would be performed after a certain date or that the level of bona
fide services the Participant would perform after such date (whether as an employee or as
an independent contractor) would permanently decrease to no more than 20 percent of the
average level of bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding 36 month period (or the full period of services
to the Related Employer if the employee has been providing services to the Related Employer
for less than 36 months). If a Participant continues to provide services to a Related
Employer in a capacity other than as an employee, the Participant will not be deemed to
have a termination of employment if the Participant is providing services at an annual rate
that is at least 50 percent of the services rendered by such individual, on average, during
the immediately preceding 36 month period of employment (or such lesser period of
employment) and the annual remuneration for such services is at least 50 percent of the
average annual remuneration earned during the such 36 calendar months of employment (or
such lesser period of employment).
	 
	 	 	An independent contractor is considered to have experienced a Separation from Service with
the Related Employer upon the expiration of the contract (or, in the case of more than one
contract, all contracts) under which services are performed for the Related Employer if the
expiration

2-3

 

	 	 	constitutes a good-faith and complete termination of the contractual relationship.
	 
	 	 	If a Participant provides services as both an employee and an independent contractor of the
Related Employer, the Participant must separate from service both as an employee and as an
independent contractor to be treated as having incurred a Separation from Service. If a
Participant ceases providing services as an independent contractor and begins providing
services as an employee, or ceases providing services as an employee and begins providing
services as an independent contractor, the Participant will not be considered to have
experienced a Separation from Service until the Participant has ceased providing services
in both capacities.
	 
	 	 	If a Participant provides services both as an employee and as a member of the board of
directors of a corporate Related Employer (or an analogous position with respect to a
noncorporate Related Employer), the services provided as a director are not taken into
account in determining whether the Participant has incurred a Separation from Service as an
employee for purposes of a nonqualified deferred compensation plan in which the Participant
participates as an employee that is not aggregated under Code Section 409A with any plan in
which the Participant participates as a director.
	 
	 	 	If a Participant provides services both as an employee and as a member of the board of
directors of a corporate related Employer (or an analogous position with respect to a
noncorporate Related Employer), the services provided as an employee are not taken into
account in determining whether the Participant has experienced a Separation from Service as
a director for purposes of a nonqualified deferred compensation plan in which the
Participant participates as a director that is not aggregated under Code Section 409A with
any plan in which the Participant participates as an employee.
	 
	 	 	All determinations of whether a Separation from Service has occurred will be made in a
manner consistent with Code Section 409A and the final regulations thereunder.

	2.24	 	“Unforeseeable Emergency” means a severe financial hardship of the Participant resulting from
an illness or accident of the Participant, the Participant’s spouse, the Participant’s
Beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to
Code section 152(b)(i), (b)(2) and (d)(i)(B); 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.

2-4

 

	2.25	 	“Valuation Date” means each business day of the Plan Year.
	 
	2.26	 	“Years of Service” means each one year period for which the Participant receives service
credit in accordance with the provisions of Section 7.01(d) of the Adoption Agreement.

2-5

 

ARTICLE 3 — PARTICIPATION

	3.1	 	Participation. The Participants in the Plan shall be those Directors and employees of the
Employer who satisfy the requirements of Section 2.01 of the Adoption Agreement.
	 
	3.2	 	Termination of Participation. The Administrator may terminate a Participant’s participation
in the Plan in a manner consistent with Code Section 409A. If the Employer terminates a
Participant’s participation before the Participant experiences a Separation from Service the
Participant’s vested Accounts shall be paid in accordance with the provisions of Article 9.

3-1

 

ARTICLE 4 — PARTICIPANT ELECTIONS

	4.1	 	Deferral Agreement. If permitted by the Plan Sponsor in accordance with Section 4.01 of the
Adoption Agreement, each Eligible Employee and Director may elect to defer his Compensation
within the meaning of Section 3.01 of the Adoption Agreement by executing in writing or
electronically, a deferral agreement in accordance with rules and procedures established by
the Administrator and the provisions of this Article 4.
	 
	 	 	A new deferral agreement must be timely executed for each Plan Year during which the
Eligible Employee or Director desires to defer Compensation. An Eligible Employee or
Director who does not timely execute a deferral agreement shall be deemed to have elected
zero deferrals of Compensation for such Plan Year.
	 
	 	 	A deferral agreement may be changed or revoked during the period specified by the
Administrator. Except as provided in Section 9.3 or in Section 4.01(c) of the Adoption
Agreement, a deferral agreement becomes irrevocable at the close of the specified period.
	 
	4.2	 	Amount of Deferral. An Eligible Employee or Director may elect to defer Compensation in any
amount permitted by Section 4.01(a) of the Adoption Agreement.
	 
	4.3	 	Timing of Election to Defer. Each Eligible Employee or Director who desires to defer
Compensation otherwise payable during a Plan Year must execute a deferral agreement within the
period preceding the Plan Year specified by the Administrator. Each Eligible Employee who
desires to defer Compensation that is a Bonus must execute a deferral agreement within the
period preceding the Plan Year during which the Bonus is earned that is specified by the
Administrator, except that if the Bonus can be treated as performance based compensation as
described in Code Section 409A(a)(4)(B)(iii), the deferral agreement may be executed within
the period specified by the Administrator, which period, in no event, shall end after the date
which is six months prior to the end of the period during which the Bonus is earned, provided
the Participant has performed services continuously from the later of the beginning of the
performance period or the date the performance criteria are established through the date the
Participant executed the deferral agreement and provided further that the compensation has not
yet become ‘readily ascertainable’ with the meaning of Reg. Sec 1.409A-2(a)(8). In addition,
if the Compensation qualifies as ‘fiscal year compensation’ within the meaning of Reg. Sec.
1.409A -2(a)(6), the deferral agreement may be made not later than the

4-1

 

	 	 	end of the Employer’s taxable year immediately preceding the first taxable year of the
Employer in which any services are performed for which such Compensation is payable.

	 	 	Except as otherwise provided below, an employee who is classified or designated as an
Eligible Employee during a Plan Year or a Director who is designated as eligible to
participate during a Plan Year may elect to defer Compensation otherwise payable during the
remainder of such Plan Year in accordance with the rules of this Section 4.3 by executing a
deferral agreement within the thirty (30) day period beginning on the date the employee is
classified or designated as an Eligible Employee or the date the Director is designated as
eligible, whichever is applicable, if permitted by Section 4.01(b)(ii) of the Adoption
Agreement. If Compensation is based on a specified performance period that begins before
the Eligible Employee or Director executes his deferral agreement, the election will be
deemed to apply to the portion of such Compensation equal to the total amount of
Compensation for the performance period multiplied by the ratio of the number of days
remaining in the performance period after the election becomes irrevocable and effective
over the total number of days in the performance period. The rules of this paragraph shall
not apply unless the Eligible Employee or Director can be treated as initially eligible in
accordance with Reg. Sec. 1.409A-2(a)(7).
	 
	4.4	 	Election of Payment Schedule and Form of Payment.
	 
	 	 	All elections of a payment schedule and a form of payment will be made in accordance with
rules and procedures established by the Administrator and the provisions of this Section
4.4.

(a) If the Plan Sponsor has elected to permit annual distribution elections in accordance
with Section 6.01(h) of the Adoption Agreement the following rules apply. At the time an
Eligible Employee or Director completes a deferral agreement, the Eligible Employee or
Director must elect a distribution event (which includes a specified time) and a form of
payment for the Compensation subject to the deferral agreement from among the options the
Plan Sponsor has made available for this purpose and which are specified in 6.01(b) of the
Adoption Agreement. Prior to the time required by Reg. Sec. 1.409A-2, the Eligible
Employee or Director shall elect a distribution event (which includes a specified time) and
a form of payment for any Employer contributions that may be credited to the Participant’s
Account during the Plan Year. If an Eligible Employee or Director fails to elect a
distribution event, he shall be deemed to have elected Separation from Service as the
distribution event. If he fails to elect a form of payment, he shall be deemed to have
elected a lump sum form of payment.

4-2

 

(b) If the Plan Sponsor has elected not to permit annual distribution elections in
accordance with Section 6.01(h) of the Adoption Agreement the following rules apply. At
the time an Eligible Employee or Director first completes a deferral agreement but in no
event later than the time required by Reg. Sec. 1.409A-2, the Eligible Employee or Director
must elect a distribution event (which includes a specified time) and a form of payment for
amounts credited to his Account from among the options the Plan Sponsor has made available
for this purpose and which are specified in Section 6.01(b) of the Adoption Agreement. If
an Eligible Employee or Director fails to elect a distribution event, he shall be deemed to
have elected Separation from Service in the distribution event. If the fails to elect a
form of payment, he shall be deemed to have elected a lump sum form of payment.

4-3

 

ARTICLE 5 — EMPLOYER CONTRIBUTIONS

	5.1	 	Matching Contributions. If elected by the Plan Sponsor in Section 5.01(a) of the Adoption
Agreement, the Employer will credit the Participant’s Account with a matching contribution
determined in accordance with the formula specified in Section 5.01(a) of the Adoption
Agreement. The matching contribution will be treated as allocated to the Participant’s
Account at the time specified in Section 5.01(a)(iii) of the Adoption Agreement.
	 
	5.2	 	Other Contributions. If elected by the Plan Sponsor in Section 5.01(b) of the Adoption
Agreement, the Employer will credit the Participant’s Account with a contribution determined
in accordance with the formula or method specified in Section 5.01(b) of the Adoption
Agreement. The contribution will be treated as allocated to the Participant’s Account at the
time specified in Section 5.01(b)(iii) of the Adoption Agreement.

5-1

 

ARTICLE 6 — ACCOUNTS AND CREDITS

	6.1	 	Establishment of Account. For accounting and computational purposes only, the Administrator
will establish and maintain an Account on behalf of each Participant which will reflect the
credits made pursuant to Section 6.2, distributions or withdrawals, along with the earnings,
expenses, gains and losses allocated thereto, attributable to the hypothetical investments
made with the amounts in the Account as provided in Article 7. The Administrator will
establish and maintain such other records and accounts, as it decides in its discretion to be
reasonably required or appropriate to discharge its duties under the Plan.
	 
	6.2	 	Credits to Account. A Participant’s Account will be credited for each Plan Year with the
amount of his elective deferrals under Section 4.1 at the time the amount subject to the
deferral election would otherwise have been payable to the Participant and the amount of
Employer contributions treated as allocated on his behalf under Article 5.

6-1

 

ARTICLE 7 — INVESTMENT OF CONTRIBUTIONS

	7.1	 	Investment Options. The amount credited to each Account shall be treated as invested in the
investment options designated for this purpose by the Administrator.
	 
	7.2	 	Adjustment of Accounts. The amount credited to each Account shall be adjusted for
hypothetical investment earnings, expenses, gains or losses in an amount equal to the
earnings, expenses, gains or losses attributable to the investment options selected by the
party designated in Section 9.01 of the Adoption Agreement from among the investment options
provided in Section 7.1. If permitted by Section 9.01 of the Adoption Agreement, a
Participant (or the Participant’s Beneficiary after the death of the Participant) may, in
accordance with rules and procedures established by the Administrator, select the investments
from among the options provided in Section 7.1 to be used for the purpose of calculating
future hypothetical investment adjustments to the Account or to future credits to the Account
under Section 6.2 effective as of the Valuation Date coincident with or next following notice
to the Administrator. Each Account shall be adjusted as of each Valuation Date to reflect:
(a) the hypothetical earnings, expenses, gains and losses described above; (b) amounts
credited pursuant to Section 6.2; and (c) distributions or withdrawals. In addition, each
Account may be adjusted for its allocable share of the hypothetical costs and expenses
associated with the maintenance of the hypothetical investments provided in Section 7.1.

7-1

 

ARTICLE 8 — RIGHT TO BENEFITS

	8.1	 	Vesting. A Participant, at all times, has the 100% nonforfeitable interest in the amounts
credited to his Account attributable to his elective deferrals made in accordance with Section
4.1.
	 
	 	 	A Participant’s right to the amounts credited to his Account attributable to Employer
contributions made in accordance with Article 5 shall be determined in accordance with the
relevant schedule and provisions in Section 7.01 of the Adoption Agreement. Upon a
Separation from Service and after application of the provisions of Section 7.01 of the
Adoption Agreement, the Participant shall forfeit the nonvested portion of his Account.
	 
	8.2	 	Death. The Plan Sponsor may elect to accelerate vesting upon the death of the Participant in
accordance with Section 7.01(c) of the Adoption Agreement and/or to accelerate distributions
upon Death in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement.
If the Plan Sponsor does not elect to accelerate distributions upon death in accordance with
Section 6.01(b) or Section 6.01(d) of the Adoption Agreement, the vested amount credited to
the Participant’s Account will be paid in accordance with the provisions of Article 9.
	 
	 	 	A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation
of Beneficiary or Beneficiaries in accordance with rules and procedures established by the
Administrator.
	 
	 	 	A copy of the death notice or other sufficient documentation must be filed with and
approved by the Administrator. If upon the death of the Participant there is, in the
opinion of the Administrator, no designated Beneficiary for part or all of the
Participant’s vested Account, such amount will be paid to his estate (such estate shall be
deemed to be the Beneficiary for purposes of the Plan) in accordance with the provisions of
Article 9.
	 
	8.3	 	Disability. If the Plan Sponsor has elected to accelerate vesting upon the occurrence of a
Disability in accordance with Section 7.01(c) of the Adoption Agreement and/or to permit
distributions upon Disability in accordance with Section 6.01(b) or Section 6.01(d) of the
Adoption Agreement, the determination of whether a Participant has incurred a Disability shall
be made by the Administrator in its sole discretion in a manner consistent with the
requirements of Code Section 409A.

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ARTICLE 9 — DISTRIBUTION OF BENEFITS

	9.1	 	Amount of Benefits. The vested amount credited to a Participant’s Account as determined
under Articles 6, 7 and 8 shall determine and constitute the basis for the value of benefits
payable to the Participant under the Plan.
	 
	9.2	 	Method and Timing of Distributions. Except as otherwise provided in this Article 9,
distributions under the Plan shall be made in accordance with the elections made or deemed
made by the Participant under Article 4. Subject to the provisions of Section 9.6 requiring a
six month delay for certain distributions to Key Employees, distributions following a payment
event shall commence at the time specified in Section 6.01(a) of the Adoption Agreement. If
permitted by Section 6.01(g) of the Adoption Agreement, a Participant may elect, at least
twelve months before a scheduled distribution event, to delay the payment date for a minimum
period of sixty months from the originally scheduled date of payment, provided, however, that
in no event shall such election delay the final installment payment beyond the maximum fifteen
years specified in Section 6.01(b) of the Adoption Agreement. The distribution election
change must be made in accordance with procedures and rules established by the Administrator.
The Participant may, at the same time the date of payment is deferred, change the form of
payment but such change in the form of payment may not effect an acceleration of payment in
violation of Code Section 409A or the provisions of Reg. Sec. 1.409A-2(b). For purposes of
this Section 9.2, a series of installment payments is always treated as a single payment and
not as a series of separate payments.
	 
	9.3	 	Unforeseeable Emergency. A Participant may request a distribution due to an Unforeseeable
Emergency if the Plan Sponsor has elected to permit Unforeseeable Emergency withdrawals under
Section 8.01(a) of the Adoption Agreement. The request must be in writing and must be
submitted to the Administrator along with evidence that the circumstances constitute an
Unforeseeable Emergency. The Administrator has the discretion to require whatever evidence it
deems necessary to determine whether a distribution is warranted, and may require the
Participant to certify that the need cannot be met from other sources reasonably available to
the Participant. Whether a Participant has incurred an Unforeseeable Emergency will be
determined by the Administrator on the basis of the relevant facts and circumstances in its
sole discretion, but, in no event, will an Unforeseeable Emergency be deemed to exist if the
hardship can be relieved: (a) through reimbursement or compensation by

9-1

 

	 	 	insurance or otherwise, (b) by liquidation of the Participant’s assets to the extent such
liquidation would not itself cause severe financial hardship, or (c) by cessation of
deferrals under the Plan. A distribution due to an Unforeseeable Emergency must be limited
to the amount reasonably necessary to satisfy the emergency need and may include any
amounts necessary to pay any federal, state, foreign or local income taxes and penalties
reasonably anticipated to result from the distribution. The distribution will be made in
the form of a single lump sum cash payment. If permitted by Section 8.01(b) of the
Adoption Agreement, a Participant’s deferral elections for the remainder of the Plan Year
will be cancelled upon a withdrawal due to an Unforeseeable Emergency. If the payment of
all or any portion of the Participant’s vested Account is being delayed in accordance with
Section 9.6 at the time he experiences an Unforeseeable Emergency, the amount being delayed
shall not be subject to the provisions of this Section 9.3 until the expiration of the six
month period of delay required by Section 9.6.

	9.4	 	Payment Election Overrides. If the Plan Sponsor has elected one or more payment election
overrides in accordance with Section 6.01(d) of the Adoption Agreement, the following
provisions apply. Upon the occurrence of the first event selected by the Plan Sponsor, the
remaining vested amount credited to the Participant’s Account shall be paid in the form
designated to the Participant or his Beneficiary regardless of whether the Participant had
made different elections of time and /or form of payment or whether the Participant was
receiving installment payments at the time of the event.
	 
	9.5	 	Cashouts Of Amounts Not Exceeding Stated Limit. If the vested amount credited to the
Participant’s Account and Other Accounts does not exceed the limit established for this
purpose by the Plan Sponsor in Section 6.01(e) of the Adoption Agreement at the time he
undergoes a Separation from Service with the Related Employer for any reason, the Employer
shall distribute such amount to the Participant at the time specified in Section 6.01(a) of
the Adoption Agreement in a single lump sum cash payment following such Separation from
Service regardless of whether the Participant had made different elections of time or form of
payment as to the vested amount credited to his Account or whether the Participant was
receiving installments at the time of such termination. A Participant’s Account, for purposes
of this Section 9.5, shall include any amounts described in Section 1.3. If a distribution
under this Section 9.5 is delayed pursuant to Section 9.6, then in the event the Account and
Other Accounts have increased in value so that their aggregate value exceeds the amount
specified in Section 6.01(e) of the Adoption Agreement, then such Account and Other Accounts
shall instead be paid in accordance with the applicable plan and plans and deferral elections

9-2

 

	 	 	thereunder.

	9.6	 	Required Delay in Payment to Key Employees. Except as otherwise provided in this Section
9.6, a distribution made on account of Separation from Service (or Retirement, if applicable)
to a Participant who is a Key Employee as of the date of his Separation from Service (or
Retirement, if applicable) shall not be made before the date which is six months after the
Separation from Service (or Retirement, if applicable). All Participants shall be treated as
Key Employees.
	 
	 	 	The six month delay does not apply to payments described in Section 9.9(a), (b) or (d)
or to payments that occur after the death of the Participant. If the payment of all or any
portion of the Participant’s vested Account is being delayed in accordance with this
Section 9.6 at the time he incurs a Disability which would otherwise require a distribution
under the terms of the Plan, no amount shall be paid until the expiration of the six month
period of delay required by this Section 9.6.
	 
	9.7	 	Change in Control. If the Plan Sponsor has elected to permit distributions upon a Change in
Control, the following provisions shall apply. A distribution made upon a Change in Control
will be made at the time specified in Section 6.01(a) of the Adoption Agreement in the form
elected by the Participant in accordance with the procedures described in Article 4.
Alternatively, if the Plan Sponsor has elected in accordance with Section 11.02 of the
Adoption Agreement to require distributions upon a Change in Control, the Participant’s
remaining vested Account shall be paid to the Participant or the Participant’s Beneficiary at
the time specified in Section 6.01(a) of the Adoption Agreement as a single lump sum payment.
A Change in Control, for purposes of the Plan, will occur upon a change in the ownership of
the Plan Sponsor, a change in the effective control of the Plan Sponsor or a change in the
ownership of a substantial portion of the assets of the Plan Sponsor, but only if elected by
the Plan Sponsor in Section 11.03 of the Adoption Agreement. The Plan Sponsor, for this
purpose, includes any corporation identified in this Section 9.7. All distributions made in
accordance with this Section 9.7 are subject to the provisions of Section 9.6.
	 
	 	 	If a Participant continues to make deferrals in accordance with Article 4 after he has
received a distribution due to a Change in Control, the residual amount payable to the
Participant shall be paid at the time and in the form specified in the elections he makes
in accordance with Article 4 or upon his death or Disability as provided in Article 8.
	 
	 	 	Whether a Change in Control has occurred will be determined by the

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	 	 	Administrator in accordance with the rules and definitions set forth in this Section 9.7.
A distribution to the Participant will be treated as occurring upon a Change in Control if
the Plan Sponsor terminates the Plan in accordance with Section 10.2 and distributes the
Participant’s benefits within twelve months of a Change in Control as provided in Section
10.3.

	 	(a)	 	Relevant Corporations. To constitute a Change in Control for purposes of the
Plan, the event must relate to (i) the corporation for whom the Participant is
performing services at the time of the Change in Control, (ii) the corporation that is
liable for the payment of the Participant’s benefits under the Plan (or all
corporations liable if more than one corporation is liable) but only if either the
deferred compensation is attributable to the performance of services by the
Participant for such corporation (or corporations) or there is a bona fide business
purpose for such corporation (or corporations) to be liable for such payment and, in
either case, no significant purpose of making such corporation (or corporations)
liable for such payment is the avoidance of federal income tax, or (iii) a corporation
that is a majority shareholder of a corporation identified in (i) or (ii), or any
corporation in a chain of corporations in which each corporation is a majority
shareholder of another corporation in the chain, ending in a corporation identified in
(i) or (ii). A majority shareholder is defined as a shareholder owning more than
fifty percent (50%) of the total fair market value and voting power of such
corporation.
	 
	 	(b)	 	Stock Ownership. Code Section 318(a) applies for purposes of determining
stock ownership. Stock underlying a vested option is considered owned by the
individual who owns the vested option (and the stock underlying an unvested option is
not considered owned by the individual who holds the unvested option). If, however, a
vested option is exercisable for stock that is not substantially vested (as defined by
Treasury Regulation Section 1.83-3(b) and (j)) the stock underlying the option is not
treated as owned by the individual who holds the option.
	 
	 	(c)	 	Change in the Ownership of a Corporation. A change in the ownership of a
corporation occurs on the date that any one person or more than one person acting as a
group, acquires ownership of stock of the corporation that, together with stock held
by such person or group, constitutes more than fifty percent (50%) of the total fair
market value or total voting power of the stock of such corporation. If any one
person or more than one person acting as a group is considered to own more than fifty
percent (50%) of the total fair market value or total voting power of the stock of a
corporation, the acquisition of additional stock by the same person or persons is not
considered to cause a change in the ownership of the corporation (or

9-4

 

	 	 	 	to cause a change in the effective control of the corporation as discussed below in
Section 9.7(d)). An increase in the percentage of stock owned by any one person, or
persons acting as a group, as a result of a transaction in which the corporation
acquires its stock in exchange for property will be treated as an acquisition of
stock. Section 9.7(c) applies only when there is a transfer of stock of a
corporation (or issuance of stock of a corporation) and stock in such corporation
remains outstanding after the transaction. For purposes of this Section 9.7(c),
persons will not be considered to be acting as a group solely because they purchase
or own stock of the same corporation at the same time or as a result of a public
offering. Persons will, however, be considered to be acting as a group if they are
owners of a corporation that enters into a merger, consolidation, purchase or
acquisition of stock, or similar business transaction with the corporation. If a
person, including an entity, owns stock in both corporations that enter into a
merger, consolidation, purchase or acquisition of stock, or similar transaction,
such shareholder is considered to be acting as a group with other shareholders in a
corporation prior to the transaction giving rise to the change and not with respect
to the ownership interest in the other corporation.
	 
	 	(d)	 	Change in the effective control of a corporation. A change in the effective
control of a corporation occurs on the date that either (i) any one person, or more
than one person acting as a group, acquires (or has acquired during the twelve month
period ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the corporation possessing thirty percent (30%) or more of the
total voting power of the stock of such corporation, or (ii) a majority of members of
the corporation’s board of directors is replaced during any twelve month period by
directors whose appointment or election is not endorsed by a majority of the members
of the corporation’s board of directors prior to the date of the appointment or
election, provided that for purposes of this paragraph (ii), the term corporation
refers solely to the relevant corporation identified in Section 9.7(a) for which no
other corporation is a majority shareholder for purposes of Section 9.7(a). In the
absence of an event described in Section 9.7(d)(i) or (ii), a change in the effective
control of a corporation will not have occurred. A change in effective control may
also occur in any transaction in which either of the two corporations involved in the
transaction has a change in the ownership of such corporation as described in Section
9.7(c) or a change in the ownership of a substantial portion of the assets of such
corporation as described in Section 9.7(e). If any one person, or more than one
person acting as a group, is considered to effectively control a corporation within
the meaning of this Section 9.7(d), the acquisition of additional control of the
corporation by the

9-5

 

	 	 	 	same person or persons is not considered to cause a change in the effective control
of the corporation or to cause a change in the ownership of the corporation within
the meaning of Section 9.7(c). For purposes of this Section 9.7(d), persons will or
will not be considered to be acting as a group in accordance with rules similar to
those set forth in Section 9.7(c) with the following exception. If a person,
including an entity, owns stock in both corporations that enter into a merger,
consolidation, purchase or acquisition of stock, or similar transaction, such
shareholder is considered to be acting as a group with other shareholders in a
corporation only with respect to the ownership in that corporation prior to the
transaction giving rise to the change and not with respect to the ownership interest
in the other corporation.
	 
	 	(e)	 	Change in the ownership of a substantial portion of a corporation’s assets.
A change in the ownership of a substantial portion of a corporation’s assets occurs on
the date that any one person, or more than one person acting as a group (as determined
in accordance with rules similar to those set forth in Section 9.7(d)), acquires (or
has acquired during the twelve month period ending on the date of the most recent
acquisition by such person or persons) assets from the corporation that have a total
gross fair market value equal to or more than forty percent (40%) of the total gross
fair market value of all of the assets of the corporation immediately prior to such
acquisition or acquisitions. For this purpose, gross fair market value means the
value of the assets of the corporation or the value of the assets being disposed of
determined without regard to any liabilities associated with such assets. There is no
Change in Control event under this Section 9.7(e) when there is a transfer to an
entity that is controlled by the shareholders of the transferring corporation
immediately after the transfer. A transfer of assets by a corporation is not treated
as a change in ownership of such assets if the assets are transferred to (i) a
shareholder of the corporation (immediately before the asset transfer) in exchange for
or with respect to its stock, (ii) an entity, fifty percent (50%) or more of the total
value or voting power of which is owned, directly or indirectly, by the corporation,
(iii) a person, or more than one person acting as a group, that owns, directly or
indirectly, fifty percent (50%) or more of the total value or voting power of all the
outstanding stock of the corporation, or (iv) an entity, at least fifty (50%) of the
total value or voting power of which is owned, directly or indirectly, by a person
described in Section 9.7(e)(iii). For purposes of the foregoing, and except as
otherwise provided, a person’s status is determined immediately after the transfer of
assets.

9-6

 

	9.8	 	Permissible Delays in Payment. Distributions may be delayed beyond the date payment would
otherwise occur in accordance with the provisions of Articles 8 and 9 in any of the following
circumstances as long as the Employer treats all payments to similarly situated Participants
on a reasonably consistent basis.

	 	(a)	 	The Employer may delay payment if it reasonably anticipates that its
deduction with respect to such payment would be limited or eliminated by the
application of Code Section 162(m). Payment must be made during the Participant’s
first taxable year in which the Employer reasonably anticipates, or should reasonably
anticipate, that if the payment is made during such year the deduction of such payment
will not be barred by the application of Code Section 162(m) or during the period
beginning with the Participant’s Separation from Service and ending on the later of
the last day of the Employer’s taxable year in which the Participant separates from
service or the 15th day of the third month following the Participant’s Separation from
Service. If a scheduled payment to a Participant is delayed in accordance with this
Section 9.8(a), all scheduled payments to the Participant that could be delayed in
accordance with this Section 9.8(a) will also be delayed.
	 
	 	(b)	 	The Employer may also delay payment if it reasonably anticipates that the
making of the payment will violate federal securities laws or other applicable laws
provided payment is made at the earliest date on which the Employer reasonably
anticipates that the making of the payment will not cause such violation.
	 
	 	(c)	 	The Employer reserves the right to amend the Plan to provide for a delay in
payment upon such other events and conditions as the Secretary of the Treasury may
prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

	9.9	 	Permitted Acceleration of Payment. The Employer may permit acceleration of the time or
schedule of any payment or amount scheduled to be paid pursuant to a payment under the Plan
provided such acceleration would be permitted by the provisions of Reg. Sec. 1.409A-3(j)(4),
including the following events:

	 	(a)	 	Domestic Relations Order. A payment may be accelerated if such payment is
made to an alternate payee pursuant to and following the receipt and qualification of
a domestic relations order as defined in Code Section 414(p).
	 
	 	(b)	 	Compliance with Ethics Agreements and Legal Requirements. A payment may be
accelerated as may be necessary to comply

9-7

 

	 	 	 	with ethics agreements with the Federal government or as may be reasonably
necessary to avoid the violation of Federal, state, local or foreign ethics law or
conflicts of laws, in accordance with the requirements of Code Section 409A.
	 
	 	(c)	 	De Minimis Amounts. A payment will be accelerated if (i) the amount of the
payment is not greater than the applicable dollar amount under Code Section
402(g)(1)(B), (ii) at the time the payment is made the amount constitutes the
Participant’s entire interest under the Plan and all other plans that are aggregated
with the Plan under Reg. Sec. 1.409A-1(c)(2).
	 
	 	(d)	 	FICA Tax. A payment may be accelerated to the extent required to pay the
Federal Insurance Contributions Act tax imposed under Code Sections 3101, 3121(a) and
3121(v)(2) of the Code with respect to compensation deferred under the Plan (the “FICA
Amount”). Additionally, a payment may be accelerated to pay the income tax on wages
imposed under Code Section 3401 of the Code on the FICA Amount and to pay the
additional income tax at source on wages attributable to the pyramiding Code Section
3401 wages and taxes. The total payment under this subsection (d) may not exceed the
aggregate of the FICA Amount and the income tax withholding related to the FICA
Amount.
	 
	 	(e)	 	Section 409A Additional Tax. A payment may be accelerated if the Plan fails
to meet the requirements of Code Section 409A; provided that such payment may not
exceed the amount required to be included in income as a result of the failure to
comply with the requirements of Code Section 409A.
	 
	 	(f)	 	Offset. A payment may be accelerated in the Employer’s discretion as
satisfaction of a debt of the Participant to the Employer, where such debt is incurred
in the ordinary course of the service relationship between the Participant and the
Employer, the entire amount of the reduction in any of the Employer’s taxable years
does not exceed $5,000, and the reduction is made at the same time and in the same
amount as the debt otherwise would have been due and collected from the Participant.
	 
	 	(g)	 	Other Events. A payment may be accelerated in the Administrator’s discretion
in connection with such other events and conditions as permitted by Code Section 409A.

9-8

 

ARTICLE 10 — AMENDMENT AND TERMINATION

	10.1	 	Amendment by Plan Sponsor. The Plan Sponsor reserves the right to amend the Plan (for itself
and each Employer) through action of its Board of Directors. No amendment can directly or
indirectly deprive any current or former Participant or Beneficiary of all or any portion of
his Account which had accrued and vested prior to the amendment.
	 
	10.2	 	Plan Termination Following Change in Control or Corporate Dissolution. If so elected by the
Plan Sponsor in 11.01 of the Adoption Agreement, the Plan Sponsor reserves the right to
terminate the Plan and distribute all amounts credited to all Participant Accounts within the
30 days preceding or the twelve months following a Change in Control as determined in
accordance with the rules set forth in Section 9.7. For this purpose, the Plan will be treated
as terminated only if all agreements, methods, programs and other arrangements sponsored by
the Related Employer immediately after the Change in Control which are treated as a single
plan under Reg. Sec. 1.409A-1(c)(2) are also terminated so that all participants under the
Plan and all similar arrangements are required to receive all amounts deferred under the
terminated arrangements within twelve months of the date the Plan Sponsor irrevocably takes
all necessary action to terminate the arrangements. In addition, the Plan Sponsor reserves the
right to terminate the Plan within twelve months of a corporate dissolution taxed under Code
Section 331 or with the approval of a bankruptcy court pursuant to 11 U. S. C. Section
503(b)(1)(A) provided that amounts deferred under the Plan are included in the gross incomes
of Participants in the latest of (a) the calendar year in which the termination occurs, (b)
the first calendar year in which the amount is no longer subject to a substantial risk of
forfeiture, or (c) the first calendar year in which payment is administratively practicable.
	 
	10.3	 	Other Plan Terminations. The Plan Sponsor retains the discretion to terminate the Plan if
(a) all arrangements sponsored by the Plan Sponsor that would be aggregated with any
terminated arrangement under Code Section 409A and Reg. Sec. 1.409A-1(c)(2) are terminated,
(b) no payments other than payments that would be payable under the terms of the arrangements
if the termination had not occurred are made within twelve months of the termination of the
arrangements, (c) all payments are made within twenty-four months of the termination of the
arrangements, (d) the Plan Sponsor does not adopt a new arrangement that would be aggregated
with any terminated arrangement under Code Section 409A and the regulations thereunder at any
time within the three year period following the date of termination of the arrangement, and
(e) the termination does not occur proximate to a downturn in the financial health of the Plan
sponsor. The Plan Sponsor also reserves the right to amend

10-1

 

	 	 	the Plan to provide that termination of the Plan will occur under such conditions and
events as may be prescribed by the Secretary of the Treasury in generally applicable
guidance published in the Internal Revenue Bulletin.

10-2

 

ARTICLE 11 — THE TRUST

	11.1	 	Establishment of Trust. The Plan Sponsor may but is not required to establish a trust to
hold amounts which the Plan Sponsor may contribute from time to time to correspond to some or
all amounts credited to Participants under Section 6.2. If the Plan Sponsor elects to
establish a trust in accordance with Section 10.01 of the Adoption Agreement, the provisions
of Sections 11.2 and 11.3 shall become operative.
	 
	11.2	 	Grantor Trust. Any trust established by the Plan Sponsor shall be between the Plan Sponsor
and a trustee pursuant to a separate written agreement under which assets are held,
administered and managed, subject to the claims of the Plan Sponsor’s creditors in the event
of the Plan Sponsor’s insolvency. The trust is intended to be treated as a grantor trust
under the Code, and the establishment of the trust shall not cause the Participant to realize
current income on amounts contributed thereto. The Plan Sponsor must notify the trustee in
the event of a bankruptcy or insolvency.
	 
	11.3	 	Investment of Trust Funds. Any amounts contributed to the trust by the Plan Sponsor shall be
invested by the trustee in accordance with the provisions of the trust and the instructions of
the Administrator. Trust investments need not reflect the hypothetical investments selected
by Participants under Section 7.1 for the purpose of adjusting Accounts and the earnings or
investment results of the trust need not affect the hypothetical investment adjustments to
Participant Accounts under the Plan.

11-1

 

ARTICLE 12 — PLAN ADMINISTRATION

	12.1	 	Powers and Responsibilities of the Administrator. The Administrator has the full power and
the full responsibility to administer the Plan in all of its details, subject, however, to the
applicable requirements of ERISA. The Administrator’s powers, discretionary authority and
responsibilities include, but are not limited to, the following:

	 	(a)	 	To make and enforce such rules and procedures as it deems necessary or proper
for the efficient administration of the Plan;
	 
	 	(b)	 	To interpret the Plan, its interpretation thereof to be final, except as
provided in Section 12.2, on all persons claiming benefits under the Plan;
	 
	 	(c)	 	To decide all questions concerning the Plan and the eligibility of any person
to participate in the Plan;
	 
	 	(d)	 	To administer the claims and review procedures specified in Section 12.2;
	 
	 	(e)	 	To compute the amount of benefits which will be payable to any Participant,
former Participant or Beneficiary in accordance with the provisions of the Plan;
	 
	 	(f)	 	To determine the person or persons to whom such benefits will be paid;
	 
	 	(g)	 	To authorize the payment of benefits;
	 
	 	(h)	 	To comply with the reporting and disclosure requirements of Part 1 of
Subtitle B of Title I of ERISA;
	 
	 	(i)	 	To appoint such agents, counsel, accountants, and consultants as may be
required to assist in administering the Plan;
	 
	 	(j)	 	By written instrument, to allocate and delegate its responsibilities,
including the formation of an Administrative Committee to administer the Plan.

12-1

 

	12.2	 	Claims and Review Procedures.

	 	(a)	 	Claims Procedure.

	 	 	 	If any person believes he is being denied any rights or benefits under the Plan,
such person may file a claim in writing with the Administrator. If any such claim
is wholly or partially denied, the Administrator will notify such person of its
decision in writing. Such notification will contain (i) specific reasons for the
denial, (ii) specific reference to pertinent Plan provisions, (iii) a description
of any additional material or information necessary for such person to perfect such
claim and an explanation of why such material or information is necessary, and (iv)
a description of the Plan’s review procedures and the time limits applicable to
such procedures, including a statement of the person’s right to bring a civil
action following an adverse decision on review. Such notification will be given
within 90 days after the claim is received by the Administrator. The Administrator
may extend the period for providing the notification by 90 days if special
circumstances require an extension of time for processing the claim and if written
notice of such extension and circumstance is given to such person within the
initial 90 day period. If such notification is not given within such period, the
claim will be considered denied as of the last day of such period and such person
may request a review of his claim.

	 	(b)	 	Review Procedure.

	 	 	 	Within 60 days after the date on which a person receives a written notification of
denial of claim (or, if written notification is not provided, within 60 days of the
date denial is considered to have occurred), such person (or his duly authorized
representative) may (i) file a written request with the Administrator for a review
of his denied claim and of pertinent documents and (ii) submit written issues and
comments to the Administrator. The Administrator will notify such person of its
decision in writing. Such notification will be written in a manner calculated to
be understood by such person and will contain specific reasons for the decision as
well as specific references to pertinent Plan provisions. The notification will
explain that the person is entitled to receive, upon request and free of charge,
reasonable access to and copies of all pertinent documents and has the right to
bring a civil action following an adverse decision on review. The decision on
review will be made within 60 days. The Administrator may extend the period for
making the

12-2

 

	 	 	 	decision on review by 60 days if special circumstances require an extension of time
for processing the request such as an election by the Administrator to hold a
hearing, and if written notice of such extension and circumstances is given to such
person within the initial 60-day period. If the decision on review is not made
within such period, the claim will be considered denied.

	 	(c)	 	Special Procedure for Claims Due to Disability.

	 	 	 	To the extent an application for distribution as a result of a Disability requires
the Administrator or the panel reviewing the Administrator’s determination, as
applicable, to make a determination of Disability under the terms of the Plan, then
such determination shall be subject to all of the general rules described in this
Section, except as they are expressly modified by this Section 12(c).

	 	(i)	 	The initial decision on the claim for a Disability
distribution will be made within forty-five (45) days after the Plan receives
the claimant’s claim, unless special circumstances require additional time, in
which case the Administrator will notify the claimant before the end of the
initial forty-five (45)-day period of an extension of up to thirty (30) days.
If necessary, the Administrator may notify the claimant, prior to the end of
the initial thirty (30)-day extension period, of a second extension of up to
thirty (30) days. If an extension is due to the claimant’s failure to supply
the necessary information, then the notice of extension will describe the
additional information and the claimant will have forty-five (45) days to
provide the additional information. Moreover, the period for making the
determination will be delayed from the date the notification of extension was
sent out until the claimant responds to the request for additional
information. No additional extensions may be made, except with the claimant’s
voluntary consent. The contents of the notice shall be the same as described
in Section 12(a) above. If a disability distribution claim is denied in whole
or in part, then the claimant will receive notification, as described in
Section 12(a).
	 
	 	(ii)	 	If an internal rule, guideline, protocol or similar criterion
is relied upon in making the adverse determination, then the denial notice to
the claimant will either set forth the internal rule, guideline, protocol or
similar criterion, or will state that such was relied upon and will be
provided free of charge to the claimant upon request (to the extent not
legally-

12-3

 

	 	 	 	privileged) and if the claimant’s claim was denied based on a medical
necessity or experimental treatment or similar exclusion or limit, then
the claimant will be provided a statement either explaining the decision
or indicating that an explanation will be provided to the claimant free of
charge upon request.
	 	(iii)	 	Any claimant whose application for a Disability distribution
is denied in whole or in part, may appeal the denial by submitting to the
panel reviewing the administrator’s determination (the “Review Panel”) a
request for a review of the application within one hundred and eighty (180)
days after receiving notice of the denial. The request for review shall be in
the form and manner prescribed by the Review Panel. In the event of such an
appeal for review, the provisions of Section 12(b) regarding the claimant’s
rights and responsibilities shall apply. Upon request, the Review Panel will
identify any medical or vocational expert whose advice was obtained on behalf
of the Review Panel in connection with the denial, without regard to whether
the advice was relied upon in making the determination. The entity or
individual appointed by the Review Panel to review the claim will consider the
appeal de novo, without any deference to the initial denial. The review will
not include any person who participated in the initial denial or who is the
subordinate of a person who participated in the initial denial.
	 
	 	(iv)	 	If the initial Disability distribution denial was based in
whole or in part on a medical judgment, then the Review Panel will consult
with a health care professional who has appropriate training and experience in
the field of medicine involved in the medical judgment, and who was neither
consulted in connection with the initial determination nor is the subordinate
of any person who was consulted in connection with that determination; and
upon notifying the claimant of an adverse determination on review, include in
the notice either an explanation of the clinical basis for the determination,
applying the terms of the Plan to the claimant’s medical circumstances, or a
statement that such explanation will be provided free of charge upon request.
	 
	 	(v)	 	A decision on review shall be made promptly, but not later
than forty-five (45) days after receipt of a request for review, unless
special circumstances require an extension of time for processing. If an
extension is required, the claimant will

12-4

 

	 	 	 	be notified before the end of the initial forty-five (45)-day period that
an extension of time is required and the anticipated date that the review
will be completed. A decision will be given as soon as possible, but not
later than ninety (90) days after receipt of a request for review. The
Review Panel shall give notice of its decision to the claimant; such
notice shall comply with the requirements set forth in paragraph (h)
above. In addition, if the claimant’s claim was denied based on a medical
necessity or experimental treatment or similar exclusion, then the
claimant will be provided a statement explaining the decision, or a
statement providing that such explanation will be furnished to the
claimant free of charge upon request. The notice shall also contain the
following statement: “You and your Plan may have other voluntary
alternative dispute resolution options, such as mediation. One way to
find out what may be available is to contact your local U.S. Department of
Labor Office and your State insurance regulatory agency.”

	 	(d)	 	Exhaustion of Claims Procedure and Right to Bring Legal Claim.

	 	 	 	No action in law or equity shall be brought more than one (1) year after
the Review Panel’s affirmation of a denial of the claim, or, if earlier,
more than four (4) years after the facts or events giving rise to the
claimant’s allegation(s) or claim(s) first occurred.

	12.3	 	Plan Administrative Costs. All reasonable costs and expenses (including legal, accounting,
and employee communication fees) incurred by the Administrator in administering the Plan shall
be paid by the Plan to the extent not paid by the Employer.

12-5

 

ARTICLE 13 — MISCELLANEOUS

	13.1	 	Unsecured General Creditor of the Employer. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or claims in any
property or assets of the Employer. For purposes of the payment of benefits under the Plan,
any and all of the Employer’s assets shall be, and shall remain, the general, unpledged,
unrestricted assets of the Employer. Each Employer’s obligation under the Plan shall be
merely that of an unfunded and unsecured promise to pay money in the future.
	 
	13.2	 	Employer’s Liability. Each Employer’s liability for the payment of benefits under the Plan
shall be defined only by the Plan and by the deferral agreements entered into between a
Participant and the Employer. An Employer shall have no obligation or liability to a
Participant under the Plan except as provided by the Plan and a deferral agreement or
agreements. An Employer shall have no liability to Participants employed by other Employers.
	 
	13.3	 	Limitation of Rights. Neither the establishment of the Plan, nor any amendment thereof, nor
the creation of any fund or account, nor the payment of any benefits, will be construed as
giving to the Participant or any other person any legal or equitable right against the
Employer, the Plan or the Administrator, except as provided herein; and in no event will the
terms of employment or service of the Participant be modified or in any way affected hereby.
	 
	13.4	 	Anti-Assignment. Except as may be necessary to fulfill a domestic relations order within the
meaning of Code Section 414(p), none of the benefits or rights of a Participant or any
Beneficiary of a Participant shall be subject to the claim of any creditor. In particular, to
the fullest extent permitted by law, all such benefits and rights shall be free from
attachment, garnishment, or any other legal or equitable process available to any creditor of
the Participant and his or her Beneficiary. Neither the Participant nor his or her
Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber, or assign
any of the payments which he or she may expect to receive, contingently or otherwise, under
the Plan, except the right to designate a Beneficiary to receive death benefits provided
hereunder. Notwithstanding the preceding, the benefit payable from a Participant’s Account
may be reduced, at the discretion of the administrator, to satisfy any debt or liability to
the Employer.
	 
	13.5	 	Facility of Payment. If the Administrator determines, on the basis of medical reports or
other evidence satisfactory to the Administrator, that the recipient of any benefit payments
under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity
or other incapacity, the Administrator may direct the Employer to disburse such payments to a
person or institution designated by a court which has jurisdiction over such recipient or a
person or institution otherwise having the legal authority under State law for the care and
control of such recipient. The receipt by such person or institution of any such

13-1

 

	 	 	payments therefore, and any such payment to the extent thereof, shall discharge the
liability of the Employer, the Plan and the Administrator for the payment of benefits
hereunder to such recipient.
	 
	13.6	 	Notices. Any notice or other communication to the Employer or Administrator in connection
with the Plan shall be deemed delivered in writing if addressed to the Plan Sponsor at the
address specified in Section 1.03 of the Adoption Agreement and if either actually delivered
at said address or, in the case or a letter, 5 business days shall have elapsed after the same
shall have been deposited in the United States mails, first-class postage prepaid and
registered or certified.
	 
	13.7	 	Tax Withholding. If the Employer concludes that tax is owing with respect to any deferral or
payment hereunder, the Employer shall withhold such amounts from any payments due the
Participant, as permitted by law, or otherwise make appropriate arrangements with the
Participant or his Beneficiary for satisfaction of such obligation. Tax, for purposes of this
Section 13.7 means any federal, state, local or any other governmental income tax, employment
or payroll tax, excise tax, or any other tax or assessment owing with respect to amounts
deferred, any earnings thereon, and any payments made to Participants under the Plan.
	 
	13.8	 	Indemnification. (a) Each Indemnitee (as defined in Section 13.8(e)) shall be indemnified and
held harmless by the Employer for all actions taken by him and for all failures to take action
(regardless of the date of any such action or failure to take action), to the fullest extent
permitted by the law of the jurisdiction in which the Employer is incorporated, against all
expense, liability, and loss (including, without limitation, attorneys’ fees, judgments,
fines, taxes, penalties, and amounts paid or to be paid in settlement) reasonably incurred or
suffered by the Indemnitee in connection with any Proceeding (as defined in Subsection (e)).
No indemnification pursuant to this Section shall be made, however, in any case where (1) the
act or failure to act giving rise to the claim for indemnification is determined by a court to
have constituted gross negligence, willful misconduct or recklessness or (2) there is a
settlement to which the Employer does not consent.

(b) The right to indemnification provided in this Section shall include the right to have
the expenses incurred by the Indemnitee in defending any Proceeding paid by the Employer in
advance of the final disposition of the Proceeding, to the fullest extent permitted by the
law of the jurisdiction in which the Employer is incorporated; provided that, if such law
requires, the payment of such expenses incurred by the Indemnitee in advance of the final
disposition of a Proceeding shall be made only on delivery to the Employer of an
undertaking, by or on behalf of the Indemnitee, to repay all amounts so advanced without
interest if it shall ultimately be determined that the Indemnitee is not entitled to be
indemnified under this Section or otherwise.

(c) Indemnification pursuant to this Section shall continue as to an Indemnitee who has
ceased to be such and shall inure to the benefit of his heirs, executors, and
administrators. The Employer agrees that the undertakings made in this Section shall be
binding on its successors or assigns and shall survive the termination, amendment or
restatement of the Plan.

13-2

 

(d) The foregoing right to indemnification shall be in addition to such other rights as the
Indemnitee may enjoy as a matter of law or by reason of insurance coverage of any kind and
is in addition to and not in lieu of any rights to indemnification to which the Indemnitee
may be entitled pursuant to the by-laws of the Employer.

(e) For the purposes of this Section, the following definitions shall apply:

(1) “Indemnitee” shall mean each person serving as an Administrator (or any other person
who is an employee, director, or officer of the Employer) who was or is a party to, or is
threatened to be made a party to, or is otherwise involved in, any Proceeding, by reason of
the fact that he is or was performing administrative functions under the Plan.

(2) “Proceeding” shall mean any threatened, pending, or completed action, suit, or
proceeding (including, without limitation, an action, suit, or proceeding by or in the right
of the Employer), whether civil, criminal, administrative, investigative, or through
arbitration.

	13.9	 	Successors. The provisions of the Plan shall bind and inure to the benefit of the Plan
Sponsor, the Employer and their successors and assigns and the Participant and the
Participant’s designated Beneficiaries.
	 
	13.10	 	Disclaimer. It is the Plan Sponsor’s intention that the Plan comply with the requirements of
Code Section 409A. Neither the Plan Sponsor nor the Employer shall have any liability to any
Participant should any provision of the Plan fail to satisfy the requirements of Code Section
409A.
	 
	13.11	 	Governing Law. The Plan will be construed, administered and enforced according to the laws
of the State specified by the Plan Sponsor in Section 12.01 of the Adoption Agreement.

13-3exv10w8

Exhibit 10.8

Execution
Copy

EXECUTIVE EMPLOYMENT AGREEMENT

     This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is effective as of June 16, 2008
(the “Effective Date”), between Clinical Data, Inc. a Delaware corporation (the
“Company”), and C. Evan Ballantyne (the “Executive”).

W I T N E S S E T H:

     WHEREAS, the Executive is currently employed as the Senior Vice President and Chief Financial
Officer of the Company;

     WHEREAS, the Company has offered to continue employing the Executive on the terms set forth
below; and

     WHEREAS, the Executive has agreed to continued employment with the Company on the terms as set
forth below;

     NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and
of other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

     1. EMPLOYMENT TERM. The Executive’s term of employment under this Agreement shall be
for an initial term commencing on the Effective Date and shall end on June 30, 2009. The term of
this Agreement shall be automatically extended thereafter for successive one (1) year periods
unless, at least ninety (90) days prior to the end of the initial term of this Agreement or the
then current succeeding one-year extended term of this Agreement, the Company or Executive has
notified the other that the term hereunder shall terminate upon its expiration date. The initial
term of this Agreement, as it may be extended from year to year thereafter, is herein referred to
as the “Employment Term.” In all events hereunder, Executive’s employment is subject to
earlier termination pursuant to Section 7 hereof, and upon such earlier termination the Employment
Term shall be deemed to have ended.

     2. POSITION & DUTIES.

     (a) Except as provided in Section 2(b) below, the Executive shall serve as the Company’s
Senior Vice President and Chief Financial Officer during the Employment Term. As such, the
Executive shall have such duties, authorities and responsibilities commensurate with the duties,
authorities and responsibilities of persons in similar capacities in similarly sized companies and
such other duties and responsibilities as the Company’s Board of Directors (the “Board”)
shall designate that are consistent with the Executive’s position.

     (b) During the Employment Term, the Executive shall use his best efforts to perform faithfully
and efficiently the duties and responsibilities assigned to the Executive hereunder and devote all
of the Executive’s business time (excluding periods of vacation and other approved leaves of
absence) to the performance of the Executive’s duties with the Company, provided the foregoing
shall not prevent the Executive from participating in charitable, civic, educational, professional,
community or industry affairs or, with prior written approval of the Board, serving on the board of
directors or advisory boards of other companies. The Executive shall not

 

 

manage the Executive’s and the Executive’s family’s personal investments in a manner that
creates a potential business conflict or the appearance thereof. If at any time service on any
board of directors or advisory board would, in the good faith judgment of the Board, conflict with
the Executive’s fiduciary duty to the Company or create any appearance thereof, the Executive shall
promptly resign from such other board of directors or advisory board after written notice of the
conflict is received from the Board.

     (c) The Executive further agrees to serve without additional compensation as a director of the
Company and/or an officer and director of any of the Company’s subsidiaries and agrees that any
amounts received from any such corporation may be offset against the amounts due hereunder. In
addition, it is agreed that the Company may assign the Executive to one of its subsidiaries for
payroll purposes, but such assignment shall not relieve the Company of its obligations hereunder.

     3. BASE SALARY. The Company agrees to pay the Executive a base salary (the “Base
Salary”) at an annual rate of $281,215, payable in accordance with the regular payroll
practices of the Company, but not less frequently than monthly. The Executive’s Base Salary shall
be subject to review by the Board (or a committee thereof) and may be increased, but not decreased,
from time to time by the Board. The base salary as determined herein from time to time shall
constitute “Base Salary” for purposes of this Agreement.

     4. BONUSES. The Executive shall be eligible to participate in the Company’s bonus and
other incentive compensation plans and programs for the Company’s senior executives at a level
commensurate with his position for the fiscal year during the Employment Term. The Executive shall
have the opportunity to earn an annual target bonus measured against performance criteria to be
determined by the Board (or a committee thereof) of 100% of Base Salary.

     5. EQUITY AWARDS. The Executive shall be subject to, and shall comply with, the stock
ownership guidelines of the Company as may be in effect from time to time. If there is a Change in
Control (as defined in the attached Appendix C) or if the Executive’s employment is terminated by
the Company without Cause (as defined in Section 7(c)), or by the Executive for Good Reason (as
defined in Section 7(e)), then all outstanding unvested equity awards granted to the Executive
listed on Appendix D hereto shall become fully vested and the time period that Executive may have
to exercise such option grants shall be extended for a period equal to the shorter of (i) three (3)
years, or (ii) the remaining term of the options (the “Extended Exercise Period”). The
parties agree that the attached Appendix D may be modified and updated upon a vote of the Board of
Directors, only in order for the Board to add to Appendix D certain future awards that the Board
agrees shall also qualify for acceleration and the Extended Exercise Period. Upon such a vote of
the Board, the parties shall attach a revised Appendix D to this Agreement, which shall include the
additional option grant(s) that the Board has expressly agreed shall qualify for acceleration and
the Extended Exercise Period, and this Agreement shall not be deemed amended or modified in any
other manner as a result.

     6. EMPLOYEE BENEFITS.

2

 

     (a) BENEFIT PLANS. The Executive shall be entitled to participate in all employee
benefit plans of the Company including, but not limited to, 401(k), profit sharing, medical
coverage, education, or other retirement or welfare benefits that the Company has adopted or may
adopt, maintain or contribute to for the benefit of its senior executives at a level commensurate
with the Executive’s positions, subject to satisfying the applicable eligibility requirements.

     (b) VACATION. The Executive shall be entitled to four (4) weeks of paid vacation per
year, plus any amounts (up to a maximum of three (3) weeks) rolled over from previous years.
Vacation may be taken at such times as the Executive elects with due regard to the needs of the
Company.

     (c) BUSINESS AND ENTERTAINMENT EXPENSES. Upon presentation of appropriate
documentation, the Executive shall be reimbursed in accordance with the Company’s expense
reimbursement policy for all reasonable and necessary business and entertainment expenses incurred
in connection with the performance of the Executive’s duties hereunder.

     (d) [RESERVED]

     (e) INDEMNIFICATION. The Company shall indemnify the Executive to the same extent
that its officers, directors and employees are entitled to indemnification pursuant to any
agreements with the Company relating thereto, the Company’s Certificate of Incorporation and Bylaws
for any acts or omissions by reason of being a director, officer or employee of the Company as of
the Effective Date. The parties acknowledge that the Executive is also afforded contractual
indemnification pursuant to that certain Indemnification Agreement between the Executive and the
Company, dated as of August 7, 2006 (the “Indemnification Agreement”), which shall remain
in full force and effect.

     (f) CERTAIN AMENDMENTS. Nothing herein shall be construed to prevent the Company from
amending, altering, eliminating or reducing any plans, benefits or programs so long as the
Executive continues to receive compensation and benefits consistent with Sections 3 through 6.

     7. TERMINATION. The Executive’s employment and the Employment Term shall terminate on
the first of the following to occur:

     (a) DISABILITY. Upon written notice by the Company to the Executive of termination
due to Disability, while the Executive remains Disabled. For purposes of this Agreement,
“Disability” shall be deemed the reason for the termination by the Company of the
Executive’s employment, if, as a result of the Executive incapacity due to physical or mental
illness, the Executive shall have been absent from fully performing his duties with the Company for
a cumulative period of six (6) months, the Company shall have provided a notice of termination
under this Section 7(a), and, within thirty days after such notice being given, the Executive shall
not have returned to the full performance of his duties hereunder.

     (b) DEATH. Automatically on the date of death of the Executive.

3

 

     (c) CAUSE. Immediately upon written notice by the Company to the Executive of a
termination for Cause. “Cause” shall mean (i) the willful failure of the Executive to
render services to the Company in accordance with his assigned duties consistent with this
Agreement, and such failure continues for a period of more than 30 days after written notice has
been provided to the Executive by the Board which itemizes the reasons for such failure of
performance; (ii) reckless misconduct, bad faith or gross negligence of the Executive in
connection with the performance of his assigned duties or breach of the material terms of this
Agreement which results in material loss, damage or injury to the Company or materially and
adversely affects the business activities, reputation, goodwill or image of the Company; (iii) the
conviction of the Executive of any felony or a crime of moral turpitude, either in connection with
the performance of his obligations to the Company or which adversely affects the Executive’s
ability to perform such obligations, or which adversely affects the business activities,
reputation, goodwill or image of the Company; (iv) dishonesty or breach of fiduciary duty, which
results in material loss, damage or injury to the Company or materially and adversely affects the
business activities, reputation, goodwill or image of the Company; (v) the commission by the
Executive of an act of fraud, embezzlement or deliberate disregard of the rules or policies of the
Company which results in material loss, damage or injury to the Company or materially and adversely
affects the business activities, reputation, goodwill or image of the Company; or (vi) the
unauthorized and intentional disclosure by the Executive of any trade secret or confidential
information of the Company or any of its clients or customers, which results in material damage or
injury to the Company, or materially and adversely affects the business activities, reputation,
goodwill or image of the Company or its clients or customers.

     (d) WITHOUT CAUSE. Upon written notice by the Company to the Executive of an
involuntary termination without Cause and other than due to death or Disability.

     (e) GOOD REASON. Upon written notice by the Executive to the Company of a termination
for Good Reason, unless the reasons for any proposed termination for Good Reason are remedied in
all material respects by the Company within 30 days following written notification by the Executive
to the Company, that the Executive intends to terminate the Executive’s employment hereunder for
one of the reasons set forth below. “Good Reason” shall mean, without the Executive’s
express written consent, the occurrence of any of the following events:

          (1) During the Employment Term,

               (A) an adverse change in the Executive’s position as Executive Vice President and Chief Legal
Officer as a result of a material diminution in the Executive’s duties or responsibilities or the
assignment to the Executive of any duties or responsibilities that are inconsistent in any material
respect with the Executive’s position, authority, duties or responsibilities as contemplated by
this Agreement; provided, however, that “Good Reason” shall not exist under this Section 7(e)(1)
solely because (i) the Company’s stock is no longer publicly traded on an established securities
exchange or (ii) the Company has restructured, sold or spun-off any of its businesses, products or
services;

               (B) any material breach of this Agreement by the Company that is adverse to the Executive;

4

 

               (C) the Executive being required to relocate to a principal place of employment more than
fifty (50) miles from Newton, Massachusetts, the Executive’s current principal place of employment
with the Company as of the Effective Date;

               (D) the failure of the Company to obtain an agreement from any successor to all or
substantially all of the assets or business of the Company to assume and agree to perform this
Agreement within fifteen (15) days after a merger, consolidation, sale or similar transaction; or

               (E) the Executive’s termination of employment at any time during the thirty-day period
beginning on the last day of the Employment Term, as determined solely for this purpose under
Section 1, following the Company’s notice of nonrenewal.

          (2) Notwithstanding the foregoing, (i) a suspension of the Executive’s title and authority
while on administrative leave due to a reasonable belief that the Executive has engaged in
misconduct, whether or not the suspected misconduct constitutes Cause for employment termination,
shall not be considered “Good Reason”, (ii) an event shall not be considered Good Reason if the
Executive fails to deliver notice of termination for Good Reason specifying such event in detail
within 90 days of his actual knowledge of such event, and (iii) changes to compensation and benefit
plans not specifically targeted to the Executive shall not be considered Good Reason.

     (f) WITHOUT GOOD REASON. The Executive shall provide 60 days’ prior written notice to
the Company of the Executive’s intended termination of employment without Good Reason (the
“Transition Period”). During the Transition Period, the Executive shall assist and advise
the Company in any transition of business, customers, prospects, projects and strategic planning,
and the Company shall pay the pro rata portion of the Executive’s annual salary and benefits
through the end of the Transition Period. The Company may, in its sole discretion, upon five (5)
days prior written notice to the Executive, make such termination of employment effective earlier
than the Transition Period, but it shall pay the pro rata portion of the Executive’s salary and
benefits through the earlier of: the balance of the Transition Period, or such time during the
Transition Period as the Executive accepts employment or a consulting engagement from a third
party.

     8. CONSEQUENCES OF TERMINATION. Any termination payments made and benefits provided
under this Agreement to the Executive shall be in lieu of any termination or severance payments or
benefits for which the Executive may be eligible under any of the plans, policies or programs of
the Company or its affiliates as may be in effect from time to time. Except to the extent
otherwise provided in this Agreement, all benefits, including, without limitation, stock options,
stock appreciation rights, restricted stock units and other awards under the Company’s long-term
incentive programs, shall be subject to the terms and conditions of the plan or arrangement under
which such benefits accrue, are granted or are awarded. Subject to Section 9, the following
amounts and benefits shall be due to the Executive.

     (a) DISABILITY. Upon employment termination due to Disability, the Company shall pay
or provide the Executive (i) any unpaid Base Salary through the date of termination and any accrued
vacation (up to a maximum of seven (7) weeks); (ii) any unpaid bonus earned with

5

 

respect to any fiscal year ending on or preceding the date of termination; (iii) reimbursement
for any unreimbursed expenses incurred through the date of termination; (iv) all other payments and
benefits to which the Executive may be entitled under the terms of any applicable compensation
arrangement or benefit, equity or perquisite plan or program or grant or this Agreement, including
but not limited to any applicable insurance benefits (collectively, “Accrued Amounts”).
Executive will also be paid a pro-rata portion of the Executive’s annual bonus for the performance
year in which the Executive’s termination occurs (the “Pro Rata Bonus”), payable in
accordance with the last sentence of Section 8(e) (determined by multiplying the amount the
Executive would have received based upon actual performance had employment continued through the
end of the performance year by a fraction, the numerator of which is the number of days during the
performance year of termination that the Executive is employed by the Company and the denominator
of which is 365). Upon such termination, all stock options, stock appreciation rights and
restricted stock awards will fully vest and become non-forfeitable. Notwithstanding anything
contained herein to the contrary, the Pro Rata Bonus shall not be paid in the event the Executive
voluntarily resigns from employment with the Company or otherwise voluntarily terminates employment
without Good Reason.

     (b) DEATH. In the event the Employment Term ends on account of the Executive’s death,
the Executive’s estate (or to the extent a beneficiary has been designated in accordance with a
program, the beneficiary under such program) shall be entitled to any Accrued Amounts, including
but not limited to proceeds from any Company sponsored life insurance programs. Executive’s estate
(or beneficiary) will also be paid a pro-rata portion of the Pro Rata Bonus. Upon the Executive’s
death, all stock options, stock appreciation rights and restricted stock awards will fully vest and
become non-forfeitable.

     (c) TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If the Executive’s employment
should be terminated (i) by the Company for Cause, or (ii) by the Executive without Good Reason,
the Company shall pay to the Executive any Accrued Amounts only, and shall not be obligated to make
any additional payments to Executive.

     (d) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the Executive’s employment by
the Company is terminated by the Company other than for Cause (and not due to Disability or death)
or by the Executive for Good Reason, then the Company shall pay or provide the Executive with:

          (1) Accrued Amounts;

          (2) the Pro Rata Bonus;

          (3) subject to compliance with Section 11(a)-(g) inclusive, continued payment of the
Executive’s Base Salary as in effect immediately preceding the last day of the Employment Term for
a period of 12 months after the last day of employment;

          (4) continued participation at the Company’s expense in all medical, dental and vision plans
which cover the Executive (and eligible dependents) upon the same terms and conditions (except for
the requirements of the Executive’s continued employment) in effect for active employees of the
Company, for a period of 12 months following the last day of the

6

 

Employment Term. In the event the Executive obtains other employment that offers
substantially similar or improved benefits, as to any particular medical, dental or vision plan,
such continuation of coverage by the Company for such similar or improved benefit under such plan
under this subsection shall immediately cease. The continuation of health benefits under this
subsection shall reduce the Executive’s rights and the Company’s payment obligations under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).

     (e) The parties acknowledge and agree that all calculations of bonuses by the Company are
based on targets, goals and objectives established by the Board of Directors for each fiscal year,
and that any bonus plans, as well as the Executive’s rights to receive bonus payments, are
conditioned on an assessment by the Board of Directors (or a committee thereof) of the satisfaction
of performance targets for the applicable fiscal year in which the bonus is to be paid. The
parties acknowledge that calculations of applicable bonuses have historically been made within 90
days following the conclusion of a fiscal year for which the bonus may be due or accrued, and
payment of the applicable bonus has been historically made within 10 business days following the
Board of Directors’ determination. Accordingly, the parties recognize and agree that the right to
receive any payment to which the Executive may be entitled under the terms of any applicable bonus
arrangement or benefit, including any bonus-related portion of the Accrued Amount, or the Pro Rata
Bonus, can only be established after the review and calculations of the applicable fiscal year
bonus entitlements are made by the Board of Directors (including any committee thereof). Once such
calculations are made by the Board of Directors (including any committee thereof), the Executive’s
right to receive the Pro Rata Bonus (or any applicable bonus-related portion of the Accrued Amount)
shall be accrued and paid as promptly as practicable following a determination of the bonus by the
Board of Directors (or any committee thereof) in the event the Executive is entitled to be paid
such bonus under the preceding provisions of Section 8(a)-(d) above. Notwithstanding the
foregoing, if the Executive is terminated by the Company without Cause, or by the Executive for
Good Reason, the Board of Directors (including any committee thereof) shall use its best efforts to
meet as promptly as practicable within 30 days following any notice of such termination by the
Company without Cause, or by the Executive for Good Reason, in order to make a good faith
determination of the Pro Rata Bonus, and to pay such Pro Rata Bonus (if earned) within 30 days of
such determination by the Board of Directors (including any committee thereof).

     9. CONDITIONS. Any payments or benefits made or provided pursuant to Section 8 (other
than Accrued Amounts) are subject to the Executive’s (or, in the event of the Executive’s death,
the beneficiary’s or estate’s, or in the event of the Executive’s Disability, the guardian’s):

     (a) compliance with the provisions of Section 11 hereof;

     (b) delivery to the Company of the executed Agreement and General Release (the “General
Release”), which shall be in the form attached hereto as Appendix A (with such changes
therein or additions thereto as needed under then applicable law to give effect to its intent and
purpose) within 21 days of presentation thereof by the Company to the Executive; and

     (c) delivery to the Company of a resignation from all offices, directorships and fiduciary
positions with the Company, its affiliates and employee benefit plans.

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     Notwithstanding the due date of any post-employment payments, any amounts due following a
termination under this Agreement (other than Accrued Amounts) shall not be due until after the
expiration of any revocation period applicable to the General Release without the Executive having
revoked such General Release, and any such amounts shall be paid or commence being paid to the
Executive within five (5) days of the expiration of such revocation period without the occurrence
of a revocation by the Executive (or such later date as may be required under Section 409A of the
Code). Nevertheless (and regardless of whether the General Release has been executed by the
Executive), upon any termination of Executive’s employment, Executive shall be entitled to receive
any Accrued Amounts, payable after the date of termination in accordance with the Company’s
applicable plan, program, policy or payroll procedures.

     10. SECTION 4999 EXCISE TAX.

     (a) If any payments, rights or benefits (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement of Executive with the Company or any person affiliated
with the Company) (the “Payments”) received or to be received by Executive will be subject to the
tax (the “Excise Tax”) imposed by Section 4999 of the Code (or any similar tax that may hereafter
be imposed), then, except as set forth in Section 10(b) below, the Company shall pay to Executive
an amount in addition to the Payments (the “Gross-Up Payment”) as calculated below. The Gross Up
Payment shall be in an amount such that, after deduction of any Excise Tax on the Payments and any
federal, state and local income and employment tax and Excise Tax on the Gross Up Payment, but
before deduction for any federal, state or local income and employment tax on the Payments, the net
amount retained by the Executive shall be equal to the Payments.

     (b) Notwithstanding anything in this Agreement to the contrary, if the amount of Payments that
will be subject to the Excise Tax does not exceed four times the “Base Amount” (as defined in
Section 280G(d)(2) of the Code), then Executive’s taxable cash-based benefits under this Agreement
will first be reduced in the order selected by Executive, and then, if necessary, Executive’s
equity-based compensation (based on the value of such equity-based compensation as a “parachute
payment” as defined in Treasury Regulations promulgated under Section 280G of the Code and IRS
revenue rulings, revenue procedures and other official guidance) shall be reduced in the order
selected by Executive, and then any other Payments shall be reduced as reasonably determined by the
Company, to the extent necessary to avoid imposition of the Excise Tax. If Executive does not
select the amount to be reduced within the time prescribed by the Company, the reductions specified
herein shall be made by the Company in its sole discretion from such compensation as it shall
determine. Any amount so reduced shall be irrevocably forfeited and Executive shall have no
further rights to receive it.

     (c) The process for calculating the Excise Tax, determining the amount of any Gross-Up Payment
and other procedures relating to this Section 10 are set forth in Appendix B attached hereto. For
purposes of making the determinations and calculations required herein, the Accounting Firm (as
defined in Appendix B) may rely on reasonable, good faith interpretations concerning the
application of Section 280G and 4999 of the Code, provided that the Accounting Firm shall make such
determinations and calculations on the basis of “substantial authority”

8

 

(within the meaning of Section 6662 of the Code) and shall provide opinions to that effect to
both the Company and Executive.

     11. POST-EMPLOYMENT OBLIGATIONS

     (a) CONFIDENTIALITY. The Executive agrees that the Executive shall not, directly or
indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than
in the course of the Executive’s employment and for the benefit of the Company, either during the
period of the Executive’s employment or at any time thereafter, any nonpublic, proprietary or
confidential information, knowledge or data relating to the Company, any of its subsidiaries,
affiliated companies or businesses, which shall have been obtained by the Executive during the
Executive’s employment by the Company. The foregoing shall not apply to information that (i) was
known to the public prior to its disclosure to the Executive; (ii) becomes known to the public
subsequent to disclosure to the Executive through no wrongful act of the Executive or any
representative of the Executive; or (iii) the Executive is required to disclose by applicable law,
regulation or legal process (provided that the Executive provides the Company with prior notice of
the contemplated disclosure and reasonably cooperates with the Company at its expense in seeking a
protective order or other appropriate protection of such information). Notwithstanding clauses (i)
and (ii) of the preceding sentence, the Executive’s obligation to maintain such disclosed
information in confidence shall not terminate where only portions of the information are in the
public domain.

     (b) NON-SOLICITATION. During the Executive’s employment with the Company and for the
twelve (12) month period thereafter, whether at the end of the Employment Term or thereafter, the
Executive agrees that the Executive will not, directly or indirectly, individually or on behalf of
any other person, firm, corporation or other entity, knowingly solicit, aid or induce (i) any
managerial level employee of the Company or any of its subsidiaries or affiliates to leave such
employment in order to accept employment with or render services to or with any other person, firm,
corporation or other entity unaffiliated with the Company or knowingly take any action to
materially assist or aid any other person, firm, corporation or other entity in identifying or
hiring any such employee (provided, that the foregoing shall not be violated by general advertising
not targeted at Company employees nor by serving as a reference for an employee with regard to an
entity with which the Executive is not affiliated) or (ii) any customer of the Company or any of
its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its
subsidiaries or affiliates from another person, firm, corporation or other entity or assist or aid
any other persons or entity in identifying or soliciting any such customer (provided, that the
foregoing shall not apply to any product or service which is not covered by the non-competition
provision set forth in Section 11(c), below).

     (c) NON-COMPETITION. The Executive acknowledges that the Executive performs services
of a unique nature for the Company that are irreplaceable, and that the Executive’s performance of
such services to a competing business (other than respecting a product or service of the Company
involving less than one percent (1%) of the Company’s revenues in the prior fiscal year (“De
Minimis”)) will result in irreparable harm to the Company. Accordingly, during the Executive’s
employment hereunder and for the twelve (12) month period thereafter, (whether at the end of the
Employment Term or thereafter), the Executive shall not, without the Board’s prior written consent,
directly or indirectly engage in the development,

9

 

production, marketing, or sale of products or services that compete (or, upon
commercialization, could compete) with products of the Company or its affiliates being developed,
marketed or sold as of the date of such termination (such business or activity, a “Competing
Business”) whether such engagement shall be as an officer, director, owner, employee, partner,
consultant, advisor or any other capacity. This Section 11(c) shall not prevent the Executive from
owning not more than one percent (1%) of the total shares of all classes of stock outstanding of
any publicly held entity engaged in such business, nor will it restrict the Executive from
rendering services to charitable organizations, as such term is defined in Section 501(c) of the
Code.

     (d) NON-DISPARAGEMENT. Each of the Executive and the Company (for purposes hereof,
“the Company” shall mean only (i) the Company by press release or other formally released
announcement and (ii) the executive officers and directors thereof and not any other employees)
agrees not to make any public statements that disparage the other party, or in the case of the
Company, its respective affiliates, employees, officers, directors, products or services.
Notwithstanding the foregoing, statements made in the course of sworn testimony in administrative,
judicial or arbitral proceedings (including, without limitation, depositions in connection with
such proceedings) shall not be subject to this Section 11(d).

     (e) RETURN OF COMPANY PROPERTY AND RECORDS. The Executive agrees that upon
termination of the Executive’s employment, for any cause whatsoever, the Executive will surrender
to the Company in good condition (reasonable wear and tear excepted) all property and equipment
belonging to the Company and all records (including all copies or derivations) kept by the
Executive containing the names, addresses or any other information with regard to customers or
customer contacts of the Company, or concerning any proprietary or confidential information of the
Company or any operational, financial or other documents given to or developed by the Executive
during the Executive’s employment with the Company.

     (f) COOPERATION. The Executive agrees that, following termination of the Executive’s
employment for any reason, the Executive shall upon reasonable advance notice, and to the extent it
does not interfere with previously scheduled travel plans and does not unreasonably interfere with
other business activities or employment obligations, assist and cooperate with the Company with
regard to any matter or project in which the Executive was involved during the Executive’s
employment, including any litigation. The Company shall compensate the Executive for any lost
wages or expenses associated with such cooperation and assistance.

     (g) ASSIGNMENT OF INVENTIONS. The Executive will promptly communicate and disclose in
writing to the Company all inventions, developments and processes including software, whether
patentable or not, as well as patents and patent applications (hereinafter collectively called
“Inventions”), made, conceived, developed, or purchased by the Executive, or under which the
Executive acquires the right to grant licenses or to become licensed, alone or jointly with others,
which have arisen or may arise out of the Executive’s employment, or relate to any matters
pertaining to, or useful in connection with, the business, processes or affairs of the Company or
any of its subsidiaries. Included herein as if developed during the employment period is any
specialized equipment and software developed for use in the business of the Company. All of the
Executive’s right, title and interest in, to, and under all such Inventions, licenses, and right to
grant licenses shall be the sole property of the Company. Any such

10

 

Inventions disclosed to anyone by the Executive within one (1) year after the termination of
employment for any cause whatsoever shall be deemed to have been made or conceived by the Executive
during the Term. As to all such Inventions, the Executive will, upon request of the Company
execute all documents which the Company deems necessary or proper to enable it to establish title
to such Inventions or other rights, and to enable it to file and prosecute applications for letters
patent of the United States and any foreign country; and do all things (including the giving of
evidence in suits and other proceedings) which the Company deems necessary or proper to obtain,
maintain, or assert patents for any and all such Inventions or to assert its rights in any
Inventions not patented.

     (h) EQUITABLE RELIEF AND OTHER REMEDIES. The parties acknowledge and agree that the
other party’s remedies at law for a breach or threatened breach of any of the provisions of this
Section would be inadequate and, in recognition of this fact, the parties agree that, in the event
of such a breach or threatened breach, in addition to any remedies at law, the other party, without
posting any bond, shall be entitled to obtain equitable relief in the form of specific performance,
temporary restraining order, a temporary or permanent injunction or any other equitable remedy
which may then be available.

     (i) REFORMATION. If it is determined by a court of competent jurisdiction in any
state that any restriction in this Section 11 is excessive in duration or scope or is unreasonable
or unenforceable under the laws of that state, it is the intention of the parties that such
restriction may be modified or amended by the court to render it enforceable to the maximum extent
permitted by the law of that state.

     (j) SURVIVAL OF PROVISIONS. The obligations contained in this Section 11 shall
survive the termination or expiration of the Executive’s employment with the Company and shall be
fully enforceable thereafter.

     12. NO ASSIGNMENT.

     (a) The Executive may not assign or delegate any rights or obligations hereunder without first
obtaining the written consent of the other party hereto.

     (b) The Company, without the Executive’s consent, may assign this Agreement to a parent or
subsidiary, or to any successor to all or substantially all of the business and/or assets of the
Company provided the Company shall require such successor to expressly assume and agree in writing
to perform this Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place and shall deliver a copy of such
assignment to the Executive.

     13. NOTICE. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a)
on the date of delivery if delivered by hand, (b) on the date of transmission, if delivered by
confirmed facsimile, (c) on the first business day following the date of deposit if delivered by
guaranteed overnight delivery service, or (d) on the fourth business day following the date
delivered or mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

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     If to the Executive: at the address (or to the facsimile number) shown on the records of the
Company.

     If to the Company:

Arthur B. Malman, Chair of the Compensation Committee

Malman & Goldman LLP

900 Third Avenue, 29th Floor

New York, New York 10022

Facsimile No. (212) 202-5017

     And

     Randal J. Kirk, Sr. Managing Director and CEO

Third Security, LLC

The Governor Tyler

1881 Grove Avenue

Radford, VA 24141

Facsimile No. (540) 633-7979

or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.

     14. SECTION HEADINGS; INCONSISTENCY. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement. If there is any inconsistency between this Agreement and any
other agreement (including but not limited to any option, stock, long-term incentive or other
equity award agreement), plan, program, policy or practice (collectively, “Other
Provision”) of the Company the terms of this Agreement shall control over such Other Provision.

     15. PRIOR AGREEMENTS. This Agreement supersedes and replaces any and all prior
employment agreements and change in control agreements (collectively, the “Prior
Agreements”) between the Company and the Executive. By signing this Agreement, the Executive
acknowledges that the Prior Agreements are terminated and cancelled, and releases and discharges
the Company from any and all obligations and liabilities heretofore or now existing under or by
virtue of such Prior Agreements, it being the intention of the parties hereto that this Agreement
effective immediately shall supersede and be in lieu of the Prior Agreements. Notwithstanding
anything contained in this Agreement to the contrary, the Indemnification Agreement shall not be
affected by this Agreement and, except to the extent expressly superceded hereby, the Stock Option
Agreements listed from time to time on Appendix D shall remain in full force and effect.

     16. SEVERABILITY. The provisions of this Agreement shall be deemed severable and the
invalidity of unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.

     17. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and the

12

 

same instruments. One or more counterparts of this Agreement may be delivered by facsimile,
with the intention that delivery by such means shall have the same effect as delivery of an
original counterpart thereof.

     18. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer or director as may be designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent
time. This Agreement together with all exhibits hereto sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein. No agreements or
representations, oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed by the laws of the
Commonwealth of Massachusetts without regard to its conflicts of law principles.

     19. PAYMENT OF COMPENSATION. The parties shall revisit this Agreement when the IRS
issues final regulations under Section 409A of the Code for the sole purpose of determining whether
any amendments are required in order to comply with such regulations. The parties shall promptly
agree in good faith on appropriate provisions to avoid any material risk of noncompliance without
materially changing the economic value (to the Executive) or the cost (to the Company) of this
Agreement. Notwithstanding the foregoing, the Company shall in no event be obligated to indemnify
the Executive for any taxes or interest that may be assessed by the IRS pursuant to Section 409A of
the Code. To the extent the Executive does not receive payments under this Agreement as required
by this Agreement due to the application of Section 409A, all suspended payments shall earn and
accrue interest at the prevailing “Prime Rate” of interest as published by The Wall Street Journal
at the time the payment is made, and any payment when so made, shall be made as a lump sum payment,
including accrued interest.

     20. MITIGATION OF DAMAGES. In no event shall the Executive be obliged to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be
reduced by any compensation earned by the Executive as a result of employment by another employer,
except as set forth in this Agreement.

     21. REPRESENTATIONS. The Executive represents and warrants to the Company that the
Executive has the legal right to enter into this Agreement and to perform all of the obligations on
the Executive’s part to be performed hereunder in accordance with its terms and that the Executive
is not a party to any agreement or understanding, written or oral, which could prevent the
Executive from entering into this Agreement or performing all of the Executive’s obligations
hereunder. The Executive further represents and warrants that he has been advised to consult with
an attorney and that he has been represented by the attorney of his choosing during the negotiation
of this Agreement, that he has consulted with his attorney before executing this Agreement, that he
has carefully read and fully understand all of the provisions of this Agreement and that he is
voluntarily entering into this Agreement.

13

 

     22. WITHHOLDING. The Company may withhold from any and all amounts payable under this
Agreement such federal, state and local taxes as may be required to be withheld pursuant to any
applicable law or regulation.

     23. SURVIVAL. The respective obligations of, and benefits afforded to, the Company
and Executive which by their express terms or clear intent survive termination of Executive’s
employment with the Company, including, without limitation, the provisions of Sections 8 through
24, inclusive of this Agreement, will survive termination of Executive’s employment with the
Company, and will remain in full force and effect according to their terms.

     24. AGREEMENT OF THE PARTIES. The language used in this Agreement will be deemed to
be the language chosen by the parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any party hereto. Neither Executive nor the Company shall be
entitled to any presumption in connection with any determination made hereunder in connection with
any arbitration, judicial or administrative proceeding relating to or arising under this Agreement.

     25. DISPUTE RESOLUTION. In the event of any controversy, dispute or claim between the
parties under, arising out of or related to this Agreement (including but not limited to, claims
relating to breach, termination of this Agreement, or the performance of a party under this
Agreement) whether based on contract, tort, statute or other legal theory (collectively referred to
hereinafter as “Disputes”), the parties shall follow the dispute resolution procedures set
forth below. The parties shall first attempt to resolve a dispute, at the written request of
either party, through discussions between the Executive and an authorized senior management
representative of the Company. If a dispute is not resolved by the foregoing discussions between
the senior management of the Company and the Executive within thirty (30) days, the parties agree,
at the written request of either party, to submit the dispute to a sole mediator selected by the
parties for settlement within an additional thirty-day period.

     To the extent any Dispute is not settled by mediation as outlined above, then any Dispute
shall be finally settled by arbitration in accordance with the rules of the American Arbitration
Association then in force, and that the arbitration hearings shall be held in Boston,
Massachusetts. The parties agree to (i) appoint an arbitrator who is knowledgeable in employment
and human resource matters and, to the extent possible, the industry in which the Company operates,
and instruct the arbitrator to follow substantive rules of law; (ii) require the testimony to be
transcribed; and (iii) require the award to be accompanied by findings of act and a statement of
reasons for the decision. The arbitrator shall have the authority to permit discovery, to the
extent deemed appropriate by the arbitrator, upon request of a party, but such discovery process
shall continue for no more than thirty (30) days. The arbitrator shall have no power or authority
to add to or detract from the written agreement of the parties. If the parties cannot agree upon
an arbitrator within ten (10) days after demand by either of them, either or both parties may
request the American Arbitration Association name a panel of five (5) arbitrators. The Company
shall strike the names of two (2) off this list, the Executive shall also strike two (2) names, and
the remaining name shall be the arbitrator. The parties shall stipulate that arbitration shall be
completed within sixty (60) days. All costs and expenses, including attorneys’ and the
arbitrator’s fees, of all parties incurred in any dispute which is determined and/or settled by
arbitration shall be borne by the party determined to be primarily liable in respect of such

14

 

dispute; provided, however, that if complete liability is not assessed against any one
party, the parties shall share the total costs in proportion to their respective amounts of
liability so determined. Any award shall be final, binding and conclusive upon the parties and a
judgment rendered thereon may be entered in any court having jurisdiction thereof. This Section
shall not limit the right of any party to sue for injunctive relief for a breach of the obligations
in Section 11 (a)-(g) inclusive.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement, effective as of the date
first written above.

	 	 	 	 	 	 	 
	 	 	CLINICAL DATA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Andrew J Fromkin
 

Andrew J. Fromkin
	 	 
	 

	 	 	 	President and CEO	 	 
	 
	 	 	 	 	 	 
	 	 	Date: June 16, 2008	 	 
	 
	 	 	 	 	 	 
	 	 	C. EVAN BALLANTYNE	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ C. Evan Ballantyne	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Date: June 16, 2008	 	 

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APPENDIX A

FORM OF RELEASE

AGREEMENT AND GENERAL RELEASE

     Clinical Data, Inc., its affiliates, subsidiaries, divisions, successors and assigns in such
capacity, and the current, future and former employees, officers, directors, trustees and agents
thereof (collectively referred to throughout this Agreement as “Employer”), and C. Evan
Ballantyne (“Executive”), the Executive’s heirs, executors, administrators, successors and
assigns (collectively referred to throughout this Agreement as “Employee”) agree:

     1. Last Day of Employment. Executive’s last day of employment with Employer is
[insert date]. In addition, effective as of [insert date], Executive resigns from the Executive’s
position as Chief Financial Officer of Employer and will not be eligible for any benefits or
compensation after [insert date], other than as specifically provided in Sections 6 and 8 of the
Executive Employment Agreement between Employer and Executive dated
as of June 16, 2008 (the
“Employment Agreement”). Executive further acknowledges and agrees that, after [insert date], the
Executive will not represent the Executive as being a director, employee, officer, trustee, agent
or representative of Employer for any purpose. In addition, effective as of [insert date],
Executive resigns from all offices, directorships, trusteeships, committee memberships and
fiduciary capacities held with, or on behalf of, Employer or any benefit plans of Employer. These
resignations will become irrevocable as set forth in Section 3 below.

     2. Consideration. The parties acknowledge that this Agreement and General Release is
being executed in accordance with Section 9 of the Employment Agreement.

     3. Revocation. Executive may revoke this Agreement and General Release for a period
of fifteen (15) calendar days following the day Executive executes this Agreement and General
Release. Any revocation within this period must be submitted, in writing, to Employer and state,
“I hereby revoke my acceptance of our Agreement and General Release.” The revocation must be
personally delivered to Randal J. Kirk, Sr. Managing Director and CEO, c/o Third Security, LLC, The
Governor Tyler, 1881 Grove Avenue, Radford, VA 24141, or his designee, or mailed to this same
person and address, and postmarked within fifteen (15) calendar days of execution of this Agreement
and General Release. This Agreement and General Release shall not become effective or enforceable
until the revocation period has expired. If the last day of the revocation period is a Saturday,
Sunday, or legal holiday, then the revocation period shall not expire until the next following day
which is not a Saturday, Sunday, or legal holiday.

     4. General Release of Claims. (A) The Employee knowingly and voluntarily releases and
forever discharges Employer from any and all actions, causes of action, contributions, indemnities,
duties, debts, sums of money, suits, controversies, restitutions, understandings, agreements,
promises, claims regarding stock, stock options or other forms of equity compensation, commitments,
damages, fees and liabilities, responsibilities and any and all claims, demands, executions and
liabilities of whatsoever kind, nature or description, oral or written, known or unknown, matured
or unmatured, suspected or unsuspected at the present time, in law or in equity, whether known and
unknown, against Employer, which the Employee has,

17

 

has ever had or may have as of the date of execution of this Agreement and General Release,
including, but not limited to, any alleged violation of:

	 	–	 	Title VII of the Civil Rights Act of 1964, as amended;
	 
	 	–	 	The Civil Rights Act of 1991;
	 
	 	–	 	Sections 1981 through 1988 of Title 42 of the United States Code, as amended;
	 
	 	–	 	The Employee Retirement Income Security Act of 1974, as amended;
	 
	 	–	 	The Immigration Reform and Control Act, as amended;
	 
	 	–	 	The Americans with Disabilities Act of 1990, as amended;
	 
	 	–	 	The Age Discrimination in Employment Act of 1967, as amended;
	 
	 	–	 	The Older Workers Benefit Protection Act of 1990;
	 
	 	–	 	The Worker Adjustment and Retraining Notification Act, as amended;
	 
	 	–	 	The Occupational Safety and Health Act, as amended;
	 
	 	–	 	The Family and Medical Leave Act of 1993;
	 
	 	–	 	Any wage payment and collection, equal pay and other similar laws, acts and
statutes of the Commonwealth of Massachusetts;
	 
	 	–	 	Any other federal, state or local civil or human rights law or any other local,
state or federal law, regulation or ordinance;
	 
	 	–	 	Any public policy, contract, tort, or common law; or
	 
	 	–	 	Any allegation for costs, fees, or other expenses including attorneys’ fees
incurred in these matters.

     Notwithstanding anything herein to the contrary, the sole matters to which the Agreement and
General Release do not apply are: (i) Employee’s express rights or claims for accrued vested
benefits under any employee benefit plan, policy or arrangement maintained by Employer or under
COBRA; (ii) Employee’s rights under the provisions of the Employment Agreement which are intended
to survive termination of employment; (iii) Employee’s rights as a stockholder; or (v) any rights
of the Executive to indemnification as a Director or Officer of the Company.

     (B) For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the undersigned parties, except as expressly provided under paragraph (C)
immediately below, the Company does hereby remise, release, acquit and forever discharge Employee
of and from all actions, causes of action, contributions, indemnities, duties, debts, sums of
money, suits, controversies, restitutions, understandings, agreements, promises,

18

 

commitments, damages, responsibilities and any and all claims, demands, executions and liabilities
of whatsoever kind, nature or description, oral or written, known or unknown, matured or unmatured,
suspected or unsuspected at the present time, in law or in equity, including, without limitation,
any claims which have heretofore arisen or which may arise out of or are or may be in any way or in
any manner connected with or related to Employee’s acts performed for, on behalf and in the name of
the Company, any actions taken by Employee in his capacity as an officer or director of the
Company, or the Employee’s employment by the Company, which the Releasing Party ever had, now has
or hereafter can, shall or may have against the Released Party, from the beginning of the world to
the date hereof.

     (C) Expressly excluded from the above release of all claims are any and all claims which
result from any of the following upon final adjudication thereof by a court of competent
jurisdiction after all appeal periods have lapsed or have been waived by the relevant party: (i)
theft, embezzlement or forgery by Employee relating to the Company, its clients or former clients
or its affiliated companies; (ii) gross negligence or actual or constructive fraud by Employee in
the conduct of the Company’s business or in the conduct of the affairs of any client or former
client of the Company; and (iii) breach of any duty owed by Employee under applicable law
including, but not limited to, breach of any fiduciary duty or breach of any other legal duty by
Employee in the conduct of the Company’s business as an officer or director of the Company, or in
the conduct of the affairs of any client or former client of the Company.

     (D) The parties recognize and agree that the Employee’s right to receive any bonus payment to
which the Employee may be entitled under Section 8 of the Executive Employment Agreement, including
any bonus-related portion of the Accrued Amount, or the Pro Rata Bonus, can only be established
after the review and calculations of the applicable fiscal year bonus entitlements are made by the
Board of Directors (including any committee thereof). Once such calculations are made by the Board
of Directors (including any committee thereof), the Employee’s right to receive the Pro Rata Bonus
(or any applicable bonus-related portion of the Accrued Amount) shall be accrued and paid as
promptly as practicable following a determination of the bonus by the Board of Directors (or any
committee thereof) in the event the Employee is entitled to be paid such bonus under the provisions
of Section 8(a)-(d) of the Executive Employment Agreement. Notwithstanding the foregoing, if the
Employee is terminated by the Company without Cause, or by the Executive for Good Reason, the Board
of Directors (including any committee thereof) shall use its best efforts to meet as promptly as
practicable within 30 days following any notice of such termination by the Company without Cause,
or by the Executive for Good Reason, in order to make a good faith determination of the Pro Rata
Bonus, and to pay such Pro Rata Bonus (if earned) within 30 days of the determination by the Board
of Directors (including any committee thereof).

     5. No Claims Permitted. Employee waives Executive’s right to file any charge or
complaint against Employer arising out of Executive’s employment with or separation from Employer
before any federal, state or local court or any state or local administrative agency, except where
such waivers are prohibited by law.

     6. Affirmations. Employee affirms Executive has not filed, has not caused to be
filed, and is not presently a party to, any claim, complaint, or action against Employer in any
forum. Employee further affirms that the Executive has been paid and/or has received all

19

 

compensation, wages, bonuses, commissions, and/or benefits to which Executive may be entitled
and no other compensation, wages, bonuses, commissions and/or benefits are due to Executive, except
as provided in Sections 6 and 8 of the Employment Agreement. Employee also affirms Executive has
no known workplace injuries.

     7. Cooperation; Return of Property. Employee agrees to reasonably cooperate with
Employer and its counsel in connection with any investigation, administrative proceeding or
litigation relating to any matter that occurred during Executive’s employment in which Executive
was involved or of which Executive has knowledge. Employer will reimburse the Employee for any
reasonable out-of-pocket travel, delivery or similar expenses incurred in providing such service to
Employer. Employee represents that Executive has returned to Employer all property belonging to
Employer, including but not limited to any leased vehicle, laptop, cell phone, keys, access cards,
phone cards and credit cards, provided that Executive may retain, and Employer shall cooperate in
transferring, Executive’s cell phone number and any home communication and security equipment as
well as Executive’s rolodex and other address books.

     8. Governing Law and Interpretation. This Agreement and General Release shall be
governed and conformed in accordance with the laws of the Commonwealth of Massachusetts without
regard to its conflict of laws provisions. In the event Employee or Employer breaches any
provision of this Agreement and General Release, Employee and Employer affirm either may institute
an action to specifically enforce any term or terms of this Agreement and General Release. Should
any provision of this Agreement and General Release be declared illegal or unenforceable by any
court of competent jurisdiction and should the provision be incapable of being modified to be
enforceable, such provision shall immediately become null and void, leaving the remainder of this
Agreement and General Release in full force and effect. Nothing herein, however, shall operate to
void or nullify any general release language contained in the Agreement and General Release.

     9. No Admission of Wrongdoing. Employee agrees neither this Agreement and General
Release nor the furnishing of the consideration for this Release shall be deemed or construed at
any time for any purpose as an admission by Employer of any liability or unlawful conduct of any
kind.

     10. Amendment. This Agreement and General Release may not be modified, altered or
changed except upon express written consent of both parties wherein specific reference is made to
this Agreement and General Release.

     11. Entire Agreement. This Agreement and General Release sets forth the entire
agreement between the parties hereto and fully supersedes any prior agreements or understandings
between the parties; provided, however, that notwithstanding anything in this Agreement and General
Release, the provisions in the Employment Agreement which are intended to survive termination of
the Employment Agreement, including but not limited to those contained in Section 11 thereof, shall
survive and continue in full force and effect. Employee acknowledges Executive has not relied on
any representations, promises, or agreements of any kind made to Executive in connection with
Executive’s decision to accept this Agreement and General Release.

20

 

     EMPLOYEE HAS BEEN ADVISED THAT EXECUTIVE HAS UP TO TWENTY-ONE (21) CALENDAR DAYS TO REVIEW
THIS AGREEMENT AND GENERAL RELEASE AND HAS BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY
PRIOR TO EXECUTION OF THIS AGREEMENT AND GENERAL RELEASE.

     EMPLOYEE AGREES ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL
RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE (21) CALENDAR DAY
CONSIDERATION PERIOD.

     HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES SET
FORTH HEREIN, AND TO RECEIVE THE SUMS AND BENEFITS SET FORTH IN THE EMPLOYMENT AGREEMENT, EMPLOYEE
FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE
INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS EXECUTIVE HAS OR MIGHT HAVE AGAINST EMPLOYER.

     IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this Agreement and
General Release as of the date set forth below:

	 	 	 	 	 	 	 
	 	 	CLINICAL DATA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	

	 	 
	 

	 	 	 	 

Andrew J. Frommkin
	 	 
	 

	 	 	 	President and CEO	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	C.EVAN BALLANYTNE	 	 
	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 

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APPENDIX B

TAX GROSS-UP PAYMENT RULES AND PROCEDURES

     1. Subject to Paragraph 3 below, all determinations required to be made under Section 10 of
this Agreement, including whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by an accounting firm (the “Accounting Firm”) selected in accordance with
Paragraph 2 below. The Accounting Firm shall provide detailed supporting calculations both to the
Company and Executive within 15 business days of the event that results in the potential for an
excise tax liability for the Executive, which could include but is not limited to a Change in
Control and the subsequent vesting of any cash payments or awards, or the Executive’s termination
of employment, or such earlier time as is required by the Company. The initial Gross-Up Payment,
if any, as determined pursuant to this Paragraph 1, shall be paid on the Executive’s behalf to the
applicable taxing authorities within five (5) days of the receipt of the Accounting Firm’s
determination. If the Accounting Firm determines that no Excise Tax is payable to the Executive,
it shall furnish the Executive with a written report indicating that he has substantial authority
not to report any Excise Tax on his federal income tax return. Any determination by the Accounting
Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company
should have been made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to Paragraph 3 below and
Executive thereafter is required to make a payment or additional payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred and any such
Underpayment, increased by all applicable interest and penalties associated with the Underpayment,
shall be promptly paid by the Company to or for the benefit of Executive. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income tax
at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes on earned income at the highest marginal
rate of taxation in the state and locality of Executive’s residence on the Effective Date of
Termination, net of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.

     2. The Accounting Firm shall be a public accounting firm proposed by the Company and agreed
upon by the Executive. If Executive and the Company cannot agree on the firm to serve as the
Accounting Firm within ten (10) days after the date on which the Company proposed to Executive a
public accounting firm to serve as Auditor, then Executive and the Company shall each select one
accounting firm and those two firms shall jointly select the accounting firm to serve as the
Accounting Firm within ten (10) days after being requested by the Company and Executive to make
such selection. The Company shall pay the Auditor’s fee.

     3. Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than fifteen (15) business days
after Executive knows of such claim and shall apprise the Company of the nature

22

 

of such claim and the date on which such claim is requested to be paid. Executive shall not
pay such claim prior to the expiration of the period ending on the date that any payment of taxes
with respect to such claim is due or the thirty day period following the date on which Executive
gives such notice to the Company, whichever period is shorter. If the Company notifies Executive
in writing prior to the expiration of such period that it desires to contest such claim, Executive
shall (i) give the Company any information reasonably requested by the Company relating to such
claim, (ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by the Company, (iii)
cooperate with the Company in good faith in order effectively to contest such claim, and (iv)
permit the Company to participate in any proceedings relating to such claim; provided, however,
that the Company shall bear and pay directly all costs and expenses (including attorneys fees and
any additional interest and penalties) incurred in connection with such contest and shall indemnify
and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such representation and payment
of costs and expenses. Without limitation of the foregoing provisions of this Paragraph 3, the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect to such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment to Executive, on
an interest-free basis and shall indemnify and hold Executive harmless, on an after-tax basis, from
any Excise Tax and income tax, including interest or penalties with respect thereto, imposed with
respect to such advance or with respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations relating to payment of taxes for
the taxable year of Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company’s control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other authority.

     4. If, after the receipt by Executive of an amount advanced by the Company pursuant to
Paragraph 3 above, Executive becomes entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company’s complying with the requirements of Paragraph 3), promptly
pay to the Company the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto).

23

 

APPENDIX C

DEFINITION OF A CHANGE IN CONTROL

A “Change in Control” means the consummation of or entering into by the Company of any
agreement, contract, plan or understanding with respect to (i) the merger, consolidation or
reorganization of the Company into or with another corporation in a business combination
transaction in which the Company is the target of such transaction (except one in which the holders
of capital stock of the Company immediately prior to such merger, consolidation or reorganization
continue to beneficially own (within the meaning of Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the “Act”)) at least a majority of the voting power of the capital stock
of the surviving corporation), (ii) any sale, lease or transfer of all or substantially all of the
capital stock, assets or intellectual property of the Company (except (A) to an entity
majority-owned or controlled by the Company or by any of the holders of capital stock of the
Company, or (B) in any transaction structured as a spin-off or divestiture of assets or
intellectual property of the Company or its subsidiaries ), (iii) any other transaction other than
an equity financing transaction or series of related equity financing transactions pursuant to or
as a result of which an individual, entity or group (within the meaning of Sections 13(d)(3) or
14(d)(2) of the Act) acquires or beneficially owns capital stock of the Company representing a
majority of the Company’s outstanding voting power, or (iv) a complete or substantial liquidation
or dissolution of the Company. In the event of any interpretation of this definition, the Board of
Directors of the Company, upon advice of legal counsel, shall have final and conclusive authority,
so long as such authority is exercised in good faith.

24

 

APPENDIX D

EQUITY AWARDS

     The following chart summarizes the Executive’s outstanding options as of June 16, 2008 that
are subject to Section 5 of this Agreement:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grant	 	No. of	 	Exercise	 	 	 	 
	Date	 	Options	 	Price	 	Vested	 	Unvested
	 	07AUG06	 	 	 	75,000	 	 	$	8.65	 	 	 	25,000	 	 	 	50,000	 
	 	14JUN07	 	 	 	45,000	 	 	$	14.99	 	 	 	15,000	 	 	 	30,000	 
	 	17APR08	 	 	 	50,000	 	 	$	16.95	 	 	 	-0-	 	 	 	50,000	 
	 	 	 	 	 	 	 	 	 
	Total	 	 	170,000	 	 	NA	 	 	 	40,000	 	 	 	130,000	 
	 	 	 	 	 	 	 	 	 

25

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