Document:

exv10w1

Exhibit 10.1

THORATEC CORPORATION

AMENDED AND RESTATED 2006 INCENTIVE STOCK PLAN

Approved by the Shareholders on May 25, 2006

Amended and Restated by the Board on May 25, 2006 and April 7, 2008

Approved by the Shareholders on May 20, 2008

Amended and Restated by the Board on May 20, 2008 and March 2, 2010

Approved by the Shareholders on May 19, 2010

Termination Date: May 24, 2016

I. PURPOSES

     1.1 Eligible Stock Award Recipients. The persons eligible to receive Stock Awards are
the Employees, Directors, and Consultants of the Company and its Affiliates.

     1.2 Available Stock Awards. The types of stock awards that may be granted under this
Plan shall be: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Restricted Stock
Bonuses, (iv) Restricted Stock Purchase Rights, (v) Stock Appreciation Rights, (vi) Phantom Stock
Units, (vii) Restricted Stock Units, (viii) Performance Share Bonuses, and (ix) Performance Share
Units.

     1.3 General Purpose. The Company, by means of this new Plan, which will serve as the
successor to the Company’s 1997 Stock Option Plan (“1997 Plan”), the Company’s 1996 Stock Option
Plan (“1996 Plan”), and the Company’s Nonemployee Directors Stock Option Plan (“Directors 1996
Plan”), seeks to create incentives for eligible Employees (including officers), Directors, and
Consultants of the Company, through their participation in the growth in value of the Common Stock
of the Company, to accept or continue their employment or other service relationship with the
Company, increase their interest in the Company’s welfare, and improve the operations and increase
the profits of the Company. The Plan will serve as a replacement for the 1997 Plan, the 1996 Plan,
and the Directors 1996 Plan. Stock awards granted under any of these plans shall continue to be
governed by the terms of the plan under which the stock award was granted that were in effect on
the date of grant of such award.

II. DEFINITIONS

     2.1 “Affiliate” means a parent or subsidiary of the Company, with “parent” meaning an entity
that controls the Company directly or indirectly, through one or more intermediaries, and
“subsidiary” meaning an entity that is controlled by the Company directly or indirectly, through
one or more intermediaries. Solely with respect to the granting of any Incentive Stock Options,
Affiliate means any parent corporation or subsidiary corporation of the Company, whether now or
hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the
Code.

     2.2 “Beneficial Owner” means the definition given in Rule 13d-3 promulgated under the Exchange
Act.

 

     2.3 “Board” means the Board of Directors of the Company.

     2.4 “Change of Control” means the occurrence of any of the following events:

          (i) Any person or group is or becomes the Beneficial Owner, directly or indirectly, of more
than 50% of the total voting power of the voting stock of the Company, including by way of merger,
consolidation or otherwise;

          (ii) The sale, exchange, lease or other disposition of all or substantially all of the assets
of the Company to a person or group of related persons, as such terms are defined or described in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act;

          (iii) A merger or consolidation or similar transaction involving the Company;

          (iv) A change in the composition of the Board occurring within a two-year period, as a result
of which fewer than a majority of the Directors are Incumbent Directors; or

          (v) A dissolution or liquidation of the Company.

     2.5 “Code” means the Internal Revenue Code of 1986, as amended.

     2.6 “Committee” means a committee of one or more members of the Board (or officers who are not
members of the Board to the extent allowed by law) appointed by the Board in accordance with
Section 3.3 of the Plan.

     2.7 “Common Stock” means the common shares of the Company.

     2.8 “Company” means Thoratec Corporation, a California corporation.

     2.9 “Consultant” means any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for such services or
(ii) who is a member of the board of directors of an Affiliate. However, the term “Consultant”
shall not include either Directors who are not compensated by the Company for their services as a
Director or Directors who are compensated by the Company solely for their services as a Director.

     2.10 “Continuous Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Director, or Consultant is not interrupted or terminated. The
Participant’s Continuous Service shall not be deemed to have terminated merely because of a change
in the capacity in which the Participant renders service to the Company or an Affiliate as an
Employee, Consultant, or Director, or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the Participant’s Continuous
Service. For example, a change in status from an Employee of the Company to a Consultant of an
Affiliate or a Director will not constitute an interruption of Continuous Service. The Board or the
chief executive officer of the Company, in that party’s sole discretion, may determine whether
Continuous Service shall be considered interrupted in the case of any leave of absence approved by
the Company or an Affiliate, including sick leave, military leave, or any other personal leave.

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     2.11 “Covered Employee” means the chief executive officer and the four (4) other highest
compensated officers of the Company for whom total compensation is required to be reported to
shareholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.

     2.12 “Director” means a member of the Board of Directors of the Company.

     2.13 “Disability” means the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code for all Incentive Stock Options. For all other Stock Awards,
“Disability” means physical or mental incapacitation such that for a period of six (6) consecutive
months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period, a
person is unable to substantially perform his or her duties. Any question as to the existence of
that person’s physical or mental incapacitation as to which the person or person’s representative
and the Company cannot agree shall be determined in writing by a qualified independent physician
mutually acceptable to the person and the Company. If the person and the Company or an Affiliate
cannot agree as to a qualified independent physician, each shall appoint such a physician and those
two (2) physicians shall select a third (3rd) who shall make such determination in
writing. The determination of Disability made in writing to the Company or an Affiliate and the
person shall be final and conclusive for all purposes of the Stock Awards.

     2.14 “Eligible Director” means any Director who is not employed by the Company or an
Affiliate.

     2.15 “Employee” means any person employed by the Company or an Affiliate. Service as a
Director or compensation by the Company or an Affiliate solely for services as a Director shall not
be sufficient to constitute “employment” by the Company or an Affiliate.

     2.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

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

          (i) If the Common Stock is listed on any established stock exchange or traded on the Nasdaq
National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no such sales were
reported) as quoted on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the date of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable;

          (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a share of Common Stock shall be the mean between
the high bid and low asked prices for the Common Stock on the day of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable; or

          (iii) In the absence of such markets for the Common Stock, the Fair Market Value shall be
determined in good faith by the Board.

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     2.18 “Full-Value Stock Award” shall mean any of a Restricted Stock Bonus, Restricted Stock
Units, Phantom Stock Units, Performance Share Bonus, or Performance Share Units.

     2.19 “Incentive Stock Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

     2.20 “Incumbent Directors” shall mean Directors who either (i) are Directors of the Company as
of the date the Plan first becomes effective pursuant to Article XVI hereof or (ii) are elected, or
nominated for election, to the Board with the affirmative votes of at least a majority of those
Directors whose election or nomination was not in connection with any transaction described in
subsections (i), (ii), or (iii) of Section 2.4, or in connection with an actual or threatened proxy
contest relating to the election of Directors to the Company.

     2.21 “Non-Employee Director” means a Director who either (i) is not a current Employee or
Officer of the Company or its parent or a subsidiary, does not receive compensation (directly or
indirectly) from the Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
(“Regulation S-K”)), does not possess an interest in any other transaction as to which disclosure
would be required under Item 404(a) of Regulation S-K and is not engaged in a business relationship
as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise
considered a “non-employee director” for purposes of Rule 16b-3.

     2.22 “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock
Option.

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

     2.24 “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant
to the Plan.

     2.25 “Option Agreement” means a written agreement between the Company and an Optionholder
evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan.

     2.26 “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

     2.27 “Outside Director” means a Director who either (i) is not a current employee of the
Company or an “affiliated corporation” (within the meaning of Treasury Regulations promulgated
under Section 162(m) of the Code), is not a former employee of the Company or an “affiliated
corporation” receiving compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an “affiliated corporation” at any time and is
not currently receiving direct or indirect remuneration from the Company or an “affiliated
corporation” for services in any capacity other than as a Director; or (ii) is otherwise considered
an “outside director” for purposes of Section 162(m) of the Code.

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     2.28 “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Stock Award.

     2.29 “Performance Share Bonus” means a grant of shares of the Company’s Common Stock not
requiring a Participant to pay any amount of monetary consideration, and which grant is subject to
the provisions of Section 8.6 of the Plan.

     2.30 “Performance Share Unit” means the right to receive the value of one (1) share of the
Company’s Common Stock at the time the Performance Share Unit vests, with the further right to
elect to defer receipt of that value otherwise deliverable upon the vesting of an award of
Performance Share Units to the extent permitted in the Participant’s Stock Award Agreement. These
Performance Share Units are subject to the provisions of Section 8.7 of the Plan.

     2.31 “Phantom Stock Unit” means the right to receive the value of one (1) share of the
Company’s Common Stock, subject to the provisions of Section 8.4 of the Plan.

     2.32 “Plan” means this Thoratec Corporation 2006 Incentive Stock Plan.

     2.33 “Restricted Stock Bonus” means a grant of shares of the Company’s Common Stock not
requiring a Participant to pay any amount of monetary consideration, and which grant is subject to
the provisions of Section 8.1 of the Plan.

     2.34 “Restricted Stock Purchase Right” means the right to acquire shares of the Company’s
Common Stock upon the payment of the agreed-upon monetary consideration, subject to the provisions
of Section 8.2 of the Plan.

     2.35 “Restricted Stock Unit” means the right to receive the value of one (1) share of the
Company’s Common Stock at the time the Restricted Stock Unit vests, with the further right to elect
to defer receipt of that value otherwise deliverable upon the vesting of an award of restricted
stock to the extent permitted in the Participant’s agreement. These Restricted Stock Units are
subject to the provisions of Section 8.5 of the Plan.

     2.36 “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule
16b-3, as in effect from time to time.

     2.37 “Securities Act” means the Securities Act of 1933, as amended.

     2.38 “Stock Appreciation Right” means the right to receive an amount equal to the Fair Market
Value of one (1) share of the Company’s Common Stock on the day the Stock Appreciation Right is
redeemed, reduced by the deemed exercise price or base price of such right, subject to the
provisions of Section 8.3 of the Plan.

     2.39 “Stock Award” means any Option award, Restricted Stock Bonus award, Restricted Stock
Purchase Right award, Stock Appreciation Right award, Phantom Stock Unit award, Restricted Stock
Unit award, Performance Share Bonus award, Performance Share Unit award, or other stock-based
award. These Awards may include, but are not limited to those listed in Section 1.2.

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     2.40 “Stock Award Agreement” means a written agreement, including an Option Agreement, between
the Company and a holder of a Stock Award setting forth the terms and conditions of an individual
Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the
Plan.

     2.41 “Ten Percent Shareholder” means a person who owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any of its Affiliates.

III. ADMINISTRATION

     3.1 Administration by Board. The Board shall administer the Plan unless and until the
Board delegates administration to a Committee, as provided in Section 3.3.

     3.2 Powers of Board. The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

          (i) To determine from time to time which of the persons eligible under the Plan shall be
granted Stock Awards; when and how each Stock Award shall be granted; what type or combination of
types of Stock Award shall be granted; the provisions of each Stock Award granted (which need not
be identical), including the time or times when a person shall be permitted to receive Common Stock
pursuant to a Stock Award; and the number of shares of Common Stock with respect to which a Stock
Award shall be granted to each such person.

          (ii) To construe and interpret the Plan and Stock Awards granted under it, and to establish,
amend and revoke rules and regulations for its administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.

          (iii) To amend the Plan or a Stock Award as provided in Section 14 of the Plan.

          (iv) Generally, to exercise such powers and to perform such acts as the Board deems necessary,
desirable, convenient or expedient to promote the best interests of the Company that are not in
conflict with the provisions of the Plan.

          (v) To adopt sub-plans and/or special provisions applicable to Stock Awards regulated by the
laws of a jurisdiction other than and outside of the United States. Such sub-plans and/or special
provisions may take precedence over other provisions of the Plan, with the exception of Section 4
of the Plan, but unless otherwise superseded by the terms of such sub-plans and/or special
provisions, the provisions of the Plan shall govern.

          (vi) To authorize any person to execute on behalf of the Company any instrument required to
effect the grant of a Stock Award previously granted by the Board.

          (vii) To determine whether Stock Awards will be settled in shares of Common Stock, cash or in
any combination thereof.

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          (viii) To determine whether Stock Awards will be adjusted for Dividend Equivalents, with
“Dividend Equivalents” meaning a credit, made at the discretion of the Board, to the account of a
Participant in an amount equal to the cash dividends paid on one share of Common Stock for each
share of Common Stock represented by a Stock Award held by such Participant.

          (ix) To establish a program whereby Participants designated by the Board can reduce
compensation otherwise payable in cash in exchange for Stock Awards under the Plan.

          (x) To impose such restrictions, conditions or limitations as it determines appropriate as to
the timing and manner of any resales by a Participant or other subsequent transfers by the
Participant of any shares of Common Stock issued as a result of or under a Stock Award, including,
without limitation, (A) restrictions under an insider trading policy and (B) restrictions as to the
use of a specified brokerage firm for such resales or other transfers.

          (xi) To provide, either at the time a Stock Award is granted or by subsequent action, that a
Stock Award shall contain as a term thereof, a right, either in tandem with the other rights under
the Stock Award or as an alternative thereto, of the Participant to receive, without payment to the
Company, a number of shares of Common Stock, cash or a combination thereof, the amount of which is
determined by reference to the value of the Stock Award.

     3.3 Delegation to Committee.

          (i) General. The Board may delegate administration of the Plan to a Committee or
Committees consisting of one or more members of the Board or one or more officers of the Company
who are not members of the Board (to the extent allowed by law), and the term “Committee” shall
apply to any person or persons to whom such authority has been delegated. If administration is
delegated to a Committee, the Committee also may exercise, in connection with the administration of
the Plan, any of the powers and authority granted to the Board under the Plan, and the Committee
may delegate to a subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the Committee or
subcommittee, as applicable), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.

          (ii) Committee Composition when Common Stock is Publicly Traded. At such time as the
Common Stock is publicly traded, in the discretion of the Board, a Committee may consist solely of
two or more Outside Directors, in accordance with Section 162(m) of the Code, and/or solely of two
or more Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such authority,
the Board or the Committee may (1) delegate to a committee of one or more individuals who are not
Outside Directors the authority to grant Stock Awards to eligible persons who are either (a) not
then Covered Employees and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom the Company wishes
to comply with Section 162(m) of the Code and/or (2) delegate to a committee of one or more
individuals who are not Non-Employee Directors the authority to grant Stock Awards to eligible
persons who are either (a) not then

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subject to Section 16 of the Exchange Act or (b) receiving a Stock Award as to which the Board
or Committee elects not to comply with Rule 16b-3 by having two or more Non-Employee Directors
grant such Stock Award.

     3.4 Effect of Board’s Decision. All determinations, interpretations and constructions
made by the Board in good faith shall not be subject to review by any person and shall be final,
binding and conclusive on all persons.

     3.5 Compliance with Section 16 of Exchange Act. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to comply with the
applicable conditions of Rule 16b-3, or any successor rule thereto. To the extent any provision of
this Plan or action by the Board fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board. Notwithstanding the above, it shall be
the responsibility of such persons, not of the Company or the Board, to comply with the
requirements of Section 16 of the Exchange Act; and neither the Company nor the Board shall be
liable if this Plan or any transaction under this Plan fails to comply with the applicable
conditions of Rule 16b-3 or any successor rule thereto, or if any person incurs any liability under
Section 16 of the Exchange Act.

IV. SHARES SUBJECT TO THE PLAN

     4.1 Share Reserve. Subject to the provisions of Section 13 of the Plan relating to
adjustments upon changes in Common Stock, the maximum aggregate number of shares of Common Stock
that may be issued pursuant to Stock Awards shall not exceed Eight Million Six Hundred Thousand
(8,600,000) shares of Common Stock (“Share Reserve”); provided that from May 20, 2008 until May 18,
2010, (i) each share of Common Stock issued pursuant to a Full-Value Stock Award shall reduce the
Share Reserve by one and seventy-four hundredths (1.74) shares and (ii) each share of Common Stock
issued pursuant to a Stock Award other than a Full-Value Stock Award shall reduce the Share Reserve
by one (1) share; and provided further that from and after May 19, 2010, (i) each share of Common
Stock issued pursuant to a Full-Value Stock Award shall reduce the Share Reserve by one and seven
tenths (1.7) shares and (ii) each share of Common Stock issued pursuant to a Stock Award other than
a Full-Value Stock Award shall reduce the Share Reserve by one (1) share. To the extent that a
distribution pursuant to a Stock Award is made in cash, the Share Reserve shall be reduced by the
number of shares of Common Stock subject to the redeemed or exercised portion of the Stock Award.
Notwithstanding any other provision of the Plan to the contrary, the maximum aggregate number of
shares of Common Stock that may be issued under the Plan pursuant to Incentive Stock Options is
Eight Million Six Hundred Thousand (8,600,000) shares of Common Stock (“ISO Limit”), subject to the
adjustments provided for in Section 13 of the Plan. No more than an aggregate of five percent (5%)
of the initial Share Reserve at the time of the adoption of this Plan and five percent (5%) of any
increase in the Share Reserve as may be approved by the shareholders of the Company from time to
time may be granted under Accelerated Vesting Restricted Stock Bonuses and Accelerated Vesting
Restricted Stock Units (as defined in Sections 8.1(ii) and 8.5(ii), respectively).

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     4.2 Reversion of Shares to the Share Reserve.

          (i) If any Stock Award granted under this Plan shall for any reason (A) expire, be cancelled
or otherwise terminate, in whole or in part, without having been exercised or redeemed in full, (B)
be reacquired by the Company prior to vesting, or (C) be repurchased at cost by the Company prior
to vesting, the shares of Common Stock not acquired by Participant under such Stock Award shall
revert or be added to the Share Reserve and become available for issuance under the Plan; provided,
however, that shares of Common Stock shall not revert or be added to the Share Reserve that are (a)
tendered in payment of an Option, (b) withheld by the Company to satisfy any tax withholding
obligation, or (c) repurchased by the Company with Option proceeds, and provided, further, that
shares of Common Stock covered by a Stock Appreciation Right, to the extent that it is exercised
and settled in shares of Common Stock, and whether or not shares of Common Stock are actually
issued to the Participant upon exercise of the Stock Appreciation Right, shall be considered issued
or transferred pursuant to the Plan. For shares that revert or are added to the Share Reserve as
provided above, the Share Reserve shall be increased by (i) one and seven tenths (1.7) shares for
each share of Common Stock underlying a Full-Value Stock Award and (ii) one (1) share for each
share of Common Stock underlying a Stock Award other than a Full-Value Stock Award.

          (ii) Shares of Common Stock that are not acquired by a holder of a stock award granted under
the 1997 Plan, the 1996 Plan, or the Directors 1996 Plan shall not revert or be added to the Share
Reserve or become available for issuance under the Plan.

     4.3 Source of Shares. The shares of Common Stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.

V. ELIGIBILITY

     5.1 Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only
to Employees. Stock Awards other than Incentive Stock Options may be granted to Employees,
Directors, and Consultants.

     5.2 Ten Percent Shareholders. A Ten Percent Shareholder shall not be granted an
Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent
(110%) of the Fair Market Value of the Common Stock on the date of grant and the Option is not
exercisable after the expiration of five (5) years from the date of grant.

     5.3 Annual Section 162(m) Limitation. Subject to the provisions of Section 13 of the
Plan relating to adjustments upon changes in the shares of Common Stock, no Employee shall be
eligible to be granted Incentive Stock Options, Nonstatutory Stock Options, or Stock Appreciation
Rights covering more than Three Hundred Fifty Thousand (350,000) shares of Common Stock during any
fiscal year; provided that in connection with his or her initial service, an Employee may be
granted Incentive Stock Options, Nonstatutory Stock Options, or Stock Appreciation Rights covering
not more than an additional Two Hundred Fifty Thousand (250,000) shares of Common Stock, which
shall not count against the limit set forth in the preceding sentence.

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     5.4. Consultants.

          (i) A Consultant shall not be eligible for the grant of a Stock Award if, at the time of
grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not available to
register either the offer or the sale of the Company’s securities to such Consultant because of the
nature of the services that the Consultant is providing to the Company, or because the Consultant
is not a natural person, or as otherwise provided by the rules governing the use of Form S-8,
unless the Company determines both (1) that such grant (A) shall be registered in another manner
under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not require
registration under the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (2) that such grant complies with the securities laws of all other relevant
jurisdictions.

          (ii) Form S-8 generally is available to consultants and advisors only if (A) they are natural
persons; (B) they provide bona fide services to the issuer, its parents, or its majority owned
subsidiaries; and (C) the services are not in connection with the offer or sale of securities in a
capital-raising transaction, and do not directly or indirectly promote or maintain a market for the
issuer’s securities.

VI. OPTION PROVISIONS

     Each Option shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for shares of Common Stock purchased upon exercise of
each type of Option. The provisions of separate Options need not be identical, but each Option
shall include (through incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:

     6.1 Term. Subject to the provisions of Section 5.2 of the Plan regarding grants of
Incentive Stock Options to Ten Percent Shareholders, no Option shall be exercisable after the
expiration of ten (10) years from the date it was granted, and no Option granted to an Eligible
Director pursuant to Article VII shall be exercisable after the expiration of five (5) years from
the date it was granted.

     6.2 Exercise Price of an Incentive Stock Option. Subject to the provisions of Section
5.2 of the Plan regarding Ten Percent Shareholders, the exercise price of each Incentive Stock
Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common
Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an
Incentive Stock Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code.

     6.3 Exercise Price of a Nonstatutory Stock Option. The exercise price of each
Nonstatutory Stock Option shall be not less than one hundred percent (100%) of the Fair Market
Value of the Common Stock subject to the Option on the date the Option is granted.

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Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted with an exercise
price lower than that set forth in the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

     6.4 Consideration. The purchase price of Common Stock acquired pursuant to an Option
shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash
or by check at the time the Option is exercised or (ii) at the discretion of the Board at the time
of the grant of the Option (or subsequently in the case of a Nonstatutory Stock Option): (1) by
delivery to the Company of other Common Stock, (2) pursuant to a “same day sale” program to the
extent permitted by law, (3) reduction of the Company’s liability to the Optionholder, (4) a
reduction in the number of shares of Common Stock otherwise issuable upon the exercise of the
Option, (5) by any other form of consideration permitted by law, but in no event shall a promissory
note or other form of deferred payment constitute a permissible form of consideration for an Option
granted under the Plan, or (6) by some combination of the foregoing. In the absence of a provision
to the contrary in the individual Optionholder’s Option Agreement, payment for Common Stock
pursuant to an Option may only be made in the form of cash, check, or pursuant to a “same day sale”
program.

     6.5 Transferability of an Incentive Stock Option. An Incentive Stock Option shall not
be transferable except by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing,
the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

     6.6 Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall
be transferable to the extent provided in the Option Agreement. If the Nonstatutory Stock Option
does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

     6.7 Vesting Generally. Options granted under the Plan shall be exercisable at such
time and upon such terms and conditions as may be determined by the Board. The vesting provisions
of individual Options may vary. If vesting is based on the Participant’s Continuous Service, such
Options shall not fully vest in less than three (3) years. If vesting is based on the achievement
of performance criteria, such Options shall not fully vest in less than one (1) year. The
provisions of this Section 6.7 are subject to any Option provisions governing the minimum number of
shares of Common Stock as to which an Option may be exercised. Notwithstanding the foregoing
provisions of this Section 6.7, Options granted in recognition of a Participant’s long-term
Continuous Service may vest fully in periods shorter than those described above or may be fully
vested upon grant.

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     6.8 Termination of Continuous Service. In the event an Optionholder’s Continuous
Service terminates (other than upon the Optionholder’s death or Disability), the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination) but only within such period of time as is specified in the
Option Agreement (and in no event later than the expiration of the term of such Option as set forth
in the Option Agreement). If, after termination, the Optionholder does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall terminate. In the
absence of a provision to the contrary in the individual Optionholder’s Option Agreement, the
Option shall remain exercisable for three (3) months following the termination of the
Optionholder’s Continuous Service.

     6.9 Extension of Termination Date. An Optionholder’s Option Agreement may also provide
that if the exercise of the Option following the termination of the Optionholder’s Continuous
Service (other than upon the Optionholder’s death or Disability) would be prohibited at any time
solely because the issuance of shares of Common Stock would violate the registration requirements
under the Securities Act or other applicable securities law, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in the Option Agreement or (ii)
the expiration of a period of three (3) months after the termination of the Optionholder’s
Continuous Service during which the exercise of the Option would not be in violation of such
registration requirements or other applicable securities law. The provisions of this Section 6.9
notwithstanding, in the event that a sale of the shares of Common Stock received upon exercise of
his or her Option would subject the Optionholder to liability under Section 16(b) of the Exchange
Act, then the Option will terminate on the earlier of (1) the fifteenth (15th) day after
the last date upon which such sale would result in liability, or (2) two hundred ten (210) days
following the date of termination of the Optionholder’s employment or other service to the Company
(and in no event later than the expiration of the term of the Option).

     6.10 Disability of Optionholder. In the event that an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his
or her Option to the extent that the Optionholder was entitled to exercise such Option as of the
date of termination, but only within such period of time as is specified in the Option Agreement
(and in no event later than the expiration of the term of such Option as set forth in the Option
Agreement). If, after termination, the Optionholder does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate. In the absence of a provision
to the contrary in the individual Optionholder’s Option Agreement, the Option shall remain
exercisable for twelve (12) months following such termination.

     6.11 Death of Optionholder. In the event (i) an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s death or (ii) the Optionholder dies within the period
(if any) specified in the Option Agreement after the termination of the Optionholder’s Continuous
Service for a reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s
estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionholder’s death pursuant to Section 6.5 or
6.6 of the Plan, but only within such period of time as is specified in the Option Agreement (and
in no event later than the expiration of the term of such Option as set forth in the Option
Agreement). If, after death, the Option is not exercised within the time

12

 

specified in the Option Agreement, the Option shall terminate. In the absence of a provision
to the contrary in the individual Optionholder’s Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionholder’s death.

     6.12 Early Exercise Generally Not Permitted. The Company’s general policy is not to
allow the Optionholder to exercise the Option as to any part or all of the shares of Common Stock
subject to the Option prior to the vesting of the Option. If, however, an Option Agreement does
permit such early exercise, any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board determines to be
appropriate.

VII. NON-DISCRETIONARY STOCK AWARDS FOR ELIGIBLE
DIRECTORS

     In addition to any other Stock Awards that Eligible Directors may be granted on a
discretionary basis under the Plan, which Stock Awards may only be granted by a Committee comprised
solely of Non-Employee Directors, each Eligible Director of the Company shall be automatically
granted without the necessity of action by the Board, the following Stock Awards.

     7.1 Initial Grant. On the date that a Director commences service on the Board and
satisfies the definition of an Eligible Director, an initial grant of restricted stock in the form
of a Restricted Stock Bonus award or an award of Restricted Stock Units shall automatically be made
to that Eligible Director (the “Initial Grant”). Unless expressly provided in this Article VII,
such Initial Grant shall be subject to the applicable provisions of Section 8.1 or Section 8.5, as
the case may be. In the absence of an affirmative decision by the Board to the contrary, the
Initial Grant shall be in the form of a Restricted Stock Bonus award. The number of shares subject
to this Initial Grant shall be Seven Thousand (7,000) shares; provided, however, that prior to the
date of grant the Board may, in its sole discretion, provide that a different number of shares
shall be subject to this Initial Grant. The other terms governing this Initial Grant shall be as
determined by the Board in its sole discretion. If at the time a Director commences service on the
Board, the Director does not satisfy the definition of an Eligible Director, such Director shall
not be entitled to an Initial Grant at any time, even if such Director subsequently becomes an
Eligible Director.

     7.2 Annual Grant. An annual grant of restricted stock in the form of a Restricted
Stock Bonus award or an award of Restricted Stock Units (the “Annual Grant”) shall automatically be
made to each Director who (1) is re-elected to the Board and (2) is an Eligible Director on the
relevant grant date. Unless expressly provided in this Article VII, such Annual Grant shall be
subject to the applicable provisions of Section 8.1 or Section 8.5, as the case may be. In the
absence of an affirmative decision by the Board to the contrary, the Annual Grant shall be in the
form of a Restricted Stock Bonus award. The number of shares subject to this Annual Grant shall be
Five Thousand (5,000) shares. The other terms governing this Annual Grant shall be as determined by
the Board in its sole discretion. The date of grant of an Annual Grant is the date of the first
meeting of the Board following the annual meeting of the Company’s shareholders (even if that Board
meeting is held on the same day as the annual meeting of the shareholders).

13

 

     7.3 Vesting. Initial Grants and Annual Grants granted pursuant to this Article shall
be subject to a share reacquisition right in favor of the Company. Such grants shall vest as to one
fourth (1/4) of the total award annually, such that the award is fully vested after four (4) years
of Continuous Service. In the event a Director’s Continuous Service terminates, the Company shall
automatically reacquire without cost any shares of Common Stock held by the Director that have not
vested as of the date of such termination and any unvested Restricted Stock Units shall
automatically expire as of the date of such termination.

VIII. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS

     8.1 Restricted Stock Bonus Awards. Each Restricted Stock Bonus agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem appropriate.
Restricted Stock Bonuses shall be paid by the Company in shares of the Common Stock of the Company.
The terms and conditions of Restricted Stock Bonus agreements may change from time to time, and the
terms and conditions of separate Restricted Stock Bonus agreements need not be identical, but each
Restricted Stock Bonus agreement shall include (through incorporation of provisions hereof by
reference in the agreement or otherwise) the substance of each of the following provisions:

          (i) Consideration. A Restricted Stock Bonus may be awarded in consideration for past
services actually rendered to the Company or an Affiliate for its benefit; provided, however, that
in the case of a Restricted Stock Bonus to be made to a new Employee, Director, or Consultant who
has not performed prior services for the Company, the Restricted Stock Bonus will not be awarded
until the Board determines that such person has rendered services to the Company for a sufficient
period of time to ensure proper issuance of the shares in compliance with the California
Corporations Code.

          (ii) Vesting. Vesting shall generally be based on the Participant’s Continuous
Service. Shares of Common Stock awarded under the Restricted Stock Bonus agreement shall be subject
to a share reacquisition right in favor of the Company in accordance with a vesting schedule to be
determined by the Board. Absent a provision to the contrary in the Participant’s Restricted Stock
Bonus agreement, so long as the Participant remains in Continuous Service with the Company, a
Restricted Stock Bonus granted to the Participant shall vest as to one fourth (1/4) of the total
Restricted Stock Bonus award on each annual anniversary of the grant date, such that the Restricted
Stock Bonus is fully vested after four (4) years of Continuous Service from the grant date. If
vesting is based on the Participant’s Continuous Service, such Restricted Stock Bonus shall not
fully vest in less than three (3) years. If vesting is based on the achievement of performance
criteria, such Restricted Stock Bonus shall not fully vest in less than one (1) year.
Notwithstanding the foregoing provisions of this Section 8.1(ii), a Restricted Stock Bonus granted
in recognition of a Participant’s long-term Continuous Service may vest fully in periods shorter
than those described above or may be fully vested upon grant (“Accelerated Vesting Restricted Stock
Bonuses”), subject to provisions of the last sentence of Section 4.1.

          (iii) Termination of Participant’s Continuous Service. In the event a Participant’s
Continuous Service terminates, the Company shall automatically reacquire without cost any or all of
the shares of Common Stock held by the Participant that have not vested as of the date of
termination under the terms of the Restricted Stock Bonus agreement.

14

 

          (iv) Transferability. Rights to acquire shares of Common Stock under the Restricted
Stock Bonus agreement shall be transferable by the Participant only upon such terms and conditions
as are set forth in the Restricted Stock Bonus agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the Restricted Stock Bonus agreement remains
subject to the terms of the Restricted Stock Bonus agreement.

     8.2 Restricted Stock Purchase Awards. Each Restricted Stock Purchase Right agreement
shall be in such form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of the Restricted Stock Purchase Right agreements may change
from time to time, and the terms and conditions of separate Restricted Stock Purchase Right
agreements need not be identical, but each Restricted Stock Purchase Right agreement shall include
(through incorporation of provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions:

          (i) Purchase Price. The purchase price under each Restricted Stock Purchase Right
agreement shall be such amount as the Board shall determine and designate in such Restricted Stock
Purchase Right agreement. The purchase price shall not be less than one hundred percent (100%) of
the Common Stock’s Fair Market Value on the date such award is made or at the time the purchase is
consummated.

          (ii) Consideration. The purchase price of Common Stock acquired pursuant to the
Restricted Stock Purchase Right agreement shall be paid either: (A) in cash or by check at the time
of purchase; or (B) at the discretion of the Board, according to a deferred payment or other
similar arrangement with the Participant to the extent permitted by law.

          (iii) Vesting. The Board shall determine the criteria under which shares of Common
Stock under the Restricted Stock Purchase Right agreement may vest; the criteria may or may not
include performance criteria or Continuous Service. Shares of Common Stock acquired under the
Restricted Stock Purchase Right agreement may, but need not, be subject to a share repurchase
option in favor of the Company in accordance with a vesting schedule to be determined by the Board.

          (iv) Termination of Participant’s Continuous Service. In the event a Participant’s
Continuous Service terminates, the Company may repurchase any or all of the shares of Common Stock
held by the Participant that have not vested as of the date of termination under the terms of the
Restricted Stock Purchase Right agreement.

          (v) Transferability. Rights to acquire shares of Common Stock under the Restricted
Stock Purchase Right agreement shall be transferable by the Participant only upon such terms and
conditions as are set forth in the Restricted Stock Purchase Right agreement, as the Board shall
determine in its discretion, so long as Common Stock awarded under the Restricted Stock Purchase
Right agreement remains subject to the terms of the Restricted Stock Purchase Right agreement.

          (vi) Term. No Restricted Stock Purchase Right shall be exercisable after the
expiration of ten (10) years from the date it was granted.

15

 

     8.3 Stock Appreciation Rights. Two types of Stock Appreciation Rights (“SARs”) shall
be authorized for issuance under the Plan: (1) stand-alone SARs and (2) stapled SARs.

          (i) Stand-Alone SARs. The following terms and conditions shall govern the grant and
redeemability of stand-alone SARs:

     (A) The stand-alone SAR shall cover a specified number of underlying shares of Common Stock
and shall be redeemable upon such terms and conditions as the Board may establish. Upon redemption
of the stand-alone SAR, the holder shall be entitled to receive a distribution from the Company in
an amount equal to the excess of (i) the aggregate Fair Market Value (on the redemption date) of
the shares of Common Stock underlying the redeemed right over (ii) the aggregate base price in
effect for those shares.

     (B) The number of shares of Common Stock underlying each stand-alone SAR and the base price in
effect for those shares shall be determined by the Board in its sole discretion at the time the
stand-alone SAR is granted. In no event, however, may the base price per share be less than one
hundred percent (100%) of the Fair Market Value per underlying share of Common Stock on the grant
date.

     (C) The distribution with respect to any redeemed stand-alone SAR may be made in shares of
Common Stock valued at Fair Market Value on the redemption date, in cash, or partly in shares and
partly in cash, as the Board shall in its sole discretion deem appropriate.

          (ii) Stapled SARs. The following terms and conditions shall govern the grant and
redemption of stapled SARs:

     (A) Stapled SARs may only be granted concurrently with an Option to acquire the same number of
shares of Common Stock as the number of such shares underlying the stapled SARs.

     (B) Stapled SARs shall be redeemable upon such terms and conditions as the Board may establish
and shall grant a holder the right to elect among (i) the exercise of the concurrently granted
Option for shares of Common Stock, whereupon the number of shares of Common Stock subject to the
stapled SARs shall be reduced by an equivalent number, (ii) the redemption of such stapled SARs in
exchange for a distribution from the Company in an amount equal to the excess of the Fair Market
Value (on the redemption date) of the number of vested shares which the holder redeems over the
aggregate base price for such vested shares, whereupon the number of shares of Common Stock subject
to the concurrently granted Option shall be reduced by any equivalent number, or (iii) a
combination of (i) and (ii).

     (C) The distribution to which the holder of stapled SARs shall become entitled under this
Section 8 upon the redemption of stapled SARs as described in Section 8.3(ii)(B) above may be made
in shares of Common Stock valued at Fair Market Value on the redemption date, in cash, or partly in
shares and partly in cash, as the Board shall in its sole discretion deem appropriate.

          (iii) Term. No SAR shall be exercisable after the expiration of ten (10) years from
the date it was granted.

16

 

     8.4 Phantom Stock Units. The following terms and conditions shall govern the grant and
redeemability of Phantom Stock Units:

          (i) Phantom Stock Unit awards shall be redeemable by the Participant upon such terms and
conditions as the Board may establish. The value of a single Phantom Stock Unit shall be equal to
the Fair Market Value of a share of Common Stock, unless the Board otherwise provides in the terms
of the Stock Award Agreement.

          (ii) The distribution with respect to any exercised Phantom Stock Unit award may be made in
shares of Common Stock valued at Fair Market Value on the redemption date, in cash, or partly in
shares and partly in cash, as the Board shall in its sole discretion deem appropriate.

     8.5 Restricted Stock Units. The following terms and conditions shall govern the grant
and redeemability of Restricted Stock Units:

     A Restricted Stock Unit is the right to receive the value of one (1) share of the Company’s
Common Stock at the time the Restricted Stock Unit vests. To the extent permitted by the Board in
the terms of his or her Restricted Stock Unit agreement, a Participant may elect to defer receipt
of the value of the shares of Common Stock otherwise deliverable upon the vesting of an award of
Restricted Stock Units, so long as such deferral election complies with applicable law, including
Section 409A of the Code and, to the extent applicable, the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”). An election to defer such delivery shall be irrevocable and shall be
made in writing on a form acceptable to the Company. The election form shall be filed prior to the
vesting date of such Restricted Stock Units in a manner determined by the Board. When the
Participant vests in such Restricted Stock Units, the Participant will be credited with a number of
Restricted Stock Units equal to the number of shares of Common Stock for which delivery is
deferred. Restricted Stock Units may be paid by the Company by delivery of shares of Common Stock,
in cash, or a combination thereof, as the Board shall in its sole discretion deem appropriate, in
accordance with the timing and manner of payment elected by the Participant on his or her election
form, or if no deferral election is made, as soon as administratively practicable following the
vesting of the Restricted Stock Unit.

     Each Restricted Stock Unit agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of Restricted Stock Unit
agreements may change from time to time, and the terms and conditions of separate Restricted Stock
Unit agreements need not be identical, but each Restricted Stock Unit agreement shall include
(through incorporation of provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions:

          (i) Consideration. A Restricted Stock Unit may be awarded in consideration for past
services actually rendered to the Company or an Affiliate for its benefit. The Board shall have the
discretion to provide that the Participant pay for such Restricted Stock Unit with cash or other
consideration permissible by law.

          (ii) Vesting. Vesting shall generally be based on the Participant’s Continuous
Service. If vesting is based on the Participant’s Continuous Service, such Restricted Stock Unit

17

 

award shall not fully vest in less than three (3) years. If vesting is based on the
achievement of performance criteria, such Restricted Stock Unit award shall not fully vest in less
than one (1) year. Notwithstanding the foregoing provisions of this Section 8.5(ii), a Restricted
Stock Unit granted in recognition of a Participant’s long-term Continuous Service may vest fully in
periods shorter than those described above (“Accelerated Vesting Restricted Stock Units”), subject
to provisions of the last sentence of Section 4.1.

          (iii) Termination of Participant’s Continuous Service. The unvested portion of the
Restricted Stock Unit award shall expire immediately upon the termination of Participant’s
Continuous Service.

          (iv) Transferability. Rights to acquire the value of shares of Common Stock under the
Restricted Stock Unit agreement shall be transferable by the Participant only upon such terms and
conditions as are set forth in the Restricted Stock Unit agreement, as the Board shall determine in
its discretion, so long as any Common Stock awarded under the Restricted Stock Unit agreement
remains subject to the terms of the Restricted Stock Unit agreement.

     8.6 Performance Share Bonus Awards. Each Performance Share Bonus agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem appropriate.
Performance Share Bonuses shall be paid by the Company in shares of the Common Stock of the
Company. The terms and conditions of Performance Share Bonus agreements may change from time to
time, and the terms and conditions of separate Performance Share Bonus agreements need not be
identical, but each Performance Share Bonus agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:

          (i) Consideration. A Performance Share Bonus may be awarded in consideration for past
services actually rendered to the Company or an Affiliate for its benefit. In the event that a
Performance Share Bonus is granted to a new Employee, Director, or Consultant who has not performed
prior services for the Company, the Performance Share Bonus will not be awarded until the Board
determines that such person has rendered services to the Company for a sufficient period of time to
ensure proper issuance of the shares in compliance with the California Corporations Code.

          (ii) Vesting. Vesting shall be based on the achievement of certain performance
criteria, whether financial, transactional or otherwise, as determined by the Board. A Performance
Share Bonus shall not fully vest in less than one (1) year. Vesting shall be subject to the
Performance Share Bonus agreement. Upon failure to meet performance criteria, shares of Common
Stock awarded under the Performance Share Bonus agreement shall be subject to a share reacquisition
right in favor of the Company in accordance with a vesting schedule to be determined by the Board.

          (iii) Termination of Participant’s Continuous Service. In the event a Participant’s
Continuous Service terminates, the Company shall reacquire any or all of the shares of Common Stock
held by the Participant that have not vested as of the date of termination under the terms of the
Performance Share Bonus agreement.

18

 

          (iv) Transferability. Rights to acquire shares of Common Stock under the Performance
Share Bonus agreement shall be transferable by the Participant only upon such terms and conditions
as are set forth in the Performance Share Bonus agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the Performance Share Bonus agreement remains
subject to the terms of the Performance Share Bonus agreement.

     8.7 Performance Share Units. The following terms and conditions shall govern the grant
and redeemability of Performance Share Units:

     A Performance Share Unit is the right to receive the value of one (1) share of the Company’s
Common Stock at the time the Performance Share Unit vests. To the extent permitted by the Board in
the terms of his or her Performance Share Unit agreement, a Participant may elect to defer receipt
of the value of shares of Common Stock otherwise deliverable upon the vesting of an award of
performance shares. An election to defer such delivery shall be irrevocable and shall be made in
writing on a form acceptable to the Company. The election form shall be filed prior to the vesting
date of such performance shares in a manner determined by the Board. When the Participant vests in
such performance shares, the Participant will be credited with a number of Performance Share Units
equal to the number of shares of Common Stock for which delivery is deferred. Performance Share
Units may be paid by the Company by delivery of shares of Common Stock, in cash, or a combination
thereof, as the Board shall in its sole discretion deem appropriate, in accordance with the timing
and manner of payment elected by the Participant on his or her election form, or if no deferral
election is made, as soon as administratively practicable following the vesting of the Performance
Share Unit.

     Each Performance Share Unit agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of Performance Share Unit
agreements may change from time to time, and the terms and conditions of separate Performance Share
Unit agreements need not be identical, but each Performance Share Unit agreement shall include
(through incorporation of provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions:

          (i) Consideration. A Performance Share Unit may be awarded in consideration for past
services actually rendered to the Company or an Affiliate for its benefit. The Board shall have the
discretion to provide that the Participant pay for such Performance Share Unit with cash or other
consideration permissible by law.

          (ii) Vesting. Vesting shall be based on the achievement of certain performance
criteria, whether financial, transactional or otherwise, as determined by the Board. Vesting shall
be subject to the Performance Share Unit agreement. The terms of the Performance Share Unit
agreement notwithstanding, a Performance Share Unit may not fully vest in less than one (1) year.

          (iii) Termination of Participant’ Continuous Service. The unvested portion of any
Performance Share Unit shall expire immediately upon the termination of Participant’s Continuous
Service.

19

 

          (iv) Transferability. Rights to acquire the value of shares of Common Stock under the
Performance Share Unit agreement shall be transferable by the Participant only upon such terms and
conditions as are set forth in the Performance Share Unit agreement, as the Board shall determine
in its discretion, so long as Common Stock awarded under the Performance Share Unit agreement
remains subject to the terms of the Performance Share Unit agreement.

IX. COVENANTS OF THE COMPANY

     9.1 Availability of Shares. During the term of the Stock Awards, the Company shall
keep available at all times the number of shares of Common Stock required to satisfy such Stock
Awards.

     9.2 Securities Law Compliance. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be required to grant
Stock Awards and to issue and sell shares of Common Stock upon exercise, redemption or satisfaction
of the Stock Awards; provided, however, that this undertaking shall not require the Company to
register under the Securities Act the Plan or any Stock Award or any Common Stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall
be relieved from any liability for failure to issue and sell Common Stock related to such Stock
Awards unless and until such authority is obtained.

X. USE OF PROCEEDS FROM STOCK

     Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute general funds
of the Company.

XI. NO REPRICING WITHOUT SHAREHOLDER APPROVAL

     11.1 Subject to approval by the Company’s shareholders, the Board shall have the authority to
effect, at any time and from time to time, (i) the repricing of any outstanding Options under the
Plan and/or (ii) with the consent of the affected Optionholders, the cancellation of any
outstanding Options under the Plan and the grant in substitution therefor of new Stock Awards under
the Plan, including new Options covering the same or different number of shares of Common Stock,
but having an exercise price per share not less than one hundred percent (100%) of the Fair Market
Value or, in the case of a Ten Percent Shareholder (as described in Section 5.2 of the Plan), not
less than one hundred ten percent (110%) of the Fair Market Value) per share of Common Stock on the
new grant date. Notwithstanding the foregoing, the Board may grant an Option with an exercise price
lower than that set forth above if such Option is granted as part of a transaction to which Section
424(a) of the Code applies.

     11.2 Shares subject to an Option cancelled under this Section 11 shall continue to be counted
against the maximum award of Options permitted to be granted pursuant to Section 5.3 of the Plan.
The repricing of an Option under this Section 11, resulting in a reduction of the exercise price,
shall be deemed to be a cancellation of the original Option and the grant of a substitute Option;
in the event of such repricing, both the original and the substituted Options shall be counted
against the maximum awards of Options permitted to be granted pursuant to

20

 

Section 5.3 of the Plan. The provisions of this Section 11.2 shall be applicable only to the
extent required by Section 162(m) of the Code.

XII. MISCELLANEOUS

     12.1 Acceleration of Exercisability and Vesting. The Board (or Committee, if so
authorized by the Board) shall have the power to accelerate exercisability and/or vesting of any
Stock Award granted pursuant to the Plan upon a Change of Control or upon the death, Disability or
termination of Continuous Service of the Participant. In furtherance of such power, the Board or
Committee may accelerate the time at which a Stock Award may first be exercised or the time during
which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding any
provisions in the Stock Award Agreement to the contrary.

     12.2 Shareholder Rights. No Participant shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares of Common Stock subject to a Stock
Award except to the extent that the Company has issued the shares of Common Stock relating to such
Stock Award.

     12.3 No Employment or Other Service Rights. Nothing in the Plan or any instrument
executed or Stock Award granted pursuant thereto shall confer upon any Participant any right to
continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award
was granted or shall affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate,
or (iii) the service of a Director pursuant to the Bylaws of the Company, and any applicable
provisions of the corporate law of the state or other jurisdiction in which the Company is
domiciled, as the case may be.

     12.4 Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair
Market Value (determined at the time of grant) of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by any Optionholder during any calendar year
(under all plans of the Company and its Affiliates) exceeds One Hundred Thousand dollars
($100,000), or such other limit as may be set by law, the Options or portions thereof which exceed
such limit (according to the order in which they were granted) shall be treated as Nonstatutory
Stock Options.

     12.5 Investment Assurances. The Company may require a Participant, as a condition of
exercising or redeeming a Stock Award or acquiring Common Stock under any Stock Award, (i) to give
written assurances satisfactory to the Company as to the Participant’s knowledge and experience in
financial and business matters and/or to employ a purchaser representative reasonably satisfactory
to the Company who is knowledgeable and experienced in financial and business matters and that he
or she is capable of evaluating, alone or together with the purchaser representative, the merits
and risks of acquiring the Common Stock; (ii) to give written assurances satisfactory to the
Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the
Participant’s own account and not with any present intention of selling or otherwise distributing
the Common Stock; and (iii) to give such other written assurances as the Company may determine are
reasonable in order to comply with applicable

21

 

law. The foregoing requirements, and any assurances given pursuant to such requirements, shall
be inoperative if (1) the issuance of the shares of Common Stock under the Stock Award has been
registered under a then currently effective registration statement under the Securities Act or (2)
as to any particular requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable securities laws, and in
either case otherwise complies with applicable law. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such counsel deems necessary
or appropriate in order to comply with applicable laws, including, but not limited to, legends
restricting the transfer of the Common Stock.

     12.6 Withholding Obligations. To the extent provided by the terms of a Stock Award
Agreement, the Participant may satisfy any federal, state, local, or foreign tax withholding
obligation relating to the exercise or redemption of a Stock Award or the acquisition, vesting,
distribution, or transfer of Common Stock under a Stock Award by any of the following means (in
addition to the Company’s right to withhold from any compensation or other amounts payable to the
Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of Common Stock
otherwise issuable to the Participant, provided, however, that no shares of Common Stock are
withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (iii)
delivering to the Company owned and unnumbered shares of Common Stock.

     12.7 Section 409A. Notwithstanding anything in the Plan to the contrary, it is the
intent of the Company that all Stock Awards granted under this Plan (including, but not limited to,
Restricted Stock Units, Phantom Stock Units, and Performance Share Units) shall not cause an
imposition of the additional taxes provided for in Section 409A(a)(1)(B) of the Code; furthermore,
it is the intent of the Company that the Plan shall be administered so that the additional taxes
provided for in Section 409A(a)(1)(B) of the Code are not imposed.

XIII. ADJUSTMENTS UPON CHANGES IN STOCK

     13.1 Capitalization Adjustments. If any change is made in the Common Stock subject to
the Plan, or subject to any Stock Award, without the receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend,
spinoff, dividend in property other than cash, stock split, liquidating dividend, extraordinary
dividends or distributions, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the Company), the Plan
shall be equitably adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to Section 4.1 above, the maximum number of securities subject to award to any person
pursuant to Section 5.3 above, and the number of securities subject to Initial Grants and Annual
Grants to Eligible Directors under Article VII of the Plan, and the outstanding Stock Awards shall
be equitably adjusted in the class(es) and number of securities or other property and price per
share of the securities or other property subject to such outstanding Stock Awards. The Board shall
determine the form of such adjustments in its sole discretion, and its determination shall be
final, binding and conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a transaction “without receipt of consideration” by the Company.)

22

 

     13.2 Adjustments Upon a Change of Control.

          (i) In the event of a Change of Control as defined in Section 2.4(i) through 2.4(iv), such as
an asset sale, merger, or change in Board composition, then the Board or the board of directors of
any surviving entity or acquiring entity may provide or require that the surviving or acquiring
entity shall: (1) assume or continue all or any part of the Stock Awards outstanding under the Plan
or (2) substitute substantially equivalent stock or cash-based awards (including an award to
acquire substantially the same consideration paid to the shareholders in the transaction by which
the Change of Control occurs) for those outstanding under the Plan. In the event any surviving
entity or acquiring entity refuses to assume or continue such Stock Awards or to substitute similar
stock awards for those outstanding under the Plan, then with respect to Stock Awards held by
Participants whose Continuous Service has not terminated, the Board in its sole discretion and
without liability to any person may: (1) provide for the payment of a cash amount in exchange for
the cancellation of a Stock Award equal to the product of (x) the excess, if any, of the Fair
Market Value per share of Common Stock at such time over the exercise or redemption price, if any,
times (y) the total number of shares then subject to such Stock Award; (2) continue the
Stock Awards; or (3) notify Participants holding an Option, Stock Appreciation Right, Phantom Stock
Unit, Restricted Stock Unit or Performance Share Unit that they must exercise or redeem any portion
of such Stock Award (including, at the discretion of the Board, any unvested portion of such Stock
Award) at or prior to the closing of the transaction by which the Change of Control occurs and that
the Stock Awards shall terminate if not so exercised or redeemed at or prior to the closing of the
transaction by which the Change of Control occurs. With respect to any other Stock Awards
outstanding under the Plan, such Stock Awards shall terminate if not exercised or redeemed prior to
the closing of the transaction by which the Change of Control occurs. The Board shall not be
obligated to treat all Stock Awards, even those that are of the same type, in the same manner.

          (ii) In the event of a Change of Control as defined in Section 2.4(v), such as a dissolution
of the Company, all outstanding Stock Awards shall terminate immediately prior to such event.

XIV. AMENDMENT OF THE PLAN AND STOCK AWARDS

     14.1 Amendment of Plan. The Board at any time, and from time to time, may amend the
Plan. However, except as provided in Section 13 of the Plan relating to adjustments upon changes in
Common Stock, no amendment shall be effective unless approved by the shareholders of the Company to
the extent shareholder approval is necessary to satisfy the requirements of Section 422 of the
Code, any New York Stock Exchange, Nasdaq or other securities exchange listing requirements, or
other applicable law or regulation.

     14.2 Shareholder Approval. The Board may, in its sole discretion, submit any other
amendment to the Plan for shareholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations
thereunder regarding the exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

23

 

     14.3 Contemplated Amendments. It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with
the maximum benefits provided or to be provided under the provisions of the Code and the
regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan
and/or Incentive Stock Options granted under it into compliance therewith.

     14.4 No Material Impairment of Rights. Rights under any Stock Award granted before
amendment of the Plan shall not be materially impaired by any amendment of the Plan unless (i) the
Company requests the consent of the Participant and (ii) the Participant consents in writing.

     14.5 Amendment of Stock Awards. The Board at any time, and from time to time, may
amend the terms of any one or more Stock Awards subject to and consistent with the terms of the
Plan, including Sections 14.1 and 14.2; provided, however, that the rights of the Participant under
any Stock Award shall not be materially impaired by any such amendment unless (i) the Company
requests the consent of the Participant and (ii) the Participant consents in writing.

XV. TERMINATION OR SUSPENSION OF THE PLAN

     15.1 Plan Term. The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of
the date that the Plan is approved by the shareholders of the Company, as the adoption of the Plan
by the Board is conditioned upon such shareholder approval. No Stock Awards may be granted under
the Plan while the Plan is suspended or after it is terminated.

     15.2 No Material Impairment of Rights. Suspension or termination of the Plan shall not
materially impair rights and obligations under any Stock Award granted while the Plan is in effect
except with the written consent of the Participant.

XVI. EFFECTIVE DATE OF PLAN

     The Plan shall become effective immediately following its approval by the shareholders of the
Company, which approval shall be within twelve (12) months before or after the date the Plan is
adopted by the Board. If the Plan is approved by the shareholders of the Company, the 1997 Plan,
the 1996 Plan, and the Directors 1996 Plan shall terminate on the effective date of the Plan. If
the Plan is not approved by the shareholders of the Company, the 1997 Plan, the 1996 Plan, and the
Directors 1996 Plan shall continue unaffected. No Stock Awards may be granted under the Plan prior
to the time that the shareholders have approved the Plan.

XVII. CHOICE OF LAW

     The law of the State of California shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s conflict of laws rules.

24Exhibit 10.1

Exhibit 10.1

THE HARTFORD 2010 INCENTIVE STOCK PLAN

1. Purpose

The purpose of the Plan is to motivate and reward superior performance on the part of
Key Employees of The Hartford Financial Services Group, Inc. (“The Hartford” or “the
Company”) and its subsidiaries and affiliates and to thereby attract and retain Key
Employees of superior ability. In addition, the Plan is intended to further opportunities
for stock ownership by such Key Employees and Directors in order to increase their
proprietary interest in The Hartford and, as a result, their interest in the success of the
Company. Awards will be made, in the discretion of the Committee, to Key Employees
(including officers and directors who are also Key Employees) whose responsibilities and
decisions directly affect the performance of any Participating Company and its subsidiaries,
and also to Directors. Such incentive awards may consist of Options, Rights, Performance
Shares, Restricted Stock, Restricted Units or any combination of the foregoing, as the
Committee may determine.

2. Definitions

When used herein, the following terms shall have the following meanings:

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

“Award” means an award granted to any Key Employee or Director in accordance with the
provisions of the Plan in the form of Options, Rights, Performance Shares, Restricted Stock
or Restricted Units, or any combination of the foregoing, as applicable.

“Award Document” means the written notice, agreement, or other document evidencing each
Award granted under the Plan. Such Award Document may be in an electronic, internet,
intranet or other non-paper form, including any acceptance thereof and actions thereunder by
an Award recipient.

“Beneficial Owner” means any Person who, directly or indirectly, has the right to vote
or dispose of or has “beneficial ownership” (within the meaning of Rule 13d-3 under the Act)
of any securities of a company, including any such right pursuant to any agreement,
arrangement or understanding (whether or not in writing), provided that: (a) a
Person shall not be deemed the Beneficial Owner of any security as a result of an agreement,
arrangement or understanding to vote such security (i) arising solely from a revocable proxy
or consent given in response to a public proxy or consent solicitation made pursuant to, and
in accordance with, the Act and the applicable rules and regulations thereunder, or (ii)
made in connection with, or to otherwise participate in, a proxy or consent solicitation
made, or to be made, pursuant to, and in accordance with, the applicable provisions of the
Act and the applicable rules and regulations thereunder, in either case described in clause
(i) or (ii) above, whether or not such agreement,
arrangement or understanding is also then reportable by such Person on Schedule 13D
under the Act (or any comparable or successor report); and (b) a Person engaged in business
as an underwriter of securities shall not be deemed to be the Beneficial Owner of any
security acquired through such Person’s participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such acquisition.

 

 

 

“Beneficiary” means the beneficiary or beneficiaries designated pursuant to the Plan to
receive the amount, if any, payable under the Plan upon the death of an Award recipient.

“Board” means the Board of Directors of the Company.

“Change of Control” means the occurrence of an event defined in Section 9 of the Plan.

“Code” means the Internal Revenue Code of 1986, as amended. For purposes of this Plan,
references to sections of the Code shall be deemed to include references to any applicable
regulations thereunder and any successor or similar provision.

“Committee” means the Compensation and Personnel Committee of the Board or such other
committee as may be designated by the Board to administer the Plan. If the Committee does
not exist or cannot function for any reason, the Board may take any action under the Plan
that would otherwise be the responsibility of the Committee.

“Company” means The Hartford Financial Services Group, Inc. and its successors and
assigns.

“Director” means a member of the Board who is not an employee of any Participating
Company.

“Dividend Equivalents” means an amount credited with respect to an outstanding
Restricted Unit equal to the cash dividends paid or property distributions awarded upon one
share of Stock. Any Dividend Equivalents on unearned performance-based Awards will be
accrued, but will only be paid as and when the underlying performance-based Awards are
vested and payable.

“Eligible Employee” means an Employee as defined in the Plan; provided, however, that
except as the Board or the Committee, pursuant to authority delegated by the Board, may
otherwise provide on a basis uniformly applicable to all persons similarly situated,
“Eligible Employee” shall not include any “Ineligible Person,” which includes: (a) a person
who (i) holds a position with the Company’s “HARTEMP” Program, (ii) is hired to work for a
Participating Company through a temporary employment agency, or (iii) is hired to a position
with a Participating Company with notice on his or her date of hire that the position will
terminate on a certain date; (b) a person who is a leased employee (within the meaning of
Code Section 414(n)(2))

 

 

 

of a Participating Company or is otherwise employed by or through a temporary help firm,
technical help firm, staffing firm, employee leasing firm, or professional employer
organization, regardless of whether such person is an Employee of a Participating Company,
and (c) a person who performs services for a Participating Company as an independent
contractor or under any other non-employee classification, or who is classified by a
Participating Company as, or determined by a Participating Company to be, an independent
contractor, regardless of whether such person is characterized or ultimately determined by
the Internal Revenue Service or any other Federal, State or local governmental authority or
regulatory body to be an employee of a Participating Company or its affiliates for income or
wage tax purposes or for any other purpose.

Notwithstanding any provision in the Plan to the contrary, if any person is an
Ineligible Person, or otherwise does not qualify as an Eligible Employee, or otherwise is
ineligible to participate in the Plan, and such person is later required by a court or
governmental authority or regulatory body to be classified as a person who is eligible to
participate in the Plan, such person shall not be eligible to participate in the Plan,
notwithstanding such classification, unless and until designated as an Eligible Employee by
the Committee, and if so designated, the participation of such person in the Plan shall be
prospective only.

“Employee” means any person regularly employed by a Participating Company, but shall
not include any person who performs services for a Participating Company as an independent
contractor or under any other non-employee classification, or who is classified by a
Participating Company as, or determined by a Participating Company to be, an independent
contractor.

“Fair Market Value,” unless otherwise indicated in the provisions of this Plan, means a
price that is based on the opening, closing, actual, high, low, or average selling prices of
one share of Stock reported on the New York Stock Exchange or other established stock
exchange (or exchanges) on the applicable date, the preceding trading day, the next
succeeding trading day, or an average of trading days, as determined by the Committee in its
discretion. Unless the Committee determines otherwise, such Fair Market Value shall be
deemed, as of any date, to be equal to the reported closing price for one share of Stock on
the New York Stock Exchange or, if no sales of Stock have taken place on such date, the
reported closing price on the most recent date on which selling prices were quoted, the
determination to be made in the discretion of the Committee.

“Formula Price” means (i) in the case of the exercise of any Right or Option, the Fair
Market Value of the Stock at the time of such exercise and (ii) in the case of any other
Award, the highest of: (a) the highest composite daily closing price of the Stock during
the period beginning on the 60th calendar day prior to the Change of Control and
ending on the date of such Change of Control, (b) the highest gross price paid for the Stock
during the same period of time, as reported in a report on Schedule 13D filed with the
Securities and Exchange Commission, or (c) the highest gross price paid or to be paid for a
share of Stock (whether by way of exchange, conversion, distribution upon merger,
liquidation or otherwise) in any of the transactions set forth in Section 9 of the Plan as
constituting a Change of Control.

 

 

 

“Incentive Stock Option” means a stock option qualified under Section 422 of the Code.

“Key Employee” means an Eligible Employee (including any officer or director who is
also an Eligible Employee) whose responsibilities and decisions, in the judgment of the
Committee, directly affect the performance of the Company and its subsidiaries.

“Option” means an option awarded under Section 5 of the Plan to purchase Stock of the
Company, which option may be an Incentive Stock Option or a non-qualified stock option.

“Participating Company” means the Company or any subsidiary or other affiliate of the
Company; provided, however, for Incentive Stock Options only, “Participating Company” means
the Company or any corporation which at the time such Option is granted qualifies as a
“subsidiary” of the Company under Section 424(f) of the Code.

“Performance Share” means a performance share awarded under Section 6 of the Plan.

“Person” has the meaning ascribed to such term in Section 3(a)(9) of the Act, as
supplemented by Section 13(d)(3) of the Act; provided, however, that Person shall not
include: (a) the Company, any subsidiary of the Company or any other Person controlled by
the Company, (b) any trustee or other fiduciary holding securities under any employee
benefit plan of the Company or of any subsidiary of the Company, or (c) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of securities of the Company.

“Plan” means The Hartford 2010 Incentive Stock Plan, as the same may be amended,
administered or interpreted from time to time.

“Plan Year” means the calendar year.

“Potential Change of Control” means the occurrence of an event defined in Section 9 of
the Plan.

“Restricted Stock” means Stock awarded under Section 7 of the Plan subject to such
restrictions as the Committee deems appropriate or desirable.

“Restricted Unit” means a contractual right awarded under Section 7 of the Plan to
receive pursuant to the Plan one share of Stock at the end of a specified period of time,
subject to such restrictions as the Committee deems appropriate or desirable.

 

 

 

“Restriction Period” means, in the case of Performance Shares, Restricted Stock or
Restricted Units the period established by the Committee pursuant to Section 6 or 7, as
applicable, during which shares of Stock or other rights of the recipient of such an Award
(or his or her permissive assigns) remain subject to forfeiture pending completion of a
period of service or such other criteria or conditions as the Committee shall specify.

“Retirement” means satisfaction of the requirements for early or normal retirement
under the final average pay formula of the Retirement Plan (assuming such Key Employee were
covered under the final average pay formula of the Retirement Plan), provided such event
results in such Key Employee’s separation from employment with the Company.

“Retirement Plan” means The Hartford Retirement Plan for U.S. Employees, as amended
from time to time.

“Right” means a stock appreciation right awarded under Section 5 of the Plan.

“Stock” means the common stock ($.01 par value) of The Hartford.

“The Hartford” means the Company and its subsidiaries, and their successors and
assigns.

“Third Party Service Provider” means any consultant, agent, advisor, or independent
contractor who renders services to The Hartford that (a) are not in connection with the
offer and sale of The Hartford’s securities in a capital raising transaction, and (b) do not
directly or indirectly promote or maintain a market for The Hartford’s securities.

“Total Disability” means the complete and permanent inability of a Key Employee to
perform all of his or her duties under the terms of his or her employment with any
Participating Company, as determined by the Committee upon the basis of such evidence,
including independent medical reports and data, as the Committee deems appropriate or
necessary.

“Transferee” means any person or entity to whom or to which a non-qualified stock
option has been transferred and assigned in accordance with Section 5(h) of the Plan.
Unless the Committee shall expressly permit otherwise, with respect to any Key Employee or
Director, only (i) the Key Employee’s or Director’s child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, mother-in-law, father-in-law, son-in-law or daughter-in-law
(including adoptive relationships), (ii) trusts for the exclusive benefit of one or more
such persons and/or the Key Employee or Director, and (iii) another entity owned solely by
one or more such persons and/or the Key Employee or Director shall be a Transferee.

 

 

 

3. Shares Subject to the Plan

Subject to adjustments in accordance with Section 13, the aggregate number of shares of
Stock which may be awarded under the Plan shall be subject to a maximum limit applicable to
all Awards for the duration of the Plan (the “Maximum Limit”). The Maximum Limit shall be
18,000,000 shares of Stock, which shall consist of (i) a number of shares of Stock not
previously authorized for issuance under any plan, plus (ii) the number of shares of Stock
remaining available for issuance under The Hartford 2005 Incentive Stock Plan but not
subject to outstanding awards as of March 31, 2010. The maximum number of shares of Stock
with respect to which Awards may be granted under the Plan in the form of Incentive Stock
Options shall be 18,000,000.

Subject to adjustments in accordance with Section 13, and subject to the Maximum Limit
set forth above on the number of Shares that may be awarded in the aggregate under the Plan,
the maximum number of shares that may be awarded to Directors under the Plan shall be
1,000,000 shares of Stock. Additionally, a Director may not be granted an Award covering
more than 50,000 shares of Stock in any Plan Year, except that this annual limit on Director
Awards shall be 100,000 shares of Stock for any Director serving as Chairman of the Board
and provided, however, that in the Plan Year in which an individual is first appointed or
elected as a Director, the limit applicable to such Director shall be increased by 50,000
shares of Stock.

In addition to the foregoing, in any Plan Year: (a) no individual Key Employee may
receive an Award of Options or Rights for more than 2,000,000 shares, and (b) no individual
Key Employee may receive an Award of Restricted Stock, Restricted Units or Performance
Shares for more than 500,000 shares.

Except with respect to shares of Stock equivalent to a maximum of five percent of the
Maximum Limit authorized above in this Section 3, and except as may be provided in Section 9
regarding a Change of Control, any Full Value Awards which vest on the basis of a Key
Employee’s continued employment with the Company shall not provide for vesting, other than
vesting upon death, Total Disability or Retirement, or such other circumstances, such as a
substantial reduction in force or a divestiture or sale of a business or unit, that the
Committee finds that a waiver of the applicable restrictions (or any portion thereof) would
be in the best interests of the Company, which is more rapid than pro rata annual vesting
over a three year period, and any Full Value Awards which vest upon the attainment of
performance objectives shall provide for a performance period of at least twelve months.
For purposes of this paragraph, a “Full Value Award” is an Award other than in the form of
an Option or Right, which is settled by the issuance of Stock. Notwithstanding the
foregoing, Awards of Restricted Units attributable to a Key Employee’s voluntary deferral of
an amount which would otherwise have been payable to the Key Employee in cash shall not be
subject to the restrictions set forth in this paragraph and shall not be counted against the
five percent limit referenced above.

 

 

 

Subject to the above limitations, shares of Stock to be issued under the Plan may
be made available from the authorized but unissued shares, or shares held by the
Company in treasury or from shares purchased in the open market.

For the purpose of computing the total number of shares of Stock available for Awards
under the Plan, there shall be counted against the foregoing limitations the number of
 shares of Stock subject to issuance upon exercise or settlement of Awards and the number of
 shares of Stock which equals the value of Performance Share Awards based upon their target
payout, in each case determined as at the dates on which such Awards are granted. If any
Awards under the Plan are forfeited, terminated, surrendered, exchanged, expire unexercised,
or are settled in cash in lieu of Stock (including to effect tax withholding) or for the net
issuance of a lesser number of shares than the number subject to the Award, the shares of
Stock which were theretofore subject to such Awards shall again be available for Awards
under the Plan to the extent of such forfeiture, termination, expiration, or cash or net
settlement of such Awards. If any award under the prior The Hartford Incentive Stock Plan
(as approved by the Company’s shareholders in 2000) or under the prior The Hartford 2005
Incentive Stock Plan (as approved by the Company’s shareholders in 2005) that was
outstanding as of March 31, 2010, is forfeited, terminated, surrendered, exchanged, expires
unexercised, or is settled in cash in lieu of Stock (including to effect tax withholding) or
for the net issuance of a lesser number of shares than the number subject to the award, the
 shares of Stock subject to such award (or the relevant portion thereof) shall be available
for Awards under the Plan and such shares shall be added to the Maximum Limit to the extent
of such forfeiture, termination, expiration, or cash or net settlement of such awards.

The Committee may grant other types of equity-based or equity-related awards
(“Stock-Based Awards”) not otherwise described by the terms of this Plan (including the
grant or offer for sale of unrestricted shares of Stock) in such amounts (subject to the
Maximum Limit and other limitations provided for herein) and subject to such terms and
conditions as the Committee shall determine. Such Stock-Based Awards may be granted as an
inducement to enter the employ of The Hartford or in satisfaction of any obligation of The
Hartford to a Key Employee, whether pursuant to this Plan or otherwise, that would otherwise
have been payable in cash or in respect of any other obligation of The Hartford Such
Stock-Based Awards may entail the transfer of actual Stock, or payment in cash or otherwise
of amounts based on the value of Stock and may include, without limitation, awards designed
to comply with or take advantage of the applicable local laws of jurisdictions other than
the United States. The Committee shall specify the extent to which the award recipient
shall have the right to receive Stock-Based Awards following termination of employment with
The Hartford; such provisions need not be uniform among all Stock-Based Awards, and may
reflect distinctions based on the reasons for such termination. Except as the Committee
shall otherwise specify at or after grant, Stock-Based Awards may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws
of descent and distribution, and during the award recipient’s lifetime only by the
recipient.

 

 

 

4. Grant of Awards and Award Documents

(a) Subject to the provisions of the Plan, the Committee shall: (i) determine and
designate from time to time those Key Employees and Directors or groups of Key Employees and
Directors to whom Awards are to be granted, (ii) determine the form or forms of Award to be
granted to any Key Employee and any Director; (iii) determine the amount or number of shares
of Stock subject to each Award; and (iv) determine the terms and conditions of each Award.
The Committee may in its discretion also make awards to Third Party Service Providers on
substantially the same terms and conditions as Awards are made to Key Employees, subject to
such modifications as are necessary to reflect the different nature of the services
provided.

(b) Each Award granted under the Plan shall be evidenced by an Award Document. Such
Award Document shall be subject to and incorporate the express terms and conditions of each
Award, if any, required under the Plan or required by the Committee.

5. Options and Rights

(a) With respect to Options and Rights, the Committee shall: (i) authorize the
granting of Incentive Stock Options, non-qualified stock options, or a combination of
Incentive Stock Options and non-qualified stock options; (ii) authorize the granting of
Rights which may or may not be granted in connection with all or part of any Option granted
under this Plan; (iii) determine the number of shares of Stock subject to each Option or the
number of shares of Stock that shall be used to determine the value of a Right; and (iv)
determine the time or times when and the manner in which each Option or Right shall be
exercisable and the duration of the exercise period.

(b) Any option issued hereunder which is intended to qualify as an Incentive Stock
Option shall be subject to such limitations or requirements as may be necessary for the
purposes of Section 422 of the Code or any regulations and rulings thereunder to the extent
and in such form as determined by the Committee in its discretion.

(c) The exercise period for an Option and a Right shall not exceed ten years from the
date of grant.

(d) The Option price per share shall be determined by the Committee at the time any
Option is granted and shall be not less than the Fair Market Value of one share of Stock on
the date the Option is granted. The grant price related to each Right shall be determined
by the Committee at the time any Right is granted; however, such grant price shall not be
less than the Fair Market Value of one share of Stock on the date the Right is granted.

(e) No part of any Option or Right may be exercised until the Key Employee who has been
granted the Award shall have remained in the employ of a Participating Company for such
period after the date of grant as the Committee may specify, if any,
and the Committee may further require exercisability in installments.

 

 

 

(f) Except as provided in Section 9, the purchase price of the shares of Stock as to
which an Option is exercised shall be paid to the Company at the time of exercise either in
cash, Stock already owned by the optionee, or a combination of the foregoing having a total
Fair Market Value equal to the purchase price. The Committee shall determine acceptable
methods for tendering Stock as payment upon exercise of an Option and may impose such
limitations and prohibitions on the use of Stock for such purpose as it deems appropriate.

(g) Unless otherwise set forth in the Award Document, in case of a Key Employee’s
termination of employment with all Participating Companies, the following provisions shall
apply:

(i) If a Key Employee who has been granted an Option or Right shall die before such
Option or Right has expired, his or her Option or Right may be exercised in full by: (A)
the person or persons to whom the Key Employee’s rights under the Option or Right pass upon
his or her death pursuant to the terms of the Plan, or if no such person has such right, by
his or her executors or administrators; (B) his or her Transferee(s) (with respect to
non-qualified Options or Rights); or (C) his or her Beneficiary designated pursuant to the
Plan, at any time, or from time to time, within five years after the date of the Key
Employee’s death or within such other period, and subject to such terms and conditions as
the Committee may specify, but not later than the expiration date specified in Section 5(c)
above. Any such Options or Rights not fully exercisable immediately prior to such optionee’s
death shall become fully exercisable upon such death unless the Committee, in its sole
discretion, shall otherwise determine.

(ii) If the Key Employee’s employment with all Participating Companies terminates (A)
because of his or her Total Disability, or (B) because of his or her voluntary termination
of employment due to Retirement, he or she may exercise his or her Options or Rights in full
at any time, or from time to time, within five years after the date of the termination of
his or her employment, or within such other period, and subject to such terms and conditions
as the Committee may specify, but not later than the expiration date specified in Section
5(c) above. Any such Options or Rights not fully exercisable immediately prior to such
optionee’s Total Disability or Retirement shall become fully exercisable upon such Total
Disability or Retirement unless the Committee, in its sole discretion, shall otherwise
determine at the time of grant.

(iii) If the Key Employee shall be terminated for cause as determined by the Committee,
all of such Key Employee’s Options or Rights outstanding at the date of such termination
(whether or not then exercisable) shall be canceled without further action by the Key
Employee, the Committee or the Company coincident with the effective date of such
termination.

 

 

 

(iv) Except as provided in Section 5(g)(ii) and Section 9, if a Key Employee’s
employment terminates for any other reason (including a voluntary resignation), he or she
may exercise his or her Options or Rights, to the extent that he or
she shall have been entitled to do so at the date of the termination of his or her
employment, at any time, or from time to time, within four months after the date of the
termination of his or her employment, or within such other period, and subject to such terms
and conditions, as the Committee may specify, but not later than the expiration date
specified in Section 5(c) above. All Options and Rights held by such Key Employee or any of
his or her assigns that are not eligible to be exercised upon the date of such termination
shall be canceled without further action by the Key Employee, the Committee or the Company
coincident with the effective date of such termination.

(v) Any Options or Rights not exercised within the period established in accordance
with this Section 5(g) shall be subject to Section 5(l) herein.

(h) Except as provided in this Section 5(h) or required by applicable law, no Option or
Right granted under the Plan shall be transferable other than upon the death of the
recipient of such Option or Right. During the lifetime of the optionee, an Option or Right
shall be exercisable only by the Key Employee or Director to whom the Option or Right is
granted. Notwithstanding the foregoing, all or a portion of a non-qualified Option or Right
may be transferred and assigned by such persons designated by the Committee, to such persons
or groups of persons designated as permissible Transferees by the Committee, and upon such
terms and conditions as the Committee may from time to time authorize and determine in its
sole discretion. Notwithstanding the preceding sentence, no Award under the Plan may be
transferred for value (as defined in the General Instructions to Form S-8 with respect to
the registration, pursuant to the Securities Act of 1933, of employee benefit plan
securities and/or interests).

(i) Except as provided in Section 9, if a Director’s service on the Board terminates
for any reason, including without limitation, termination due to death, disability or
retirement, such Director (or Beneficiary, in the event of death) may exercise any Option or
Right granted to him or her only to the extent determined by the Committee as set forth in
such Director’s Award Document and/or any administrative rules or other terms and conditions
adopted by the Committee from time to time applicable to such Option or Right granted to
such Director.

(j) With respect to an Incentive Stock Option, the Committee shall specify such terms
and provisions as the Committee may determine to be necessary or desirable in order to
qualify such Option as an “incentive stock option” within the meaning of Section 422 of the
Code.

(k) With respect to the exercisability and settlement of Rights:

(i) Except as expressly provided below, upon exercise of a Right, a Key Employee or
Director shall be entitled, subject to such terms and conditions as the Committee may
specify, to receive all or a portion of the excess of (A) the Fair Market Value of a
specified number of shares of Stock at the time of exercise, as determined by the Committee,
over (B) a specified amount which shall not, subject to Section 5(d), be less than the Fair
Market Value of such specified number of shares of Stock at the time
the Right is granted. Payment of any such excess shall be made as the Committee shall
specify in cash, the issuance or transfer to the Key Employee or Director of whole shares of
Stock with a Fair Market Value at such time equal to any excess, or a combination of cash
and shares of Stock with a combined Fair Market Value at such time equal to any such excess,
all as determined by the Committee. The Company will not issue a fractional share of Stock
and, if a fractional share would otherwise be issuable, the Company shall pay cash equal to
the Fair Market Value of the fractional share of Stock at such time.

 

 

 

(ii) Notwithstanding Section 5(k)(i), the Committee may specify at grant that payment
of any excess referenced in the first sentence of Section 5(k)(i) shall not be paid until a
specified date or, if earlier, upon the termination of the Key Employee’s employment, the
cessation of the Director’s service on the Board or, subject to Section 9(c)(vi), a Change
of Control. To the extent permissible without adverse tax consequences for the Key Employee
or Director, the Committee may permit the Key Employee or Director to elect when such
payment is made. Amounts, if any, deferred pursuant to this Section 5(k)(ii) shall be
subject to such terms and conditions as the Committee shall determine, including the manner
in which any deemed earnings on such deferred amounts shall be determined.

(iii) In the event of the exercise of such Right, the Company’s obligation in respect
of any related Option or such portion thereof will be discharged by payment of the Right so
exercised.

(l) Each outstanding Option and Right shall be deemed to be exercised, in the manner
set forth below, at the close of business on the scheduled expiration date of such Option or
Right if at such time the Option or Right by its terms remains exercisable and, if so
exercised, would result in a distribution to the holder of such Option or Right of at least
one share of Stock of the Company net of any applicable tax withholding requirements (a
“Deemed Exercise”). Such Deemed Exercise may be effected without notification by the
Director or Key Employee to the Company or by the Company to the Key Employee or Director.
Upon such Deemed Exercise, the Company shall issue and deliver to the Director or Key
Employee the greatest number of whole shares of Stock equal to the quotient of (i) divided
by (ii), with the quotient reduced as necessary to satisfy any applicable tax withholding
requirements, where (i) and (ii) are:

(i) The product of (x) the number of shares of Stock as to which the Option or Right is
being deemed exercised and (y) the excess of the Fair Market Value on the Deemed Exercise
date over the exercise price per share of such Option or the specified amount for such
Right, and

(ii) The Fair Market Value on such date.

with any remainder being payable in cash to the Participant. If, on the scheduled
expiration date of any Option or Right, the exercise of such Option or Right would not
result in a Deemed Exercise, then such Option or Right shall be canceled without further
action by the Key Employee or Director, the Committee or the Company on the date following the last date on which such Option or Right may have been exercised in accordance
with this Section 5.

 

 

 

6. Performance Shares

(a) Subject to the provisions of the Plan, the Committee shall: (i) determine and
designate from time to time those Key Employees and Directors or groups of Key Employees and
Directors to whom Awards of Performance Shares are to be made, (ii) determine the
performance period (the “Performance Period”) and performance objectives (the “Performance
Objectives”) applicable to such Awards, (iii) determine whether to impose a Restriction
Period following the completion of the Performance Period applicable to any Key Employees
and Directors or groups of Key Employees and Directors, (iv) determine the form of
settlement of a Performance Share, and (v) generally determine the terms and conditions of
each such Award. At any date, each Performance Share shall have a value equal to the Fair
Market Value of a share of Stock at such date; provided that the Committee may limit the
aggregate amount payable upon the settlement of any Award.

(b) The Committee shall determine a Performance Period of not less than one nor more
than five years. Performance Periods may overlap and Key Employees or Directors may
participate simultaneously with respect to Performance Shares for which different
Performance Periods are prescribed.

(c) The Committee may impose a Restriction Period of any duration with respect to any
 shares of stock issued in payment of a Performance Share Award, which shall apply
immediately following the completion of the Performance Period to which it relates.

(d) The Committee shall determine the Performance Objectives of Awards of Performance
Shares. Performance Objectives may vary from Key Employee to Key Employee, Director to
Director and between groups of Key Employees and Directors, and shall be based upon one or
more of the following objective criteria, as the Committee deems appropriate: (A) earnings
per share, (B) return on equity, (C) cash flow, (D) return on total capital, (E) return on
assets, (F) economic value added, (G) increase in surplus, (H) reductions in operating
expenses, (I) increases in operating margins, (J) earnings before income taxes and
depreciation, (K) total shareholder return, (L) return on invested capital, (M) cost
reductions and savings, (N) earnings before interest, taxes, depreciation and amortization
(“EBITDA”), (O) pre-tax operating income, (P) net income, (Q) after-tax operating income,
(R) book value or book value per share, (S) core earnings or core earnings per share and/or
(T) productivity improvements. The objective criteria shall be (i) determined solely by
reference to any one or more of the above performance factors of the Company (or the
performance factors of any subsidiary or affiliate of the Company or any division or unit
thereof), or (ii) based on any one or more of the above performance factors of the Company
(or the performance factors of any subsidiary or affiliate of the Company or any division or
unit thereof), as compared with the performance factors of other companies or entities, or
(iii) based on a Key Employee’s attainment of personal objectives with respect to any one or more of the performance factors of the Company
(or the performance factors of any subsidiary or affiliate of the Company or any division or
unit thereof), or with respect to any one or more of the following: growth and
profitability, customer satisfaction, leadership effectiveness, business development,
negotiating transactions and sales or developing long term business goals. If during the
course of a Performance Period there shall occur significant events which the Committee
expects to have a substantial effect on the applicable Performance Objectives during such
period, the Committee may revise such Performance Objectives.

 

 

 

(e) At the beginning of a Performance Period, the Committee shall determine for each
Key Employee or group of Key Employees the number of Performance Shares or the percentage of
Performance Shares which shall be paid to the Key Employee or member of the group of Key
Employees following completion of the Performance Period or if later, following any
applicable Restriction Period, if the applicable Performance Objectives are met in whole or
in part.

(f) If a Key Employee terminates service with all Participating Companies during a
Performance Period or any applicable Restriction Period: (i) because of death, (ii)
because of Total Disability, (iii) because of his or her voluntary termination of employment
due to Retirement, or (iv) under other circumstances where the Committee in its sole
discretion finds that a waiver would be in the best interests of the Company; that Key
Employee may, as determined by the Committee, be entitled to payment in settlement of such
Performance Shares at the end of the Performance Period or if later, at the end of any
applicable Restriction Period, based upon the extent to which the Performance Objectives
were satisfied at the end of such Performance Period and prorated for the portion of the
Performance Period together with any applicable Restriction Period during which the Key
Employee was actively employed by any Participating Company. If a Key Employee terminates
service with all Participating Companies during a Performance Period or any applicable
Restriction Period for any other reason, then such Key Employee shall not be entitled to any
Award with respect to that Performance Period and shall forfeit any shares of Stock subject
to a Restriction Period unless the Committee shall otherwise determine.

(g) Except as provided in Section 9, if a Director’s service on the Board terminates
for any reason, including, without limitation, termination due to death, disability or
retirement, prior to the lapse of any applicable Restriction Period, such Director (or
Beneficiary, in the event of death) shall be or become vested in, or entitled to payment in
respect of, such Award to the extent determined by the Committee as set forth in such
Director’s Award Document and/or any administrative rules or other terms and conditions
adopted by the Committee from time to time applicable to such Award granted to such
Director; provided that, to the extent that any such rules or terms and conditions establish
a payment term not associated directly with the vesting of any such Award, only the payment
terms established under such rules or terms and conditions as are in effect at the date the
Award is granted to the Director shall apply to such Award.

 

 

 

(h) Each Award of a Performance Share shall be paid in whole shares of
Stock, or cash, or a combination of Stock and cash either as a lump sum payment or, if
the Committee shall so determine at the time of grant, in annual installments, with payment
to commence as soon as practicable (but in any event within 90 days) after the end of the
relevant Performance Period or if later, at the end of any applicable Restriction Period.

(i) Except as otherwise required by applicable law, no Performance Share granted under
the Plan shall be transferable other than on account of death in accordance with the terms
of the Plan.

(j) Notwithstanding anything else contained in the Plan to the contrary, unless the
Committee otherwise determines at the time of grant, any Award of Performance Shares, to an
officer of the Company or a Subsidiary who is subject to the reporting requirements of
Section 16(a) of the Act, shall become vested, if at all, upon the determination by the
Committee that Performance Objectives established by the Committee have been attained, in
whole or in part, to the extent required to ensure that such Award is deductible by the
Company or such Subsidiary pursuant to Section 162(m) of the Code. To the extent such Award
is so intended to qualify as performance-based compensation under Section 162(m),
notwithstanding anything else in the Plan to the contrary, the Committee shall not have any
discretionary power or authority to increase the amount payable with respect to such Award
after it has been granted, and shall be deemed not to have and may not exercise with respect
to such Award any authority or discretion afforded to it under the Plan that would cause the
Award to fail to so qualify.

7. Restricted Stock and Restricted Units

(a) Except as provided in Section 9, Restricted Stock and Restricted Units shall be
subject to a Restriction Period specified by the Committee. The Committee may provide for
the lapse of a Restriction Period in installments where deemed appropriate, and it may also
require the achievement of predetermined performance objectives in order for such
Restriction Period to lapse. Except as otherwise provided in the Plan or as specified by
the Committee, certificates for shares related to an Award of Restricted Stock or Restricted
Units shall be delivered to a Key Employee or Director as soon as administratively
practicable (but in no event later than 90 days) following the end of the applicable
Restriction Period.

(b) Except when the Committee determines otherwise pursuant to Section 7(d), if a Key
Employee terminates employment with all Participating Companies for any reason before the
expiration of the Restriction Period, all shares of Restricted Stock and all rights with
respect to any Award of Restricted Units still subject to restriction shall be forfeited by
the Key Employee and shall be reacquired by the Company.

(c) Except as otherwise provided in this Section 7 or required by applicable law, no
 shares of Restricted Stock received by a Key Employee or Director and no rights conveyed by
an Award of Restricted Units shall be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of during the Restriction Period.

 

 

 

(d) In the event that a Key Employee’s employment terminates due to (i) death, (ii)
Total Disability, (iii) a voluntary termination of employment due to Retirement, or (iv)
such other circumstances, such as a substantial reduction in force or a divestiture or sale
of a business or unit, that the Committee finds that a waiver of the applicable restrictions
(or any portion thereof) would be in the best interests of the Company, such Key Employee
(or Beneficiary, in the event of death) shall be or become vested in, or entitled to payment
in respect of, Restricted Stock or Restricted Units then held by such Key Employee to the
extent determined by the Committee and set forth in such Key Employee’s Award Documents
and/or any administrative rules or other terms and conditions adopted by the Committee from
time to time applicable to such Restricted Stock or Restricted Units granted to such Key
Employee; provided that, while the Committee may waive or modify the vesting conditions, the
payment terms in effect under such Award Documents, rules or terms and conditions at the
date the Award is granted to the Key Employee shall not be modified. With respect to any
Award of Restricted Units, unless otherwise expressly provided herein or otherwise
determined by the Committee (and specified in writing) at the time of grant, any amount
payable to the Key Employee or his or her Beneficiary in accordance with this Section 7(d)
shall be paid within 90 days following the end of the applicable Restriction Period
determined without regard to this paragraph.

(e) Except as provided in Section 9, if a Director’s service on the Board terminates
for any reason, including without limitation termination due to death, disability or
retirement, prior to the lapse of any applicable Restriction Period, such Director (or
Beneficiary, in the event of death) shall be or become vested in, or entitled to payment in
respect of, such Award to the extent determined by the Committee as set forth in such
Director’s Award Document and/or any administrative rules or other terms and conditions
adopted by the Committee from time to time applicable to such Award granted to such
Director; provided that, to the extent that any such rules or terms and conditions establish
a payment term not associated directly with the vesting of any such Award, only the payment
terms established under such rules or terms and conditions as are in effect at the date the
Award is granted to the Director shall apply to such Award.

(f) The Committee may require, on such terms and conditions as it deems appropriate or
desirable, that the certificates for Stock delivered under the Plan in respect of any grant
of Restricted Stock may be held in custody by a bank or other institution, or that the
Company may itself hold such shares in custody until the Restriction Period expires or until
restrictions thereon otherwise lapse, or later as provided in Section 14 hereof. The
Committee may require, as a condition of any Award of Restricted Stock that the Key Employee
or Director shall have delivered a stock power endorsed in blank relating to the Restricted
Stock. Notwithstanding any provision of the Plan to the contrary, Restricted Stock may be
evidenced on a book entry or electronic basis or pursuant to other arrangements (including,
without limitation, in an omnibus or nominee account administered by a third party) until
restrictions thereon otherwise lapse, in lieu of issuing physical certificates to the Key
Employee or Director.

 

 

 

(g) At the discretion of the Committee, the Restricted Unit account of a Key Employee
or Director may be credited with Dividend Equivalents during the Restricted Period which
shall be subject to the same terms and conditions (and become payable and be paid) as the
Restricted Units to which they relate. Unless the Committee shall otherwise determine at or
after grant, all Dividend Equivalents payable in respect of Restricted Units shall be deemed
reinvested in that number of Restricted Units determined based on the Fair Market Value on
the date the corresponding dividend on the Stock is payable to stockholders.

(h) Nothing in this Section 7 shall preclude a Key Employee or Director from exchanging
any shares of Restricted Stock subject to the restrictions contained herein for any other
 shares of Stock that are similarly restricted.

(i) Subject to Section 7(f) and Section 8, a stock certificate shall be issued in the
name of each Key Employee or Director awarded Restricted Stock under the Plan. Such
certificate shall be registered in the name of the Key Employee or Director, and shall bear
an appropriate legend reciting the terms, conditions and restrictions, if any, applicable to
such Award and shall be subject to appropriate stop-transfer orders. Upon the lapse of the
Restricted Period with respect to Restricted Stock, such shares shall no longer be subject
to the restrictions imposed under this Section 7 and the Company shall issue or have issued
new share certificates, or otherwise render available the shares represented by the
certificate, without the legend referred to herein in exchange for those certificates
previously issued. Upon the lapse of the Restricted Period with respect to any Restricted
Units, the Company shall deliver (or otherwise render available) to the Key Employee or
Director (or, if applicable, his or her beneficiary or permitted assigns, one share of Stock
for each Restricted Unit as to which restrictions have lapsed (including any such Restricted
Units related to any Dividend Equivalents credited with respect to such Restricted Units).
The Committee may, in its sole discretion, elect to pay cash or part cash and part Stock in
lieu of delivering only Stock for Restricted Units. If a cash payment is made in lieu of
delivering Stock, the amount of such cash payment for each share of Stock to which a Key
Employee or Director is entitled shall be equal to the Fair Market Value on the date on
which the Restricted Period lapsed with respect to the related Restricted Unit.
Notwithstanding the foregoing, the Committee may, to the extent possible without adverse tax
consequences to the Key Employee or Director, require or permit the deferral of payment in
respect of Restricted Units to a date or dates (including, without limitation, the date the
Key Employee’s employment or a Director’s services on the Board terminates) subsequent to
the date that the Restriction Period lapses on such terms and conditions (including, without
limitation, the manner in which the amounts payable shall be deemed invested during the
period of deferral) as it shall determine from time to time.

 

 

 

(j) Except for the restrictions set forth herein and unless otherwise determined by the
Committee, a Key Employee or Director shall have all the rights of a shareholder with
respect to shares of Restricted Stock, including but not limited to, the right to vote and
the right to receive dividends. A Key Employee or Director shall not have any right,
in respect of Restricted Units awarded pursuant to the Plan, to vote on any matter submitted
to the Company’s stockholders until such time, if at all, as the shares of Stock
attributable to such Restricted Units have been issued.

(k) In addition, the Committee may permit Key Employees and Directors or any group of
Key Employees and Directors to elect to receive Restricted Units in exchange for or in lieu
of other compensation (including salaries, annual bonuses, annual retainer and meeting fees)
that would otherwise have been payable to such Key Employees and Directors in cash. The
Committee shall establish the terms and conditions of any such Restricted Units, including
the Restriction Period applicable thereto, and the date on which Stock shall be issued in
respect thereof. The Committee shall establish the terms and conditions applicable to any
election by a Key Employee or Director to receive Restricted Units (including the time at
which any such election shall be made).

(l) Notwithstanding anything else contained in the Plan to the contrary, the Committee
may determine at the time of grant that any Award of Restricted Stock or Restricted Units to
a Key Employee or Director shall become vested, if at all, only upon the determination by
the Committee that Performance Objectives established by the Committee have been attained,
in whole or in part. In such case, the Performance Objectives determined by the Committee
may vary from Key Employee to Key Employee, Director to Director and between groups of Key
Employees and Directors, and shall be established by the Committee and determined by
applying the standards (and selecting from the criteria) applicable to Performance Shares
under Section 6(d). If there shall occur significant events which the Committee expects to
have a substantial effect on the applicable Performance Objectives, the Committee may revise
such Performance Objectives. Unless the Committee otherwise determines at the time of
grant, any Award of Restricted Stock or Restricted Units that is subject to
performance-based vesting in accordance with this Section 7(l), to an officer of the Company
or a Subsidiary who is subject to the reporting requirements of Section 16(a) of the Act,
shall be subject to the same requirements and restrictions as apply to a Performance Share
Award under Section 6(j).

8. Issuance of Stock

(a) The Company shall not be required to issue or deliver any shares of Stock prior to:
(i) the listing of such shares on any stock exchange on which the Stock may then be listed,
(ii) the completion of any registration or qualification of such shares under any federal or
state law, or any ruling or regulation of any government body which the Company shall, in
its sole discretion, determine to be necessary or advisable, and (iii) the satisfaction of
any tax withholding obligations as provided in Section 14 hereof.

 

 

 

(b) All shares of Stock delivered under the Plan shall also be subject to such
stop-transfer orders and other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed and any applicable
federal or state securities laws, and the Committee may cause a legend or legends to be
placed on any such certificates to make appropriate reference to such restrictions. In
making such determination, the Committee may rely upon an opinion of counsel for the
Company.

(c) Except to the extent such shares are subject to forfeiture during any applicable
Restriction Period, each Key Employee or Director who receives Stock in settlement of or as
part of an Award, shall have all of the rights of a shareholder with respect to such shares,
including the right to vote the shares and receive dividends and other distributions. No Key
Employee or Director awarded an Option, a Right, a Restricted Unit or a Performance Share
shall have any right as a shareholder with respect to any shares of Stock covered by his or
her Option, Right, Restricted Unit or Performance Share prior to the date of issuance to him
or her of such shares.

9. Change of Control

(a) For purposes of this Plan, a Change of Control shall occur if:

(i) a report on Schedule 13D shall be filed with the Securities and Exchange Commission
pursuant to Section 13(d) of the Act disclosing that any Person, other than the Company or a
subsidiary of the Company or any employee benefit plan sponsored by the Company or a
subsidiary of the Company is the Beneficial Owner of forty percent or more of the
outstanding stock of the Company entitled to vote in the election of directors of the
Company;

(ii) any Person other than the Company or a subsidiary of the Company or any employee
benefit plan sponsored by the Company or a subsidiary of the Company shall purchase shares
pursuant to a tender offer or exchange offer to acquire any stock of the Company (or
securities convertible into stock) for cash, securities or any other consideration, provided
that after consummation of the offer, the Person in question is the Beneficial Owner of
twenty percent or more of the outstanding stock of the Company entitled to vote in the
election of directors of the Company (calculated as provided in paragraph (d) of Rule 13d-3
under the Act in the case of rights to acquire stock);

(iii) any merger, consolidation, recapitalization or reorganization of the Company
approved by the stockholders of the Company shall be consummated, other than any such
transaction immediately following which the persons who were the Beneficial Owners of the
outstanding securities of the Company entitled to vote in the election of directors of the
Company immediately prior to such transaction are the Beneficial Owners of at least 55% of
the total voting power represented by the securities of the entity surviving such
transaction entitled to vote in the election of directors of such entity (or the ultimate
parent of such entity) in substantially the same relative proportions as their ownership of
the securities of the Company entitled to vote in the election of
directors of the Company immediately prior to such transaction; provided that, such
continuity of ownership (and preservation of relative voting power) shall be deemed to be
satisfied if the failure to meet such threshold (or to preserve such relative voting power)
is due solely to the acquisition of voting securities by an employee benefit plan of the
Company, such surviving entity or any subsidiary of such surviving entity;

 

 

 

(iv) any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company approved by the
stockholders of the Company shall be consummated; or

(v) within any 24 month period, the persons who were directors of the Company
immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for
any reason other than death) to constitute at least a majority of the Board or the board of
directors of any successor to the Company, provided that any director who was not a director
at the beginning of such period shall be deemed to be an Incumbent Director if such director
(A) was elected to the Board by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent Directors either actually
or by prior operation of this clause (v), and (B) was not designated by a Person who has
entered into an agreement with the Company to effect a transaction described in Section
9(a)(iii) or Section 9(a)(iv) of the Plan.

(b) For purposes of this Plan, a Potential Change of Control shall occur if:

(i) A Person shall commence a tender offer, which if successfully consummated, would
result in such Person being the Beneficial Owner of at least 20% of the stock of the Company
entitled to vote in the election of directors of the Company;

(ii) The Company enters into an agreement, the consummation of which would constitute a
Change of Control;

(iii) Solicitation of proxies for the election of directors of the Company by anyone
other than the Company, which, if such directors were elected, would result in the
occurrence of a Change of Control as described in Section 9(a)(v); or

(iv) Any other event shall occur which is deemed to be a Potential Change of Control by
the Board, the Committee, or any other appropriate committee of the Board in its sole
discretion.

(c) Notwithstanding any provision in this Plan to the contrary, upon the occurrence of
a Change of Control:

(i) Each Option and Right outstanding on the date such Change of Control occurs, and
which is not then fully vested and exercisable, shall immediately vest and become
exercisable to the full extent of the original grant for the remainder of its term.

 

 

 

(ii) The surviving or resulting corporation may, in its discretion, provide for the
assumption or replacement of each outstanding Option and Right granted under the Plan on
terms which are no less favorable to the optionee than those applicable to the Options and
Rights immediately prior to the Change of Control.

(iii) Except to the extent otherwise expressly provided in Section 9(c)(vi), the
restrictions applicable to shares of Restricted Stock or to Restricted Units held by Key
Employees pursuant to Section 7 shall lapse upon the occurrence of a Change of Control, and
such Key Employees shall receive immediately unrestricted certificates for all of such
 shares.

(iv) If a Change of Control occurs during the course of a Performance Period or any
Restriction Period applicable to an Award of Performance Shares pursuant to Section 6, then
a Key Employee shall be deemed to have satisfied the Performance Objectives at the target
level specified in the Key Employee’s Award agreement or, if greater, otherwise specified by
the Committee at or after grant, and to have completed any applicable Restriction Period
effective on the date of such occurrence. Except to the extent otherwise expressly
provided in Section 9(c)(vi), distribution of amounts payable in connection with an Award of
Performance Shares shall be made immediately following (but in no event later than 30 days)
following the occurrence of the Change of Control.

(v) Without limiting the foregoing provisions of this Section 9(c), in the event of a
Change of Control the Committee may, in its discretion, provide any of the following either
absolutely or subject to the election of such Key Employees:

a. Each Option and Right shall be surrendered or exercised for an immediate lump sum
cash amount equal to the excess of the Formula Price over the exercise price;

b. Each Restricted Stock, Restricted Unit and Award of Performance Shares shall be
exchanged for an immediate lump sum cash amount equal to the number of outstanding units or
 shares awarded to such Key Employee multiplied by the Formula Price.

(vi) Notwithstanding the foregoing provisions of this Section 9(c), unless the event
constituting a Change of Control for purposes of the Plan shall also constitute a “change in
control” as defined in the regulations promulgated under Section 409A of the Code, no
distribution or payment shall be made upon or in connection with the occurrence of a Change
of Control with respect to (x) any Restricted Units or Performance Shares or (y) any other
Award that the Committee shall determine, on or before the later of December 31, 2008 (or
such later date as shall be permitted under transitional relief provided under Section 409A
of the Code) and the date the Award is granted, does not qualify for any applicable
exemption from the application of Section 409A of the Code (such as by reason of being a
stock right or qualifying as a short-term deferral). To the extent that, pursuant to the
immediately preceding sentence, an Award
is not distributable or payable upon the occurrence of a Change of Control, distribution or
payment of such Award shall be made at the time otherwise specified under the Plan or the
Award Documents without regard to the occurrence of a Change of Control. Without limiting
the generality of the foregoing, nothing in this Section 9(c)(vi) shall be construed to
prevent any Key Employee’s rights in respect of any Award from becoming non-forfeitable upon
the occurrence of a Change of Control.

 

 

 

(d) Notwithstanding any provision in this Plan to the contrary, in the event of a
Change of Control as described in Section 9(a)(iii) or Section 9(a)(iv) of the Plan, in the
case of an awardee whose employment or service involuntarily terminates on or after the date
of a shareholder approval described in either of such Sections but before the date of a
consummation described in either of such Sections, and the consummation occurs within 60
days of such date of termination, then the date of termination of such an awardee’s
employment or service shall be deemed for purposes of the Plan to be the day following the
date of the applicable consummation.

10. Beneficiary

(a) Each Key Employee, Director and/or his or her Transferee may file with the Company
a written designation of one or more persons as the Beneficiary who shall be entitled to
receive the Award, if any, payable under the Plan upon his or her death. A Key Employee,
Director or Transferee may from time to time revoke or change his or her Beneficiary
designation without the consent of any prior Beneficiary by filing a new designation with
the Company. The last such designation received by the Company shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall be effective
unless received by the Company prior to the Key Employee’s, Director’s or Transferee’s
death, as the case may be, and in no event shall it be effective as of a date prior to such
receipt.

(b) If no such Beneficiary designation is in effect at the time of death of a Key
Employee, Director or Transferee, as the case may be, or if no designated Beneficiary
survives the Key Employee, Director or Transferee or if such designation conflicts with
applicable law, the estate of the Key Employee, Director or Transferee, as the case may be,
shall be entitled to receive the Award, if any, payable under the Plan upon his or her
death. If the Committee is in doubt as to the right of any person to receive such Award, the
Company may retain such Award, without liability for any interest thereon, until the
Committee determines the rights thereto, or the Company may pay such Award into any court of
appropriate jurisdiction and such payment shall be a complete discharge of the liability of
the Company therefore.

 

 

 

11. Administration of the Plan

(a) All decisions, determinations or actions of the Committee made or taken pursuant to
grants of authority under the Plan shall be made or taken in the sole discretion of the
Committee and shall be final, conclusive and binding on all persons for all purposes.

(b) The Committee shall have full power, discretion and authority to interpret,
construe and administer the Plan and any part thereof, and its interpretations and
constructions thereof and actions taken thereunder shall be, except as otherwise determined
by the Board, final, conclusive and binding on all persons for all purposes. Except to the
extent otherwise expressly provided in the Plan, any action, authority or power reserved to
the Committee shall be within the Committee’s sole and absolute discretion.

(c) The Committee’s decisions and determinations under the Plan need not be uniform and
may be made selectively among Key Employees and Directors, whether or not such Key Employees
and Directors are similarly situated.

(d) The Committee may, in its sole discretion, delegate such of its powers as it deems
appropriate to the Company’s Executive Vice President, Human Resources (or other person
holding a similar position) or the Company’s Chief Executive Officer, except that Awards to
executive officers shall be made, and matters related thereto shall be determined, solely by
the Committee or the Board or any other appropriate committee of the Board.

 

 

 

12. Amendment, Extension or Termination

The Board or the Committee may, at any time, amend or modify the Plan and,
specifically, may make such modifications to the Plan as it deems necessary to avoid the
application of Section 162(m) of the Code and the Treasury regulations issued thereunder.
However: (i) no amendment shall, without approval by a majority of the Company’s
stockholders, (A) alter the group of persons eligible to participate in the Plan, or (B)
except as provided in Section 13 increase the maximum number of shares of Stock which are
available for Awards under the Plan; or, (ii) with respect to all Options and Rights, allow
the Committee to reprice the Options or Rights. The Board may suspend or terminate the Plan
at any time without the consent of any person. Notwithstanding anything in this Plan to the
contrary, the Plan shall not be amended, modified, suspended or terminated during the period
in which a Change of Control is threatened. For purposes of the preceding sentence, a
Change of Control shall be deemed to be threatened for the period beginning on the date of
any Potential Change of Control, and ending upon the earlier of: (I) the second anniversary
of the date of such Potential Change of Control, (II) the date a Change of Control occurs,
or (III) the date the Board or the Committee determines in good faith that a Change of
Control is no longer threatened. Further, notwithstanding anything in this Plan to the
contrary, no amendment, modification, suspension or termination following a Change of
Control shall adversely impair or reduce the rights of any person with respect to a prior
Award without the consent of such person. Notwithstanding the preceding provisions, the
Board or the Committee may amend the Plan or an Award Document to take effect retroactively
or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an
Award Document to any present or future law relating to plans of this or similar nature and
the administrative regulations and rulings promulgated thereunder (including, but not
limited to, amendments deemed necessary or advisable to avoid payments being subject to
additional tax under Code Section 409A).

13. Adjustments in Event of Change in Common Stock

In the event of any reorganization, merger, recapitalization, consolidation,
liquidation, special cash dividend, stock dividend, stock split, reclassification,
combination of shares, rights offering, split-up or extraordinary dividend (including a
spin-off) or divestiture, or any other change in the corporate structure or shares, the
Committee shall make such adjustment in the Stock subject to Awards, including Stock subject
to purchase by an Option or issuable in respect of Restricted Units, or the terms,
conditions or restrictions on Stock or Awards, including the price payable upon the exercise
of such Option and the number of shares subject to Restricted Stock or Restricted Unit
Awards, as shall be necessary to preserve Key Employee rights substantially proportionate to
those rights existing immediately prior to such transaction or event.

 

 

 

14. Miscellaneous

(a) If a Change of Control has not occurred and if the Committee determines that a Key
Employee has taken action inimical to the best interests of any Participating Company, the
Committee may, in its sole discretion, terminate in whole or in part such portion of any
Option or Right as has not yet become exercisable at the time of termination, terminate any
Performance Share Award for which the Performance Period or any applicable Restriction
Period has not been completed or terminate any Award of Restricted Stock or Restricted Units
for which the Restriction Period has not lapsed.

(b) Except as provided in Section 9, nothing in this Plan or any Award granted
hereunder shall confer upon any employee any right to continue in the employ of any
Participating Company or interfere in any way with the right of any Participating Company to
terminate his or her employment at any time. No Award payable under the Plan shall be deemed
salary or compensation for the purpose of computing benefits under any employee benefit plan
or other arrangement of any Participating Company for the benefit of its employees unless
the Company shall determine otherwise. No Key Employee shall have any claim to an Award
until it is actually granted under the Plan. To the extent that any person acquires a right
to receive payments from the Company under this Plan, such right shall be no greater than
the right of an unsecured general creditor of the Company. All payments to be made hereunder
shall be paid from the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such amounts
except as provided in Section 7(e) with respect to Restricted Stock.

(c) The Committee shall have the right to make such provisions as deemed appropriate in
its sole discretion to satisfy any obligation of the Company to withhold federal, state or
local income or other taxes (including FICA obligations) incurred by reason of the operation
of the Plan or an Award under the Plan, including but not limited to at any time: (i)
requiring a Key Employee to submit payment to the Company for such taxes before making
settlement of any Award of Stock or other amount due under the Plan, (ii) withholding such
taxes from wages or other amounts due to the Key Employee before making settlement of any
Award of Stock or other amount due under the Plan, (iii) making settlement of any Award of
Stock or other amount due under the Plan to a Key Employee part in Stock and part in cash to
facilitate satisfaction of such withholding obligations, or (iv) receiving Stock already
owned by, or withholding Stock otherwise due to, the Key Employee in an amount determined
necessary to satisfy such withholding obligations; provided, however, that, notwithstanding
any language herein to the contrary, any Key Employee who is an executive officer of the
Company (within the meaning of Section 16 of the Act) shall have the right to satisfy his or
her obligations to the Company pursuant to this Section 14(c) by instructing the Company not
to deliver to the Key Employee Stock otherwise deliverable to the Key Employee in an amount
sufficient to satisfy such obligations to the Company.

 

 

 

(d) The Committee may permit deferrals of compensation pursuant to the Plan
or any subplan hereof which meet the requirements of Code Section 409A and the
regulations thereunder. Additionally, to the extent any Award is subject to Code Section
409A, notwithstanding any provision herein to the contrary, the Plan does not permit the
acceleration of the time or schedule of any distribution related to such Award, except as
permitted by Code Section 409A and the regulations and rulings promulgated thereunder.

(e) The Plan and the grant of Awards shall be subject to all applicable federal and
state laws, rules, and regulations and to such approvals by any government or regulatory
agency as may be required. The Plan and each Award Document shall be governed by the laws
of the State of Delaware, excluding any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of the Plan to the substantive law of
another jurisdiction. Unless otherwise provided in the Award Document, recipients of an
Award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the
federal or state courts of Connecticut to resolve any and all issues that may arise out of
or relate to the Plan or any related Award Document. Notwithstanding any other provision
hereof, the Plan shall, during the period that the United States Department of the Treasury
holds any debt or equity securities of the Company, comply with the provisions of Section
111 of the Emergency Economic Stabilization Act of 2008, as amended, and any guidance or
regulations thereunder.

(f) The terms of the Plan shall be binding upon the Company and its successors and
assigns.

(g) Captions preceding the sections hereof are inserted solely as a matter of
convenience and in no way define or limit the scope or intent of any provision hereof.

15. Effective Date, Term of Plan and Shareholder Approval

The effective date of the Plan shall be May 19, 2010. No Award shall be granted under
this Plan after the Plan’s termination date. The Plan’s termination date shall be the
earlier of: (a) May 19, 2020, or (b) the date on which the Maximum Limit (as defined in
Section 3 of the Plan) is reached; provided, however, that the Plan will continue in effect
for existing Awards as long as any such Award is outstanding.

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