Document:

exv10w1

Exhibit 10.1

ROCKVILLE BANK

ADVISORY AGREEMENT

     This Advisory Agreement (this “Agreement”) is made and entered into as of the 26th
day of January, 2011, by and between Rockville Bank, a Connecticut bank (the “Bank”), and William
J. McGurk (the “Advisor”).

WITNESSETH:

     WHEREAS, the Advisor will have served as President and Chief Executive Officer (“CEO”) of the
Bank from 1980 until his anticipated retirement at the annual shareholders’ meeting on April 26,
2011, as a member of the board of directors of the Bank from 1981 until the present and as
President, Chief Executive Officer and a Director of Rockville Financial, Inc. from 2004 until
April 26, 2011, and thereby gained unprecedented familiarity and insight into the Bank, its
operations and relationships with the communities it grew to serve; and

     WHEREAS, the Bank desires to retain the Advisor in an advisory capacity to advise his
successor as President and CEO and perform the services described below; and

     WHEREAS, the Advisor is willing to provide such services to the Bank on the terms and
conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Bank and the Advisor hereby agree as follows:

1. Definitions.

     (a) Advisory Period means the period commencing on the Effective Date and ending on the
twenty-four (24) month anniversary of such date, or as may be extended by mutual agreement of the
parties in a written amendment hereto.

     (b) “Material Breach” means one of the following events in which the Advisor: (A) willfully
fails and continues to fail to substantially perform his material duties under this Agreement
(other than any failure resulting from the Advisor’s incapacity due to physical or mental injury or
illness or Disability or any failure after the issuance of a notice of termination by Advisor)
which failure is demonstrably and materially damaging to the financial condition or reputation of
the Bank or its affiliates, and which failure continues for more than 48 hours after a written
demand for substantial performance is delivered to the Advisor from the Board of Directors of the
Bank (the “Board”); (B) commits an act involving moral turpitude in the course of his services for
the Bank, its subsidiaries, affiliates or predecessors; (C) engages in willful misconduct with
respect to Bank business that is demonstrably and materially damaging to the financial

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condition or reputation of the Bank or its affiliates; (D) breaches his fiduciary duty to the
Bank for personal profit; (E) willfully violates, in any material respect, any banking law, rule or
regulation (or enforcement action, if any, to which the Bank becomes subject) with respect to his
performance of services for the Bank; or (F) materially violates one or more material terms of this
Agreement in a manner that is demonstrably and materially damaging to the financial condition or
reputation of the Bank or its affiliates, and which material violation the Advisor fails to cure
during a 20-day period following the date on which the Advisor receives written notice from the
Board of the material breach specifying the particulars of the breach in detail; provided that the
20-day period shall be extended for a reasonable period of time if Advisor takes, and continues to
take with commercially reasonable diligence, remedial steps the effect of which would be to cure
the material breach within such reasonable period of time. The termination of this Agreement shall
not be deemed to be for “Material Breach” within the meaning of this Section unless and until there
shall have been delivered to the Advisor a copy of a notice from the Board specifying the
particulars of the “Material Breach” in detail.

     (c) “Disability” shall mean the inability to perform, despite reasonable accommodation,
substantially all of his services under this Agreement due to any physical or mental injury or
disease. Disability shall be deemed to have occurred if the Advisor has not performed his duties
hereunder for a continuous period of six months due to any physical or mental injury or disease
that prevents the Advisor from performing substantially all of his services. The existence of such
physical or mental injury or disease shall be determined by a physician selected by the Bank, and
the physician shall certify the existence or absence of such injury or disease to the Bank and the
Advisor. For purposes of this Section, the Advisor shall be deemed to have not performed his duties
hereunder for six months if he has not, within any continuous six-month period, attended to
substantially all of his duties as directed by the CEO during that period.

     (d) Effective Date means April 26, 2011.

     (e) Notice of Termination means a written notice, which shall indicate the specific
termination provision relied upon in this Agreement and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of Advisor’s engagement under
the provision so indicated, given to the non-terminating party, in the case of Advisor, at least
thirty (30) days prior to the date of termination of services and, in the case of Bank, at least
thirty (30) days prior to the date of termination of services if terminated pursuant to Section
2(b) below (termination for Material Breach), otherwise no advance notice from Bank is required.

2. Term and Termination of Agreement.

     The term of this Agreement shall be the Advisory Period, unless this Agreement is otherwise
terminated pursuant to this Section. Any termination by the Bank or the Advisor of this Agreement
shall be communicated by Notice of Termination to the other.

     (a) Termination for Death or Disability Prior to the End of the Advisory Period. If,
during the Advisory Period, this Agreement is terminated on account of the Advisor’s death or
Disability, the Advisor shall receive any unpaid Fees (as defined in Section 4(b) below) calculated

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through the date of death or the date this Agreement is terminated due to Disability and the
reimbursement of any unreimbursed reimbursable expenses under this Agreement incurred by Advisor
calculated through the date of death or termination due to Disability, in each case within thirty
days of the date of death or termination.

     (b) Termination for Material Breach Prior to the End of the Advisory Period. If,
during the Advisory Period, the Bank terminates this Agreement for Cause, the Advisor shall receive
from the Bank any unpaid Fees and the payment of any unreimbursed reimbursable expenses under this
Agreement incurred by Advisor calculated through the date of the termination within thirty days of
the date of the termination.

     (c) Termination by the Bank Without Material Breach Prior to the End of the Advisory
Period. If, during the Advisory Period, this Agreement is terminated by the Bank other than due
to a Material Breach, then the Advisor shall receive from the Bank any unpaid Fees payable and
calculated through the end of the Advisory Period, when such Fees otherwise would have been paid to
Advisor had such termination not occurred, and the payment of any unreimbursed reimbursable
expenses under this Agreement incurred by Advisor calculated through the date of the termination
within thirty days of the date of the termination.

     (d) Termination by Advisor. If, during the Advisory Period, this Agreement is
terminated by Advisor other than due to a material violation by the Bank of this Agreement, the
Advisor shall receive from the Bank any unpaid Fees and the payment of any unreimbursed
reimbursable expenses under this Agreement incurred by Advisor calculated through the date of the
termination within thirty days of the date of the termination. If, during the Advisory Period,
this Agreement is terminated by the Advisor due to a material violation by the Bank of this
Agreement, then the Advisor shall receive from the Bank any unpaid Fees payable and calculated
through the end of the Advisory period, when such Fees otherwise would have been paid to Advisor
had such termination not occurred, and the payment of any unreimbursed reimbursable expenses under
this Agreement incurred by Advisor calculated through the date of the termination within thirty
days of the date of the termination. For purposes of this Agreement, a material violation by the
Bank of this Agreement will be deemed to have occurred upon the occurrence of either of the
following circumstances provided the Advisor shall have given written notice of such circumstances
within a period not to exceed 30 days of the initial existence of such circumstance(s) and the Bank
shall not have remedied such circumstance(s) within 10 days after receipt of such notice: (i) the
failure by the Bank to pay to Advisor any compensation due hereunder when due; or (ii) any failure
by the Bank to perform any material obligation under, or breach by the Bank of any material
provision of, this Agreement.

3. Title, Authority, Position and Duties.

     (a) The Advisor’s title with each of Rockville Financial Inc. and the Bank during the Advisory
Period will be “Vice Chairman — Public Affairs”. In this capacity, the Advisor’s services will be
to focus on market outreach and provide business development, industry and community public
relations and occasional ombudsman efforts. The Advisor’s expected duties may include preparation
and delivery of marketing messages, serving as a spokesman on selected occasions and appearing at
events on behalf of the Bank all as reasonably requested or approved by the CEO, a

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senior executive designated by the CEO or the Chairman. Advisor’s services under this
Agreement are in addition to his service as a full voting member on the Board of Directors of each
institution. The Advisor will serve on the committees of the Board of Directors of the Bank (and
its holding company) as determined pursuant to the Board’s then standard practices.

     (b) The Advisor’s position will be non-executive in nature, with the Advisor’s authority being
equal to but no greater than that of other Board members of Rockville Financial, Inc. and of the
Bank. The Advisor will report to the CEO or a person designated by the CEO.

     (c) The Advisor will also serve as a board member, and a member of the grants committee of the
Rockville Bank Foundation. Additionally, the Advisor will provide advice and counseling to the CEO
or to his designees, from time to time as reasonably requested. The Advisor agrees to use his best
efforts to advance the interests of the Bank during the Advisory Period.

     (d) The Bank understands that Advisor may continue to be involved in other business or
volunteer activities during the Advisory Period, including working with and/or being a member,
trustee, or director of any professional organization, community service organization, non-profit
organization or bank industry organization or the like, provided those activities do not conflict
with Advisor’s Non-Compete Obligations (as defined in Section 5(b) of this Agreement) or other
business or ethical conflicts.

     (e) The Advisor will not have a required minimum number of hours of work or a set work
schedule during the Advisory Period; provided, however, the number of hours during which bona fide
services may be performed on behalf of Rockville Financial, Inc., the Bank, Rockville Bank
Foundation and/or any of their affiliates or subsidiaries during the Advisory Period shall not
exceed, in the aggregate, an average of eight hours per week, and in no event shall Advisor perform
services in excess of 20% of the average level of bona fide services he performed (whether as an
employee or independent contractor) over the 36-month period immediately preceding the commencement
of the Advisory Period (as further provided in Section 10 below).

4. Compensation.

	 	 	During the Advisory Period, the Advisor shall be compensated by the Bank as follows:

     (a) The Bank shall pay to the Advisor for his services, on a monthly basis, compensation at a
rate calculated on the basis of $96,000 per annum ($8,000 per month) (the “Retainer”).

     (b) The Bank additionally shall pay to the Advisor, on a monthly basis, the sum of $500 (the
“Transportation Charge”) to cover all local transportation-related expenses to be incurred by
Advisor in the provision of services hereunder (this being defined as travel to any location in the
States of Connecticut or Massachusetts) (the Retainer and the Transportation Charge are
collectively referred to as the “Fees”). In addition, the Bank shall
reimburse the Advisor for his ordinary and necessary business expenses (other than local
transportation-related expenses), incurred in connection with the performance of his services for
the Bank under this Agreement up to $500 per month, in each case in accordance with Bank policy.

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     (c) The Advisor shall not be an employee and shall not be entitled, based upon this Agreement
or the services to be rendered pursuant hereto, to participate in any of the Bank’s employee plans
or benefits programs as offered by the Bank from time to time.

     (d) The Advisor will determine the methods, details and means of providing the services
required hereunder. The Advisor shall perform such services at any place or location and at such
times as the Advisor shall determine. Additionally, to the extent required for his duties as a
Board or committee member, the Bank will provide office space for the use of the Advisor at 25 Park
Street, Rockville, Connecticut 06066 and will provide minimal administrative support for such
duties through staff selected by the CEO or a person designated by the CEO.

     (e) Advisor shall receive as additional compensation any fee or other compensation paid by
Rockville Financial, Inc., the Bank, Rockville Bank Foundation or any of their respective
affiliates or subsidiaries to or on behalf of any other member of any board or committee of which
the Advisor also is a member, in accordance with the standard compensation practices of such boards
or committees.

     (f) Any Fees, reimbursements or other compensation paid by Rockville Financial, Inc., the
Bank, Rockville Bank Foundation or any of their respective affiliates or subsidiaries are exclusive
of any Connecticut sales and use tax, if any, due thereon. The payor of such compensation shall be
solely responsible for the proper and timely reporting and remittance of such taxes, and shall
indemnify, defend and hold harmless Advisor from and against any such taxes, interest and penalties
assessed or claimed by the State of Connecticut based upon the compensation paid hereunder.

     (g) The Bank shall pay the monthly Fees due for any monthly period hereunder on or before the
first day of such monthly period, and any reimbursement of expenses shall be paid within twenty
days of the submission by Advisor of a written request for same with adequate substantiation. Any
amounts required to be paid hereunder, if not paid when due, shall bear interest at the lower of
the rate of one percent per month or the legal maximum until paid in full, and the Bank agrees to
pay Advisor’s costs of collection, including reasonable attorneys’ fees, in the event of
nonpayment.

5. Further Obligations of the Advisor.

     (a) Confidentiality. Unless he obtains the prior written consent of the Bank, the
Advisor shall at all times, both during and following the Advisory Period, keep confidential and
shall refrain from using for the benefit of himself, or any person or entity other than the Bank or
its subsidiaries or affiliates, any material document or information obtained from the Bank or its
subsidiaries, affiliates or predecessors, in the course of his employment with any of them
concerning its properties, operations or business (unless such document or information is readily

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ascertainable from public or published information or trade sources or has otherwise been made
available to the public through no fault of his own) until the same ceases to be material (or
becomes so ascertainable or available); provided, however, that nothing herein shall prevent the
Advisor, with or without the Bank’s consent, from participating in or disclosing documents or
information in connection with any judicial or administrative investigation, inquiry or proceeding
or the Bank’s public reporting requirements to the extent that such participation or disclosure is
required under applicable law or Advisor has received written advice from his legal counsel that
such participation or disclosure may be required under applicable law.

     (b) Non-Compete and Non-Solicitation. The Advisor hereby covenants and agrees that,
for the Advisory Period (whether or not this Agreement is terminated within the Advisory Period
provided the Bank satisfies its financial obligations under this Agreement) he shall not, without
the written consent of the Bank, either directly or indirectly, the following comprising the
Advisor’s non-competition and non-solicitation obligations (“Non-Compete Obligations”):

     (i) solicit or accept employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any savings bank, savings and loan association,
bank, trust company, bank holding company, savings and loan holding company, or other
similar institution that maintains a branch office in Hartford, New London, Tolland or
Windham Counties, Connecticut (each a “Competing Bank”);

     (ii) solicit, offer employment to, or take any other action intended, or that a
reasonable person acting in like circumstances would expect, to have the effect of causing
any officer or employee of the Bank or any of its subsidiaries or affiliates to terminate
his or her employment and accept employment or become affiliated with, or provide services
for compensation in any capacity whatsoever to, a Competing Bank;

     (iii) provide any information, advice or recommendation with respect to any such
officer or employee to a Competing Bank, which is intended, or that a reasonable person
acting in like circumstances would expect, to have the effect of causing any officer or
employee of the Bank or any of its subsidiaries or affiliates to terminate his or her
employment and accept employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, a Competing Bank; or

     (iv) solicit, provide any information, advice or recommendation or take any other
action intended, or that a reasonable person acting in like circumstances would expect, to
have the effect of causing any customer of the Bank to terminate an existing relationship
with the Bank.

     Notwithstanding the foregoing, Advisor may, if requested, provide a written letter of
recommendation or an oral reference on behalf of an individual who then is employed or formerly was
employed by the Bank. It is further agreed that the ownership of not more than one percent of the
equity securities of any company having securities listed on an exchange or regularly traded in the
over-the-counter market shall not, of itself, be deemed a violation of the provisions of this
Section 5(b).

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6. Equitable Relief.

     The Advisor acknowledges and agrees that in the event of conduct by the Advisor inconsistent
with any of the provisions of Sections 5(a) and 5(b) hereof, the Bank may suffer irreparable harm
for which monetary damages alone will constitute an insufficient remedy. Consequently, in the event
of any such conduct, the Bank may, in addition to other rights and remedies existing in its favor,
apply to any court of law or equity of competent jurisdiction for injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof, in each case without the
requirement of posting a bond or proving actual damages.

7. Successors.

     This Agreement and all rights of the Advisor shall inure to the benefit of and be enforceable
by the Advisor’s personal or legal representatives, estates, executors, administrators, heirs and
beneficiaries. All amounts payable to the Advisor hereunder shall be paid, in the event of the
Advisor’s death, to the Advisor’s estate, heirs and representatives, and, except as provided in
this Section, no party may assign this Agreement or any rights, interests, or obligations hereunder
without the prior written approval of the other party. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

8. Severability and Enforcement.

     The provisions of this Agreement shall be regarded as divisible, and if any such provisions or
any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remainder of such provisions or parts hereof and the
applicability hereof shall not be affected hereby. It is expressly understood and agreed that
although the Advisor and the Bank consider the restrictions contained herein to be reasonable, if a
final judicial determination is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement is an unenforceable restriction
against Advisor, the provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court of competent
jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained herein.

9. Amendment.

     This Agreement may not be amended or modified at any time except by a written instrument
executed by the Bank and the Advisor.

10. Independent Contractor; Effect on Prior Separation from Service.

     The parties agree that the Advisor will retire as an employee of the Bank and its affiliates
and subsidiaries as of the Effective Date, and will not be acting as an employee during the

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Advisory Period under this Agreement, and that the Bank shall not be required to withhold
from amounts to be paid to the Advisor hereunder any federal, state or local withholding or other
taxes, or make any contributions for social security, Medicare or the like. The parties agree that
Advisor will separate from service (within the meaning of Section 409A of the Internal Revenue
Code of 1986, as amended (“Code”)) with the Bank effective April 26, 2011, and that the duties as
Advisor will not impact the date of such separation from service. Without limitation, the
expectation of the parties is that the level of bona fide services to be performed by Advisor for
the Bank during the Advisory Period shall permanently decrease to a level equal to 20% or less of
the average level of bona fide services he performed (whether as an employee or an independent
contractor) over the immediately preceding 36-month period.

11. Dispute Resolution.

     (a) In the event of any dispute, claim, question or disagreement arising out of or relating to
this Agreement or the breach hereof, the parties hereto shall use their best efforts to settle such
dispute, claim, question or disagreement. To this effect, they shall consult and negotiate with
each other, in good faith, and, recognizing their mutual interests, attempt to reach a just and
equitable solution satisfactory to both parties.

     (b) If they do not reach such a solution within a period of thirty (30) days, then the parties
agree first to endeavor in good faith to amicably settle their dispute by mediation under the
Commercial Mediation Rules of the American Arbitration Association (the “AAA”), before resorting to
arbitration. Thereafter, any unresolved controversy or claim arising out of or relating to this
Agreement or any alleged breach hereof, upon notice by any party to the other, shall be submitted
to and finally settled by arbitration in accordance with the Commercial Arbitration Rules (the
“Rules”) of the AAA in effect at the time demand for arbitration is made by any such party. The
parties shall mutually agree upon a single arbitrator within thirty (30) days of such demand. In
the event that the parties are unable to so agree within such thirty (30) day period, then within
the following thirty (30) day period, one arbitrator shall be named by each party. A third
arbitrator shall be named by the two arbitrators so chosen within ten (10) days after the
appointment of the first two arbitrators. In the event that the third arbitrator is not agreed
upon, he or she shall be named by the AAA. Arbitration shall occur in Hartford, Connecticut or such
other location as may be mutually agreed to by the parties.

     (c) The award determined by the panel of arbitrators shall be final and binding, and judgment
may be entered based upon such award in any court of law having competent jurisdiction. The award
is subject to confirmation, modification, correction or vacation only as explicitly provided for
in Title 9 of the United States Code. The prevailing party may be awarded pre- and post-award
interest, and may be awarded attorney’s fees incurred in connection with the arbitration, in each
case in the discretion of the arbitrators. The parties acknowledge that this Agreement evidences a
transaction involving interstate commerce. The United States Arbitration Act and the Rules shall
govern the interpretation, enforcement, and proceedings pursuant to this Section. Any provisional
remedy which would be available from a court of law shall be available from the arbitrators to the
parties to this Agreement pending arbitration. Either party may make an application to the
arbitrators seeking injunctive relief to maintain the status quo, or may seek from a court of
competent jurisdiction any interim or provisional relief that may be necessary to protect

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the rights and property of that party, until such times as the arbitration award is rendered
or the controversy otherwise resolved.

12. Notice.

     Any communication required or permitted to be given under this Agreement, including but not
limited to any notice, direction, designation, consent, instruction, objection or waiver, shall be
in writing and shall be deemed to have been given at such time as it is delivered personally, or
five (5) days after mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at such other address as
one such party may by written notice specify to the other party:

If to the Advisor:

William J. McGurk

21 Still Meadow Lane

Somers, CT 06071

with a copy to:

Alan E. Lieberman, Esq.

Shipman & Goodwin LLP

One Constitution Plaza

Hartford, CT 06103

If to the Bank:

Rockville Bank

1645 Ellington Road

South Windsor, CT 06074

Attention: Raymond Lefurge, Chairman

13. Waiver.

     Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof
shall not be deemed a waiver of such term, covenant or condition. A waiver of any provision of this
Agreement must be made in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any one or
more times shall not be deemed a waiver or relinquishment of such right or power at any other time
or times.

14. Counterparts.

     This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same Agreement.

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15. Governing Law.

     This Agreement shall be governed by and construed and enforced in accordance with the laws of
the State of Connecticut applicable to contracts entered into and to be performed entirely within
the State of Connecticut, except to the extent that federal law controls.

16. Headings and Construction.

     The headings of sections in this Agreement are for convenience of reference only and are not
intended to qualify the meaning of any section. Any reference to a Section herein shall refer to
a section of this Agreement, unless otherwise stated.

17. Indemnification.

     The Bank shall indemnify, hold harmless and defend Advisor from and against any and all
liabilities, actions, administrative proceedings, suits, causes of action, taxes, interest,
penalties, fines, damages, fees (including reasonable attorneys’ fees) and costs (collectively,
the “Costs”), imposed, claimed, or incurred against or by Advisor, arising directly or indirectly
from (i) any act or omission to act taken by Advisor at the direction of Rockville Financial,
Inc., the Bank, or any of their respective affiliates or subsidiaries, or in furtherance of this
Agreement (except to the extent such Costs are the direct result of Advisor’s willful misconduct
or bad faith conduct not reasonably believed by him to be in the best interests of the Bank),
and/or (ii) the enforcement of this indemnity.

18. Entire Agreement: Modifications; Survival.

     This Agreement contains the entire agreement of the parties relating to the subject matter
hereof, and supersedes in its entirety any and all prior agreements, understandings or
representations relating to the subject matter hereof. No modifications of this Agreement shall be
valid unless made in writing and signed by the parties hereto. Notwithstanding the foregoing,
nothing in this Agreement shall be construed to supersede, limit, modify, amend or otherwise impact
the rights of Advisor under any other agreements or understandings that Advisor has with Rockville
Financial, Inc., the Bank and/or any of their respective affiliates or subsidiaries, including but
not limited to an Employment Agreement for William J. McGurk as Amended and Restated as of January
5, 2009, or under any benefit plans or programs in which Advisor is a participant or is or may
become eligible to be a participant. Any payment obligation incurred by a party prior to or as of
the termination or expiration of this Agreement, and Sections 2, 4(f), 4(g), and 5 through 18 of
this Agreement, shall survive the termination or expiration of this Agreement.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.

THE NEXT PAGE IS THE SIGNATURE PAGE.]

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

     THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

/s/ William J. McGurk

William J. McGurk, Advisor

	 	 	 	 	 
	 	ROCKVILLE BANK

 	 
	 	By:  	/s/ Raymond H. Lefurge Jr. 	 
	 	 	Name:  	Raymond Lefurge 	 
	 	 	Title:  	Chairman of the Board of Directors 	 
	 

11exv10w91

Exhibit 10.91

QUALCOMM Incorporated

2006 Long-Term Incentive Plan

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	1. Establishment, Purpose and Term of Plan
	 	 	 	i
	1.1 Establishment
	 	 	 	i
	1.2 Purpose
	 	 	 	i
	1.3 Term of Plan
	 	 	 	i
	2. Definitions and Construction
	 	 	 	i
	2.1 Definitions
	 	 	 	i
	2.2 Construction
	 	viii
	3. Administration
	 	viii
	3.1 Administration by the Committee
	 	viii
	3.2 Authority of Officers
	 	viii
	3.3 Administration with Respect to Insiders
	 	viii
	3.4 Committee Complying with Section 162(m)
	 	viii
	3.5 Powers of the Committee
	 	ix
	3.6 Indemnification
	 	 	 	x
	3.7 Arbitration
	 	 	 	x
	3.8 Repricing Prohibited
	 	 	 	x
	4. Shares Subject to Plan
	 	xi
	4.1 Maximum Number of Shares Issuable
	 	xi
	4.2 Adjustments for Changes in Capital Structure
	 	xi
	5. Eligibility and Award Limitations
	 	xii
	5.1 Persons Eligible for Awards
	 	xii
	5.2 Participation
	 	xii
	5.3 Incentive Stock Option Limitations
	 	xii
	5.4 Award Limits
	 	xiii
	6. Terms and Conditions of Options
	 	xiv
	6.1 Exercise Price
	 	xiv
	6.2 Exercisability and Term of Options
	 	xiv
	6.3 Payment of Exercise Price
	 	xv
	6.4 Effect of Termination of Service
	 	xvi
	6.5 Transferability of Options
	 	xvi
	7. Terms and Conditions of Stock Appreciation Rights
	 	xvii

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TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page
	7.1 Types of SARs Authorized
	 	xvii
	7.2 Exercise Price
	 	xvii
	7.3 Exercisability and Term of SARs
	 	xvii
	7.4 Deemed Exercise of SARs
	 	xvii
	7.5 Effect of Termination of Service
	 	xvii
	7.6 Nontransferability of SARs
	 	xviii
	8. Terms and Conditions of Restricted Stock Awards
	 	xviii
	8.1 Types of Restricted Stock Awards Authorized
	 	xviii
	8.2 Purchase Price
	 	xviii
	8.3 Purchase Period
	 	xviii
	8.4 Vesting and Restrictions on Transfer
	 	xviii
	8.5 Voting Rights; Dividends and Distributions
	 	xix
	8.6 Effect of Termination of Service
	 	xix
	8.7 Nontransferability of Restricted Stock Award Rights
	 	xix
	9. Terms and Conditions of Performance Awards
	 	xix
	9.1 Types of Performance Awards Authorized
	 	xix
	9.2 Initial Value of Performance Shares and Performance Units
	 	xx
	9.3 Establishment of Performance Period, Performance Goals and Performance
Award Formula
	 	xx
	9.4 Measurement of Performance Goals
	 	xx
	9.5 Settlement of Performance Awards
	 	xxi
	9.6 Voting Rights; Dividend Equivalent Rights and Distributions
	 	xxi
	9.7 Effect of Termination of Service
	 	xxii
	9.8 Nontransferability of Performance Awards
	 	xxii
	10. Terms and Conditions of Restricted Stock Unit Awards
	 	xxii
	10.1 Grant of Restricted Stock Unit Awards
	 	xxiii
	10.2 Vesting
	 	xxiii
	10.3 Voting Rights, Dividend Equivalent Rights and Distributions
	 	xxiii
	10.4 Effect of Termination of Service
	 	xxiii
	10.5 Settlement of Restricted Stock Unit Awards
	 	xxiv
	10.6 Nontransferability of Restricted Stock Unit Awards
	 	xxiv

ii

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page
	11. Deferred Compensation Awards
	 	xxiv
	11.1 Establishment of Deferred Compensation Award Programs
	 	xxiv
	11.2 Terms and Conditions of Deferred Compensation Awards
	 	xxv
	12. Other Stock-Based Awards
	 	xxvi
	13. Effect of Change in Control on Options and SARs
	 	xxvi
	13.1 Accelerated Vesting
	 	xxvi
	13.2 Assumption or Substitution
	 	xxvi
	13.3 Effect of Change in Control on Awards Other Than Options and SARs
	 	xxvii
	14. Compliance with Securities Law
	 	xxvii
	15. Tax Withholding
	 	xxvii
	15.1 Tax Withholding in General
	 	xxvii
	15.2 Withholding in Shares
	 	xxviii
	16. Amendment or Termination of Plan
	 	xxviii
	17. Miscellaneous Provisions
	 	xxviii
	17.1 Repurchase Rights
	 	xxviii
	17.2 Provision of Information
	 	xxviii
	17.3 Rights as Employee, Consultant or Director
	 	xxviii
	17.4 Rights as a Stockholder
	 	xxix
	17.5 Fractional Shares
	 	xxix
	17.6 Severability
	 	xxix
	17.7 Beneficiary Designation
	 	xxix
	17.8 Unfunded Obligation
	 	xxix

iii

 

QUALCOMM Incorporated

2006 Long-Term Incentive Plan

     1. Establishment, Purpose and Term of Plan.

          1.1 Establishment. The QUALCOMM Incorporated 2006 Long-Term Incentive Plan (the “Plan”) was
adopted December 5, 2005, and approved by the stockholders of the Company on March 7, 2006 (the
date of such approval, the “Effective Date”). The Plan is a restatement of the Company’s 2001
Stock Option Plan. The Plan is also a successor to the Company’s 1991 Stock Option Plan and the
Company’s 2001 Non-Employee Directors’ Stock Option Plan and its predecessor plan (the “Prior
Plans”) and the source of shares for the Company’s Executive Retirement Matching Contribution Plan
(“ERMCP”). This amendment and restatement of the Plan is hereby adopted December 13, 2010, subject
to approval by the stockholders of the Company.

          1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract and retain the best qualified
personnel to perform services for the Participating Company Group, by motivating such persons to
contribute to the growth and profitability of the Participating Company Group, by aligning their
interests with interests of the Company’s stockholders, and by rewarding such persons for their
services by tying a significant portion of their total compensation package to the success of the
Company. The Plan seeks to achieve this purpose by providing for Awards in the form of Options,
Stock Appreciation Rights, Restricted Stock Awards, Performance Shares, Performance Units,
Restricted Stock Units, Deferred Compensation Awards and other Stock-Based Awards as described
below. The Plan is also a source for the issuance of shares pursuant to the ERMCP.

          1.3 Term of Plan. The Plan shall continue in effect until the earlier of its termination by
the Board or the date on which all of the shares of Stock available for issuance under the Plan
have been issued and all restrictions on such shares under the terms of the Plan and the agreements
evidencing Awards granted under the Plan have lapsed. However, Awards shall not be granted later
than ten (10) years from the Effective Date. The Company intends that the Plan comply with Section
409A of the Code (including any amendments to or replacements of such section), and the Plan shall
be so construed.

     2. Definitions and Construction.

          2.1 Definitions. Whenever used herein, the following terms shall have their respective
meanings set forth below:

               (a) “Affiliate” means (i) an entity, other than a Parent Corporation, that directly, or
indirectly through one or more intermediary entities, controls the Company or (ii) an entity, other
than a Subsidiary Corporation, that is controlled by the Company directly, or indirectly through
one or more intermediary entities. For this purpose, the term “control” (including the term
“controlled by”) means the possession, direct or indirect, of the power to

 

 

direct or cause the direction of the management and policies of the relevant entity, whether
through the ownership of voting securities, by contract or otherwise; or shall have such other
meaning assigned such term for the purposes of registration on Form S-8 under the Securities Act.

               (b) “Award” means any Option, SAR, Restricted Stock Award, Performance Share, Performance
Unit, Restricted Stock Unit or Deferred Compensation Award or other Stock-Based Award granted under
the Plan or an award of shares pursuant to the ERMCP.

               (c) “Award Agreement” means a written agreement between the Company and a Participant setting
forth the terms, conditions and restrictions of the Award granted to the Participant.

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

               (e) A “Change in Control” shall mean an Ownership Change Event or a series of related
Ownership Change Events (collectively, a “Transaction”) wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the Transaction, in
substantially the same proportions as their ownership of shares of the Company’s voting stock
immediately before the Transaction, direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding voting securities of the
Company or, in the case of a Transaction described in Section 2.1(z)(iii), the corporation or other
business entity to which the assets of the Company were transferred (the “Transferee”), as the case
may be. The Board shall determine in its discretion whether multiple sales or exchanges of the
voting securities of the Company or multiple Ownership Change Events are related. Notwithstanding
the preceding sentence, a Change in Control shall not include a Spinoff Transaction.

               (f) “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.

               (g) “Committee” means the Compensation Committee or other committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified by the Board. If no
committee of the Board has been appointed to administer the Plan, the Board shall exercise all of
the powers of the Committee granted herein, and, in any event, the Board may in its discretion
exercise any or all of such powers. The Committee shall have the exclusive authority to administer
the Plan and shall have all of the powers granted herein, including, without limitation, the power
to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law.

               (h) “Company” means QUALCOMM Incorporated, a Delaware corporation, or any Successor.

               (i) “Consultant” means a person engaged to provide consulting or advisory services (other than
as an Employee or a member of the Board) to a Participating Company.

 

 

               (j) “Deferred Compensation Award” means an Award of Stock Units granted to a Participant
pursuant to Section 11 of the Plan.

               (k) “Director” means a member of the Board or of the board of directors of any Participating
Company.

               (l) “Disability” means the Participant has been determined by the long-term disability insurer
of the Participating Company Group as eligible for disability benefits under the long-term
disability plan of the Participating Company Group or the Participant has been determined eligible
for Supplemental Security Income benefits by the Social Security Administration of the United
States of America; provided, however that with respect to Nonemployee Director Awards, “Disability”
means the Participant has been determined eligible for Supplemental Security Income benefits by the
Social Security Administration of the United States of America and also means the inability of the
Participant, in the opinion of a qualified physician acceptable to the Company, to perform the
duties of the Participant’s position with the Participating Company Group because of sickness or
other physical or mental incapacity.

               (m) “Dividend Equivalent” means a credit, made at the discretion of the Committee or as
otherwise provided by the Plan, to the account of a Participant in an amount equal to the cash
dividends paid on one share of Stock for each share of Stock represented by an Award held by such
Participant.

               (n) “Employee” means any person treated as an employee (including an Officer or a member of
the Board who is also treated as an employee) in the records of a Participating Company and, with
respect to any Incentive Stock Option granted to such person, who is an employee for purposes of
Section 422 of the Code; provided, however, that neither service as a member of the Board nor
payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.
The Company shall determine in good faith and in the exercise of its discretion whether an
individual has become or has ceased to be an Employee and the effective date of such individual’s
employment or termination of employment, as the case may be. For purposes of an individual’s
rights, if any, under the Plan as of the time of the Company’s determination, all such
determinations by the Company shall be final, binding and conclusive, notwithstanding that the
Company or any court of law or governmental agency subsequently makes a contrary determination.

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

               (p) “Fair Market Value” means, as of any date, the value of a share of Stock or other property
as determined by the Committee, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the following:

                    (i) Except as otherwise determined by the Committee as permitted under this Section 2.1(p),
if, on such date, the Stock is listed on a national or regional securities exchange or market
system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock as
quoted on such national or regional securities exchange or

 

 

market system constituting the primary market for the Stock, as reported in The Wall Street
Journal or such other source as the Company deems reliable, and, if there is no such closing price
on the day of determination, the Fair Market Value of a share of Stock under this Section 2.1(p)(i)
shall be the closing price of a share of Stock on the next trading day following the day of
determination.

                    (ii) Notwithstanding the foregoing, the Committee may, in its discretion, determine the Fair
Market Value on the basis of the closing, high, low or average sale price of a share of Stock or
the actual sale price of a share of Stock received by a Participant, on such date, the preceding
trading day, the next succeeding trading day or an average determined over a period of trading
days; provided, however, that, for purposes of determining the exercise price of Options (under
Section 6.1) or SARs (under Section 7.2), the Fair Market Value shall not be less than the Fair
Market Value determined under Section 2.1(p)(i). The Committee may vary its method of
determination of the Fair Market Value as provided in this Section for different purposes under the
Plan.

                    (iii) If, on such date, the Stock is not listed on a national or regional securities exchange
or market system, the Fair Market Value of a share of Stock shall be as determined by the Committee
in good faith without regard to any restriction other than a restriction which, by its terms, will
never lapse.

               (q) “Incentive Stock Option” means an Option intended to be (as set forth in the Award
Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of
the Code.

               (r) “Insider” means an Officer, a Director or any other person whose transactions in Stock are
subject to Section 16 of the Exchange Act.

               (s) “Non-Control Affiliate” means any entity in which any Participating Company has an
ownership interest and which the Committee shall designate as a Non-Control Affiliate.

               (t) “Nonemployee Director” means a Director who is not an Employee.

               (u) “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the
Award Agreement) an incentive stock option within the meaning of Section 422(b) of the Code.

               (v) “Normal Retirement Age” means the date on which a Participant has attained the age of
sixty (60) years and has completed ten years of continuous Service; provided, however, that with
respect to Nonemployee Director Awards, “Normal Retirement Age” means the date on which a
Participant has attained the age of seventy (70) years and has completed nine years of continuous
Service.

               (w) “Officer” means any person designated by the Board as an officer of the Company.

 

 

               (x) “Option” means the right to purchase Stock at a stated price for a specified period of
time granted to a Participant pursuant to Section 6 of the Plan. An Option may be either an
Incentive Stock Option or a Nonstatutory Stock Option.

               (y) “Option Expiration Date” means the date of expiration of the Option’s term as set forth in
the Award Agreement.

               (z) An “Ownership Change Event” shall be deemed to have occurred if any of the following
occurs with respect to the Company: (i) the direct or indirect sale or exchange in a single or
series of related transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all, as determined by the Board in
its discretion, of the assets of the Company; or (iv) a liquidation or dissolution of the Company.

               (aa) “Parent Corporation” means any present or future “parent corporation” of the Company, as
defined in Section 424(e) of the Code.

               (bb) “Participant” means any eligible person who has been granted one or more Awards.

               (cc) “Participating Company” means the Company or any Parent Corporation, Subsidiary
Corporation or Affiliate.

               (dd) “Participating Company Group” means, at any point in time, all entities collectively
which are then Participating Companies.

               (ee) “Performance Award” means an Award of Performance Shares or Performance Units.

               (ff) “Performance Award Formula” means, for any Performance Award, a formula or table
established by the Committee pursuant to Section 9.3 of the Plan which provides the basis for
computing the value of a Performance Award at one or more threshold levels of attainment of the
applicable Performance Goal(s) measured as of the end of the applicable Performance Period.

               (gg) “Performance Goal” means a performance goal established by the Committee pursuant to
Section 9.3 of the Plan.

               (hh) “Performance Period” means a period established by the Committee pursuant to Section 9.3
of the Plan at the end of which one or more Performance Goals are to be measured.

               (ii) “Performance Share” means a bookkeeping entry representing a right granted to a
Participant pursuant to Section 9 of the Plan to receive a payment equal to the value of a
Performance Share, as determined by the Committee, based on performance.

 

 

               (jj) “Performance Unit” means a bookkeeping entry representing a right granted to a
Participant pursuant to Section 9 of the Plan to receive a payment equal to the value of a
Performance Unit, as determined by the Committee, based upon performance.

               (kk) “Restricted Stock Award” means an Award of Restricted Stock.

               (ll) “Restricted Stock Unit” or “Stock Unit” means a bookkeeping entry representing a right
granted to a Participant pursuant to Section 10 or Section 11 of the Plan, respectively, to receive
a share of Stock on a date determined in accordance with the provisions of Section 10 or Section
11, as applicable, and the Participant’s Award Agreement.

               (mm) “Restriction Period” means the period established in accordance with Section 8.4 of the
Plan during which shares subject to a Restricted Stock Award are subject to Vesting Conditions.

               (nn) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or
any successor rule or regulation.

               (oo) “SAR” or “Stock Appreciation Right” means a bookkeeping entry representing, for each
share of Stock subject to such SAR, a right granted to a Participant pursuant to Section 7 of the
Plan to receive payment in any combination of shares of Stock or cash of an amount equal to the
excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR
over the exercise price.

               (pp) “Section 162(m)” means Section 162(m) of the Code.

               (qq) “Securities Act” means the Securities Act of 1933, as amended.

               (rr) “Service” means

                    (i) a Participant’s employment or service with the Participating Company Group, whether in the
capacity of an Employee, a Director or a Consultant. A Participant’s Service shall not be deemed
to have terminated merely because of a change in the capacity in which the Participant renders
Service to the Participating Company Group or a change in the Participating Company for which the
Participant renders such Service, provided that there is no interruption or termination of the
Participant’s Service. Furthermore, only to such extent as may be provided by the Company’s leave
policy, a Participant’s Service with the Participating Company Group shall not be deemed to have
terminated if the Participant takes any military leave, sick leave, or other leave of absence
approved by the Company. Notwithstanding the foregoing, a leave of absence shall be treated as
Service for purposes of vesting only to such extent as may be provided by the Company’s leave
policy. The Participant’s Service shall be deemed to have terminated either upon an actual
termination of Service or upon the entity for which the Participant performs Service ceasing to be
a Participating Company; except, and only for purposes of this Plan, if the entity for which
Participant performs Service is a Subsidiary Corporation and ceases to be a Participating Company
as a result of the distribution of the voting stock of such Subsidiary Corporation to the
shareholders of the Company, Service shall not be deemed to have terminated as a result of such

 

 

distribution. Subject to the foregoing, the Company, in its discretion, shall determine
whether the Participant’s Service has terminated and the effective date of such termination.

                    (ii) Notwithstanding any other provision of this Section, a Participant’s Service shall not be
deemed to have terminated merely because the Participating Company for which the Participant
renders Service ceases to be a member of the Participating Company Group by reason of a Spinoff
Transaction, nor shall Service be deemed to have terminated upon resumption of Service from the
Spinoff Company to a Participating Company. For all purposes under this Plan, and only for
purposes of this Plan, a Participant’s Service shall include Service, whether in the capacity of an
Employee, Director or a Consultant, for the Spinoff Company provided a Participant was employed by
the Participating Company Group immediately prior to the Spinoff Transaction.

                         In the event that the Participating Company for which Participant renders Service ceases to be
a member of the Participating Company Group by reason of a Spinoff Transaction, the Company shall
have the authority to impose any restrictions, including but not limited to, with respect to the
method of payment of the exercise price of the Options held by such individuals, if the Company
determines that such restrictions are necessary to comply with applicable local laws.

                         Further, notwithstanding the foregoing, if the Participant resides outside the United States
and the Participating Company for which the individual renders Service ceases to be a member of the
Participating Company Group by reason of a Spinoff Transaction, the Company may consider such
individual to have terminated his or her Service if it determines that there are material adverse
tax, securities law or other regulatory consequences to the Participant, the Company or the former
Participating Company as a result of the Spinoff Transaction. In this circumstance, the Company
will, in its discretion, (i) equitably adjust the Participant’s Option to ensure that he or she
maintains equivalent Option rights over the shares of common stock of the Spinoff Company for which
he or she is employed following the Spinoff Transaction, or (ii) determine that the Participant’s
Options shall fully vest and be fully exercisable and shall terminate if not exercised prior to
such Spinoff Transaction or (iii) take any other action that, in its discretion, does not impair
the rights of such Participant with respect to the Option.

               (ss) “Spinoff Company” means a Participating Company which ceases to be such as a result of a
Spinoff Transaction.

               (tt) “Spinoff Transaction” means a transaction in which the voting stock of an entity in the
Participating Company Group is distributed to the shareholders of a parent corporation as defined
by Section 424(e) of the Code, of such entity.

               (uu) “Stock” means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.2 of the Plan.

               (vv) “Stock-Based Awards” means any Award that is valued in whole or in part by reference to,
or is otherwise based on, the Stock, including dividends on the Stock, but not limited to those
Awards described in Sections 6 through 11 of the Plan.

 

 

               (ww) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.

               (xx) “Successor” means a corporation into or with which the Company is merged or consolidated
or which acquires all or substantially all of the assets of the Company and which is designated by
the Board as a Successor for purposes of the Plan.

               (yy) “Ten Percent Owner” means a Participant who, at the time an Option is granted to the
Participant, owns stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of
Section 422(b)(6) of the Code.

               (zz) “Vesting Conditions” mean those conditions established in accordance with Section 8.4 or
Section 10.2 of the Plan prior to the satisfaction of which shares subject to a Restricted Stock
Award or Restricted Stock Unit Award, respectively, remain subject to forfeiture or a repurchase
option in favor of the Company upon the Participant’s termination of Service.

          2.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated
by the context, the singular shall include the plural and the plural shall include the singular.
Use of the term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.

     3. Administration.

          3.1 Administration by the Committee. The Plan shall be administered by the Committee. All
questions of interpretation of the Plan or of any Award shall be determined by the Committee, and
such determinations shall be final and binding upon all persons having an interest in the Plan or
such Award.

          3.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided the Officer has apparent
authority with respect to such matter, right, obligation, determination or election.

          3.3 Administration with Respect to Insiders. With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements,
if any, of Rule 16b-3.

          3.4 Committee Complying with Section 162(m). While the Company is a “publicly held
corporation” within the meaning of Section 162(m), the Board may establish a Committee of “outside
directors” within the meaning of Section 162(m) to approve the grant of any Award which might
reasonably be anticipated to result in the payment of employee remuneration that would otherwise
exceed the limit on employee remuneration deductible for income tax purposes pursuant to Section
162(m).

 

 

          3.5 Powers of the Committee. In addition to any other powers set forth in the Plan and
subject to the provisions of the Plan, the Committee shall have the full and final power and
authority, in its discretion:

               (a) to determine the persons to whom, and the time or times at which, Awards shall be granted
and the number of shares of Stock or units to be subject to each Award;

               (b) to determine the type of Award granted and to designate Options as Incentive Stock Options
or Nonstatutory Stock Options;

               (c) to determine the Fair Market Value of shares of Stock or other property;

               (d) to determine the terms, conditions and restrictions applicable to each Award (which need
not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the
exercise or purchase price of shares purchased pursuant to any Award, (ii) the method of payment
for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax
withholding obligation arising in connection with any Award, including by the withholding or
delivery of shares of Stock, (iv) the timing, terms and conditions of the exercisability or vesting
of any Award or any shares acquired pursuant thereto, (v) the Performance Award Formula and
Performance Goals applicable to any Award and the extent to which such Performance Goals have been
attained, (vi) the time of the expiration of any Award, (vii) the effect of the Participant’s
termination of Service on any of the foregoing, and (viii) all other terms, conditions and
restrictions applicable to any Award or shares acquired pursuant thereto not inconsistent with the
terms of the Plan;

               (e) to determine whether an Award will be settled in shares of Stock, cash, or in any
combination thereof;

               (f) to approve one or more forms of Award Agreement;

               (g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or
conditions applicable to any Award or any shares acquired pursuant thereto;

               (h) to accelerate, continue, extend or defer the exercisability or vesting of any Award or any
shares acquired pursuant thereto, including with respect to the period following a Participant’s
termination of Service;

               (i) without the consent of the affected Participant and notwithstanding the provisions of any
Award Agreement to the contrary, to unilaterally substitute at any time a Stock Appreciation Right
providing for settlement solely in shares of Stock in place of any outstanding Option, provided
that such Stock Appreciation Right covers the same number of shares of Stock and provides for the
same exercise price (subject in each case to adjustment in accordance with Section 4.2) as the
replaced Option and otherwise provides substantially equivalent terms and conditions as the
replaced Option, as determined by the Committee;

               (j) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to
adopt sub-plans or supplements to, or alternative versions of, the Plan,

 

 

including, without limitation, as the Committee deems necessary or desirable to comply with
the laws or regulations of or to accommodate the tax policy, accounting principles or custom of,
foreign jurisdictions whose citizens may be granted Awards;

               (k) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award Agreement and to make all other determinations and take such other actions with respect
to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with
the provisions of the Plan or applicable law; and

               (l) to delegate to any proper Officer the authority to grant, amend, modify, extend, cancel or
renew one or more Awards, without further approval of the Committee, to any person eligible
pursuant to Section 5, other than a person who, at the time of such grant, is an Insider; provided,
however, that (i) the exercise price per share of each such Option shall be equal to the Fair
Market Value per share of the Stock on the effective date of grant, and (ii) each such Award shall
be subject to the terms and conditions of the appropriate standard form of Award Agreement approved
by the Committee and shall conform to the provisions of the Plan and such other guidelines as shall
be established from time to time by the Committee.

          3.6 Indemnification. In addition to such other rights of indemnification as they may have as
members of the Board or the Committee or as officers or employees of the Participating Company
Group, members of the Board or the Committee and any officers or employees of the Participating
Company Group to whom authority to act for the Board, the Committee or the Company is delegated
shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees,
actually and necessarily incurred in connection with the defense of any action, suit or proceeding,
or in connection with any appeal therein, to which they or any of them may be a party by reason of
any action taken or failure to act under or in connection with the Plan, or any right granted
hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters as to which it shall
be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad
faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the
institution of such action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.

          3.7 Arbitration. Any dispute or claim concerning any Awards granted (or not granted) pursuant
to this Plan and any other disputes or claims relating to or arising out of the Plan shall be
fully, finally and exclusively resolved by binding arbitration conducted pursuant to the Commercial
Arbitration Rules of the American Arbitration Association in San Diego, California. By accepting
an Award, Participants and the Company waive their respective rights to have any such disputes or
claims tried by a judge or jury.

          3.8 Repricing Prohibited. Without the affirmative vote of holders of a majority of the shares
of Stock cast in person or by proxy at a meeting of the stockholders of the Company at which a
quorum representing a majority of all outstanding shares of Stock is present or represented by
proxy, the Committee shall not approve a program providing for either (a) the

 

 

cancellation of outstanding Options or SARs and the grant in substitution therefore of new
Options or SARs having a lower exercise price or (b) the amendment of outstanding Options or SARs
to reduce the exercise price thereof. This paragraph shall not be construed to apply to the
issuance or assumption of an Award in a transaction to which Code section 424(a) applies, within
the meaning of Section 424 of the Code.

     4. Shares Subject to Plan.

          4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Section 4.2, the
maximum aggregate number of shares of Stock that may be issued under the Plan shall be 483,284,432
and shall consist of authorized but unissued or reacquired shares of Stock or any combination
thereof. The share reserve, determined at any time, shall be reduced by the number of shares
subject to Prior Plan Options and shares issued under the ERMCP. Any shares of Stock subject to
Prior Plan Option shall again be available for issuance under the Plan only if the Prior Plan
Option is terminated or cancelled but not if it expires. Any shares of Stock that are subject to
Awards of Options or SARs without a related Dividend Equivalent shall be counted against the limit
as one (1) share for every one (1) share granted. Any shares of Stock that are subject to Awards
(other than Options or SARs without a related Dividend Equivalent) granted on or after March 8,
2011, shall be counted against this limit as two (2) shares for every one (1) share granted. If an
outstanding Award, excluding Prior Plan Options, for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant
to an Award subject to forfeiture or repurchase, and shares issued under the ERMCP, are forfeited
to the Company, the shares of Stock allocable to the terminated portion of such Award or such
forfeited shares of Stock shall again be available for issuance under the Plan. Any shares of
Stock that again become available for issuance pursuant to this Section 4.1 shall be added back as
one (1) share if such shares were subject to Options without a Dividend Equivalent or SARs granted
under the Plan or under a Prior Plan and, with respect to any shares, as two (2) shares if such
shares were subject to Awards (other than Options without a Dividend Equivalent or SARs) granted
under the Plan or a Prior Plan and again become available pursuant to this Section 4.1 on or after
March 8, 2011. Notwithstanding anything to the contrary contained herein: (i) shares of Stock
tendered in payment of an Option shall not be added to the aggregate plan limit described above;
(ii) shares of Stock withheld by the Company to satisfy any tax withholding obligation shall not be
added to the aggregate plan limit described above; (iii) shares of Stock that are repurchased by
the Company with Option proceeds shall not be added to the aggregate plan limit described above;
and (iv) all shares of Stock covered by an SAR, to the extent that it is exercised and settled in
shares of Stock, and whether or not shares of Stock are actually issued to the Participant upon
exercise of the SAR, shall be considered issued or transferred pursuant to the Plan.

          4.2 Adjustments for Changes in Capital Structure. Subject to any required action by the
stockholders of the Company, in the event of any change in the Stock effected without receipt of
consideration by the Company, whether through merger, consolidation, reorganization,
reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change
in the capital structure of the Company, or in the event of payment of a dividend or distribution
to the stockholders of the Company in a form other than Stock (excepting normal cash dividends)
that has a material effect on the Fair Market Value of shares of Stock,

 

 

appropriate adjustments shall be made in the number and kind of shares subject to the Plan and
to any outstanding Awards, in the Award limits set forth in Section 5.4, and in connection
with the ERMCP, and in the exercise or purchase price per share under any outstanding Award in
order to prevent dilution or enlargement of Participants’ rights under the Plan. For purposes of
the foregoing, conversion of any convertible securities of the Company shall not be treated as
“effected without receipt of consideration by the Company.” If a majority of the shares which are
of the same class as the shares that are subject to outstanding Awards are exchanged for, converted
into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another
corporation (the “New Shares”), the Committee may unilaterally amend the outstanding Options to
provide that such Options are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to, and the exercise price per share of, the outstanding Awards shall be
adjusted in a fair and equitable manner as determined by the Board, in its discretion. Any
fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to
the nearest whole number. The Committee in its sole discretion, may also make such adjustments in
the terms of any Award to reflect, or related to, such changes in the capital structure of the
Company or distributions as it deems appropriate, including modification of Performance Goals,
Performance Award Formulas and Performance Periods. The adjustments determined by the Committee
pursuant to this Section 4.2 shall be final, binding and conclusive.

     5. Eligibility and Award Limitations.

          5.1 Persons Eligible for Awards. Awards may be granted only to Employees, Consultants and
Directors. For purposes of the foregoing sentence, “Employees,” “Consultants” and “Directors”
shall include prospective Employees, prospective Consultants and prospective Directors to whom
Awards are offered to be granted in connection with written offers of an employment or other
service relationship with the Participating Company Group; provided, however, that no Stock subject
to any such Award shall vest, become exercisable or be issued prior to the date on which such
person commences Service.

          5.2 Participation. Eligible persons may be granted more than one Award. However,
eligibility in accordance with this Section shall not entitle any person to be granted an
Award, or, having been granted an Award, to be granted an additional Award.

          5.3 Incentive Stock Option Limitations.

               (a) Persons Eligible. An Incentive Stock Option may be granted only to a person who, on the
effective date of grant, is an Employee of the Company, a Parent Corporation or a Subsidiary
Corporation (each being an “ISO-Qualifying Corporation”). Any person who is not an Employee of an
ISO-Qualifying Corporation on the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee of an ISO-Qualifying Corporation
shall be deemed granted effective on the date such person commences Service with an ISO-Qualifying
Corporation, with an exercise price determined as of such date in accordance with Section 6.1.

 

 

               (b) Fair Market Value Limitation. To the extent that Options designated as Incentive Stock
Options (granted under all stock option plans of the Participating Company Group, including the
Plan) become exercisable by a Participant for the first time during any calendar year for stock
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of
such Options which exceeds such amount shall be treated as Nonstatutory Stock Options. For
purposes of this Section, Options designated as Incentive Stock Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of stock shall be determined as
of the time the Option with respect to such stock is granted. If the Code is amended to provide
for a limitation different from that set forth in this Section, such different limitation shall be
deemed incorporated herein effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in
part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section, the Participant may designate which portion of such Option the Participant is exercising.
In the absence of such designation, the Participant shall be deemed to have exercised the Incentive
Stock Option portion of the Option first. Upon exercise, shares issued pursuant to each such
portion shall be separately identified.

          5.4 Award Limits.

               (a) Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject to
adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be
issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed
226,239,821 shares. The maximum aggregate number of shares of Stock that may be issued under the
Plan pursuant to all Awards other than Incentive Stock Options shall be the number of shares
determined in accordance with Section 4.1, subject to adjustment as provided in Section 4.2 and
further subject to the limitation set forth in Section 5.4(b) below.

               (b) Limits on Full Value Awards. Except for shares granted under the Executive Retirement
Matching Contribution Plan, any Restricted Stock Awards, Restricted Stock Unit Awards, Performance
Awards or Stock-Based Awards based on the full value of shares of Stock (“Full Value Awards”),
which vest on the basis of the Participant’s continued Service, shall not provide for vesting which
is any more rapid than annual pro rata vesting over a three (3) year period and any Full Value
Awards which vest upon the Participant’s attainment of Performance Goals shall provide for a
Performance Period of at least twelve (12) months. There shall be no acceleration of vesting of
such Full Value Awards at a rate more rapid than annual pro rata vesting over a three (3) year
period, except in connection with death, Disability, retirement at or after Normal Retirement Age
or a Change in Control. Notwithstanding any contrary provision of the Plan, a maximum of two
percent (2%) of the shares authorized for issuance under the Plan may be issued as Awards to
Non-Employee Directors without regard to the limitations of this Section 5.4(b).

               (c) Section 162(m) Award Limits. The following limits shall apply to the grant of any Award
if, at the time of grant, the Company is a “publicly held corporation” within the meaning of
Section 162(m).

 

 

                    (i) Options and SARs. Subject to adjustment as provided in Section 4.2, no Employee shall be
granted within any fiscal year of the Company one or more Options or Freestanding SARs which in the
aggregate are for more than 3,000,000 shares of Stock reserved for issuance under the Plan.

                    (ii) Restricted Stock and Restricted Stock Unit Awards. Subject to adjustment as provided in
Section 4.2, no Employee shall be granted within any fiscal year of the Company one or more
Restricted Stock Awards or Restricted Stock Unit Awards, subject to Vesting Conditions based on the
attainment of Performance Goals, for more than 1,000,000 shares of Stock reserved for issuance
under the Plan.

                    (iii) Performance Awards. Subject to adjustment as provided in Section 4.2, no Employee shall
be granted (1) Performance Shares which could result in such Employee receiving more than 1,000,000
shares of Stock reserved for issuance under the Plan for each full fiscal year of the Company
contained in the Performance Period for such Award, or (2) Performance Units which could result in
such Employee receiving more than $8,000,000 for each full fiscal year of the Company contained in
the Performance Period for such Award. No Participant may be granted more than one Performance
Award for the same Performance Period.

     6. Terms and Conditions of Options.

          Options shall be evidenced by Award Agreements specifying the number of shares of Stock
covered thereby, in such form as the Committee shall from time to time establish. No Option or
purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully
executed Award Agreement. Award Agreements evidencing Options may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the following terms and
conditions:

          6.1 Exercise Price. The exercise price for each Option shall be established in the discretion
of the Committee; provided, however, that (a) the exercise price per share shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no
Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less
than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum
exercise price set forth above if such Option is granted pursuant to an assumption or substitution
for another option in a manner qualifying under the provisions of Section 424(a) of the Code.

          6.2 Exercisability and Term of Options.

               (a) Option Vesting and Exercisability. Options shall be exercisable at such time or times, or
upon such event or events, and subject to such terms, conditions, performance criteria and
restrictions as shall be determined by the Committee and set forth in the Award Agreement
evidencing such Option; provided, however, that (a) no Option shall be exercisable after the
expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive
Stock Option granted to a Ten Percent Owner shall be exercisable after the

 

 

expiration of five (5) years after the effective date of grant of such Option, (c) no Option
shall become fully vested in a period of less than three (3) years from the date of grant, other
than in connection with a termination of Service or a Change in Control or in the case of an Option
granted to a Nonemployee Director, and (d) no Option offered or be granted to a prospective
Employee, prospective Consultant or prospective Director may become exercisable prior to the date
on which such person commences Service. Subject to the foregoing, unless otherwise specified by
the Committee in the grant of an Option, any Option granted hereunder shall terminate ten (10)
years after the effective date of grant of the Option, unless earlier terminated in accordance with
its provisions, or the terms of the Plan.

               (b) Participant Responsibility for Exercise of Option. Each Participant is responsible for
taking any and all actions as may be required to exercise any Option in a timely manner, and for
properly executing any documents as may be required for the exercise of an Option in accordance
with such rules and procedures as may be established from time to time. By signing an Option
Agreement each Participant acknowledges that information regarding the procedures and requirements
for the exercise of any Option is available upon such Participant’s request. The Company shall
have no duty or obligation to notify any Participant of the expiration date of any Option.

          6.3 Payment of Exercise Price.

               (a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the
exercise price for the number of shares of Stock being purchased pursuant to any Option shall be
made (i) in cash, by check or in cash equivalent, (ii) by tender to the Company, or attestation to
the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than
the exercise price, (iii) provided that the Participant is an Employee, and not an Officer or
Director (unless otherwise not prohibited by law, including, without limitation, any regulation
promulgated by the Board of Governors of the Federal Reserve System) and in the Company’s sole and
absolute discretion at the time the Option is exercised, by delivery of the Participant’s
promissory note in a form approved by the Company for the aggregate exercise price, provided that,
if the Company is incorporated in the State of Delaware, the Participant shall pay in cash that
portion of the aggregate exercise price not less than the par value of the shares being acquired,
(iv) by such other consideration as may be approved by the Committee from time to time to the
extent permitted by applicable law, or (v) by any combination thereof. The Committee may at any
time or from time to time grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which otherwise restrict one or more
forms of consideration.

               (b) Limitations on Forms of Consideration.

                    (i) Tender of Stock. Notwithstanding the foregoing, an Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company’s Stock.

                    (ii) Payment by Promissory Note. No promissory note shall be permitted if the exercise of an
Option using a promissory note would be a violation of any

 

 

law. Any permitted promissory note shall be on such terms as the Committee shall determine.
The Committee shall have the authority to permit or require the Participant to secure any
promissory note used to exercise an Option with the shares of Stock acquired upon the exercise of
the Option or with other collateral acceptable to the Company. Unless otherwise provided by the
Committee, if the Company at any time is subject to the regulations promulgated by the Board of
Governors of the Federal Reserve System or any other governmental entity affecting the extension of
credit in connection with the Company’s securities, any promissory note shall comply with such
applicable regulations, and the Participant shall pay the unpaid principal and accrued interest, if
any, to the extent necessary to comply with such applicable regulations.

          6.4 Effect of Termination of Service.

               (a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided
herein and unless otherwise provided by the Committee, an Option shall be exercisable after a
Participant’s termination of Service only during the applicable time periods provided in the Award
Agreement.

               (b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, unless the
Committee provides otherwise in the Award Agreement, if the exercise of an Option within the
applicable time periods is prevented by the provisions of Section 14 below, the Option shall remain
exercisable until three (3) months (or such longer period of time as determined by the Committee,
in its discretion) after the date the Participant is notified by the Company that the Option is
exercisable, but in any event no later than the Option Expiration Date.

               (c) Extension if Participant Subject to Section 16(b). Notwithstanding the foregoing, if a
sale within the applicable time periods of shares acquired upon the exercise of the Option would
subject the Participant to suit under Section 16(b) of the Exchange Act, the Option shall remain
exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a
sale of such shares by the Participant would no longer be subject to such suit, (ii) the one
hundred and ninetieth (190th) day after the Participant’s termination of Service, or (iii) the
Option Expiration Date.

          6.5 Transferability of Options. During the lifetime of the Participant, an Option shall be
exercisable only by the Participant or the Participant’s guardian or legal representative. Prior
to the issuance of shares of Stock upon the exercise of an Option, the Option shall not be subject
in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. Notwithstanding the foregoing,
to the extent permitted by the Committee, in its discretion, and set forth in the Award Agreement
evidencing such Option, a Nonstatutory Stock Option shall be assignable or transferable subject to
the applicable limitations, if any, described in the General Instructions to Form S-8 Registration
Statement under the Securities Act.

 

 

     7. Terms and Conditions of Stock Appreciation Rights.

          Stock Appreciation Rights shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Committee shall from time to time
establish. No SAR or purported SAR shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement. Award Agreements evidencing SARs may incorporate
all or any of the terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

          7.1 Types of SARs Authorized. SARs may be granted in tandem with all or any portion of a
related Option (a “Tandem SAR”) or may be granted independently of any Option (a “Freestanding
SAR”). A Tandem SAR may be granted either concurrently with the grant of the related Option or at
any time thereafter prior to the complete exercise, termination, expiration or cancellation of such
related Option.

          7.2 Exercise Price. The exercise price for each SAR shall be established in the discretion of
the Committee; provided, however, that (a) the exercise price per share subject to a Tandem SAR
shall be the exercise price per share under the related Option and (b) the exercise price per share
subject to a Freestanding SAR shall be not less than the Fair Market Value of a share of Stock on
the effective date of grant of the SAR.

          7.3 Exercisability and Term of SARs.

               (a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the extent, and
only to the extent, that the related Option is exercisable, subject to such provisions as the
Committee may specify where the Tandem SAR is granted with respect to less than the full number of
shares of Stock subject to the related Option.

               (b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or times, or upon
such event or events, and subject to such terms, conditions, performance criteria and restrictions
as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR;
provided, however, that no Freestanding SAR shall be exercisable after the expiration of ten (10)
years after the effective date of grant of such SAR. No SAR shall become fully vested in a period
of less than three (3) years from the date of grant, other than in connection with a termination of
Service or a Change in Control or the case of an SAR granted to a Nonemployee Director.

          7.4 Deemed Exercise of SARs. If, on the date on which an SAR would otherwise terminate or
expire, the SAR by its terms remains exercisable immediately prior to such termination or
expiration and, if so exercised, would result in a payment to the holder of such SAR, then any
portion of such SAR which has not previously been exercised shall automatically be deemed to be
exercised as of such date with respect to such portion.

          7.5 Effect of Termination of Service. Subject to earlier termination of the SAR as otherwise
provided herein and unless otherwise provided by the Committee in the grant of an SAR and set forth
in the Award Agreement, an SAR shall be exercisable after a Participant’s termination of Service
only as provided in the Award Agreement.

 

 

          7.6 Nontransferability of SARs. During the lifetime of the Participant, an SAR shall be
exercisable only by the Participant or the Participant’s guardian or legal representative. Prior
to the exercise of an SAR, the SAR shall not be subject in any manner to anticipation, alienation,
sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution.

     8. Terms and Conditions of Restricted Stock Awards.

          Restricted Stock Awards shall be evidenced by Award Agreements specifying the number of shares
of Stock subject to the Award, in such form as the Committee shall from time to time establish. No
Restricted Stock Award or purported Restricted Stock Award shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement. Award Agreements evidencing
Restricted Stock Awards may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions:

          8.1 Types of Restricted Stock Awards Authorized. Restricted Stock Awards may or may not
require the payment of cash compensation for the Stock. Restricted Stock Awards may be granted
upon such conditions as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 9.4. If either the grant of a
Restricted Stock Award or the lapsing of the Restriction Period is to be contingent upon the
attainment of one or more Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 9.3 through 9.5(a).

          8.2 Purchase Price. The purchase price, if any, for shares of Stock issuable under each
Restricted Stock Award and the means of payment shall be established by the Committee in its
discretion.

          8.3 Purchase Period. A Restricted Stock Award requiring the payment of cash consideration
shall be exercisable within a period established by the Committee; provided, however, that no
Restricted Stock Award granted to a prospective Employee, prospective Consultant or prospective
Director may become exercisable prior to the date on which such person commences Service.

          8.4 Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock
Award may or may not be made subject to Vesting Conditions based upon the satisfaction of such
Service requirements, conditions, restrictions or performance criteria, including, without
limitation, Performance Goals as described in Section 9.4, as shall be established by the Committee
and set forth in the Award Agreement evidencing such Award. During any Restriction Period in which
shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such
shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other
than as provided in the Award Agreement or as provided in Section 8.7. Upon request by the
Company, each Participant shall execute any agreement evidencing such transfer restrictions prior
to the receipt of shares of Stock hereunder.

 

 

          8.5 Voting Rights; Dividends and Distributions. Except as provided in this Section,
Section 8.4 and any Award Agreement, during the Restriction Period applicable to shares subject to
a Restricted Stock Award, the Participant shall have all of the rights of a stockholder of the
Company holding shares of Stock, including the right to vote such shares and to receive all
dividends and other distributions paid with respect to such shares. However, in the event of a
dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the
capital structure of the Company as described in Section 4.2, any and all new, substituted or
additional securities or other property (other than normal cash dividends) to which the Participant
is entitled by reason of the Participant’s Restricted Stock Award shall be immediately subject to
the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to
which such dividends or distributions were paid or adjustments were made.

          8.6 Effect of Termination of Service. Unless otherwise provided by the Committee in the grant
of a Restricted Stock Award and set forth in the Award Agreement, if a Participant’s Service
terminates for any reason, whether voluntary or involuntary (including the Participant’s death or
Disability), then the Participant shall forfeit to the Company any shares acquired by the
Participant pursuant to a Restricted Stock Award which remain subject to Vesting Conditions as of
the date of the Participant’s termination of Service in exchange for the payment of the purchase
price, if any, paid by the Participant. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company.

          8.7 Nontransferability of Restricted Stock Award Rights. Prior to the issuance of shares of
Stock pursuant to a Restricted Stock Award, rights to acquire such shares shall not be subject in
any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance
or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by
will or the laws of descent and distribution. All rights with respect to a Restricted Stock Award
granted to a Participant hereunder shall be exercisable during his or her lifetime only by such
Participant or the Participant’s guardian or legal representative.

     9. Terms and Conditions of Performance Awards.

          Performance Awards shall be evidenced by Award Agreements in such form as the Committee shall
from time to time establish. No Performance Award or purported Performance Award shall be a valid
and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Performance Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and conditions:

          9.1 Types of Performance Awards Authorized. Performance Awards may be in the form of either
Performance Shares or Performance Units. Each Award Agreement evidencing a Performance Award shall
specify the number of Performance Shares or Performance Units subject thereto, the Performance
Award Formula, the Performance Goal(s) and Performance Period applicable to the Award, and the
other terms, conditions and restrictions of the Award.

 

 

          9.2 Initial Value of Performance Shares and Performance Units. Unless otherwise provided by
the Committee in granting a Performance Award, each Performance Share shall have an initial value
equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as provided in
Section 4.2, on the effective date of grant of the Performance Share. Each Performance Unit shall
have an initial value determined by the Committee. The final value payable to the Participant in
settlement of a Performance Award determined on the basis of the applicable Performance Award
Formula will depend on the extent to which Performance Goals established by the Committee are
attained within the applicable Performance Period established by the Committee.

          9.3 Establishment of Performance Period, Performance Goals and Performance Award Formula. In
granting each Performance Award, the Committee shall establish in writing the applicable
Performance Period, Performance Award Formula and one or more Performance Goals which, when
measured at the end of the Performance Period, shall determine on the basis of the Performance
Award Formula the final value of the Performance Award to be paid to the Participant. To the
extent compliance with the requirements under Section 162(m) with respect to “performance-based
compensation” is desired, the Committee shall establish the Performance Goal(s) and Performance
Award Formula applicable to each Performance Award no later than the earlier of (a) the date ninety
(90) days after the commencement of the applicable Performance Period or (b) the date on which 25%
of the Performance Period has elapsed, and, in any event, at a time when the outcome of the
Performance Goals remains substantially uncertain. Once established, the Performance Goals and
Performance Award Formula shall not be changed during the Performance Period. The Company shall
notify each Participant granted a Performance Award of the terms of such Award, including the
Performance Period, Performance Goal(s) and Performance Award Formula.

          9.4 Measurement of Performance Goals. Performance Goals shall be established by the Committee
on the basis of targets to be attained (“Performance Targets”) with respect to one or more measures
of business or financial performance (each, a “Performance Measure”), subject to the following:

               (a) Performance Measures. Performance Measures may be one or more of the following, as
determined by the Committee: (i) revenues; (ii) gross margin; (iii) operating margin; (iv)
operating income; (v) earnings before tax; (vi) earnings before interest, taxes and depreciation
and amortization; (vii) net income; (viii) expenses; (ix) the market price of the Stock; (x)
earnings per share; (xi) return on stockholder equity; (xii) return on capital; (xiii) return on
net assets; (xiv) economic value added; (xv) market share; (xvi) customer service; (xvii) customer
satisfaction; (xviii) safety; (xix) total stockholder return; (xx) free cash flow; or (xxi) such
other measures as determined by the Committee consistent with this Section 9.4(a).

               (b) Performance Targets. Performance Targets may include a minimum, maximum, target level and
intermediate levels of performance, with the final value of a Performance Award determined under
the applicable Performance Award Formula by the level attained during the applicable Performance
Period. A Performance Target may be stated as an absolute value or as a value determined relative
to a standard selected by the Committee.

 

 

          9.5 Settlement of Performance Awards.

               (a) Determination of Final Value. As soon as practicable following the completion of the
Performance Period applicable to a Performance Award, the Committee shall certify in writing the
extent to which the applicable Performance Goals have been attained and the resulting final value
of the Award earned by the Participant and to be paid upon its settlement in accordance with the
applicable Performance Award Formula.

               (b) Discretionary Adjustment of Award Formula. In its discretion, the Committee may, either
at the time it grants a Performance Award or at any time thereafter, provide for the positive or
negative adjustment of the Performance Award Formula applicable to a Performance Award that is not
intended to constitute “qualified performance based compensation” to a “covered employee” within
the meaning of Section 162(m) (a “Covered Employee”) to reflect such Participant’s individual
performance in his or her position with the Company or such other factors as the Committee may
determine. With respect to a Performance Award intended to constitute qualified performance-based
compensation to a Covered Employee, the Committee shall have the discretion to reduce some or all
of the value of the Performance Award that would otherwise be paid to the Covered Employee upon its
settlement notwithstanding the attainment of any Performance Goal and the resulting value of the
Performance Award determined in accordance with the Performance Award Formula.

               (c) Payment in Settlement of Performance Awards. As soon as practicable following the
Committee’s determination and certification in accordance with Sections 9.5(a) and (b), payment
shall be made to each eligible Participant (or such Participant’s legal representative or other
person who acquired the right to receive such payment by reason of the Participant’s death) of the
final value of the Participant’s Performance Award. Payment of such amount shall be made in cash,
shares of Stock, or a combination thereof as determined by the Committee.

          9.6 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Performance Share Awards until the
date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement evidencing any Performance Share Award that the
Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash
dividends on Stock having a record date prior to the date on which the Performance Shares are
settled or forfeited. Such Dividend Equivalents, if any, shall be credited to the Participant in
the form of additional whole Performance Shares as of the date of payment of such cash dividends on
Stock. The number of additional Performance Shares to be so credited shall be determined by
dividing (a) the amount of cash dividends paid on such date with respect to the number of shares of
Stock represented by the Performance Shares previously credited to the Participant by (b) the Fair
Market Value per share of Stock on such date. Dividend Equivalents may be paid currently or may be
accumulated and paid to the extent that Performance Shares become nonforfeitable, as determined by
the Committee. Settlement of Dividend Equivalents may be made in cash, shares of Stock, or a
combination thereof as determined by the Committee, and may be paid on the same basis as settlement
of the related Performance Share as provided in Section 9.5, except that fractional

 

 

shares shall be paid in cash within thirty (30) days following the date of settlement of the
Performance Share Award. Dividend Equivalents shall not be paid with respect to Performance Units.
In the event of a dividend or distribution paid in shares of Stock or any other adjustment made
upon a change in the capital structure of the Company as described in Section 4.2, appropriate
adjustments shall be made in the Participant’s Performance Share Award so that it represents the
right to receive upon settlement any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant would be entitled by reason of
the shares of Stock issuable upon settlement of the Performance Share Award, and all such new,
substituted or additional securities or other property shall be immediately subject to the same
Performance Goals as are applicable to the Award.

          9.7 Effect of Termination of Service. Unless otherwise provided by the Committee in the grant
of a Performance Award and set forth in the Award Agreement, the effect of a Participant’s
termination of Service on the Performance Award shall be as follows:

               (a) Death or Disability. If the Participant’s Service terminates because of the death or
Disability of the Participant before the completion of the Performance Period applicable to the
Performance Award, the final value of the Participant’s Performance Award shall be determined by
the extent to which the applicable Performance Goals have been attained with respect to the entire
Performance Period and shall be prorated based on the number of months of the Participant’s Service
during the Performance Period. Payment shall be made following the end of the Performance Period
in any manner permitted by Section 9.5.

               (b) Other Termination of Service. If the Participant’s Service terminates for any reason
except death or Disability before the completion of the Performance Period applicable to the
Performance Award, such Award shall be forfeited in its entirety; provided, however, that in the
event of an involuntary termination of the Participant’s Service, the Committee, in its sole
discretion, may waive the automatic forfeiture of all or any portion of any such Award.

          9.8 Nontransferability of Performance Awards. Prior to settlement in accordance with the
provisions of the Plan, no Performance Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Performance Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

     10. Terms and Conditions of Restricted Stock Unit Awards.

          Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying the number of
Restricted Stock Units subject to the Award, in such form as the Committee shall from time to time
establish. No Restricted Stock Unit Award or purported Restricted Stock Unit Award shall be a
valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement.
Award Agreements evidencing Restricted Stock Units may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms and conditions:

 

 

          10.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon
such conditions as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 9.4. If either the grant of a
Restricted Stock Unit Award or the Vesting Conditions with respect to such Award is to be
contingent upon the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 9.3 through 9.5(a).

          10.2 Vesting. Restricted Stock Units may or may not be made subject to Vesting Conditions
based upon the satisfaction of such Service requirements, conditions, restrictions or performance
criteria, including, without limitation, Performance Goals as described in Section 9.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing such Award.

          10.3 Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Restricted Stock Units until the date
of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion,
may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant
shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on
Stock having a record date prior to the date on which Restricted Stock Units held by such
Participant are settled. Such Dividend Equivalents, if any, shall be paid by crediting the
Participant with additional whole Restricted Stock Units as of the date of payment of such cash
dividends on Stock. The number of additional Restricted Stock Units to be so credited shall be
determined by dividing (a) the amount of cash dividends paid on such date with respect to the
number of shares of Stock represented by the Restricted Stock Units previously credited to the
Participant by (b) the Fair Market Value per share of Stock on such date. Such additional
Restricted Stock Units shall be subject to the same terms and conditions and shall be settled in
the same manner and at the same time (or as soon thereafter as practicable) as the Restricted Stock
Units originally subject to the Restricted Stock Unit Award, except that fractional shares may be
settled in cash within thirty (30) days following the date of settlement of the Restricted Stock
Unit Award. In the event of a dividend or distribution paid in shares of Stock or any other
adjustment made upon a change in the capital structure of the Company as described in Section 4.2,
appropriate adjustments shall be made in the Participant’s Restricted Stock Unit Award so that it
represents the right to receive upon settlement any and all new, substituted or additional
securities or other property (other than normal cash dividends) to which the Participant would
entitled by reason of the shares of Stock issuable upon settlement of the Award, and all such new,
substituted or additional securities or other property shall be immediately subject to the same
Vesting Conditions as are applicable to the Award.

          10.4 Effect of Termination of Service. Unless otherwise provided by the Committee in the
grant of a Restricted Stock Unit Award and set forth in the Award Agreement, if a Participant’s
Service terminates for any reason, whether voluntary or involuntary (including the Participant’s
death or Disability), then the Participant shall forfeit to the Company any Restricted Stock Units
pursuant to the Award which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service.

 

 

          10.5 Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on
the date on which Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award
vest or on such other date determined by the Committee, in its discretion, and set forth in the
Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities
or other property pursuant to an adjustment described in Section 10.3) for each Restricted Stock
Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of
applicable taxes. Notwithstanding the foregoing, if permitted by the Committee and set forth in
the Award Agreement, the Participant may elect in accordance with terms specified in the Award
Agreement to defer receipt of all or any portion of the shares of Stock or other property otherwise
issuable to the Participant pursuant to this Section.

          10.6 Nontransferability of Restricted Stock Unit Awards. Prior to the issuance of shares of
Stock in settlement of a Restricted Stock Unit Award, the Award shall not be subject in any manner
to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by
will or by the laws of descent and distribution. All rights with respect to a Restricted Stock
Unit Award granted to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participant’s guardian or legal representative.

     11. Deferred Compensation Awards.

          11.1 Establishment of Deferred Compensation Award Programs. This Section 11 shall not be
effective unless and until the Committee determines to establish a program pursuant to this
Section. The Committee, in its discretion and upon such terms and conditions as it may determine,
may establish one or more programs pursuant to the Plan under which:

               (a) Participants designated by the Committee who are Insiders or otherwise among a select
group of highly compensated Employees may irrevocably elect, prior to a date specified by the
Committee, to reduce such Participant’s compensation otherwise payable in cash (subject to any
minimum or maximum reductions imposed by the Committee) and to be granted automatically at such
time or times as specified by the Committee one or more Awards of Stock Units with respect to such
numbers of shares of Stock as determined in accordance with the rules of the program established by
the Committee and having such other terms and conditions as established by the Committee.

               (b) Participants designated by the Committee who are Insiders or otherwise among a select
group of highly compensated Employees may irrevocably elect, prior to a date specified by the
Committee, to be granted automatically an Award of Stock Units with respect to such number of
shares of Stock and upon such other terms and conditions as established by the Committee in lieu
of:

                    (i) shares of Stock otherwise issuable to such Participant upon the exercise of an Option;

 

 

                    (ii) cash or shares of Stock otherwise issuable to such Participant upon the exercise of an
SAR; or

                    (iii) cash or shares of Stock otherwise issuable to such Participant upon the settlement of a
Performance Award or Performance Unit.

          11.2 Terms and Conditions of Deferred Compensation Awards. Deferred Compensation Awards
granted pursuant to this Section 11 shall be evidenced by Award Agreements in such form as the
Committee shall from time to time establish. No such Deferred Compensation Award or purported
Deferred Compensation Award shall be a valid and binding obligation of the Company unless evidenced
by a fully executed Award Agreement. Award Agreements evidencing Deferred Compensation Awards may
incorporate all or any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:

               (a) Vesting Conditions. Deferred Compensation Awards shall not be subject to any vesting
conditions.

               (b) Terms and Conditions of Stock Units.

                    (i) Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Stock Units until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company). However, a Participant shall be entitled to
receive Dividend Equivalents with respect to the payment of cash dividends on Stock having a record
date prior to date on which Stock Units held by such Participant are settled. Such Dividend
Equivalents shall be paid by crediting the Participant with additional whole and/or fractional
Stock Units as of the date of payment of such cash dividends on Stock. The method of determining
the number of additional Stock Units to be so credited shall be specified by the Committee and set
forth in the Award Agreement. Such additional Stock Units shall be subject to the same terms and
conditions and shall be settled in the same manner and at the same time (or as soon thereafter as
practicable) as the Stock Units originally subject to the Stock Unit Award. In the event of a
dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the
capital structure of the Company as described in Section 4.2, appropriate adjustments shall be made
in the Participant’s Stock Unit Award so that it represent the right to receive upon settlement any
and all new, substituted or additional securities or other property (other than normal cash
dividends) to which the Participant would be entitled by reason of the shares of Stock issuable
upon settlement of the Award.

                    (ii) Settlement of Stock Unit Awards. A Participant electing to receive an Award of Stock
Units pursuant to this Section 11 shall specify at the time of such election a settlement date with
respect to such Award. The Company shall issue to the Participant as soon as practicable following
the earlier of the settlement date elected by the Participant or the date of termination of the
Participant’s Service, a number of whole shares of Stock equal to the number of whole Stock Units
subject to the Stock Unit Award. Such shares of Stock shall be fully vested, and the Participant
shall not be required to pay any additional

 

 

consideration (other than applicable tax withholding) to acquire such shares. Any fractional
Stock Unit subject to the Stock Unit Award shall be settled by the Company by payment in cash of an
amount equal to the Fair Market Value as of the payment date of such fractional share.

                    (iii) Nontransferability of Stock Unit Awards. Prior to their settlement in accordance with
the provision of the Plan, no Stock Unit Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Stock Unit Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

     12. Other Stock-Based Awards.

     In addition to the Awards set forth in Sections 6 through 11 above, the Committee, in its sole
discretion, may carry out the purpose of this Plan by awarding Stock-Based Awards as it determines
to be in the best interests of the Company and subject to such other terms and conditions as it
deems necessary and appropriate.

     13. Effect of Change in Control on Options and SARs.

          13.1 Accelerated Vesting. The Committee, in its sole discretion, may provide in any Award
Agreement or, in the event of a Change in Control, may take such actions as it deems appropriate to
provide for the acceleration of the exercisability and vesting in connection with such Change in
Control of any or all outstanding Options and SARs and shares acquired upon the exercise of such
Options and SARs upon such conditions and to such extent as the Committee shall determine. The
previous sentence notwithstanding such acceleration shall not occur to the extent an Option or SAR
is assumed or substituted with a substantially similar award in connection with a Change in
Control.

          13.2 Assumption or Substitution. In the event of a Change in Control, the surviving,
continuing, successor, or purchasing corporation or other business entity or parent thereof, as the
case may be (the “Acquiring Corporation”), may, without the consent of the Participant, either
assume the Company’s rights and obligations under outstanding Options and SARs or substitute for
outstanding Options and SARs substantially equivalent options or stock appreciation rights for the
Acquiring Corporation’s stock. Any Options or SARs which are neither assumed or substituted for by
the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of
the Change in Control shall terminate and cease to be outstanding effective as of the date of the
Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option or
SAR prior to the Change in Control and any consideration received pursuant to the Change in Control
with respect to such shares shall continue to be subject to all applicable provisions of the Award
Agreement evidencing such Award except as otherwise provided in such Award Agreement. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding
Options or SARs immediately prior to an Ownership Change Event described in Section 2.1(z)(i)
constituting a Change in Control is the surviving or continuing corporation and immediately after
such Ownership Change Event less than fifty percent (50%) of the total combined voting power of its

 

 

voting stock is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions
of Section 1504(b) of the Code, the outstanding Options and SARs shall not terminate unless the
Board otherwise provides in its discretion.

          13.3 Effect of Change in Control on Awards Other Than Options and SARs. The Committee may, in
its discretion, provide in any Award Agreement evidencing any Award other than an Option or SAR
that, in the event of a Change in Control, the lapsing of any applicable Vesting Condition, vesting
restriction, Restriction Period, Performance Goal or other limitation applicable to the Award or
the Stock subject to such Award held by a Participant whose Service has not terminated prior to the
Change in Control shall be accelerated and/or waived, effective immediately prior to the
consummation of the Change in Control, to such extent as specified in such Award Agreement;
provided, however, that such acceleration or waiver shall not occur to the extent an Award is
assumed or substituted with a substantially equivalent Award in connection with the Change in
Control. Any acceleration, waiver or the lapsing of any restriction that was permissible solely by
reason of this Section 13.3 and the provisions of such Award Agreement shall be conditioned upon
the consummation of the Change in Control.

     14. Compliance with Securities Law.

          The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject
to compliance with all applicable requirements of federal, state and foreign law with respect to
such securities and the requirements of any stock exchange or market system upon which the Stock
may then be listed. In addition, no Award may be exercised or shares issued pursuant to an Award
unless (a) a registration statement under the Securities Act shall at the time of such exercise or
issuance be in effect with respect to the shares issuable pursuant to the Award or (b) in the
opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in
accordance with the terms of an applicable exemption from the registration requirements of the
Securities Act. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the
lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite authority shall not
have been obtained. As a condition to issuance of any Stock, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.

     15. Tax Withholding.

          15.1 Tax Withholding in General. The Company shall have the right to deduct from any and all
payments made under the Plan, or to require the Participant, through payroll withholding, cash
payment or otherwise, including by means of a cashless exercise or net exercise of an Option, to
make adequate provision for, the federal, state, local and foreign taxes, if any, required by law
to be withheld by the Participating Company Group with respect to an Award or the shares acquired
pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release
shares of Stock from an escrow established pursuant to an Award

 

 

Agreement, or to make any payment in cash under the Plan until the Participating Company
Group’s tax withholding obligations have been satisfied by the Participant.

          15.2 Withholding in Shares. The Company shall have the right, but not the obligation, to
deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an
Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a
Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of any shares of Stock
withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount
determined by the applicable minimum statutory withholding rates.

     16. Amendment or Termination of Plan.

          The Board or the Committee may amend, suspend or terminate the Plan at any time. However,
without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum
aggregate number of shares of Stock that may be issued under the Plan (except by operation of the
provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive
Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s
stockholders under any applicable law, regulation or rule. No amendment, suspension or termination
of the Plan shall affect any then outstanding Award unless expressly provided by the Board or the
Committee. In any event, no amendment, suspension or termination of the Plan may adversely affect
any then outstanding Award without the consent of the Participant unless necessary to comply with
any applicable law, regulation or rule.

     17. Miscellaneous Provisions.

          17.1 Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase
options, or other conditions and restrictions as determined by the Committee in its discretion at
the time the Award is granted. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder
and shall promptly present to the Company any and all certificates representing shares of Stock
acquired hereunder for the placement on such certificates of appropriate legends evidencing any
such transfer restrictions.

          17.2 Provision of Information. Each Participant shall be given access to information
concerning the Company equivalent to that information generally made available to the Company’s
common stockholders.

          17.3 Rights as Employee, Consultant or Director. No person, even though eligible pursuant to
Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be
selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall
confer on any Participant a right to remain an Employee, Consultant or Director or interfere with
or limit in any way any right of a Participating Company to terminate the Participant’s Service at
any time. To the extent that an Employee of a Participating Company

 

 

other than the Company receives an Award under the Plan, that Award shall in no event be
understood or interpreted to mean that the Company is the Employee’s employer or that the Employee
has an employment relationship with the Company.

          17.4 Rights as a Stockholder. A Participant shall have no rights as a stockholder with
respect to any shares covered by an Award until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date such shares are issued, except as provided in
Section 4.2 or another provision of the Plan.

          17.5 Fractional Shares. The Company shall not be required to issue fractional shares upon the
exercise or settlement of any Award.

          17.6 Severability. If any one or more of the provisions (or any part thereof) of this Plan
shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so
as to make it valid, legal and enforceable, and the validity, legality and enforceability of the
remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired
thereby.

          17.7 Beneficiary Designation. Subject to local laws and procedures, each Participant may file
with the Company a written designation of a beneficiary who is to receive any benefit under the
Plan to which the Participant is entitled in the event of such Participant’s death before he or she
receives any or all of such benefit. Each designation will revoke all prior designations by the
same Participant, shall be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Company during the Participant’s lifetime. If a
married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness
of such designation may be subject to the consent of the Participant’s spouse. If a Participant
dies without an effective designation of a beneficiary who is living at the time of the
Participant’s death, the Company will pay any remaining unpaid benefits to the Participant’s legal
representative.

          17.8 Unfunded Obligation. Participants shall have the status of general unsecured creditors
of the Company. Any amounts payable to Participants pursuant to the Plan shall be unfunded and
unsecured obligations for all purposes, including, without limitation, Title I of the Employee
Retirement Income Security Act of 1974. No Participating Company shall be required to segregate
any monies from its general funds, or to create any trusts, or establish any special accounts with
respect to such obligations. The Company shall retain at all times beneficial ownership of any
investments, including trust investments, which the Company may make to fulfill its payment
obligations hereunder. Any investments or the creation or maintenance of any trust or any
Participant account shall not create or constitute a trust or fiduciary relationship between the
Committee or any Participating Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant’s creditors in any assets of any
Participating Company. The Participants shall have no claim against any Participating Company for
any changes in the value of any assets which may be invested or reinvested by the Company with
respect to the Plan. Each Participating Company shall be responsible for making benefit payments
pursuant to the Plan on behalf of its Participants or for

 

 

reimbursing the Company for the cost of such payments, as determined by the Company in its
sole discretion. In the event the respective Participating Company fails to make such payment or
reimbursement, a Participant’s (or other individual’s) sole recourse shall be against the
respective Participating Company, and not against the Company. A Participant’s acceptance of an
Award pursuant to the Plan shall constitute agreement with this provision.

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