Document:

Resignation Agreement between J. Curt Hockemeier and Arbinet-thexchange, Inc

 EXHIBIT 10.1 
 Arbinet-thexchange, Inc. 
 Tower II, Suite 450 
 120 Albany Street 
 New Brunswick, New
Jersey 08901 
 June 11, 2007 
 Mr. J. Curt
Hockemeier 
 8 Coldstream Court 
 Skillman, NJ 08558 

Re: Resignation Agreement 
 Dear Curt: 
 You have indicated your intention to resign from employment with Arbinet-thexchange, Inc. (the “Company”). This letter (the “Agreement”) sets forth
the agreement that we have reached regarding your resignation from employment. 
 The Agreement is intended to establish an arrangement for ending your
employment in a mutually agreeable manner, including by permitting you to resign and receive severance pay and related benefits consistent with the severance pay and benefits you would have received pursuant to the terms of the March 29, 2000
employment letter (“Employment Letter”) if you had been terminated from employment without cause. Absent this Agreement, you acknowledge that you would not be entitled to any severance, benefits or equity enhancements upon resignation from
employment. 
 Regardless of whether you enter into this Agreement you are obligated, among other things, to comply with the provisions set forth in the
Employee Inventions and Confidentiality Agreement agreed to by you and the Company (the “Confidentiality Agreement”) and the Stock Option Agreement dated May 31, 2002, Stock Option Agreement dated August 19, 2002, Stock Option
Agreement dated February 28, 2003, Restricted Stock Award Agreement dated June 30, 2003, Stock Option Agreement dated January 8, 2004, Incentive Stock Option Agreement dated February 23, 2005, Incentive Stock Option Agreement
dated February 23, 2005, Restricted Stock Unit Agreement dated August 25, 2005, Nonstatutory Stock Option Agreement dated November 16, 2006, and Performance Share Award Agreement dated November 16, 2006 you entered into with the
Company (collectively, the “Equity Agreements”). 
 The Company shall provide you with the right to continue group medical and dental insurance
coverage after the Resignation Date under the law known as COBRA. The terms for the opportunity will be set forth in separate correspondence. Your eligibility to participate in any other employee benefit plan and programs of the Company shall cease
on or after the Resignation Date (as defined below) in accordance with the applicable benefit plan or program terms. 

 The remainder of this letter is an agreement between you and the Company. In exchange for the promises and
representations set forth below, you and Company agree as follows: 
  

	1.	Resignation from Employment 

 This confirms that you are hereby
resigning from employment with the Company effective June 11, 2007 (the “Resignation Date”). On or before the Company’s first payroll date following the Resignation Date, the Company shall pay you all salary through the
Resignation Date plus all pay for all accrued but unused vacation. 
  

	2.	Notice Period 

 For the sixty (60) day period immediately
following the Resignation Date (“Notice Period”), you will continue to vest in equity awards previously granted to you as if you continued to be employed during the Notice Period. 
  

	3.	Severance Pay 

 The Company shall pay you severance pay in the form
of one time a lump sum payment of Five Hundred Twenty Four Thousand Six Hundred Thirty Nine Dollars and Seventy Two Cents ($524,639.72), which is comprised of: 
  

				
	 •   14 months base salary (12 months of severance plus 60 days notice pay)
	  	$	490,000
	 •   Reimbursement for COBRA payments for a period of one year following the end of the Notice Period plus an amount equal
to potential employer contributions to Arbinet’s retirement plan for one year, which amount cannot exceed $25,000
	  	$	25,000
	 •   Amount equivalent to the employer portion of COBRA payments, accrued vacation and potential employer contributions to
the Company’s retirement plan during Notice Period
	  	$	9,639.72

 The Company will make this lump sum payment to you within 48 hours after this Agreement becomes effective.

  

	4.	Equity Awards. 

 (a) Stock Options. All stock
options that you held to purchase shares of the Company’s common stock pursuant to the Company’s Amended and Restated 1997 Stock Incentive Plan (the “1997 Plan”) or the Company’s 2004 Stock Incentive Plan, as amended (the
“2004 Plan” and together with the 1997 Plan, the “Stock Option Plans”), as applicable, that were not vested as of your Resignation Date (“Unvested Option Shares”) lapsed on the Resignation Date and are not exercisable.
However, in consideration for you entering into this Agreement and provided that you abide by the terms herein, the Company shall allow you to vest 52,930 of the 

 
Unvested Option Shares as of the Resignation Date (“Additional Options”). You will have a right to exercise your vested stock options (including
the Additional Options) within six (6) months of the Resignation Date by following the procedures in the applicable Equity Agreements and the Stock Option Plans. You acknowledge and agree that any and all rights or remedies you have, had, may
have or may have had with respect to the remaining 46,875 Unvested Option Shares are terminated as of the Resignation Date. 
 The post-employment exercise
of any stock options shall be subject to the terms of the Equity Agreements and the Stock Option Plans. 
 You acknowledge that the following is an accurate
summary of all of your stock options in the Company as of the Resignation Date: 
  

														
	 Grant Date
	  	 Stock Option Plan
	  	 Total Number
 of Option
 Shares
 Outstanding
	  	 Vested Option
 Shares
	 	 	Unvested Option
Shares	 	 	Exercise Price
	 May 31, 2002
	  	1997 Plan	  	912	  	912	 	 	0	 	 	$	0.16
	 August 19, 2002
	  	1997 Plan	  	20,221	  	20,221	 	 	0	 	 	$	0.16
	 February 28, 2003
	  	1997 Plan	  	5,730	  	5,730	 	 	0	 	 	$	0.16
	 January 8, 2004
	  	1997 Plan	  	23,437	  	23,437	(1)	 	0	 	 	$	8.32
	 February 23, 2005
	  	2004 Plan	  	150,000	  	150,000	 	 	0	 	 	$	25.15
	 February 23, 2005
	  	2004 Plan	  	50,000	  	50,000	 	 	0	 	 	$	25.15
	 November 16, 2006
	  	2004 Plan	  	150,000	  	103,125	(2)	 	46,875	(2)	 	$	5.51

	(1)	This number includes the 2,930 Additional Options you received pursuant to the terms of this Agreement. 

	(2)	This number includes the 50,000 Additional Options you received pursuant to the terms of this Agreement. 

 (b) Restricted Stock. All shares of restricted stock that you held pursuant to the 1997 Plan that were not vested as of your Resignation Date
(“Unvested Restricted Stock”) lapsed on the Resignation Date and are not exercisable. However, in consideration for you entering into this Agreement and provided that you abide by the terms herein, the Company shall allow you to
vest all of the Unvested Restricted Stock as of the Resignation Date (“Additional Restricted Stock”). 

 You acknowledge that the following is an accurate summary of all of your restricted stock in the Company as of the
Resignation Date: 
  

										
	 Grant Date
	  	 Stock Option Plan
	  	Total Number of
Shares of Restricted
Stock Outstanding	  	Vested Restricted
Stock	 	 	Unvested Restricted
Stock
	 June 30, 2003
	  	1997 Plan	  	93,749	  	93,749	(1)	 	0

	(1)	The Company shall accelerate vesting with respect to all of the Unvested Restricted Stock. 

 (c) Restricted Stock Units. All restricted stock units that you held to receive shares of the Company’s common stock pursuant to the 2004
Plan that were not vested as of your Resignation Date (“Unvested Restricted Stock Units”) lapsed on the Resignation Date and are not exercisable. However, in consideration for you entering into this Agreement and provided that you
abide by the terms herein, the Company shall allow you to vest 22,224 of the Unvested Restricted Stock Units as of the Resignation Date (“Additional Units”). You acknowledge and agree that any and all rights or remedies you have, had, may
have or may have had with respect to the remaining 22,224 Unvested Restricted Stock Units are terminated as of the Resignation Date. 
 You acknowledge that
the following is an accurate summary of all of your restricted stock units in the Company as of the Resignation Date: 
  

										
	 Grant Date
	  	 Stock Option Plan
	  	Total Number of
Restricted Stock
Units Outstanding	  	Vested Restricted
Stock Units	 	 	Unvested Restricted
Stock Units
	 August 25, 2005
	  	2004 Plan	  	66,670	  	44,446	(1)	 	22,224

	(1)	This number includes the 22,224 Additional Units you received pursuant to the terms of this Agreement. 

 (d) Performance Shares. You acknowledge and agree that, as of the Resignation Date, all performance shares that you held to receive shares of the
Company’s common stock pursuant to the 2004 Plan lapsed on the Resignation Date and are not exercisable (the “Forfeited Performance Shares”). You acknowledge and agree that any and all rights or remedies you have, had, may have or may
have had with respect to the Forfeited Performance Shares are terminated as of the Resignation Date. 
  

	5.	Tax Treatment 

 The Company shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this Agreement to the extent that it reasonably and in good faith determines that it is required to make such deductions, withholdings and 

 
tax reports. Payments under this Agreement shall be in amounts net of any such deductions or withholdings. Nothing in this Agreement shall be construed to
require the Company to make any payments to compensate you for any adverse tax effect associated with any payments or benefits or for any deduction or withholding from any payment or benefit. 
  

	6.	Confidentiality Agreement 

 You acknowledge and agree that the
Confidentiality Agreement you entered into with the Company shall remain in full force and effect and is hereby incorporated by reference. 
  

	7.	Non Competition and Non Solicitation 

 (a) You agree
for one year following the Resignation Date (the “Restricted Period”), you will not enter into Competition with the Company. “Competition” shall mean participating, directly or indirectly, as an individual proprietor, partner,
stockholder, officer, employee, director, joint venturer, investor, lender, consultant or in any capacity whatsoever in a business in competition with any business conducted by the Company or its affiliates (a “Competitor”) in any
jurisdiction where the Company and/or its affiliates conduct as of the Resignation Date such business, which shall be deemed to include, without limitation, any business activity or jurisdiction which is covered by or included in a written proposal
or business plan existing on the Resignation Date; provided, however, that such participation shall not include (i) the mere ownership of not more than one percent (1%) of the total outstanding stock of a publicly-held company,
(ii) the performance of services for any enterprise to the extent such services are not performed, directly or indirectly, for a business unit of the enterprise in the aforesaid Competition; or (iii) any activity engaged in with the prior
written approval of the Board of Directors. The Company acknowledges that you serving on the board of directors, advising or being an employee of Cedar Point Communications and/or Core180, Inc. are approved. 
 (b) You agree that, during the Restricted Period, you will not, directly or indirectly (i) solicit, recruit or hire any non-administrative or
non-clerical employee of the Company for the purpose of being employed by you or by any Competitor of the Company on whose behalf you are acting as an agent, representative or employee and that you will not convey any confidential information or
trade secrets about other employees of the Company to any other person or (ii) influence or attempt to influence customers or suppliers of the Company or its affiliates to direct their business to any Competitor of the Company. 
 (c) You acknowledge that the restrictive covenants contained herein are reasonable and necessary for the protection of the business of the Company and
its affiliates and that part of the compensation to be paid under this Agreement is in consideration for these restrictive covenant provisions. If any restriction set forth with regard to competition or solicitation of employees or customers is
found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or over too broad a geographic area, it shall be interpreted to extend over a maximum period of
time, range of activities or geographic area as to which it may be enforceable. You further acknowledge and consent that the Company would, by reason of such competition or solicitation of employees or customers, be entitled, in addition to all
other remedies, to injunctive relief in a court of appropriate jurisdiction prohibiting you from competing with the Company or its affiliates and/or from engaging in solicitation in violation of this Agreement. 

	8.	Mutual Releases of Claims 

 (a) By offering you the
opportunity to enter into this Agreement, the Company is not admitting that it violated any legal or other obligation to you. 
 In consideration for, among
other terms, permitting you to receive the above-described severance pay, benefits and equity enhancements to which you acknowledge you otherwise would not be entitled after resigning from employment, you voluntarily release and forever discharge
the Company, its affiliated and related entities, its and their respective predecessors, successors and assigns, its and their respective employee benefit plans and fiduciaries of such plans, and the current and former trustees, officers, employees,
attorneys, accountants and agents of each of the foregoing in their official and personal capacities (collectively referred to as the “Releasees”) generally from any and all claims, demands, debts, damages and liabilities of every name and
nature, known or unknown (“Claims”) that, as of the date when you sign this Agreement, you have, ever had, now claim to have or ever claimed to have had against any or all of the Releasees. This release includes, without limitation, all
Claims: 
  

	•	 	 relating to your employment by and termination of employment with the Company; 

  

	•	 	 of wrongful discharge; 

  

	•	 	 of breach of contract; 

  

	•	 	 of retaliation or discrimination under federal, state or local law; 

  

	•	 	 of defamation or other torts; 

  

	•	 	 of violation of public policy; 

  

	•	 	 for wages, bonuses, incentive compensation, vacation pay or any other compensation or benefits; and 

  

	•	 	 for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorneys’ fees;

 provided, however, that this release shall not affect your vested rights under the Company’s Section 401(k) plan or
your rights under this Agreement or any rights that you may have to indemnification under the Company’s current Amended and Restated Certificate of Incorporation and Second Amended and Restated By-laws and applicable director and officer
insurance policy. 
 You agree that you shall not seek or accept damages of any nature, other equitable or legal remedies for your own benefit,
attorney’s fees, or costs from any of the Releasees with respect to any Claim. As a material inducement to the Company to enter into this Agreement, you represent that you have not assigned to any third party and you have not filed with any
agency or court any Claim released by this Agreement. 
 (b) In consideration for, among other terms, your release of Claims pursuant to this
Section 8, the Company voluntarily releases and forever discharges you generally from all claims that, as of the date when the Company signs this Agreement, the Company has, ever had, now claims to have or ever claimed to have had against you,
including, without limitation, all Claims relating to your 

 
employment by the Company; provided, however, that this release shall not preclude any Claims arising out of any criminal or fraudulent conduct
on your part (the Company is currently unaware of any basis for any such Claims). 
  

	9.	Future Cooperation 

 You agree to cooperate reasonably with the
Company (including its outside counsel) in connection with the contemplation, prosecution and defense of all phases of existing, past and future litigation, regulatory or administrative actions about which the Company believes you may have knowledge
or information. You further agree to make yourself reasonably available at mutually convenient times as reasonably deemed necessary by the Company’s counsel. The Company shall not utilize this Section 9 to require you to make yourself
available to an extent that would unreasonably interfere with employment responsibilities that you may have. You agree to appear without the necessity of a subpoena to testify truthfully in any legal proceedings in which the Company calls you as a
witness. The Company shall reimburse you for any reasonable business travel expenses that you incur on the Company’s behalf as a result of your cooperation services after receipt of appropriate documentation. 
  

	10.	Press Release 

 On the Resignation Date, the Company shall issue a
mutually-agreed upon press release in which it shall state that you resigned from your employment effective June 11, 2007. 
  

	11.	Legally Binding 

 This Agreement is a legally binding document and
your signature will commit you to its terms. You acknowledge that you have been advised to discuss all aspects of this Agreement with your attorney, that you have carefully read and fully understand all of the provisions of this Agreement, and that
you are voluntarily entering into this Agreement. 
  

	12.	Absence of Reliance 

 In signing this Agreement, you are not relying
upon any promises or representations made by anyone at or on behalf of the Company. 
  

	13.	Enforcement 

 (a) Jurisdiction. You and the Company hereby agree
that the state and federal courts of New York shall have the exclusive jurisdiction to consider any matters related to this Agreement, including without limitation any claim for violation of this Agreement. With respect to any such court action, you
(i) submit to the jurisdiction of such courts, (ii) consent to service of process, and (iii) waive any other requirement (whether imposed by statute, rule of court or otherwise) with respect to personal jurisdiction or venue.

 (b) Relief. You agree that it would be difficult to measure any harm caused to the Company that might result from any breach by you of your
promises set forth in Sections 6, 7, or 8 and that in any event money damages would be an inadequate remedy for any such 

 
breach. Accordingly, you agree that if you breach, or propose to breach, any portion of your obligations under Sections 6, 7, or 8 the Company shall be
entitled, in addition to all other remedies it may have, to an injunction or other appropriate equitable relief to restrain any such breach, without showing or proving any actual damage to the Company and without the necessity of posting a bond. In
addition, in the event that you breach any portion of Section 7(a) or Section 7(b), you agree that the restrictions of Section 7(a) or Section 7(b), as applicable, shall remain in effect for the period of such breach
notwithstanding the period of one (1) year set forth above and you further agree that the same restrictions shall apply for a period of one (1) year commencing effective upon the cessation of any such breach. 
  

	14.	Enforceability 

 If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of
such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law. 
  

	15.	Waiver 

 No waiver of any provision of this Agreement shall be
effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. 
  

	16.	Governing Law; Interpretation 

 This Agreement shall be interpreted
and enforced under the laws of New York, without regard to conflict of law principles. In the event of any dispute, this Agreement is intended by the parties to be construed as a whole, to be interpreted in accordance with its fair meaning, and not
to be construed strictly for or against either you or the Company or the “drafter” of all or any portion of this Agreement. 
  

	17.	Entire Agreement 

 This Agreement along with the Confidentiality
Agreement and the Equity Agreements as modified by Section 5 herein, constitute the entire agreement between you and the Company relating to the subject matter herein. This Agreement supersedes any previous agreements or understandings between
you and the Company, including, without limitation, the Employment Letter. 

	18.	Time for Consideration 

 To accept this Agreement, you must return a
signed original of this Agreement so that it is received by the undersigned at or before 7:00 a.m. on Monday, June 11, 2007. This Agreement shall become effective upon execution. 
  

	19.	Counterparts 

 This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be an original, but all of which together shall constitute one and the same document. 
 Please indicate your agreement to the terms of this Agreement by signing and returning to me the original of this letter within the time period set forth above. 
 Very truly yours, 
  

							
	ARBINET-THEXCHANGE, INC.	 	 	 	 
				
	 By:
	 	 /s/ Robert C. Atkinson
	 		 	June 11, 2007
		 	Robert C. Atkinson	 		 	Date
		 	Chairman of the Board of Directors	 		 	
			
	The foregoing is agreed to and accepted by:	 	 	 	 
			
	 /s/ J. Curt Hockemeier
	 		 	June 11, 2007
	J. Curt Hockemeier	 		 	DateOmnibus Incentive Plan

 EXHIBIT 10.1 
 DISCOVER FINANCIAL SERVICES 
 OMNIBUS INCENTIVE PLAN 
 1. Purpose. The primary purposes of the Discover Financial Services Omnibus Incentive Plan are to attract, retain and motivate employees, to
compensate them for their contributions to the growth and profits of the Company and to encourage them to own Discover Financial Services Stock. 
 2. Definitions. Except as otherwise provided in an applicable Award Document, the following capitalized terms shall have the meanings indicated below for purposes of the Plan and any Award: 
 “Administrator” means the individual or individuals to whom the Committee delegates authority under the Plan in accordance with
Section 5(b). 
 “Award” means any award of Restricted Stock, Restricted Stock Units, Options, SARs or Other
Awards (or any combination thereof) made under and pursuant to the terms of the Plan. 
 “Award Date” means the date
specified in a Participant’s Award Document as the grant date of the Award. 
 “Award Document” means a written
document (including in electronic form) that sets forth the terms and conditions of an Award. Award Documents shall be authorized in accordance with Section 12(e). 
 “Board” means the Board of Directors of Discover. 
 “Code”
means the Internal Revenue Code of 1986, as amended, and the applicable rulings, regulations and guidance thereunder. 
 “Committee” means the Compensation Committee of the Board, any successor committee thereto or any other committee of the Board appointed by the Board to administer the Plan or to have authority with respect to the
Plan, or any subcommittee appointed by such Committee. 
 “Company” means Discover Financial Services and all of its
Subsidiaries. 
 “Discover” means Discover Financial Services, a Delaware corporation. 
 “Eligible Individuals” means the individuals described in Section 6 who are eligible for Awards. 
 “Fair Market Value” means, with respect to a Share, the fair market value thereof as of the relevant date of determination, as
determined in accordance with a valuation methodology approved by the Committee. 
 “Incentive Stock Option” means an
Option that is intended to qualify for special federal income tax treatment pursuant to sections 421 and 422 of the Code, as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is so designated in the
applicable Award Document. 
  

 1 

 “Option” or “Stock Option” means a right, granted to a
Participant pursuant to Section 9, to purchase one Share. 
 “Other Award” means any other form of award
authorized under Section 11 of the Plan, including any such Other Award the receipt of which was elected pursuant to Section 12(a). 
 “Participant” means an individual to whom an Award has been made. 
 “Performance
Period” shall mean any period designated by the Committee, including any partial year, annual or multi-year period as determined by the Committee in its discretion, during which (i) the Section 162(m) Performance Goals
applicable to an Award shall be measured and (ii) the conditions to vesting applicable to an Award shall remain in effect. 
 “Plan” means the Discover Financial Services Omnibus Incentive Plan, as amended from time to time in accordance with Section 16(e) below. 
 “Replacement Awards” shall mean an Option or Restricted Stock Units granted in connection with the spin-off of the Company
pursuant to the Employee Matters Agreement entered into by the Company and Morgan Stanley dated as of June 30, 2007. 
 “Restricted Stock” means Shares granted or sold to a Participant pursuant to Section 7. 
 “Restricted Stock Unit” means a right, granted to a Participant pursuant to Section 8, to receive one Share or an amount in cash equal to the Fair Market Value of one Share, as authorized by the Committee.

 “SAR” means a right, granted to a Participant pursuant to Section 10, to receive upon exercise of such right,
in cash or Shares (or a combination thereof) as authorized by the Committee, an amount equal to the increase in the Fair Market Value of one Share over a specified exercise price. 
 “Section 162(m) Participant” means, for a given fiscal year of Discover, any Participant designated by the Committee as a
Participant whose compensation may be subject to the limit on deductible compensation imposed by section 162(m) of the Code (or any successor provisions thereto). 
 “Section 162(m) Performance Goals” means any one or more of the following measures, each of which may be based on absolute standards or peer industry group comparatives and may be applied at
various organizational levels (e.g., corporate, business unit, division): the attainment by a Share of a specified value within or for a specified period of time, earnings per share, earnings before interest expense and taxes, return to stockholders
(including dividends), return on equity, earnings, revenues, cash flow or cost reduction goals, operating profit, pretax return on total capital, economic value added, or any combination of the foregoing. The measures may pertain to Performance
Periods of any duration, and may be weighted differently for Participants based on their management level and the extent to which their responsibilities are 

  

 2 

 
primarily corporate or business unit-related, and may be based in whole or in part on the performance of the Company, a Subsidiary, division and/or other
operational unit under one or more of such measures. In the sole discretion of the Committee, but subject to section 162(m) of the Code, the Committee may amend or adjust the Section 162(m) Performance Goals or other terms and conditions of an
outstanding Award in recognition of unusual or nonrecurring events affecting the Company or its financial statements or changes in law or accounting principles. 
 “Section 409A” means section 409A of the Code (or any successor provisions thereto). 
 “Shares” means shares of Stock. 
 “Stock” means the common stock, par value $0.01
per share, of Discover Financial Services. 
 “Subsidiary” means (i) a corporation or other entity with respect
to which Discover, directly or indirectly, has the power, whether through the ownership of voting securities, by contract or otherwise, to elect at least a majority of the members of such corporation’s board of directors or analogous governing
body, or (ii) any other corporation or other entity in which Discover, directly or indirectly, has an equity or similar interest and which the Committee designates as a Subsidiary for purposes of the Plan. 
 “Substitute Awards” means Awards granted upon assumption of, or in substitution for, outstanding awards previously granted by a
company or other entity acquired (directly or indirectly) by Discover or with which Discover combines. 
 3. Effective Date and Term of
Plan. 
  

	 	(a)	Effective Date. The Plan shall become effective upon its adoption by the Board, subject to approval by the stockholder(s) of Discover prior to the date the Company Shares are
distributed to public shareholders. Prior to such stockholder approval, the Committee may grant Awards conditioned on stockholder approval, but no Shares may be issued or delivered pursuant to any such Award until the stockholder(s) of Discover have
approved the Plan. The Plan shall be submitted to public shareholders in accordance with the provisions of section 162(m) of the Code. If such approval of the public shareholders is not obtained in accordance with the provisions of section 162(m) of
the Code, the Plan shall thereupon terminate and no further grants or payments may be made hereunder. 

  

	 	(b)	Term of Plan. No Awards may be made under the Plan after the date that is 5 years from the date of shareholder approval. 

 4. Stock Subject to Plan. 
  

	 	(a)	Overall Plan Limit. The total number of Shares that may be delivered pursuant to Awards shall be 45,000,000 as calculated pursuant to Section 4(c). The number of Shares
available for delivery under the Plan shall be adjusted as provided in Section 4(b). Shares delivered under the Plan may be authorized but unissued shares or treasury shares that Discover acquires in the open market, in private transactions or
otherwise. 

  

 3 

	 	(b)	Adjustments for Certain Transactions. In the event of a stock split, reverse stock split, stock dividend, recapitalization, reorganization, merger, consolidation,
extraordinary dividend or distribution, split-up, spin-off, combination, reclassification or exchange of shares, warrants or rights offering to purchase Stock at a price substantially below Fair Market Value or other change in corporate structure or
any other event that affects Discover’s capitalization, the Committee shall equitably adjust (i) the number and kind of shares authorized for delivery under the Plan, including the maximum number of Shares available for stock-based Awards
as provided in Section 4(d), the maximum number of Incentive Stock Options as provided in Section 4(e), and (ii) the number and kind of shares subject to any outstanding Award and the exercise or purchase price per share, if any,
under any outstanding Award. In the discretion of the Committee, such an adjustment may take the form of a cash payment to a Participant. The Committee shall make all such adjustments, and its determination as to what adjustments shall be made, and
the extent thereof, shall be final. Unless the Committee determines otherwise, such adjusted Awards shall be subject to the same vesting schedule and restrictions to which the underlying Award is subject. 

  

	 	(c)	Calculation of Shares Available for Delivery. In calculating the number of Shares that remain available for delivery pursuant to Awards at any time, the following rules shall
apply (subject to the limitation in Section 4(e)): 

  

	 	1.	The number of Shares available for delivery shall be reduced by the number of Shares subject to an Award and, in the case of an Award that is not denominated in Shares, the number
of Shares actually delivered upon payment or settlement of the Award. 

  

	 	2.	The number of Shares tendered (by actual delivery or attestation) or withheld from an Award to pay the exercise price of the Award or to satisfy any tax withholding obligation or
liability of a Participant shall be added back to the number of Shares available for delivery pursuant to Awards. 

  

	 	3.	The number of Shares in respect of any portion of an Award that is canceled or that expires without having been paid or settled by the Company shall be added back to the number of
Shares available for delivery pursuant to Awards to the extent such Shares were counted against the Shares available for delivery pursuant to clause (1). 

  

	 	4.	 If an Award is settled or paid by the Company in whole or in part through the delivery of consideration other than Shares, or by delivery of fewer than the full
number of Shares that was counted against the 

  

 4 

	 	 
Shares available for delivery pursuant to clause (1), there shall be added back to the number of Shares available for delivery pursuant to Awards the excess
of the number of Shares that had been so counted over the number of Shares (if any) actually delivered upon payment or settlement of the Award. 

  

	 	(d)	Individual Limits on Stock-Based Awards. The maximum number of Shares that may be subject to Options or SARs granted to or elected by a Participant in any fiscal year shall
be 2,000,000 Shares. The limitation imposed by this Section 4(d) shall not include Options or SARs granted to a Participant pursuant to section 162(m) Performance Goals. The maximum number of Shares that may be subject to Restricted Stock or
Restricted Stock Units granted to or elected by a Participant in any fiscal year shall be 1,000,000 Shares. 

  

	 	(e)	ISO Limit. The full number of Shares available for delivery under the Plan may be delivered pursuant to Incentive Stock Options, except that in calculating the number of
Shares that remain available for Awards of Incentive Stock Options, the rules set forth in Section 4(c) shall not apply to the extent not permitted by section 422 of the Code. 

 5. Administration. 
  

	 	(a)	Committee Authority Generally. The Committee shall administer the Plan and shall have full power and authority to make all determinations under the Plan, subject to the
express provisions hereof, including without limitation: (i) to select Participants from among the Eligible Individuals; (ii) to make Awards; (iii) to determine the number of Shares subject to each Award or the cash amount payable in
connection with an Award; (iv) to establish the terms and conditions of each Award, including, without limitation, those related to vesting, cancellation, payment and exercisability; (v) to specify and approve the provisions of the Award
Documents delivered to Participants in connection with their Awards; (vi) to construe and interpret any Award Document delivered under the Plan; (vii) to prescribe, amend and rescind rules and procedures relating to the Plan;
(viii) to make all determinations necessary or advisable in administering the Plan and Awards, including without limitation determinations as to whether (and if so as of what date) a Participant has commenced, or has experienced a termination
of, employment; (ix) to vary the terms of Awards to take account of securities law and other legal or regulatory requirements of jurisdictions in which Participants work or reside or to procure favorable tax treatment for Participants; and
(x) to formulate such procedures as it considers to be necessary or advisable for the administration of the Plan. 

  

	 	(b)	 Delegation. To the extent not prohibited by applicable laws or rules of the New York Stock Exchange, the Committee may from time to time 

  

 5 

	 	 
delegate some or all of its authority under the Plan to one or more Administrators consisting of one or more members of the Committee as a subcommittee or
subcommittees thereof or of one or more members of the Board who are not members of the Committee or one or more officers of the Company (or of any combination of such persons). Any such delegation shall be subject to the restrictions and limits
that the Committee specifies at the time of such delegation or thereafter. The Committee may at any time rescind all or part of the authority delegated to an Administrator or appoint a new Administrator. At all times, an Administrator appointed
under this Section 5(b) shall serve in such capacity at the pleasure of the Committee. Any action undertaken by an Administrator in accordance with the Committee’s delegation of authority shall have the same force and effect as if
undertaken directly by the Committee, and any reference in the Plan to the Committee shall, to the extent consistent with the terms and limitations of such delegation, be deemed to include a reference to an Administrator.

  

	 	(c)	Authority to Construe and Interpret. The Committee shall have full power and authority, subject to the express provisions hereof, to construe and interpret the Plan.

  

	 	(d)	Committee Discretion. All of the Committee’s determinations in carrying out, administering, construing and interpreting the Plan shall be made or taken in its sole
discretion and shall be final, binding and conclusive for all purposes and upon all persons. In the event of any disagreement between the Committee and an Administrator, the Committee’s determination on such matter shall be final and binding on
all interested persons, including any Administrator. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or
not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Award
Documents, as to the persons receiving Awards under the Plan, and the terms and provisions of Awards under the Plan. 

  

	 	(e)	No Liability. Subject to applicable law: (i) no member of the Committee or any Administrator shall be liable for anything whatsoever in connection with the exercise of
authority under the Plan or the administration of the Plan except such person’s own willful misconduct; (ii) under no circumstances shall any member of the Committee or any Administrator be liable for any act or omission of any other
member of the Committee or an Administrator; and (iii) in the performance of its functions with respect to the Plan, the Committee and an Administrator shall be entitled to rely upon information and advice furnished by the Company’s
officers, the Company’s accountants, the Company’s counsel and any other party the Committee or the Administrator deems necessary, and no member of the Committee or any Administrator shall be liable for any action taken or not taken in
good faith reliance upon any such advice. 

  

 6 

 6. Eligibility. Eligible Individuals shall include all officers and other employees (including
prospective employees) of the Company, as the Committee in its sole discretion may select form time to time. Any Award made to a prospective employee shall be conditioned upon, and effective not earlier than, such person’s becoming an employee.
Members of the Board who are not Company employees will not be eligible to receive Awards under the Plan. An individual’s status as an Administrator will not affect his or her eligibility to receive Awards under the Plan. In connection with the
spin-off of the Company, certain current and former employees of Morgan Stanley will receive Replacement Awards. 
 7. Restricted
Stock. An Award of Restricted Stock shall be subject to the terms and conditions established by the Committee in connection with the Award and specified in the applicable Award Document. Restricted Stock may, among other things, be subject to
restrictions on transfer, vesting requirements or cancellation under specified circumstances. 
 8. Restricted Stock Units. An Award of
Restricted Stock Units shall be subject to the terms and conditions established by the Committee in connection with the Award and specified in the applicable Award Document. Each Restricted Stock Unit awarded to a Participant shall correspond to one
Share. Upon satisfaction of the terms and conditions of the Award, a Restricted Stock Unit will be payable, at the discretion of the Committee, in Stock or in cash equal to the Fair Market Value on the payment date of one Share. As a holder of
Restricted Stock Units, a Participant shall have only the rights of a general unsecured creditor of Discover. A Participant shall not be a stockholder with respect to the Shares underlying Restricted Stock Units unless and until the Restricted Stock
Units convert to Shares. Restricted Stock Units may, among other things, be subject to restrictions on transfer, vesting requirements or cancellation under specified circumstances. 
 9. Options. 
  

	 	(a)	 Options Generally. An Award of Options shall be subject to the terms and conditions established by the Committee in connection with the Award and specified
in the applicable Award Document. The Committee shall establish (or shall authorize the method for establishing) the exercise price of all Options awarded under the Plan, except that the exercise price of an Option shall not be less than 100% of the
Fair Market Value of one Share on the Award Date. Notwithstanding the foregoing, the exercise price of an Option that is a Substitute Award may be less than the Fair Market Value per Share on the Award Date, provided that such substitution complies
with applicable laws and regulations, including the listing requirements of the New York Stock Exchange and Section 409A or section 424 of the Code, as applicable. Upon satisfaction of the conditions to exercisability of the Award, a
Participant shall be entitled to exercise 

  

 7 

	 	 
the Options included in the Award and to have delivered, upon Discover’s receipt of payment of the exercise price and completion of any other conditions
or procedures specified by Discover, the number of Shares in respect of which the Options shall have been exercised. Options may be either nonqualified stock options or Incentive Stock Options. Options and the Shares acquired upon exercise of
Options may, among other things, be subject to restrictions on transfer, vesting requirements or cancellation under specified circumstances. 

  

	 	(b)	Prohibition on Restoration Option Grants. Anything in the Plan to the contrary notwithstanding, the terms of an Option (other than a Replacement Option) shall not provide
that a new Option will be granted, automatically and without additional consideration in excess of the exercise price of the underlying Option, to a Participant upon exercise of the Option. 

  

	 	(c)	Prohibition on Repricing of Options and SARs. Anything in the Plan to the contrary notwithstanding, the Committee may not reprice any Option or SAR. “Reprice” means
any of the following or any other action that has the same effect: (i) amending an Option or SAR to reduce its exercise price, (ii) canceling an Option or SAR at a time when its exercise price exceeds the Fair Market Value of one Share in
exchange for an Option, SAR, Restricted Stock, Restricted Stock Unit or other equity award, unless the cancellation or exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction; or (iii) taking
any other action that is treated as a repricing under generally accepted accounting principles; provided, however, that adjustments pursuant to Section 4(b) shall not be deemed to be a repricing that is prohibited by this
Section 9(c). 

  

	 	(d)	Payment of Exercise Price. Subject to the provisions of the applicable Award Document and to the extent authorized by rules and procedures of Discover from time to time, the
exercise price of the Option may be paid in cash, by actual delivery or attestation to ownership of freely transferable Shares already owned by the person exercising the Option, or by such other means as Discover may authorize.

  

	 	(e)	Maximum Term on Stock Options and SARs. No Option or SAR shall have an expiration date that is later than the tenth anniversary of the Award Date thereof.

 10. SARs. An Award of SARs shall be subject to the terms and conditions established by the Committee in connection
with the Award and specified in the applicable Award Document. The Committee shall establish (or shall authorize the method for establishing) the exercise price of all SARs awarded under the Plan, except that the exercise price of a SAR shall not be
less than 100% of the Fair Market Value of one Share on the Award Date. Notwithstanding the foregoing, the exercise price of any 

  

 8 

 
SAR that is a Substitute Award may be less than the Fair Market Value of one Share on the Award Date, subject to the same conditions set forth in
Section 9(a) for Options that are Substitute Awards. Upon satisfaction of the conditions to the payment of the Award, each SAR shall entitle a Participant to an amount, if any, equal to the Fair Market Value of one Share on the date of exercise
over the SAR exercise price specified in the applicable Award Document. At the discretion of the Committee, payments to a Participant upon exercise of a SAR may be made in Shares, cash or a combination thereof. SARs and the Shares that may be
acquired upon exercise of SARs may, among other things, be subject to restrictions on transfer, vesting requirements or cancellation under specified circumstances. 
 11. Other Awards. The Committee shall have the authority to establish the terms and provisions of other forms of equity-based or equity-related Awards (such terms and provisions to be specified in the
applicable Award Document) not described above that the Committee determines to be consistent with the purpose of the Plan and the interests of the Company, which Awards may provide for (i) cash or Stock payments based in whole or in part on
the value or future value of Stock or on any amount that Discover pays as dividends or otherwise distributes with respect to Stock, (ii) the acquisition or future acquisition of Stock, (iii) cash or Stock payments (including payment of
dividend equivalents in cash or Stock) based on one or more criteria determined by the Committee unrelated to the value of Stock, or (iv) any combination of the foregoing. The Committee also shall have the authority, without limitation, to
grant annual cash incentive awards to Eligible Individuals and to establish the terms and provisions of such cash incentive awards, including the establishment of Section 162(m) Performance Goals for any cash incentive award; provided,
however, that in no event shall the amount of a cash award payable to a Participant on account of attainment of Section 162(m) Performance Goals for any Performance Period exceed $10,000,000 (Ten Million Dollars). Awards pursuant to this
Section 11 may, among other things, be made subject to restrictions on transfer, vesting requirements or cancellation under specified circumstances. 
 12. General Terms and Provisions. 
  

	 	(a)	Awards in General. Awards may, in the discretion of the Committee, be made in substitution in whole or in part for cash or other compensation payable to an Eligible
Individual. In accordance with rules and procedures authorized by the Committee, an Eligible Individual may elect one form of Award in lieu of any other form of Award, or may elect to receive an Award in lieu of all or part of any compensation that
otherwise might have been paid to such Eligible Individual; provided, however, that any such election shall not require the Committee to make any Award to such Eligible Individual. Any such substitute or elective Awards shall have terms and
conditions consistent with the provisions of the Plan applicable to such Award. Awards may be granted in tandem with, or independent of, other Awards. The grant, vesting or payment of an Award may, among other things, be conditioned on the
attainment of Section 162(m) Performance Goals. 

  

 9 

	 	(b)	Discretionary Awards. All grants of Awards and deliveries of Shares, cash or other property under the Plan shall constitute a special discretionary incentive payment to the
Participant and shall not be required to be taken into account in computing the amount of salary, wages or other compensation of the Participant for the purpose of determining any contributions to or any benefits under any pension, retirement,
profit-sharing, bonus, life insurance, severance or other benefit plan of the Company or other benefits from the Company or under any agreement with the Participant, unless Discover specifically provides otherwise. 

  

	 	(c)	Dividends and Distributions. If Discover pays any dividend or makes any distribution to holders of Stock, the Committee may in its discretion authorize payments (which may be
in cash, Stock (including Restricted Stock) or Restricted Stock Units or a combination thereof) with respect to the Shares corresponding to an Award, or may authorize appropriate adjustments to outstanding Awards, to reflect such dividend or
distribution. The Committee may make any such payments subject to vesting, deferral, restrictions on transfer or other conditions. 

  

	 	(d)	Deferrals. In accordance with the procedures authorized by, and subject to the approval of, the Committee, Participants may be given the opportunity to defer the payment or
settlement of an Award to one or more dates selected by the Participant. 

  

	 	(e)	Award Documentation and Award Terms. The terms and conditions of an Award shall be set forth in an Award Document authorized by the Committee. The Award Document shall
include any vesting, exercisability, payment and other restrictions applicable to an Award (which may include, without limitation, the effects of termination of employment, cancellation of the Award under specified circumstances, restrictions on
transfer or provision for mandatory resale to the Company). 

  

	 	(f)	Awards to Section 162(m) Participants. Except for Options and SARs the shares underlying which are counted against the individual limit set forth in Section 4(d),
all Awards to Section 162(m) Participants shall be made pursuant to the attainment of Section 162(m) Performance Goals within the specified Performance Period, as certified by the Committee in accordance with the requirements of section
162(m) of the Code. Awards to Section 162(m) Participants shall be evidenced by an Award Document which shall provide for the forfeiture of all or a portion of such Award if the specified Section 162(m) Performance Goals are not satisfied
during the Specified Performance Period and shall specify whether such Award may be settled in Shares, Restricted Stock, Restricted Stock Units, cash or a combination thereof. Without any further action by the Board or the Committee, this
Section 12(f) shall cease to apply on the effective date of the repeal of section 162(m) of the Code (and any successor provision thereto). 

  

 10 

	 	(g)	Replacement Awards. Notwithstanding anything in this Plan to the contrary, any Award that is intended to be a Replacement Award granted in connection with the spin-off of the
Company shall be subject to the same terms and conditions as the original Morgan Stanley award to which it relates; provided, however that such awards shall be administered by the Committee. 

 13. Certain Restrictions. 
  

	 	(a)	Stockholder Rights. No Participant (or other persons having rights pursuant to an Award) shall have any of the rights of a stockholder of Discover with respect to Shares
subject to an Award until the delivery of the Shares, which shall be effected by entry of the Participant’s (or other person’s) name in the share register of Discover or by such other procedure as may be authorized by Discover. Except as
otherwise provided in Section 4(b) or 12(c), no adjustments shall be made for dividends or distributions on, or other events relating to, Shares subject to an Award for which the record date is prior to the date such Shares are delivered.
Except for the risk of cancellation and any restrictions on transfer that may apply to certain Shares (including restrictions relating to any dividends or other rights) as may be set forth in the applicable Award Document, the Participant shall be
the beneficial owner of any Shares delivered to the Participant in connection with an Award and, upon such delivery shall be entitled to all rights of ownership, including, without limitation, the right to vote the Shares and to receive cash
dividends or other dividends (whether in Shares, other securities or other property) thereon. 

  

	 	(b)	Transferability. No Award granted under the Plan shall be transferable, whether voluntarily or involuntarily, other than by will or by the laws of descent and distribution;
provided that, except with respect to Incentive Stock Options, the Committee may permit transfers on such terms and conditions as it shall determine. During the lifetime of a Participant to whom Incentive Stock Options were awarded, such Incentive
Stock Options shall be exercisable only by the Participant. 

 14. Foreign Employees. Without amending this Plan, the
Committee may grant Awards to eligible persons who are foreign nationals on such terms and conditions different from those specified in this Plan, including the terms of any plan, adopted by any Subsidiary to comply with, or take advantage of
favorable tax or other treatment available under, the law of any foreign jurisdiction, as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such
purposes the Committee may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company or its Subsidiaries
operates or has employees. 
  

 11 

 15. Representation; Compliance with Law. The Committee may condition the grant, exercise,
settlement or retention of any Award on the Participant making any representations required in the applicable Award Document. Each Award shall also be conditioned upon the making of any filings and the receipt of any consents or authorizations
required to comply with, or required to be obtained under, applicable law. 
 16. Miscellaneous Provisions. 
  

	 	(a)	Satisfaction of Obligations. As a condition to the making or retention of any Award, the vesting, exercise or payment of any Award or the lapse of any restrictions pertaining
thereto, Discover may require a Participant to pay such sum to the Company as may be necessary to discharge the Company’s obligations with respect to any taxes, assessments or other governmental charges (including FICA and other social security
or similar tax) imposed on property or income received by a Participant pursuant to the Plan or to satisfy any obligation that the Participant owes to the Company. In accordance with rules and procedures authorized by Discover, (i) such payment
may be in the form of cash or other property, and (ii) in satisfaction of such taxes, assessments or other governmental charges or of other obligations that a Participant owes to the Company, Discover may make available for delivery a lesser
number of Shares in payment or settlement of an Award, may withhold from any payment or distribution of an Award, may permit a Participant to tender previously owned Shares, or may enter into any other suitable arrangements to satisfy such
withholding or other obligation. 

  

	 	(b)	No Right to Continued Employment. Neither the Plan nor any Award shall give rise to any right on the part of any Participant to continue in the employ of the Company.

  

	 	(c)	Headings. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning of any of the provisions of the Plan.

  

	 	(d)	Governing Law. The Plan and all rights hereunder shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to any conflicts or
choice of law, rule or principle that might otherwise refer the interpretation of the award to the substantive law of another jurisdiction. 

  

	 	(e)	 Amendments and Termination. The Board or Committee may modify, amend, suspend or terminate the Plan in whole or in part at any time and may modify or amend
the terms and conditions of any outstanding Award (including by amending or supplementing the relevant Award Document 

  

 12 

	 	 
at any time); provided, however, that no such modification, amendment, suspension or termination shall, without a Participant’s consent,
materially adversely affect that Participant’s rights with respect to any Award previously made; and provided, further, that the Committee shall have the right at any time, without a Participant’s consent and whether or not the
Participant’s rights are materially adversely affected thereby, to amend or modify the Plan or any Award under the Plan in any manner that the Committee considers necessary or advisable to comply with any law, regulation, ruling, judicial
decision, accounting standards, regulatory guidance or other legal requirement. Notwithstanding the preceding sentence, neither the Board nor the Committee may accelerate the payment or settlement of any Award, including, without limitation, any
Award subject to a prior deferral election, that constitutes a deferral of compensation for purposes of Section 409A except to the extent such acceleration would not result in the Participant incurring interest or additional tax under
Section 409A. No amendment to the Plan may render any Board member who is not a Company employee eligible to receive an Award at any time while such member is serving on the Board. To the extent required by applicable law or the rules of the
New York Stock Exchange, amendments to the Plan shall not be effective unless they are approved by Discover’s stockholders. 

  

 13

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