Document:

exv10w1

 

Exhibit 10.1

IXIA

AMENDED AND RESTATED

NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN

SECTION I. PURPOSE

     The purpose of the Ixia Amended and Restated Non-Employee Director Equity Incentive Plan (this
“Plan”) is to provide an incentive which will motivate and reward “Non-Employee Directors” of the
Company and promote the best interests and long-term performance of the Company by encouraging the
ownership of the Company’s stock by such “Non-Employee Directors.” None of the Options granted
pursuant to this Plan will qualify as an Incentive Stock Option, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”).

SECTION II. CERTAIN DEFINITIONS

     A. “1933 Act” shall mean the Securities Act of 1933, as amended from time to time.

     B. “2004 Restatement” means the Original Plan, as amended, restated and approved by the
shareholders of the Company at the Company’s 2004 Annual Meeting of Shareholders held on May 13,
2004.

     C. “2004 Restatement Effective Date” means May 13, 2004.

     D. “2007 Restatement Effective Date” means May 25, 2007, provided that this Plan is
approved by the shareholders of the Company at the 2007 Annual Meeting of Shareholders of the
Company on such date. If this Plan is not so approved by the shareholders of the Company, then
this Plan will not become effective, the 2004 Restatement shall remain in full force and effect,
and the Company may continue to make grants pursuant to the terms of the 2004 Plan Restatement.

     E. “Annual Meeting of Shareholders” shall mean an Annual Meeting of Shareholders of the
Company.

     F. “Award” means any Option or Restricted Stock Unit granted pursuant to the provisions of the
Plan.

     G. “Award Agreement” means any written agreement, contract or other instrument or document
evidencing and reflecting the terms of any Award granted pursuant to the provisions of the Plan.

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

     I. “Common Stock” means the shares of the Common Stock, without par value, of the Company.

     J. “Committee” means the Committee appointed by the Board in accordance with Section XII.C. of
the Plan, if one is appointed.

 

 

     K. “Company” means Ixia, a California corporation, or any successor thereto.

     L. “Disability” means the inability of the Participant to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a continuous period
of not less than 12 months.

     M. “Dividend Equivalents” means any right granted under Section VIII.C. of the Plan.

     N. “Fair Market Value,” as of a given date, means the fair market value of one share of Common
Stock, determined as follows:

          (i) If the Common Stock is listed on any established stock exchange or on a national
market system, including without limitation the Nasdaq Global Select Market or the Nasdaq
Global Market of The Nasdaq Stock Market, the fair market value per share shall be the
closing sales price (or the closing bid price, if no sales were reported) on such exchange
or system on the date of grant of the Award or other applicable date (or, if such date is
not a trading day, on the last trading day preceding such date), as such closing sales price
(or closing bid price) is reported in such source as the Board deems reliable;

          (ii) If the Common Stock is regularly quoted by a recognized securities dealer but
sales prices are not reported, the fair market value per share shall be the average of the
closing bid and asked prices of the Common Stock on the date of grant or other applicable
date (or, if there are no such prices for such date, on the last trading day preceding such
date on which there were such reported prices) as reported in such source as the Board deems
reliable; or

          (iii) If there is no public market for the Common Stock, the fair market value per
share shall be determined by the Board in good faith.

     O. “Non-Employee Director” means a person who is a member of the Board of Directors but who is
not an employee of the Company or any subsidiary of the Company.

     P. “Option” means a stock option to purchase Common Stock granted to a Participant pursuant to
the Plan.

     Q. “Original Plan” means the Ixia Director Stock Option Plan adopted by the Board on September
1, 2000 in effect prior to the 2004 Restatement.

     R. “Participant” means a Non-Employee Director who is granted an Award.

     S. “Plan” means this Ixia Amended and Restated Non-Employee Director Equity Incentive Plan, as
adopted by the Board on April 23, 2007.

     T. “Restricted Stock Unit” means any unit granted under Section VI of this Plan evidencing the
right to receive one Share of Common Stock at some future date.

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     U. “Shares” means shares of the Common Stock, any shares into which such Shares may be
converted in accordance with Section IX of the Plan.

SECTION III. EFFECTIVENESS OF PLAN

     This Plan restatement shall become effective as of the date of approval of the shareholders of
the Company at the Annual Meeting of Shareholders scheduled to be held on May 25, 2007 (the “2007
Annual Meeting”). No Awards will be granted under this Plan prior to obtaining approval of the
shareholders of the Company at the 2007 Annual Meeting. If this Plan is not so approved by the
shareholders of the Company at the 2007 Annual Meeting, then (i) this Plan will not become
effective for any purpose, and (ii) the 2004 Restatement shall remain in full force and effect and
the Company may continue to make grants pursuant to the terms and conditions of the 2004
Restatement, including without limitation any grants to be made on the date of the 2007 Annual
Meeting.

SECTION IV. STOCK

     The maximum aggregate number of shares of Common Stock which may be reserved for issuance
under this Plan is 400,000 or the number of shares of stock to which such Shares shall be adjusted
as provided in Section IX of the Plan. Shares subject to, but not sold or issued under, any Award
terminating, expiring, forfeited or canceled for any reason prior to issuance of such Shares shall
again become available for Awards thereafter granted under the Plan and the same shall not be
deemed an increase in the number of Shares reserved for issuance under the Plan.

SECTION V. ELIGIBILITY

     Awards may be granted under the Plan only to Non-Employee Directors.

SECTION VI. INITIAL AWARD; ANNUAL AWARDS

     A. Initial Award upon Election for the First Time as a Non-Employee Director. Each
Non-Employee Director who is elected or appointed for the first time to the Board, whether through
election by the shareholders of the Company or through appointment by the Board, shall
automatically be granted, effective as of the date of such election or appointment, an Award as
determined in accordance with this Section VI.A.; provided, however, that any
director who is an employee of the Company and who ceases to be an employee but remains a director
shall not be eligible to receive any Award pursuant to this Section VI.A. upon such change in
status. The Award granted to a Non-Employee Director pursuant to this Section VI.A. shall be as
follows:

          (i) If the Non-Employee Director is elected or appointed for the first time on or after
the 2007 Restatement Effective Date, the number of Restricted Stock Units equal to the sum
of 10,000 plus (1) if the Non-Employee Director is elected or appointed for the first time
on the date of an Annual Meeting of Shareholders, the number of Restricted Stock Units (as
set forth in Section VI.B.(i) below) issuable to Non-Employee Directors re-elected on such
date, or (2) if the Non-Employee Director is elected or appointed for the first time on a
date other than the date of an Annual Meeting of Shareholders, the number of

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Restricted Stock Units obtained by multiplying (a) the number of Restricted Stock Units
(as set forth in Section VI.B.(i) below) issuable to Non-Employee Directors at the most
recent Annual Meeting of Shareholders preceding such date by (b) a fraction, the numerator
of which is equal to 12 minus the number of full months that have elapsed since the most
recent Annual Meeting of Shareholders and the denominator of which is 12.

          (ii) If the Non-Employee Director is elected or appointed for the first time on or
after the 2004 Restatement Effective Date but prior to the 2007 Restatement Effective Date,
an Option to purchase a sum of 25,000 shares of Common Stock plus (1) 10,000 shares of
Common Stock, if the Non-Employee Director is elected or appointed for the first time on the
date of an Annual Meeting of Shareholders of the Company or (2) if the Non-Employee Director
is elected or appointed for the first time on a date other than the date of an Annual
Meeting of Shareholders, the product obtained by multiplying 10,000 by a fraction, the
numerator of which is equal to 12 minus the number of full months that have elapsed since
the most recent Annual Meeting of Shareholders and the denominator of which is 12.

          (iii) If the Non-Employee Director is elected or appointed for the first time prior to
the 2004 Restatement Effective Date, an Option to purchase 10,000 shares of Common Stock.

     B. Annual Awards upon Re-Election as a Non-Employee Director. Each Non-Employee
Director shall automatically be granted an Award, as determined in accordance with this Section
VI.B., on the date of each Annual Meeting of Shareholders at which the Non-Employee Director is
re-elected to the Board of Directors; provided, however, that prior to the 2004
Restatement Effective Date, a Non-Employee Director shall be entitled to receive a re-election
grant under this Section VI.B. only if he or she has been a director of the Company for at least
six months preceding the Award date. The Award granted to a Non-Employee Director pursuant to this
Section VI.B. shall be as follows:

          (i) If the Non-Employee Director is re-elected on or after the 2007 Restatement
Effective Date, the number of Restricted Stock Units set forth below for the applicable
calendar year during which the grant is made:

	 	 	 
	Year of Annual Meeting	 	Number of Restricted Stock Units
	2007
	 	4,000
	2008
	 	4,200
	2009
	 	4,410
	2010
	 	4,630

          (ii) If the Non-Employee Director is re-elected on or after the 2004 Restatement
Effective Date but prior to the 2007 Restatement Effective Date, an Option to purchase
10,000 shares of Common Stock.

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          (iii) If the Non-Employee Director is re-elected prior to the 2004 Restatement
Effective Date, an Option to purchase 5,000 shares of Common Stock.

SECTION VII. TERMS AND CONDITIONS OF OPTIONS

     A. Option Exercise Price. The exercise price of the Common Stock subject to all
Options granted hereunder shall be 100% of the Fair Market Value of the Common Stock on the date of
the grant of such Options.

     B. Term and Vesting of Options.

          (i) Each Option granted pursuant to Sections VI.A. and VI.B. shall have a term of seven
years, subject to earlier termination pursuant to Section IX.B. of the Plan.

          (ii) Each Option granted on or after 2004 Restatement Effective Date pursuant to
Section VI.A. shall vest and become exercisable in eight equal quarterly installments
commencing on the last day of the calendar quarter in which the Option is granted and
continuing on the last day of each of the seven calendar quarters thereafter, as long as the
optionee continues to serve as a Non-Employee Director on such vesting dates.

          (iii) Each Option granted prior to the 2004 Restatement Effective Date pursuant to
Section VI.A. shall vest and become exercisable in four equal quarterly installments
commencing on the last day of the calendar quarter in which the Option is granted and
continuing on the last day of each of the three calendar quarters thereafter, as long as the
optionee continues to serve as a Non-Employee Director on such vesting dates;
provided, however, that with respect to such Options granted prior to the
2004 Restatement Effective Date and except as provided in Subsection D(ii) of this Section
VII, no Option may be exercised at any time unless the Participant is then a Non-Employee
Director and has been so continuously since the granting of the Option.

          (iv) Each Option granted pursuant to Section VI.B. will vest and become exercisable in
four equal quarterly installments commencing on the last day of the calendar quarter in
which the Option is granted and continuing on the last day of each of the three calendar
quarters thereafter, as long as the optionee continues to serve as a Non-Employee Director
on such vesting dates; provided, however, that with respect to such Options
granted prior to the 2004 Restatement Effective Date and except as provided in Subsection
D(ii) of this Section VII, no Option may be exercised at any time unless the Participant is
then a Non-Employee Director and has been so continuously since the granting of the Option.

          (v) For Options granted on or after the 2004 Restatement Effective Date pursuant to
Subsections A or B of Section VI, each vested installment of Options will expire four years
after vesting, subject to earlier termination pursuant to Section IX.B. of this Plan.

          (vi) An Option may not be exercised for a fraction of a Share.

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     C. Termination of Service.

          (i) Options granted on or after the 2004 Restatement Effective Date shall not terminate
or expire as to unexercised vested installments as a result of a Participant’s voluntary or
involuntary termination of service as a Non-Employee Director, including as a result of his
or her death or Disability. In the event of any such termination, the Participant (or his
or her personal representative if the Participant has died) may, at any time through the
expiration of the four-year exercise period for any installment vested on the date of such
termination, exercise the Options as to all or part of such vested installment. To the
extent that the Participant is not entitled to exercise the Options at the date of such
termination, or to the extent that vested installments of Options at the time of termination
of service are not exercised prior to the four-year anniversary of the date on which such
installments vested, the Options shall terminate. In no event shall any such Options be
exercisable as to any vested installment after the expiration of the four-year exercise
period applicable to such installment.

          (ii) For Options granted prior to the 2004 Restatement Effective Date, if a Participant
voluntarily or involuntarily terminates his or her service as a Non-Employee Director for
any reason other than death or Disability, the Participant may exercise the Options at any
time within 90 days after the date of such termination, but only to the extent that the
Participant was entitled to exercise the Options on the date of termination. In no event
shall such Options be exercisable after the expiration of the term of the Options, and any
Options not so exercised shall expire. For Options granted prior to the Amendment Effective
Date, if a Participant’s service as a Non-Employee Director is terminated by reason of death
or Disability, the Participant, or the Participant’s personal representative if the
Participant has died, may exercise any or all of the Participant’s unexercised Options which
are vested on the date of termination, provided such exercise occurs within 12 months after
the date of the Participant’s death or termination of service as a result of Disability but
not after the expiration of the term of the Options.

     D. Payment of Option Exercise Price. The exercise price is to be paid in full upon
exercise of an Option, either (i) in cash, (ii) by check, (iii) in shares of Common Stock having a
Fair Market Value on the date of surrender equal to the aggregate cash exercise price of the Option
being exercised, (iv) by consideration received by the Company under a cashless exercise program
acceptable to the Company in connection with the Plan, or (v) by any combination of the payment
methods specified in the foregoing clauses (i), (ii), (iii) and (iv); provided,
however, that shares of Common Stock tendered in payment must be shares owned by the
Non-Employee Director and registered in the Non-Employee Director’s name and may not include shares
of Common Stock acquired by the Non-Employee Director through the exercise of an Option granted
less than six months prior to the date of exercise of the Option being exercised.

     E. Option Agreements. An Award of an Option granted prior to the 2004 Restatement
Effective Date shall be evidenced by a written agreement in substantially the form of the agreement
attached hereto as Attachment I. An Award of an Option granted on or after the 2004
Restatement

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Effective Date shall be evidenced by a written agreement in substantially the form of the
agreement attached hereto as Attachment II.

     F. Pro Rata Allocation. In the event that the Options to be granted under the Plan on
a specific grant date would exceed the number of shares then available for grant hereunder, the
shares available for grant shall be allocated on a pro rata basis among the Non-Employee Directors
who are entitled to be granted Options on such grant date.

     G. Procedure for Exercise. An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the terms of the Option
agreement by the person entitled to exercise the Option and full payment for the shares with
respect to which the Option is exercised has been received by the Company. Full payment may
consist of any consideration and method of payment allowable under Subsection E of this Section
VII. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company) of the stock certificate evidencing such shares, no
right to vote or receive dividends or any other rights as a shareholder shall exist with respect to
the shares to be issued upon exercise of the Option, notwithstanding the exercise of the Option. A
share certificate for the number of shares acquired upon exercise of an Option shall be issued as
soon as administratively practicable after such exercise; provided, however, that
if the shares are covered by a registration statement under the 1933 Act or can otherwise be issued
without a legend restricting their transfer, the Participant may direct that the shares be issued
and delivered by electronic transfer to a securities account maintained in the Participant’s name.
No adjustment will be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section IX of the Plan.

          Exercise of an Option in any manner shall result in a decrease in the number of shares which
thereafter may be available, both for purposes of the Plan and for sale under the Option, by the
number of shares as to which the Option is exercised.

SECTION VIII. TERMS AND CONDITIONS

OF RESTRICTED STOCK UNITS

     A. Grant. A Restricted Stock Unit is a bookkeeping entry that represents the right to
receive one Share to be issued and delivered at the end of the applicable vesting period, subject
to a risk of cancellation and to the other terms and conditions set forth in the Plan and in any
Award Agreement evidencing the Restricted Stock Unit. The Company shall establish and maintain
accounts for Participants in which the Company shall record Restricted Stock Units and the
transactions and events affecting such units. Restricted Stock Units and other items reflected in
the account will represent only bookkeeping entries by the Company to evidence the Company’s
unfunded obligations. The terms of any Restricted Stock Unit granted under this Plan shall be set
forth in a written Award Agreement which shall contain provisions determined by the Committee which
are not inconsistent with the Plan and which shall be in substantially the form of the agreement
attached at Attachment III.

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     B. Vesting.

          (i) The Restricted Stock Units granted on any given date pursuant to Section VI.A. will
vest in eight equal quarterly installments commencing on the 15th day of the second calendar
month of the first calendar quarter following the calendar quarter in which the Restricted
Stock Units are granted and continuing on the 15th day of the second calendar month of each
of the seven calendar quarters thereafter, as long as the recipient continues to serve as a
Non-Employee Director on such vesting dates; provided, however, that to the extent then
unvested (1) any grants made upon initial election at an Annual Meeting shall vest in full
on the date immediately preceding the date of the Annual Meeting held during the second
calendar year following the grant date and (2) any grants made upon initial election or
appointment to the Board on a date other than the date of an Annual Meeting shall vest in
full on the date immediately preceding the date of the second anniversary of the grant date,
as long as in each case the recipient is serving as a Non-Employee Director on such vesting
date.

          (ii) The Restricted Stock Units granted on any given date pursuant to Section VI.B.
will vest in four equal quarterly installments commencing on the 15th day of the second
calendar month during the first calendar quarter following the calendar quarter in which the
Restricted Stock Units are granted and continuing on the 15th day of the second calendar
month of each of the three calendar quarters thereafter, as long as the recipient continues
to serve as a Non-Employee Director on such vesting dates; provided, however, that to the
extent then unvested, the Restricted Stock Units granted on the date of an Annual Meeting
shall vest on the date immediately preceding the date of the next year’s Annual Meeting as
long as the recipient is serving as a Non-Employee Director on such vesting date.

     C. Rights of Holders of Restricted Stock Units; Dividend Equivalents. Unless the
Committee otherwise provides in an Award Agreement for Restricted Stock Units, any Participant
holding Restricted Stock Units shall have no rights as a shareholder of the Company with respect to
such Restricted Stock Units. Subject to the provisions of the Plan and any Award Agreement, the
recipient of Restricted Stock Units may, if so determined by the Committee, be entitled to receive,
with respect to the number of shares of Common Stock covered by the Award, payments (“Dividend
Equivalents”) in amounts equivalent to cash, stock or other property paid by the Company as
dividends on the Company’s Common Stock prior to the vesting of the Restricted Stock Units.

     D. Delivery of Shares in Settlement of Restricted Stock Units. Restricted Stock Units
(if not previously cancelled) will be automatically settled on or about the vesting date(s) set
forth in the Award Agreement evidencing the Award, but in no event later than two and one-half
(2 1/2) months after the end of the calendar year in which the vesting date occurs. The Company may
make delivery of Shares in settlement of Restricted Stock Units by either delivering one or more
stock certificates representing such Shares to the Participant, registered in the name of the
Participant, or by depositing such Shares into an account maintained for the Participant and
established in connection with any Company plan or arrangement providing for investment in Common
Stock of the Company.

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     E. Termination of Continuous Status as a Non-Employee Director. Unless otherwise
determined by the Committee or unless otherwise provided in the Award Agreement evidencing the
Award, in the event of the termination of a Participant’s status as a Non-Employee Director, the
Participant’s Restricted Stock Units which are not vested as of the date of such status change
shall not vest and shall automatically be cancelled for no value and without issuance of any
Shares.

     F. Waiver of Forfeiture. The Committee may, when it finds that a waiver would be in
the best interests of the Company and subject to such terms and conditions as the Committee shall
deem appropriate, waive in whole or in part any remaining vesting restrictions with respect to any
Restricted Stock Units or any other conditions set forth in any related Award Agreement.

     G. Pro Rata Allocation. In the event that the Restricted Stock Units to be granted
under the Plan on a specific grant date would exceed the number of shares then available for grant
hereunder, the shares available for grant shall be allocated on a pro rata basis among the
Non-Employee Directors who are entitled to be granted Awards on such grant date.

SECTION IX. ADJUSTMENTS UPON

CHANGES IN CAPITALIZATION, DISSOLUTION,

LIQUIDATION, MERGER OR ASSET SALE

     A. Changes in Capitalization. Subject to any required action by the shareholders of
the Company, the number of Shares covered by each outstanding Award, or the number and type of
Shares which have been authorized for issuance under the Plan but as to which no Awards have yet
been granted or which have been returned to the Plan upon cancellation, expiration or forfeiture of
an Award, as well as the exercise price per Share, as applicable, covered by such outstanding
Awards, shall be proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, combination or reclassification or the
payment of a stock dividend (but only on the Common Stock) or any other increase or decrease in the
number of Shares effected without receipt of consideration by the Company; provided,
however, that the conversion of any convertible securities of the Company shall not be
deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into or exchangeable for shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price of Shares subject
to an Award or the number of Shares subject to the Plan. Without limiting the generality of the
foregoing, no adjustment shall be made to the number of Shares subject to the automatic grant
provisions of Section VI of the Plan as a result of any changes in capitalization as described in
this Section IX.A.

     B. Dissolution, Liquidation, Merger or Asset Sale. In the event of the proposed
dissolution or liquidation of the Company, the proposed sale of all or substantially all of the
assets of the Company, or the merger, consolidation or reorganization of the Company with or into
another corporation as a result of which the Company is not the surviving corporation or as a
result of which the outstanding shares of Common Stock are exchanged for or converted into cash or
property or securities not of the Company, the Board shall (i) declare that all Options outstanding

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under the Plan shall terminate as of a date fixed by the Board which is at least 30 days after
notice thereof is given by the Company to all Participants, unless such 30-day period is waived by
all Participants and shall give each Participant the right to exercise his or her Option or Options
granted hereunder as to all or any part of the shares subject thereto, including shares which have
not vested at such time, until the date of termination of the Options, provided,
however, that no Options may be exercised after their expiration; (ii) accelerate the
vesting of Restricted Stock Units; and/or (iii) cause any Award outstanding as of the effective
date of any such event to be cancelled in consideration of a cash payment or grant of an
alternative option or award (whether by the Company or any entity that is a party to the
transaction), or a combination thereof, to the holder of the cancelled Award, provided that such
payment and/or grant are substantially equivalent in value to the fair market value of the
cancelled Award as determined by the Board or its Committee.

     C. No Fractional Shares. No fractional shares of Common Stock shall be issuable on
account of any action described in this Section IX, and the aggregate number of shares covered by
an Award, when changed as the result of such action, shall be reduced to the largest number of
whole shares resulting from such action.

SECTION X. AMENDMENT OR TERMINATION

     A. Amendment or Termination. Unless this Plan shall have been earlier terminated as
hereinafter provided, this Plan shall terminate, and no Award shall thereafter be granted
hereunder, on September 1, 2010. The Board of Directors may, at any time prior to such date, (i)
terminate this Plan or (ii) make such amendments to or modifications of the Plan as the Board may
deem advisable; provided, however, that no amendment authorized by the Board will
be effective unless approved by the shareholders of the Company if the amendment would (a) increase
the number of shares reserved for issuance under the Plan other than an adjustment under Section IX
of the Plan; or (b) amend or modify the Plan in any other way if such amendment or modification
requires approval by the shareholders of the Company in order to comply with the requirements of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or any other
applicable law, regulation or stock exchange or market system rule or requirement.

     B. Effect of Amendment or Termination. Any amendment or termination of the Plan shall
not affect any Awards already granted under the Plan. Such Awards shall remain in full force and
effect as if the Plan had not been so amended or terminated.

SECTION XI. WITHHOLDING

     The grant of Awards hereunder and the issuance of shares pursuant thereto is conditioned upon
the Company’s reservation of the right to withhold, in accordance with any applicable law and from
any compensation payable to a Non-Employee Director, any taxes the Company determines that it is
required to withhold under federal, state or local law as a result of such grants or the issuance
of shares pursuant thereto. To the extent that such compensation, if any, is insufficient to pay
any taxes required to be so withheld, the Company may, in its sole discretion, require a
Non-Employee Director, as a condition to the issuance of such shares, to pay in cash to the Company
an amount sufficient to cover such tax liability or otherwise to make arrangements

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satisfactory to the Company to enable the Company to satisfy its withholding obligations under
federal, state and local law.

SECTION XII. MISCELLANEOUS

     A. Rights to Continued Service. Nothing in this Plan or in any Award granted pursuant
to this Plan shall confer on any individual any right to continue as a Non-Employee Director.

     B. Investment Undertakings. Until and unless the issuance of shares of Common Stock
pursuant to this Plan shall have been registered pursuant to the 1933 Act and applicable state
securities laws, each Participant acquiring shares of Common Stock under this Plan may be required,
as a condition precedent to such issuance, to execute and deliver to the Company a letter or
certificate containing such investment representations, agreements restricting sale (including,
without limitation, provision for stop transfer orders and restrictive legends on stock
certificates) and confirmation of other relevant facts to support any exemption from the
registration requirements under the 1933 Act and such state securities laws on which the Company
intends to rely, all as shall be deemed reasonably necessary by counsel for the Company and in such
form as such counsel shall determine.

     C. Administration of the Plan. The Plan shall be administered by the Board. The
Board may at any time appoint a Committee consisting of not less than two persons to administer the
Plan on behalf of the Board, subject to such terms and conditions as the Board may prescribe. The
Board or its Committee shall have the authority to make all determinations deemed necessary or
advisable for the administration of the Plan; provided, however, that the Board or
its Committee shall have no discretion to determine the selection of persons to whom Awards will be
granted, the frequency of Awards or the number of shares subject to Awards (except in accordance
with Section VII.F. hereof), the exercise prices of Options, or any other material terms of the
Awards. All decisions and determinations of the Board or its Committee with respect to the Plan
shall be final and binding.

     D. Reservation of Shares. The Company, during the term of this Plan, shall at all
times reserve and keep available, such number of shares as shall be sufficient to satisfy the
requirements of this Plan.

     E. Nontransferability of Awards. No Awards granted under the Plan, and no Shares
subject to any such Awards, that have not been issued or as to which any applicable vesting
restriction has not lapsed, may be sold, pledged, assigned, hypothecated, gifted, transferred or
disposed of in any manner, either voluntarily or involuntarily by operation of law, other than by
will or by the laws of descent or distribution or transfers between spouses incident to a divorce.
Options may be exercised during the life of the optionee only by the optionee or the optionee’s
guardian or legal representative.

     F. Requirements of Law. The granting of Awards and the issuance of Shares under this
Plan shall be subject to all applicable laws, rules and regulations and to such approvals by any
governmental agencies or national securities exchanges as may be required. Accordingly, the
Company shall not issue or sell any Shares under this Plan if such action would constitute a
violation

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of applicable laws, rules and regulations, including without limitation securities laws.
Furthermore, the inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.

SECTION XIII. EFFECTIVENESS OF THE ORIGINAL PLAN

     Effectiveness of the Original Plan was subject to approval by the shareholders of the Company
within 12 months after the date on which the Original Plan was adopted by the Board of Directors;
provided, however, that Options could be granted pursuant to the Original Plan
subject to subsequent approval of the Original Plan by the Company’s shareholders. Such approval
was given at a regular meeting of the shareholders of the Company or at a special meeting of the
shareholders duly called and held for such purpose, or by written consent of the shareholders in
accordance with applicable law. Grants of Options, if any, made prior to shareholder approval of
the Original Plan were made subject to the obtaining of such approval and, if such approval had not
been obtained as aforesaid, any such grants would not have been effective for any purpose.

*     *     *

12

 

CERTIFICATE OF SECRETARY

     The undersigned Secretary of Ixia, a California corporation (the “Company”), hereby certifies
that the foregoing is a true and correct copy of the Company’s Amended and Restated Non-Employee
Director Stock Option Plan as adopted by the Board of Directors of the Company on April 23, 2007
and as approved by the shareholders of the Company on May 25, 2007.

     IN WITNESS WHEREOF, the undersigned has executed this Certificate of Secretary as of the date
set forth below.

	 	 	 	 	 
	 	 	 
	Date:  May 26, 2007 	/s/ Ronald W. Buckly
 	 
	 	Ronald W. Buckly, Secretary 	 
	 	 	 
	 

 

 

Attachment I

IXIA

DIRECTOR STOCK OPTION PLAN

STOCK OPTION AGREEMENT

     Ixia, a California corporation (the “Company”), hereby grants to                                                     
                                                 (the “Optionee”) an option (the “Option”) to purchase a total of
                                                                            
     (                    ) shares of Common Stock (the “Shares”) of the
Company, at the price set forth herein, and in all respects subject to the terms and provisions of
the Company’s Director Stock Option Plan (the “Plan”), which terms and provisions are hereby
incorporated by reference herein. Unless the context herein otherwise requires, the terms defined
in the Plan shall have the same meanings herein.

     1. Nature of the Option. This Option is intended to be a nonstatutory stock option and is not
intended to be an incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”), or to otherwise qualify for any special tax benefits to the
Optionee.

     2. Date of Grant; Term of Option. This Option is granted as of                     , and it may not
be exercised later than                     .

     3. Option Exercise Price. The Option exercise price is $                     per Share, which price is
not less than one hundred percent (100%) of the fair market value thereof on the date this Option
is granted.

     4. Exercise of Option. This Option shall be exercisable during its term only in accordance
with the terms and provisions of the Plan and this Option as follows:

          (a) Right to Exercise. This Option shall vest and become exercisable, cumulatively, in four
(4) equal installments of                                                              (            
        ) Shares commencing on the last day of the
calendar quarter during which this Option is granted, with an additional installment vesting on the
last day of each of the three (3) calendar quarters thereafter as long as the Optionee remains a
Non-Employee Director.

          (b) Method of Exercise. This Option shall be exercisable by written notice which shall state
the election to exercise this Option, the number of Shares in respect to which this Option is being
exercised, and such other representations and agreements as to the Optionee’s investment intent
with respect to such Shares as may be required by the Company hereunder or pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and shall be delivered
in person or by certified mail to the Secretary of the Company or such other person as may be
designated by the Company. The written notice shall be accompanied by payment of the purchase
price and an executed Stock Purchase Agreement if required by the Company. Payment of the purchase
price shall be by cash, check, the delivery of Shares owned by the Optionee having a fair market
value equal to the aggregate purchase price of the Shares being purchased, or

I-1

 

any combination of such consideration and methods of payment. The purchase price may also be
paid by consideration received by the Company under any cashless exercise program acceptable to the
Company in connection with the Plan. The certificate or certificates for the Shares as to which
the Option shall be exercised shall be registered in the name of the Optionee and shall be legended
as set forth in the Plan, any Stock Purchase Agreement, and/or as required under applicable law.

          (c) Restrictions on Exercise. This Option may not be exercised if the issuance of the Shares
upon such exercise would constitute a violation of any applicable federal or state securities laws
or other laws or regulations. As a condition to the exercise of this Option, the Company may
require the Optionee to make any representation and warranty to the Company as may be required by
any applicable law or regulation.

     5. Termination of Status as an Outside Director.

          (a) If the Optionee ceases to serve as a Non-Employee Director for any reason other than death
or Disability, the Optionee shall have the right to exercise this Option at any time within three
months after the date of such termination to the extent that the Optionee was entitled to exercise
this Option at the date of such termination. To the extent that the Optionee was not entitled to
exercise the Option at the date of termination, or to the extent this Option is not exercised
within such three-month period, this Option shall terminate. Notwithstanding the foregoing, this
Option shall not be exercisable after the expiration of the term set forth in Section 2 hereof.

          (b) If the Optionee ceases to serve as a Non-Employee Director due to death or Disability, the
Optionee (or the personal representative of the Optionee if the Optionee has died) shall have the
right to exercise this Option at any time within 12 months after the date of such termination to
the extent that the Optionee was entitled to exercise the Option at the date of such termination.
To the extent that the Optionee was not entitled to exercise this Option at the date of
termination, or to the extent this Option is not exercised within such 12-month period, this Option
shall terminate. Notwithstanding the foregoing, this Option shall not be exercisable after the
expiration of the term set forth in Section 2 hereof.

     6. Nontransferability of Option. This Option may not be sold, pledged, assigned,
hypothecated, gifted, transferred or disposed of in any manner, other than by will or by the laws
of descent or distribution and may be exercised during the lifetime of the Optionee only by the
Optionee. Subject to the foregoing and the terms of the Plan, the terms of this Option shall be
binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

     7. Continuation as a Director. This Option shall not confer upon the Optionee any right to
continue or be nominated as a director of the Company or any of its subsidiaries or limit in any
respect the right of the Company to remove the Optionee as a director of the Company at any time.

I-2

 

     8. Withholding. The Company reserves the right to withhold, in accordance with any applicable
laws, from any consideration payable to the Optionee any taxes required to be withheld by federal,
state or local law as a result of the grant or exercise of this Option or the sale or other
disposition of the Shares issued upon exercise of this Option. If the amount of any consideration
payable to the Optionee is insufficient to pay such taxes or if no consideration is payable to the
Optionee, upon the request of the Company, the Optionee shall pay to the Company an amount
sufficient for the Company to satisfy any federal, state or local tax withholding requirements it
may incur, as a result of the grant or exercise of this Option or the sale or other disposition of
the Shares issued upon the exercise of this Option.

     9. The Plan. This Option is subject to, and the Company and the Optionee agrees to be bound
by, all of the terms and conditions of the Company’s Director Stock Option Plan as such Plan may be
amended from time to time in accordance with the terms thereof, provided that no such amendment
shall deprive the Optionee, without his consent, of this Option or any rights hereunder.

	 	 	 	 	 
	Date:                                                                             
         	 	Ixia, a California corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

I-3

 

     The Optionee acknowledges receipt of a copy of the Ixia Director Stock Option Plan, a copy of
which is attached hereto, and represents that he or she has read and is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms and provisions
thereof. The Optionee hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Board of Directors or its committee upon any questions arising under the
Plan.

	 	 	 	 	 	 	 
	Date:                                                            
	 	 	 	 	 	 
	 	 	 
	 	 	          Signature of Optionee
	 
	 	 	 	 	 	 
	 	 	 
	 	 	                    Address
	 
	 	 	 	 	 	 
	 	 	 
	 

	 	City
	 	State
	 	Zip Code

I-4

 

Attachment II

IXIA

AMENDED AND RESTATED

NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

STOCK OPTION AGREEMENT

     Ixia, a California corporation (the “Company”), hereby grants to                                                   
                                                  
(the “Optionee”) an option (the “Option”) to purchase a total of
              
              
              
               
              
          (                    ) shares of Common Stock (the “Shares”) of
the Company, at the price set forth herein, and in all respects subject to the terms and provisions
of the Company’s Amended and Restated Non-Employee Director Stock Option Plan (the “Plan”), which
terms and provisions are hereby incorporated by reference herein. Unless the context herein
otherwise requires, the terms defined in the Plan shall have the same meanings herein.

     1. Nature of the Option. This Option is intended to be a nonstatutory stock option and is
not intended to be an incentive stock option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”), or to otherwise qualify for any special tax
benefits to the Optionee.

     2. Date of Grant; Term of Option. This Option is granted as of                                         , and it may
not be exercised later than                     . Each vested installment of this Option will expire on
the four-year anniversary of its vesting date.

     3. Option Exercise Price. The Option exercise price is $                     per Share, which price is
not less than one hundred percent (100%) of the fair market value thereof on the date this Option
is granted.

     4. Exercise of Option. This Option shall be exercisable during its term only in accordance
with the terms and provisions of the Plan and this Option as follows:

          (a) Right to Exercise. This Option shall vest and become exercisable, cumulatively, in
                     equal installments of                                                     
                             (                    ) Shares
each commencing on the last day of the calendar quarter during which this Option is granted, with
an additional installment vesting on the last day of each of the                      calendar quarters
thereafter as long as the Optionee remains a Non-Employee Director. The Optionee may exercise this
Option, in whole or in part, to acquire Shares as to which this Option has vested at any time
during the period beginning on and including the applicable vesting date and ending on and
including the four-year anniversary of such vesting date (e.g., this Option shall be exercisable as
to the installment vesting on                                          from and including                                  
        through
the close of business on                                         ).

II-1

 

          (b) Method of Exercise. This Option shall be exercisable by written notice which shall state
the election to exercise this Option, the number of Shares in respect to which this Option is being
exercised, and such other representations and agreements as to the Optionee’s investment intent
with respect to such Shares as may be required by the Company hereunder or pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and shall be delivered
in person or by certified mail to the Secretary of the Company or such other person as may be
designated by the Company. The written notice shall be accompanied by payment of the purchase
price and an executed Stock Purchase Agreement if required by the Company. Payment of the purchase
price shall be by cash, check, the delivery of Shares owned by the Optionee having a fair market
value equal to the aggregate purchase price of the Shares being purchased, or any combination of
such consideration and methods of payment. The purchase price may also be paid by consideration
received by the Company under any cashless exercise program acceptable to the Company in connection
with the Plan. The certificate or certificates for the Shares as to which the Option shall be
exercised shall be registered in the name of the Optionee and shall be legended as set forth in the
Plan, any Stock Purchase Agreement, and/or as required under applicable law.

          (c) Restrictions on Exercise. This Option may not be exercised if the issuance of the Shares
upon such exercise would constitute a violation of any applicable federal or state securities laws
or other laws or regulations. As a condition to the exercise of this Option, the Company may
require the Optionee to make any representation and warranty to the Company as may be required by
any applicable law or regulation.

     5. Termination of Status as a Non-Employee Director. If the Optionee ceases to serve as a
Non-Employee Director for any reason, the Optionee shall have the right to exercise any vested
installments of this Option prior to the close of business on the four-year anniversary of the date
on which such installment vested. To the extent that the Optionee was not entitled to exercise the
Option at the date of termination, or to the extent any vested installment of this Option is not
exercised prior to the close of business on the four-year anniversary of the date on which such
installment vested, this Option shall terminate.

     6. Nontransferability of Option. This Option may not be sold, pledged, assigned,
hypothecated, gifted, transferred or disposed of in any manner, other than by will or by the laws
of descent or distribution. This Option may be exercised during the lifetime of the Optionee only
by the Optionee. Subject to the foregoing and the terms of the Plan, the terms of this Option
shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

     7. Continuation as a Director. This Option shall not confer upon the Optionee any right to
continue or be nominated as a director of the Company or any of its subsidiaries or limit in any
respect the right of the Company to remove the Optionee as a director of the Company at any time.

     8. Withholding. The Company reserves the right to withhold, in accordance with any applicable
laws, from any consideration payable to the Optionee any taxes required to be withheld by federal,
state or local law as a result of the grant or exercise of this Option or the sale or other
disposition of the Shares issued upon exercise of this Option. If the amount of any consideration

II-2

 

payable to the Optionee is insufficient to pay such taxes or if no consideration is payable to
the Optionee, upon the request of the Company, the Optionee shall pay to the Company an amount
sufficient for the Company to satisfy any federal, state or local tax withholding requirements it
may incur, as a result of the grant or exercise of this Option or the sale or other disposition of
the Shares issued upon the exercise of this Option.

     9. The Plan. This Option is subject to, and the Company and the Optionee agree to be bound by,
all of the terms and conditions of the Company’s Amended and Restated Non-Employee Director Stock
Option Plan as such Plan may be amended from time to time in accordance with the terms thereof,
provided that no such amendment shall deprive the Optionee, without his consent, of this Option or
any rights hereunder.

	 	 	 	 	 
	Date:                                                                       	Ixia, a California corporation

 	 
	 	By:  	 	 
	 	 	 	 
	 	Title:  	 	 
	 

II-3

 

     The Optionee acknowledges receipt of a copy of the Ixia Amended and Restated Non-Employee
Director Stock Option Plan, a copy of which is attached hereto, and represents that he or she has
read and is familiar with the terms and provisions thereof, and hereby accepts this Option subject
to all of the terms and provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board of Directors or its committee
upon any questions arising under the Plan.

	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 	 	 	 	   
	 	 	 	 	           Signature of Optionee
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	                    Address	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	City
	 	State
	 	Zip Code

II-4

 

Attachment III

Amended and Restated

Non-Employee Director Equity Incentive Plan

Restricted Stock Unit Award Agreement

Ixia (“Ixia” or the “Company”) hereby grants to you a Restricted Stock Unit Award
under the Ixia Amended and Restated Non-Employee Director Equity Incentive Plan (the
“Plan”), as set forth below. Capitalized terms defined in the Plan but not in this
Agreement shall have the meanings given to them herein.

	 	 	 
	Name:
	 	 
	 
	 	 
	Date of Grant:
	 	 
	 
	 	 
	Number of

Restricted Stock Units:
	 	 
	 
	 	 
	Nature of

Restricted Stock Units:

	 	
Each Restricted Stock Unit represents the right to
receive one share (“Share”) of Ixia Common Stock
to be issued and delivered at the end of the
applicable vesting period, subject to the risk of
cancellation as described herein and in the Plan.
	 
	 	 
	Vesting Schedule:

	 	The Restricted Stock Units will vest in
[eight/four] equal quarterly installments, with
the first installment vesting on [                     15,
200___] and the remaining installments vesting on
the 15th day of the second calendar month of each
of the [seven/three] calendar quarters thereafter,
as long as you remain a Non-Employee Director of
the Company through each such vesting dates.
	 
	 	 
	Forfeiture:

	 	If you cease to serve as a Non-Employee Director
for any reason, any Restricted Stock Units which
are not vested as of the date of such termination
shall not vest and shall automatically be
cancelled and forfeited for no value and without
any issuance of Shares.
	 
	 	 
	Taxes:

	 	Payment of the applicable taxes in connection with
the vesting of Restricted Stock Units shall be a
condition to the issuance and delivery of Shares
upon any vesting of the Restricted Stock Units
(see Restricted Stock Unit Terms and Conditions
attached hereto).

This Restricted Stock Unit Award Agreement consists of this page and the Restricted Stock Unit
Terms and Conditions attached hereto. By signing below, you accept the grant of this Restricted
Stock Unit Award and agree that this Restricted Stock Unit Award is subject in all respects to the
terms and conditions of the Plan and the related Prospectus containing information concerning the
Plan.

You further acknowledge and agree that (i) you have carefully reviewed this Restricted Stock Unit
Award Agreement (including the Restricted Stock Unit Terms and Conditions attached hereto) and the
Plan and (ii) this Restricted Stock Unit Award Agreement and the Plan set forth the entire
understanding between you and the Company regarding this Restricted Stock Unit Award and supersede
all prior or contemporaneous oral and written agreements with respect thereto.

IXIA

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	Print Name:

	 	 	 	Date
	
 
	 	 
	Title:
	 	 	 	 
	 
	 	 
	 
	 	 	 	 
	 	 	 
	                     Participant	 	Date

 

 

AMENDED AND RESTATED

IXIA NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN

Restricted Stock Unit Award Agreement — Restricted Stock Unit Terms and Conditions

The following Restricted Stock Unit Terms and Conditions apply to the Restricted Stock Unit Award
granted by Ixia (“Ixia” or the “Company”) to the Participant whose name appears on
the Restricted Stock Unit Award Agreement cover page to which these Restricted Stock Unit Terms and
Conditions are attached.

	1.	 	Amended and Restated 1997 Equity Incentive Plan. This Restricted Stock Unit Award is in all
respects subject to the terms, definitions and provisions of the Ixia Amended and Restated
Non-Employee Director Equity Incentive Plan (the “Plan”) adopted by the Company and
incorporated herein by reference. Capitalized terms defined in the Plan but not defined in
this Restricted Stock Unit Award Agreement shall have the meanings given to them in the Plan.
	 
	2.	 	Vesting of Restricted Stock Units Awards.

	 	(a)	 	Upon each vesting date for the Restricted Stock Unit Award (each, a
“Vesting Date”), one share of Ixia Common Stock shall be issuable for each
Restricted Stock Unit that vests on such date, subject to the terms and provision of
the Plan and this Restricted Stock Unit Award Agreement. Following vesting, the
Company will issue and transfer such Shares to the Participant as soon as
administratively feasible and following satisfaction of any required withholding tax
obligations as provided in Section 4 below.
	 
	 	(b)	 	To the extent the Restricted Stock Units vest and Shares are issued and
delivered to the Participant, such Shares will be free of the terms and conditions of
this Restricted Stock Unit Award Agreement.
	 
	 	(c)	 	No rights of a shareholder shall exist with respect to the Restricted Stock
Units as a result of the mere grant of the Restricted Stock Units. Such rights shall
exist only after issuance of the Shares following the applicable Vesting Date.

	3.	 	Delivery of Shares upon Vesting of Restricted Stock Units. Restricted Stock Units (if not
previously forfeited) will automatically be settled on or about the Vesting Date or Vesting
Dates set forth on the cover page of this Restricted Stock Unit Award Agreement. The Company
may make delivery of Shares upon vesting of Restricted Stock Units either by (i) delivering
one or more stock certificates representing such Shares to the Participant, registered in the
name of the Participant, or (ii) if administratively feasible for the Company at such time,
electronically depositing such Shares into a securities account maintained for the
Participant. All certificates for Shares and all Shares shall be subject to such stop
transfer orders and other restrictions as the Company may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission, any stock
exchange or quotation system upon which the Shares are then listed or quoted, and any
applicable Federal or state securities law, and the Company may cause a legend or legends to
be put on any such certificates to make appropriate reference to such restrictions.

	4.	 	Taxes. The Participant is responsible for any federal, state, local or other income,
employment or other applicable taxes required to be withheld under Federal, state, local or
other law in connection with: (i) the vesting of the Restricted Stock Unit Award and the
issuance and delivery of Shares to the Participant, or (iii) any other event occurring
pursuant to this Restricted Stock Award Agreement or the Plan (collectively, “Taxes”).
The Participant acknowledges that in connection with the issuance of Shares upon the vesting
of Restricted Stock Units, the Company may be required to withhold

III-1

 

	 	 	from the Participant an amount that is sufficient to satisfy the Company’s tax withholding
obligations. Notwithstanding any contrary provision of this Restricted Stock Unit Award
Agreement or the Plan, no Shares will be issued to the Participant (or his or her estate, if
applicable) upon vesting of Restricted Stock Units unless and until satisfactory
arrangements (as determined by the Committee) have been made by the Participant with respect
to the withholding and payment of any applicable Taxes which the Company determines must be
withheld with respect to such Shares. The Committee, in its sole discretion and pursuant to
such procedures as it may specify from time to time, may (but is not required to) permit the
Participant to satisfy any such Tax withholding obligations in any of the following ways:

	 	(a)	 	Payment in Cash. The Participant may elect to pay to the Company an amount
sufficient to cover such Taxes by making a cash payment to the Company.

	 	(b)	 	Payment by Sale of Shares. The Participant may also elect to satisfy his or
her obligations for the payment of such Taxes by arranging for the sale, upon vesting
of Restricted Stock Units, of that number of whole Shares which are otherwise
deliverable upon vesting and for which sales proceeds are sufficient to satisfy the
amount of the Taxes required to be withheld.

	 	(c)	 	Company Rights. Any elections permitted to be made pursuant to this Section 4
shall be made in writing or via electronic transmission on such form as shall be
prescribed by the Company for such purpose. The Company also reserves the right to
withhold Taxes, in accordance with any applicable law, (i) from any compensation or
other amounts payable to the Participant and/or (ii) except where the Participant is
paying taxes in the manner described in Section 4(a) above, from the Shares otherwise
issuable to the Participant upon the vesting of Restricted Stock Units. The
Participant further agrees that if he or she at any time fails to make satisfactory
arrangements for the payment of Taxes upon the vesting of Restricted Stock Units, then
in addition to the Company options specified in the immediately preceding sentence, the
Participant may be deemed to have elected to sell vested Shares to cover the payment of
applicable Taxes. In the event that the Company elects to satisfy the Participant’s
obligations for the payment of Taxes by retaining Shares which would otherwise be
deliverable in connection with the Restricted Stock Unit Award upon vesting, the
Company shall retain that number of whole Shares which have a Fair Market Value
sufficient to satisfy the amount of the Taxes required to be withheld. “Fair Market
Value” for this purpose shall be as determined in the Plan as of the last trading day
before the applicable Vesting Date.

	5.	 	Termination of Status as Non-Employee Director. If the Participant ceases to serve as an
Employee for any reason and thereby terminates his or her status as a Non-Employee Director,
the Participant’s Restricted Stock Units which are not vested as of the date of such
termination shall not vest and shall automatically be cancelled and forfeited for no value and
without any issuance of Shares.

	6.	 	Nontransferability of Restricted Stock Units. This Restricted Stock Unit Award may not be
sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in any manner either
voluntarily or involuntarily by operation of law, other than transfers between spouses
incident to a divorce. Subject to the foregoing and the terms of the Plan, the terms of this
Restricted Stock Unit Award shall be binding upon the executors, administrators, heirs,
successors and assigns of the Participant. The Shares issued upon vesting of the Restricted
Stock Unit Award will not be subject to restrictions on transfer under this Section 6.

III-2

 

	7.	 	No Dividend Equivalents. The Participant shall not be entitled to receive, currently or on a
deferred basis, any payments (i.e., “dividend equivalents”) equivalent to cash, stock or other
property paid by the Company as dividends on the Company’s Common Stock prior to the vesting
of the Restricted Stock Units.

	8.	 	No Right of Continued Service. Neither the Plan nor this Restricted Stock Unit Award shall
confer upon the Participant any right to continue in the service of the Company as a
Non-Employee Director.

	9.	 	Miscellaneous.

	 	(a)	 	Successors and Assigns. This Restricted Stock Unit Award Agreement shall bind
and inure only to the benefit of the parties to this Restricted Stock Unit Award
Agreement (the “Parties”) and their respective permitted successors and
assigns.
	 
	 	(b)	 	No Third-Party Beneficiaries. Nothing in this Restricted Stock Unit Award
Agreement is intended to confer any rights or remedies on any persons other than the
Parties and their respective permitted successors or assigns. Nothing in this
Restricted Stock Unit Award Agreement is intended to relieve or discharge the
obligation or liability of third persons to any Party. No provision of this Restricted
Stock Unit Award Agreement shall give any third person any right of subrogation or
action over or against any Party.
	 
	 	(c)	 	Amendments.

	 	(i)	 	The Committee reserves the right to amend the terms and
provisions of this Restricted Stock Unit Award without the Participant’s
consent to comply with any Federal or state securities law.
	 
	 	(ii)	 	Except as specifically provided in subsection (i) above, this
Restricted Stock Unit Award Agreement shall not be changed or modified, in
whole or in part, except by supplemental agreement signed by the Parties.
Either Party may waive compliance by the other Party with any of the covenants
or conditions of this Restricted Stock Unit Award Agreement, but no waiver
shall be binding unless executed in writing by the Party making the waiver. No
waiver or any provision of this Restricted Stock Unit Award Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. Any consent
under this Restricted Stock Unit Award Agreement shall be in writing and shall
be effective only to the extent specifically set forth in such writing.

	 	(d)	 	Governing Law. To the extent that Federal laws do not otherwise control, the
Plan and all determinations made or actions taken pursuant hereto shall be governed by
the laws of the state of California, without regard to the conflict of laws rules
thereof.
	 
	 	(e)	 	Severability. If any provision of this Restricted Stock Unit Award Agreement
or the application of such provision to any person or circumstances is held invalid or
unenforceable, the remainder of this Restricted Stock Unit Award Agreement, or the
application of such provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby.

*     *     *     *

III-3exv10w1

 

EXHIBIT 10.1

EIGHTH AMENDMENT TO THE

KAYDON CORPORATION

EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN

     This Amendment, made this 5th day of June, 2007, by Kaydon
Corporation (“Employer”).

W
I T N E S S E
T H :

          WHEREAS, the Employer amended and restated the Kaydon Corporation Employee Stock
Ownership and Thrift Plan (“Plan”) on February 19, 2002, effective January 1, 1997, and has since
amended the Plan by the instruments dated March 21, 2003, August 11, 2003, December 13, 2003,
August 3, 2004, November 1, 2004, December 21, 2005, and December 21, 2006; and

          WHEREAS, the Employer inadvertently permitted the early inclusion of employees in the Plan by
allowing employees at one location to enter the Plan prior to their completion of one thousand
hours of service; and

          WHEREAS, the Employer may have also inadvertently permitted the early inclusion of employees
in the Plan by accepting rollover contributions by employees prior to the entry date for those
employees into the Plan; and

          WHEREAS, in accordance with Section 4.05(2) of Revenue Procedure 2006-27, the Employer wishes
to amend the Plan to provide for special eligibility rules that permit the early inclusion of
otherwise eligible employees in the Plan retroactively to the date of early inclusion; and

          WHEREAS, Section 10.1 empowers the Employer to amend the Plan;

          NOW, THEREFORE, the Employer amends the Plan as follows:

     1. The following sentence is added to Section 3.1:

     The 1,000 Hours of Service requirement does not apply to William Foy or John Facey II, who
became eligible to participate in the Plan following six months of service at Kaydon Custom
Filtration Corporation.

     2. Section 3.2(b) is amended to add the following subsection (v):

          (viii) Custom
Filtration. William Foy, an Employee at Kaydon Custom Filtration
Corporation, became an Active Participant in this Plan on October 1, 2006.

 

 

John Facey II, an Employee at Kaydon Custom Filtration Corporation, became an Active Participant in
this Plan on July 1, 2006.

     3. The following sentence is added to Section 5.1(b):

     Contributions which consist of an amount that is either a rollover or a direct transfer from
another qualified retirement plan will also be accepted by the Plan if those contributions are
made on behalf of an Employee who is not currently an Active Participant. If assets are rolled
over or transferred to this Plan by an Employee who has not satisfied the eligibility
requirements of Section 3.1, that Employee’s rollover or transfer account shall represent the
Employee’s sole interest in this Plan until the Employee becomes an Active Participant.

          Except as herein amended, the Employer ratifies the plan and trust.

          IN WITNESS WHEREOF, the Employer has caused this instrument to be executed by a proper officer
the day and year first above written.

	 	 	 	 	 
	 	 	KAYDON CORPORATION
	 
	 	 	 	 
	 

	 	By
	 	/s/ James O’Leary
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Its President and Chief Executive Officer
	 
	 	 	 	 
	 

	 	By
	 	/s/ John F. Brocci
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Its Vice President Administration & Secretary

-2-

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