Document:

Exhibit 10.4

 

TE CONNECTIVITY LTD.

 

2007 STOCK AND INCENTIVE PLAN

(AMENDED AND RESTATED AS OF September 16, 2014)

 

ARTICLE I

PURPOSE

 

1.1  Purpose.  The purposes of this TE Connectivity Ltd. 2007 Stock and Incentive Plan (Amended and Restated as of September 16, 2014) (the “Plan”) are to promote the interests of TE Connectivity Ltd. (and any successor thereto) by (i) aiding in the recruitment and retention of Directors and Employees, (ii) providing incentives to such Directors and Employees by means of performance-related incentives to achieve short-term and long-term performance goals, (iii) providing Directors and Employees an opportunity to participate in the growth and financial success of the Company, and (iv) promoting the growth and success of the Company’s business by aligning the financial interests of Directors and Employees with that of the other stockholders of the Company. Toward these objectives, the Plan provides for the grant of Stock Options, Stock Appreciation Rights, Annual Performance Bonuses, Long Term Performance Awards and other Stock-Based Awards.

 

1.2  Effective Dates; Shareholder Approval.  The Plan was originally effective June 29, 2007, the date of the dividend distribution of TE Connectivity Ltd. shares to the Tyco International Ltd. shareholders of record on the distribution date. The Plan was approved by the TE Connectivity Ltd. Board of Directors on June 4, 2007 and adopted by Tyco International Ltd., as the Company’s sole shareholder, on June 4, 2007. An amendment and restatement to the Plan to ensure its compliance with Section 409A of the Code and to make certain other clarifying changes was adopted by the Board of Directors of the Company on January 13, 2009 and approved by the Company’s shareholders on June 22, 2009. In order to provide for the issuance of additional shares under the Plan, an amended and restated Plan was adopted by the Board of Directors of the Company on November 17, 2009 and was approved by the Company’s shareholders on March 10, 2010. The Plan was further amended and restated on September 29, 2010. In order to provide for the issuance of additional shares under the Plan, an amended and restated Plan was adopted by the Board of Directors of the Company on November 15, 2011 and was approved by the Company’s shareholders on March 17, 2012.  This amended and restated Plan was adopted by the Board of Directors of the Company on September 16, 2014 for the purpose of adding certain administrative amendments.

 

ARTICLE II

DEFINITIONS

 

For purposes of the Plan, the following terms have the following meanings, unless another definition is clearly indicated by particular usage and context:

 

“Acquired Company” means any business, corporation or other entity acquired by the Company or any Subsidiary.

 

“Acquired Grantee” means the grantee of a stock-based award of an Acquired Company and may include a current or former Director of an Acquired Company.

 

“Annual Performance Bonus” means an Award of cash or Shares granted under Section 4.4 of the Plan that is paid solely on account of the attainment of a specified performance target in relation to one or more Performance Measures.

 

“Award” means any form of incentive or performance award granted under the Plan, whether singly or in combination, to a Participant by the Committee pursuant to any terms and conditions that the Committee may establish and set forth in the applicable Award Certificate. Awards granted under the Plan may consist of:

 

(a)                                 “Stock Options” awarded pursuant to Section 4.3;

 

(b)                                 “Stock Appreciation Rights” awarded pursuant to Section 4.3;

 

(c)                                  “Annual Performance Bonuses” awarded pursuant to Section 4.4;

 

(d)                                 “Long Term Performance Awards” awarded pursuant to Section 4.5;

 

(e)                                  “Other Stock-Based Awards” awarded pursuant to Section 4.6;

 

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(f)                                   “Director Awards” awarded pursuant to Section 4.7; and

 

(g)                                  “Substitute Awards” awarded pursuant to Section 4.8.

 

“Award Certificate” means the document issued, either in writing or an electronic medium, by the Committee or its designee to a Participant evidencing the grant of an Award.

 

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

 

“Cause” means misconduct that is willfully or wantonly harmful to the Company or any of its Subsidiaries, monetarily or otherwise, including, without limitation, conduct that violates the Company’s Code of ethical Conduct.

 

“Change in Control” means the first to occur of any of the following events:

 

(a)                                 any “person” (as defined in Section 13(d) and 14(d) of the Exchange Act, excluding for this purpose, (i) the Company or any Subsidiary or (ii) any employee benefit plan of the Company or any Subsidiary (or any person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan that acquires beneficial ownership of voting securities of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of securities of the Company representing more than 30 percent of the combined voting power of the Company’s then outstanding securities; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Company; or

 

(b)                                 persons who, as of the Effective Date constitute the Board (the “Incumbent Directors”) cease for any reason (including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction) to constitute at least a majority thereof, provided that any person becoming a Director of the Company subsequent to the Effective Date shall be considered an Incumbent Director if such person’s election or nomination for election was approved by a vote of at least 50 percent of the Incumbent Directors; but provided further, that any such person whose initial assumption of office is in connection with an actual or threatened proxy contest relating to the election of members of the Board or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as defined in Section 13(d) and 14(d) of the Exchange Act) other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or

 

(c)                                  consummation of a reorganization, merger or consolidation or sale or other disposition of at least 80 percent of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners of outstanding voting securities of the Company immediately prior to such Business Combination beneficially own directly or indirectly more than 50 percent of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the company resulting from such Business Combination (including, without limitation, a company which, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding voting securities of the Company; or

 

(d)                                 consummation of a complete liquidation or dissolution of the Company;

 

provided, however, that if and to the extent that any provision of this Plan or an Award Certificate would cause a payment of deferred compensation that is subject to Code Section 409A(a)(2) to be made upon the occurrence of a “Change in Control,” or would change the timing and/or form of any payment of deferred compensation that is subject to Code Section 409A(a)(2) upon a specified date or event occurring after a “Change in Control” or upon a “Change in Control Termination,” then such payment shall not be made, or such change in timing or form of payment shall not occur, unless such “Change in Control” is also a “change in ownership or effective control” of the Company within the meaning of Code Section 409A(2)(A)(v) and applicable regulations and rulings thereunder and such payment, or such associated date or event, occurs no later than two years after the date of such “Change in Control.”

 

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“Change in Control Termination” means a Participant’s involuntary termination of employment that occurs during the 12 month period immediately following a Change in Control. For this purpose, a Participant’s involuntary termination of employment includes only the following:

 

(a)                                 termination of the Participant’s employment by the Company for any reason other than for Cause, Disability or death;

 

(b)                                 termination of the Participant’s employment by the Participant after one of the following events, provided that the Participant’s termination of employment occurs within one hundred and eighty (180) days after the occurrence of any such event:

 

i.                                          the Company (1) assigns or causes to be assigned to the Participant duties inconsistent in any material respect with his or her position as in effect immediately prior to the Change in Control; (2) makes or causes to be made any material adverse change in the Participant’s position, authority, duties or responsibilities; or (3) takes or causes to be taken any other action which, in the reasonable judgment of the Participant, would cause him or her to violate his or her ethical or professional obligations (after written notice of such judgment has been provided by the Participant to the Company and the Company has been given a 15-day period within which to cure such action), or which results in a significant diminution in such position, authority, duties or responsibilities; or

 

ii.                                       the Company, without the Participant’s consent, (1) requires the Participant to relocate to a principal place of employment more than fifty (50) miles from his or her existing place of employment; or (2) reduces the Participant’s base salary, annual bonus, or retirement, welfare, stock incentive, perquisite (if any) and other benefits taken as a whole.

 

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

 

“Committee” means the Management Development and Compensation Committee of the Board or any successor committee or subcommittee of the Board, which committee is comprised solely of two or more persons who are outside directors within the meaning of Section 162(m)(4)(C)(i) of the Code and the applicable regulations and nonemployee directors within the meaning of Rule 16b-3(b)(3) under the Exchange Act.

 

“Common Stock” means the common stock of the Company, $.20 (U.S.) par value, and such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 5.3 of the Plan.

 

“Company” means TE Connectivity Ltd., a Swiss company, or any successor thereto.

 

“Deferred Stock Unit” means a Unit granted under Section 4.6 to acquire Shares upon Termination of Directorship or Termination of Employment, subject to any restrictions that the Committee, in its discretion, may determine.

 

“Director” means a member of the Board who is a “non-employee director” within the meaning of Rule 16b-3(b)(3) under the Exchange Act.

 

“Director Shares” means the award of fully-vested Shares to a Director under Section 4.6 as part of the Director’s annual compensation, or under such circumstances as are deemed appropriate by the Board.

 

“Disabled” or “Disability” means the inability of the Director or Employee to perform the material duties pertaining to such Director’s directorship or such Employee’s employment due to a physical or mental injury, infirmity or incapacity for 180 days (including weekends and holidays) in any 365-day period. The existence or nonexistence of a Disability shall be determined by an independent physician selected by the Company and reasonably acceptable to the Director or Employee. Notwithstanding the above, if and to the extent that any provision of this Plan or an Award Certificate would cause a payment of deferred compensation that is subject to Code Section 409A(a)(2) to be made upon the occurrence of a “Disability” or upon a person becoming “Disabled,” or would cause a change in the timing or form of payment of such deferred compensation upon the occurrence of a “Disability” or upon a person becoming “Disabled,” then such payment shall not be made, or such change in timing or form of payment shall not occur, unless such “Disability” or condition of being “Disabled” satisfies the requirements of Code Section 409A(2)(C) and applicable regulations and rulings thereunder.

 

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“Dividend Equivalent” means an amount equal to the cash dividend or the Fair Market Value of the stock dividend that would be paid on each Share underlying an Award if the Share were duly issued and outstanding on the date on which the dividend is payable. Dividend Equivalents will not be awarded in connection with stock option or Stock Appreciation Rights Awards.

 

“Effective Date” means September 16, 2014. The original effective date of the TE Connectivity Ltd. Stock and Incentive Plan was, June 29, 2007, the date of the dividend distribution of TE Connectivity Ltd. shares to the Tyco International Ltd. shareholders of record on the distribution date.

 

“Employee” means any individual who performs services as an officer or employee of the Company or a Subsidiary.

 

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

 

“Exercise Price” means the price of a Share, as fixed by the Committee, which may be purchased under a Stock Option or with respect to which the amount of any payment pursuant to a Stock Appreciation Right is determined.

 

“Fair Market Value” of a Share means the closing sales price on the New York Stock Exchange on the date as of which the determination of Fair Market Value is being made or, if no sale is reported for such day, on the next preceding day on which a sale of Shares was reported. Notwithstanding anything to the contrary herein, the Fair Market Value of a Share will in no event be determined to be less than par value.

 

“Fair Market Value Stock Option” means a Stock Option the Exercise Price of which is fixed by the Committee at a price equal to the Fair Market Value of a Share on the date of grant.

 

“GAAP” means United States generally accepted accounting principles.

 

“Incentive Stock Option” means a Stock Option granted under Section 4.3 of the Plan that meets the requirements of Section 422 of the Code and any related regulations and is designated in the Award Certificate to be an Incentive Stock Option.

 

“Key Employee” means an Employee who is a “covered employee” within the meaning of Section 162(m)(3) of the Code.

 

“Long Term Performance Award” means an Award granted under Section 4.5 of the Plan that is paid solely on account of the attainment of a specified performance target in relation to one or more Performance Measures or other performance criteria as selected in the discretion of the Committee.

 

“Non-Employee Director” means any member of the Board, elected or appointed, who is not otherwise an Employee of the Company or a Subsidiary. An individual who is elected to the Board at an annual meeting of the stockholders of the Company will be deemed to be a member of the Board as of the date of the meeting.

 

“Nonqualified Stock Option” means any Stock Option granted under Section 4.3 of the Plan that is not an Incentive Stock Option.

 

“Participant” means a Director, Employee or Acquired Grantee who has been granted an Award under the Plan.

 

“Performance Cycle” means, with respect to any Award that vests based on Performance Measures, the period of 12 months or longer over which the level of performance will be assessed. The first Performance Cycle under the Plan will begin on such date as is set by the Committee, in its discretion.

 

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“Performance Measure” means, with respect to any Annual Performance Bonus or Long Term Performance Award, the business criteria selected by the Committee to measure the level of performance of the Company during the Performance Cycle. The Committee may select as the Performance Measure for a Performance Cycle any one or combination of the following Company measures, as interpreted by the Committee, which measures (to the extent applicable) will be determined in accordance with GAAP:

 

(a)                                 Net operating profit after taxes;

 

(b)                                 Net operating profit after taxes, per Share;

 

(c)                                  Return on invested capital;

 

(d)                                 Return on assets or net assets;

 

(e)                                  Total shareholder return;

 

(f)                                   Relative total shareholder return (as compared with a peer group of the Company);

 

(g)                                  Earnings before income taxes;

 

(h)                                 Earnings per Share;

 

(i)                                     Net income;

 

(j)                                    Free cash flow;

 

(k)                                 Free cash flow per Share;

 

(l)                                     Revenue (or any component thereof); or

 

(m)                             Revenue growth.

 

“Performance Unit” means a Long Term Performance Award denominated in dollar Units.

 

“Plan” means the TE Connectivity Ltd. 2007 Stock and Incentive Plan (Amended and Restated as of September 16, 2014), as it may be amended from time to time.

 

“Premium-Priced Stock Option” means a Stock Option the Exercise Price of which is fixed by the Committee at a price that exceeds the Fair Market Value of a Share on the date of grant.

 

“Reporting Person” means a Director or an Employee who is subject to the reporting requirements of Section 16(a) of the Exchange Act.

 

“Restricted Stock” means Shares issued pursuant to Section 4.6 that are subject to any restrictions that the Committee, in its discretion, may impose.

 

“Restricted Unit” means a Unit granted under Section 4.6 to acquire Shares or an equivalent amount in cash, which Unit is subject to any restrictions that the Committee, in its discretion, may impose.

 

“Retirement” means Termination of Employment on or after a Participant has attained age fifty-five (55) and has completed at least five years of service with the Company and its Subsidiaries.

 

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

 

“Share” means a share of Common Stock.

 

“Stock Appreciation Right” means a right granted under Section 4.3 of the Plan to an amount in cash or Shares equal to any difference between the Fair Market Value of the Shares as of the date on which the right is exercised and the Exercise Price, where the amount of Shares attributable to each Stock Appreciation Right is set forth on or before the grant date.

 

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“Stock-Based Award” means an Award granted under Section 4.6 of the Plan and denominated in Shares.

 

“Stock Option” means a right granted under Section 4.3 of the Plan to purchase from the Company a stated number of Shares at a specified price. Stock Options awarded under the Plan may be in the form of Incentive Stock Options or Nonqualified Stock Options.

 

“Subsidiary” means a subsidiary company (wherever incorporated) of the Company; provided, that in the case of any Award that provides deferred compensation subject to Code Section 409A, “Subsidiary” shall not include any subsidiary company as defined above unless such company is within a controlled group of corporations with the Company as defined in Code Sections 1563(a)(1), (2) and (3) where the phrase “at least 50%” is substituted in each place “at least 80%” appears or is with the Company part of a group of trades or businesses under common control as defined in Code Section 414(c) and Treas. Reg. § 1.414(c)-2 where the phrase “at least 50%” is substituted in each place “at least 80%” appears, provided, however, that when the relevant determination is to be based upon legitimate business criteria (as described in Treas. Reg. § 1.409A-1(b)(5)(iii)(E) and § 1.409A-1(h)(3)), the phrase “at least 20%” shall be substituted in each place “at least 50%” appears as described above with respect to both a controlled group of corporations and trades or business under common control.

 

“Target Amount” means the amount of Performance Units that will be paid if the Performance Measure is fully (100%) attained, as determined by the Committee.

 

“Target Vesting Percentage” means the percentage of performance- based Restricted Units or Shares of Restricted Stock that will vest if the Performance Measure is fully (100%) attained, as determined by the Committee.

 

“Termination of Directorship” means the date of cessation of a Director’s membership on the Board for any reason, with or without Cause, as determined by the Company; provided, that if and to the extent that any provision of this Plan or an Award Certificate would cause a payment of deferred compensation that is subject to Code Section 409A(a)(2) to be made upon the occurrence of a Termination of Directorship or would change the timing and/or form of any payment of deferred compensation that is subject to Code Section 409A(a)(2) upon a person’s Termination of Directorship, then such payment shall not be made, or such change in timing and/or form of payment shall not occur, unless such Termination of Directorship would be deemed a “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i) and applicable regulations and rulings thereunder, and shall not include any services provided in the capacity of an employee or otherwise.

 

“Termination of Employment” means the date of cessation of an Employee’s employment relationship with the Company or a Subsidiary for any reason, with or without Cause, as determined by the Company; provided, that if and to the extent that any provision of this Plan or an Award Certificate would cause a payment of deferred compensation that is subject to Code Section 409A(a)(2) to be made upon the occurrence of a Termination of Employment or would change the timing and/or form of any payment of deferred compensation that is subject to Code Section 409A(a)(2) upon a person’s Termination of Employment, then such payment shall not be made or such change in timing and/or form of payment shall not occur, unless such Termination of Employment would be deemed a “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i) and applicable regulations and rulings thereunder.

 

“Unit” means, for purposes of Performance Units, the potential right to an Award equal to a specified amount denominated in such form as is deemed appropriate in the discretion of the Committee and, for purposes of Restricted Units or Deferred Stock Units, the potential right to acquire one Share.

 

ARTICLE III

ADMINISTRATION

 

3.1  Committee.  The Plan will be administered by the Committee.

 

3.2  Authority of the Committee.  The Committee or, to the extent required by applicable law, the Board will have the authority, in its sole and absolute discretion and subject to the terms of the Plan, to:

 

(a)                                 Interpret and administer the Plan and any instrument or agreement relating to the Plan;

 

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(b)                                 Prescribe the rules and regulations that it deems necessary for the proper operation and administration of the Plan, and amend or rescind any existing rules or regulations relating to the Plan;

 

(c)                                  Select Employees to receive Awards under the Plan;

 

(d)                                 Determine the form of an Award, the number of Shares subject to each Award, all the terms and conditions of an Award, including, without limitation, the conditions on exercise or vesting, the designation of Stock Options as Incentive Stock Options or Nonqualified Stock Options, and the circumstances in which an Award may be settled in cash or Shares or may be cancelled, forfeited or suspended, and the terms of the Award Certificate;

 

(e)                                  Determine whether Awards will be granted singly, in combination or in tandem;

 

(f)                                   Establish and interpret Performance Measures (or, as applicable, other performance criteria) in connection with Annual Performance Bonuses and Long Term Performance Awards, evaluate the level of performance over a Performance Cycle and certify the level of performance attained with respect to Performance Measures (or other performance criteria, as applicable);

 

(g)                                  Except as provided in Section 6.1, waive or amend any terms, conditions, restrictions or limitations on an Award, except that the prohibition on the repricing of Stock Options and Stock Appreciation Rights, as described in Section 4.3(g), may not be waived and further provided that any such waiver or amendment shall either comply with the requirements of Section 409A or preserve any exemption from the application of Code Section 409A;

 

(h)                                 Make any adjustments to the Plan (including but not limited to adjustment of the number of Shares available under the Plan or any Award) and any Award granted under the Plan as may be appropriate pursuant to Section 5.3;

 

(i)                                     Determine and set forth in the applicable Award Certificate the circumstances under which Awards may be deferred and the extent to which a deferral will be credited with Dividend Equivalents and interest thereon;

 

(j)                                    Determine whether a Nonqualified Stock Option or Restricted Share may be transferable to family members, a family trust or a family partnership;

 

(k)                                 Establish any subplans and make any modifications to the Plan or to Awards made hereunder (including the establishment of terms and conditions not otherwise inconsistent with the terms of the Plan) that the Committee may determine to be necessary or advisable for grants made in countries outside the United States to comply with, or to achieve favorable tax treatment under, applicable foreign laws or regulations;

 

(l)                                     Appoint such agents as it shall deem appropriate for proper administration of the Plan; and

 

(m)                             Take any and all other actions it deems necessary or advisable for the proper operation or administration of the Plan.

 

3.3  Effect of Determinations.  All determinations of the Committee will be final, binding and conclusive on all persons having an interest in the Plan.

 

3.4  Delegation of Authority.  The Board or, if permitted under applicable corporate law, the Committee, in its discretion and consistent with applicable law and regulations, may delegate to the Chief Executive Officer of the Company or any other officer or group of officers as it deems to be advisable, the authority to select Employees to receive an Award and to determine the number of Shares under any such Award, subject to any terms and conditions that the Board or the Committee may establish. When the Board or the Committee delegates authority pursuant to the foregoing sentence, it will limit, in its discretion, the number of Shares or aggregate value that may be subject to Awards that the delegate may grant. Only the Committee will have authority to grant and administer Awards to Directors, Key Employees and other Reporting Persons or to delegates of the Committee, and to establish and certify Performance Measures.

 

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3.5  Employment of Advisors.  The Committee may employ attorneys, consultants, accountants and other advisors, and the Committee, the Company and the officers and directors of the Company may rely upon the advice, opinions or valuations of the advisors employed.

 

3.6  No Liability.  No member of the Committee or any person acting as a delegate of the Committee with respect to the Plan will be liable for any losses resulting from any action, interpretation or construction made in good faith with respect to the Plan or any Award granted under the Plan.

 

ARTICLE IV

AWARDS

 

4.1  Eligibility.  All Participants and Employees are eligible to be designated to receive Awards granted under the Plan, except as otherwise provided in this Article IV.

 

4.2  Form of Awards.  Awards will be in the form determined by the Committee, in its discretion, and will be evidenced by an Award Certificate. Awards may be granted singly or in combination or in tandem with other Awards.

 

4.3  Stock Options and Stock Appreciation Rights.  The Committee may grant Stock Options and Stock Appreciation Rights under the Plan to those Employees whom the Committee may from time to time select, in the amounts and pursuant to the other terms and conditions that the Committee, in its discretion, may determine and set forth in the Award Certificate, subject to the provisions below:

 

(a)  Form.  Stock Options granted under the Plan will, at the discretion of the Committee and as set forth in the Award Certificate, be in the form of Incentive Stock Options, Nonqualified Stock Options or a combination of the two. If an Incentive Stock Option and a Nonqualified Stock Option are granted to the same Participant under the Plan at the same time, the form of each will be clearly identified, and they will be deemed to have been granted in separate grants. In no event will the exercise of one Award affect the right to exercise the other Award. Stock Appreciation Rights may be granted either alone or in connection with concurrently or previously granted Nonqualified Stock Options.

 

(b)  Exercise Price.  The Committee will set the Exercise Price of Fair Market Value Stock Options or Stock Appreciation Rights granted under the Plan at a price that is equal to the Fair Market Value of a Share on the date of grant, subject to adjustment as provided in Section 5.3. The Committee will set the Exercise Price of Premium-Priced Stock Options at a price that is higher than the Fair Market Value of a Share as of the date of grant, provided that such price is no higher than 150 percent of such Fair Market Value. The Exercise Price of Incentive Stock Options will be equal to or greater than 110 percent of the Fair Market Value of a Share as of the date of grant if the Participant receiving the Stock Options owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any subsidiary or parent corporation of the Company, as defined in Section 424 of the Code. The Exercise Price of a Stock Appreciation Right granted in tandem with a Stock Option will equal the Exercise Price of the related Stock Option. The Committee will set forth the Exercise Price of a Stock Option or Stock Appreciation Right in the Award Certificate. Stock Options granted under the Plan will, at the discretion of the Committee and as set forth in the Award Certificate, be Fair Market Value Stock Options, Premium-Priced Stock Options or a combination of Fair Market Value Stock Options and Premium- Priced Stock Options.

 

(c)  Term and Timing of Exercise.  Each Stock Option or Stock Appreciation Right granted under the Plan will be exercisable in whole or in part, subject to the following conditions, unless determined otherwise by the Committee:

 

(i)                                     The Committee will determine and set forth in the Award Certificate the date on which any Award of Stock Options or Stock Appreciation Rights to a Participant may first be exercised. Unless the applicable Award Certificate provides otherwise, a Stock Option or Stock Appreciation Right will become exercisable in equal annual installments over a period of four years beginning immediately after the date on which the Stock Option or Stock Appreciation Right was granted. The right to exercise a Stock Option or Stock Appreciation Right will lapse no later than 10 years after the date of grant, except to the extent necessary to comply with applicable laws outside of the United States or to preserve the tax advantages of the Award outside the United States.

 

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(ii)                                  Unless the applicable Award Certificate provides otherwise, upon the death or Disability of a Participant who has outstanding Stock Options or Stock Appreciation Rights, the unvested Stock Options or Stock Appreciation Rights will vest. Unless the applicable Award Certificate provides otherwise, the Participant’s Stock Options and Stock Appreciation Rights will lapse, and will not thereafter be exercisable, upon the earlier of (A) their original expiration date or (B) the date that is three years after the date on which the Participant dies or incurs a Disability.

 

(iii)                               Unless the applicable Award Certificate provides otherwise, upon the Retirement of a Participant, a pro rata portion of the Participant’s Stock Options and Stock Appreciation Rights will vest so that the total number of vested Stock Options or Stock Appreciation Rights held by the Participant at Termination of Employment (including those that have already vested as of such date) will be equal to (A) the total number of Stock Options or Stock Appreciation Rights originally granted to the Participant under each Award multiplied by (ii) a fraction, the numerator of which is the period of time (in whole months) that have elapsed since the date of grant, and the denominator of which is four years (or such other applicable vesting term as is set forth in the Award Certificate). Unless the Award Certificate provides otherwise, such Participant’s Stock Options and Stock Appreciation Rights will lapse, and will not thereafter be exercisable, upon the earlier of (A) their original expiration date or (B) the date that is three years after the date of Termination of Employment.

 

(iv)                              Upon the Termination of Employment of a Participant that does not meet the requirements of paragraphs (ii) or (iii) above, or as otherwise provided in Section 5.4 (Change in Control), any unvested Stock Options or Stock Appreciation Rights will be forfeited unless the Award Certificate provides otherwise. Any Stock Options or Stock Appreciation Rights that are vested as of such Termination of Employment will lapse, and will not thereafter be exercisable, upon the earlier of (A) their original expiration date or (B) the date that is ninety (90) days after the date of such Termination of Employment unless the Award Certificate provides otherwise.

 

(v)                                 Stock Options and Stock Appreciation Rights of a deceased Participant may be exercised only by the estate of the Participant or by the person given authority to exercise the Stock Options or Stock Appreciation Rights by the Participant’s will or by operation of law. If a Stock Option or Stock Appreciation Right is exercised by the executor or administrator of a deceased Participant, or by the person or persons to whom the Stock Option or Stock Appreciation Right has been transferred by the Participant’s will or the applicable laws of descent and distribution, the Company will be under no obligation to deliver Shares or cash until the Company is satisfied that the person exercising the Stock Option or Stock Appreciation Right is the duly appointed executor or administrator of the deceased Participant or the person to whom the Stock Option or Stock Appreciation Right has been transferred by the Participant’s will or by applicable laws of descent and distribution.

 

(vi)                              A Stock Appreciation Right granted in tandem with a Stock Option is subject to the same terms and conditions as the related Stock Option and will be exercisable only to the extent that the related Stock Option is exercisable.

 

(d)  Payment of Exercise Price.  The Exercise Price of a Stock Option must be paid in full when the Stock Option is exercised. Stock certificates will be registered and delivered only upon receipt of payment. Payment of the Exercise Price may be made in cash or by certified check, bank draft, wire transfer, or postal or express money order, provided that the format is approved by the Company or a designated third-party administrator. The Committee, in its discretion may also allow payment to be made by any of the following methods, as set forth in the Award Certificate:

 

(i)                                     Delivering a properly executed exercise notice to the Company or its agent, together with irrevocable instructions to a broker to deliver to the Company, within the typical settlement cycle for the sale of equity securities on the relevant trading market (or otherwise in accordance with the provisions of Regulation T issued by the Federal Reserve Board), the amount of sale proceeds with respect to the portion of the Shares to be acquired having a Fair Market Value on the date of exercise equal to the sum of the applicable portion of the Exercise Price being so paid;

 

(ii)                                  Tendering (actually or by attestation) to the Company previously acquired Shares that have been held by the Participant for at least six months, subject to paragraph (iv), and that have a Fair Market Value on the day prior to the date of exercise equal to the applicable portion of the Exercise Price

 

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being so paid, provided that the Board has specifically approved the repurchase of such Shares (unless such approval is not required by the terms of the bye-laws of the Company) and the Committee has determined that, as of the date of repurchase, the Company is, and after the repurchase will continue to be, able to pay its liabilities as they become due; or

 

(iii)                               Provided such payment method has been expressly authorized by the Board or the Committee in advance and subject to any requirements of applicable law and regulations, instructing the Company to reduce the number of Shares that would otherwise be issued by such number of Shares as have in the aggregate a Fair Market Value on the date of exercise equal to the applicable portion of the Exercise Price being so paid.

 

(iv)                              The Committee, in consideration of applicable accounting standards, may waive any holding period on Shares required to tender pursuant to clause (ii).

 

(e)  Incentive Stock Options.  Incentive Stock Options granted under the Plan will be subject to the following additional conditions, limitations and restrictions:

 

(i)                                     Eligibility.  Incentive Stock Options may be granted only to Employees of the Company or a Subsidiary that is a subsidiary or parent corporation of the Company, within the meaning of Section 424 of the Code.

 

(ii)                                  Timing of Grant.  No Incentive Stock Option will be granted under the Plan after the 10-year anniversary of the date on which the Plan is adopted by the Board or, if earlier, the date on which the Plan is approved by the Company’s stockholders.

 

(iii)                               Amount of Award.  Subject to Section 5.3 of the Plan, no more than 10 million Shares may be available for grant in the form of Incentive Stock Options. The aggregate Fair Market Value (as of the date of grant) of the Shares with respect to which the Incentive Stock Options awarded to any Employee first become exercisable during any calendar year may not exceed $100,000 (U.S.). For purposes of this $100,000 (U.S.) limit, the Employee’s Incentive Stock Options under this Plan and all other plans maintained by the Company and its Subsidiaries will be aggregated. To the extent any Incentive Stock Option would exceed the $100,000 (U.S.) limit, the Incentive Stock Option will afterwards be treated as a Nonqualified Stock Option for all purposes to the extent required by the Code and underlying regulations and rulings.

 

(iv)                              Timing of Exercise.  If the Committee exercises its discretion in the Award Certificate to permit an Incentive Stock Option to be exercised by a Participant more than three months after the Participant has ceased being an Employee (or more than 12 months if the Participant is permanently and totally disabled, within the meaning of Section 22(e) of the Code), the Incentive Stock Option will afterwards be treated as a Nonqualified Stock Option to the extent required by the Code and underlying regulations and rulings. For purposes of this paragraph (iv), an Employee’s employment relationship will be treated as continuing intact while the Employee is on military leave, sick leave or another approved leave of absence if the period of leave does not exceed 90 days, or a longer period to the extent that the Employee’s right to reemployment with the Company or a Subsidiary is guaranteed by statute or by contract. If the period of leave exceeds 90 days and the Employee’s right to reemployment is not guaranteed by statute or contract, the employment relationship will be deemed to have ceased on the 91st day of the leave.

 

(v)                                 Transfer Restrictions.  In no event will the Committee permit an Incentive Stock Option to be transferred by an Employee other than by will or the laws of descent and distribution, and any Incentive Stock Option awarded under this Plan will be exercisable only by the Employee during the Employee’s lifetime.

 

(f)  Exercise of Stock Appreciation Rights.  Upon exercise of a Participant’s Stock Appreciation Rights, the Company will pay cash or Shares or a combination of cash and Shares, in the discretion of the Committee and as described in the Award Certificate. Cash payments will be equal to the excess of the Fair Market Value of a Share on the date of exercise over the Exercise Price, for each Share for which a Stock Appreciation Right was exercised. If Shares are paid for the Stock Appreciation Right, the Participant will receive a number of whole Shares equal to the quotient of the cash payment amount divided by the Fair Market Value of a Share on the date of exercise.

 

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(g)  No Repricing.  Except as otherwise provided in Section 5.3, in no event will the Committee (i) decrease the Exercise Price of a Stock Option or Stock Appreciation Right after the date of grant or (ii) cancel outstanding Stock Options or Stock Appreciation Rights in exchange for a cash payment or for a grant of replacement Stock Options or Stock Appreciation Rights with a lower Exercise Price than that of the replaced Stock Options or Stock Appreciation Rights or other Awards, without first obtaining the approval of the holders of a majority of the Shares who are present in person or by proxy at a meeting of the Company’s stockholders and entitled to vote.

 

4.4  Annual Performance Bonuses.  The Committee may grant Annual Performance Bonuses under the Plan in the form of cash or Shares to the Reporting Persons that the Committee may from time to time select, in the amounts and pursuant to the terms and conditions that the Committee may determine and set forth in the Award Certificate, subject to the provisions below:

 

(a)  Performance Cycles.  Annual Performance Bonuses will be awarded in connection with a 12-month Performance Cycle, which will be the fiscal year of the Company.

 

(b)  Eligible Participants.  Within 90 days after the commencement of a Performance Cycle, the Committee will determine the Reporting Persons who will be eligible to receive an Annual Performance Bonus under the Plan.

 

(c)  Performance Measures; Targets; Award Criteria.

 

(i)                                     Within 90 days after the commencement of a Performance Cycle, the Committee will fix and establish in writing (A) the Performance Measures that will apply to that Performance Cycle; (B) the Target Amount payable to each Participant; and (C) subject to subsection (d) below, the criteria for computing the amount that will be paid with respect to each level of attained performance. The Committee will also set forth the minimum level of performance, based on objective factors, that must be attained during the Performance Cycle before any Annual Performance Bonus will be paid and the percentage of the Target Amount that will become payable upon attainment of various levels of performance that equal or exceed the minimum required level.

 

(ii)                                  The Committee may, in its discretion, select Performance Measures that measure the performance of the Company or one or more business units, divisions or Subsidiaries of the Company. The Committee may select Performance Measures that are absolute or relative to the performance of one or more comparable companies or an index of comparable companies.

 

(iii)                               The Committee, in its discretion, may, on a case-by-case basis, reduce, but not increase, the amount payable to any Key Employee with respect to any given Performance Cycle, provided, however, that no reduction will result in an increase in the amount payable under any Annual Performance Bonus of another Key Employee.

 

(d)  Payment, Certification.  No Annual Performance Bonus will vest with respect to any Reporting Person until the Committee certifies in writing the level of performance attained for the Performance Cycle in relation to the applicable Performance Measures. In applying Performance Measures, the Committee may, in its discretion, exclude unusual or infrequently occurring items (including any event listed in Section 5.3 and the cumulative effect of changes in the law, regulations or accounting rules), and may determine no later than ninety (90) days after the commencement of any applicable Performance Cycle to exclude other items, each determined in accordance with GAAP (to the extent applicable) and as identified in the financial statements, notes to the financial statements or discussion and analysis of management.

 

(e)  Form of Payment.  Annual Performance Bonuses will be paid in cash or Shares. All such Performance Bonuses shall be paid no later than the 15th day of the third month following the end of the calendar year (or, if later, following the end of the Company’s fiscal year) in which such Performance Bonuses are no longer subject to a substantial risk of forfeiture (as determined for purposes of Section 409A of the Code), except to the extent that a Participant has elected to defer payment under the terms of a duly authorized deferred compensation arrangement in which case the terms of such arrangement shall govern.

 

(f)  Section 162(m) of the Code.  It is the intent of the Company that Annual Performance Bonuses be “performance-based compensation” for purposes of Section 162(m) of the Code, that this Section 4.4 be interpreted in a manner that satisfies the applicable requirements of Section 162(m)(C) of the Code and related regulations, and that the Plan be operated so that the Company may take a full tax deduction for Annual Performance Bonuses. If any provision of this Plan or any Annual Performance Bonus would otherwise frustrate or conflict with this intent, the provision will be interpreted and deemed amended so as to avoid this conflict.

 

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(g)  Retirement, Death, Disability and Other Events.  If a Participant would be entitled to an Annual Performance Bonus but for the fact that the Participant’s employment with the Company terminated prior to the end of the Performance Cycle as a result of the Participant’s Retirement, death or Disability, or such other event as designated by the Committee, the Participant may, in the Committee’s discretion, receive an Annual Performance Bonus Award, pro rated for the portion of the Performance Cycle that the Participant completed and which is payable at the same time after the end of the Performance Cycle that payments to other Annual Performance Bonus Award recipients are made.

 

4.5  Long Term Performance Awards.  The Committee may grant Long Term Performance Awards under the Plan in the form of Performance Units, Restricted Units or Restricted Stock to any Employee who the Committee may from time to time select, in the amounts and pursuant to the terms and conditions that the Committee may determine and set forth in the Award Certificate, subject to the provisions below:

 

(a)  Performance Cycles.  Long Term Performance Awards will be awarded in connection with a Performance Cycle, as determined by the Committee in its discretion, provided, however, that a Performance Cycle may be no shorter than 12 months and no longer than 5 years.

 

(b)  Eligible Participants.  Within 90 days after the commencement of a Performance Cycle, the Committee will determine the Employees who will be eligible to receive a Long Term Performance Award for the Performance Cycle, provided that the Committee may determine the eligibility of any Employee other than a Key Employee after the expiration of the 90-day period.

 

(c)  Performance Measures; Targets; Award Criteria.

 

(i)                                     Within 90 days after the commencement of a Performance Cycle, the Committee will fix and establish in writing (A) the Performance Measures that will apply to that Performance Cycle; (B) with respect to Performance Units, the Target Amount payable to each Participant; (C) with respect to Restricted Units and Restricted Stock, the Target Vesting Percentage for each Participant; and (D) subject to subsection (d) below, the criteria for computing the amount that will be paid or will vest with respect to each level of attained performance. The Committee will also set forth the minimum level of performance, based on objective factors, that must be attained during the Performance Cycle before any Long Term Performance Award will be paid or vest, and the percentage of Performance Units that will become payable and the percentage of performance- based Restricted Units or Shares of Restricted Stock that will vest upon attainment of various levels of performance that equal or exceed the minimum required level.

 

(ii)                                  The Committee may, in its discretion, select Performance Measures that measure the performance of the Company or one or more business units, divisions or Subsidiaries of the Company. The Committee may select Performance Measures that are absolute or relative to the performance of one or more comparable companies or an index of comparable companies.

 

(iii)                               The Committee, in its discretion, may, on a case-by-case basis, reduce, but not increase, the amount of Long Term Performance Awards payable to any Key Employee with respect to any given Performance Cycle, provided, however, that no reduction will result in an increase in the dollar amount or number of Shares payable under any Long Term Performance Award of another Key Employee.

 

(iv)                              With respect to Employees who are not Key Employees, the Committee may establish, in its discretion, performance criteria other than the Performance Measures that will be applicable for the Performance Cycle.

 

(d)  Payment, Certification.  No Long Term Performance Award will vest with respect to any Employee until the Committee certifies in writing the level of performance attained for the Performance Cycle in relation to the applicable Performance Measures. Long Term Performance Awards awarded to Participants who are not Key Employees will be based on the Performance Measures, or other applicable performance criteria, and payment formulas that the Committee, in its discretion, may establish for these purposes. These Performance Measures, or other performance criteria, and formulas may be the same as or different than the Performance Measures and formulas that apply to Key Employees.

 

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In applying Performance Measures, the Committee may, in its discretion, exclude unusual or infrequently occurring items (including any event listed in Section 5.3) and the cumulative effect of changes in the law, regulations or accounting rules, and may determine no later than ninety (90) days after the commencement of any applicable Performance Cycle to exclude other items, each determined in accordance with GAAP (to the extent applicable) and as identified in the financial statements, notes to the financial statements or discussion and analysis of management.

 

(e)  Form of Payment.  Long Term Performance Awards in the form of Performance Units may be paid in cash or full Shares, in the discretion of the Committee, and as set forth in the Award Certificate. Performance-based Restricted Units and Restricted Stock will be paid in full Shares. Payment with respect to any fractional Share will be in cash in an amount based on the Fair Market Value of the Share as of the date the Performance Unit becomes payable. All such Long Term Performance Awards shall be paid no later than the 15th day of the third month following the end of the calendar year (or, if later, following the end of the Company’s fiscal year) in which such Long Term Performance Awards are no longer subject to a substantial risk of forfeiture (as determined for purposes of Code Section 409A), except to the extent that a Participant has elected to defer payment under the terms of a duly authorized deferred compensation arrangement, in which case the terms of such arrangement shall govern.

 

(f)  Section 162(m) of the Code.  It is the intent of the Company that Long Term Performance Awards made to Key Employees be “performance-based compensation” for purposes of Section 162(m) of the Code, that this Section 4.5 be interpreted in a manner that satisfies the applicable requirements of Section 162(m)(C) of the Code and related regulations with respect to Long Term Performance awards made to Key Employees, and that the Plan be operated so that the Company may take a full tax deduction for Long Term Performance Awards. If any provision of this Plan or any Long Term Performance Award would otherwise frustrate or conflict with this intent, the provision will be interpreted and deemed amended so as to avoid this conflict.

 

(g)  Retirement, Death, Disability and Other Events.  If a Participant would be entitled to a Long Term Performance Award but for the fact that the Participant’s employment with the Company terminated prior to the end of the Performance Cycle as a result of the Participant’s Retirement, death or Disability, or such other event as designated by the Committee, the Participant may, in the Committee’s discretion, receive a Long Term Performance Award, pro rated for the portion of the Performance Cycle that the Participant completed and payable at the same time after the end of the Performance Cycle that payments to other Long Term Performance Award recipients are made.

 

4.6  Other Stock-Based Awards.  The Committee may, from time to time, grant Awards (other than Stock Options, Stock Appreciation Rights, Annual Performance Bonuses or Long Term Performance Awards) to any Employee who the Committee may from time to time select, which Awards consist of, or are denominated in, payable in, valued in whole or in part by reference to, or otherwise related to, Shares. These Awards may include, among other forms, Restricted Stock, Restricted Units, or Deferred Stock Units. The Committee will determine, in its discretion, the terms and conditions that will apply to Awards granted pursuant to this Section 4.6, which terms and conditions will be set forth in the applicable Award Certificate.

 

(a)  Vesting.  Unless the Award Certificate provides otherwise, restrictions on Stock-Based Awards granted under this Section 4.6 will lapse in equal annual installments over a period of four years beginning immediately after the date of grant. If the restrictions on Stock-Based Awards have not lapsed or been satisfied as of the Participant’s Termination of Employment, the Shares will be forfeited by the Participant if the termination is for any reason other than the Retirement, death or Disability of the Participant or a Change in Control. Unless the Award Certificate provides otherwise, (i) all restrictions on Stock-Based Awards granted pursuant to this Section 4.6 will lapse upon the death or Disability of the Participant, (ii) in the event of Retirement, the Award will vest pro rata with respect to the portion of the four-year vesting term (or such other vesting term as is set forth in the Award Certificate) that the Participant has completed as of the Participant’s Termination of Employment and provided that the Participant has satisfied all other applicable conditions established by the Committee with respect to such pro rata vesting, and (iii) in the event of a Change in Control, Stock-Based Awards will be treated in accordance with Section 5.4. In no event may the vesting period of a time-based full-value share award be less than three years (on either a cliff or graded vesting basis), except that the Committee may award up to 10 percent of the shares authorized for issuance under Section 5.1 with a vesting period of less than three years under such circumstances as it deems appropriate.

 

(b)  Grant of Restricted Stock.  The Committee may grant Restricted Stock to any Employee, which Shares will be registered in the name of the Participant and held for the Participant by the Company. The Participant will have all rights of a stockholder with respect to the Shares, including the right to vote and to receive dividends or other distributions, except that the Shares may be subject to a vesting schedule and will be forfeited if the Participant attempts to sell, transfer, assign, pledge or otherwise encumber or dispose of the Shares before the restrictions are satisfied or lapse.

 

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(c)  Grant of Restricted Units.  The Committee may grant Restricted Units to any Employee, which Units will be paid in cash or whole Shares or a combination of cash and Shares, as determined in the discretion of the Committee. The Committee will determine the terms and conditions applicable to the grant of Restricted Units, which terms and conditions will be set forth in the Award Certificate. For each Restricted Unit that vests, one Share will be paid or an amount in cash equal to the Fair Market Value of a Share, as set forth in the Award Certificate, will be delivered to the Participant on the applicable delivery date.

 

(d)  Grant of Deferred Stock Units.  The Committee may grant Deferred Stock Units to any Employee, which Units will be paid in whole Shares upon the Employee’s Termination of Employment if the restrictions on the Units have lapsed. One Share will be paid for each Deferred Stock Unit that becomes payable.

 

(e)  Dividends and Dividend Equivalents.  At the discretion of the Committee and as set forth in the applicable Award Certificate, dividends issued on Shares may be paid immediately or withheld and deferred in the Participant’s account. In the event of a payment of dividends on Common Stock, the Committee may credit Restricted Units with Dividend Equivalents in accordance with terms and conditions established in the discretion of the Committee. Dividend Equivalents will be subject to such vesting terms as is determined by the Committee and may be distributed immediately or withheld and deferred in the Participant’s account as determined by the Committee and set forth in the applicable Award Certificate. Deferred Stock Units may, in the discretion of the Committee and as set forth in the Award Certificate, be credited with Dividend Equivalents or additional Deferred Stock Units. The number of any Deferred Stock Units credited to a Participant’s account upon the payment of a dividend will be equal to the quotient produced by dividing the cash value of the dividend by the Fair Market Value of one Share as of the date the dividend is paid. The Committee will determine any terms and conditions on deferral of a dividend or Dividend Equivalent, including the rate of interest to be credited on deferral and whether interest will be compounded.

 

4.7  Director Awards.

 

(a)                                 The Committee may grant Deferred Stock Units to each Director in such an amount as the Board, in its discretion, may approve in advance. Each such Deferred Stock Unit will vest as determined by the Committee and set forth in the Award Certificate and will be paid in Shares within 30 days following the recipient’s Termination of Directorship, subject to deferral under any applicable deferred compensation plan approved by the Committee, in which case the terms of such arrangement shall govern. Dividend Equivalents or additional Deferred Stock Units will be credited to each Director’s account when dividends are paid on Common Stock to the shareholders, and will be paid to the Director at the same time that the Deferred Stock Units are paid to the Director.

 

(b)                                 The Committee may grant Director Shares to each Director in such amounts as the Board, in its discretion, may approve in advance.

 

(c)                                  The Committee may, in its discretion, grant Stock Options, Stock Appreciation Rights and other Stock-Based Awards to Directors.

 

4.8  Substitute Awards.  The Committee may make Awards under the Plan to Acquired Grantees through the assumption of, or in substitution for, outstanding Stock-Based Awards previously granted to such Acquired Grantees. Such assumed or substituted Awards will be subject to the terms and conditions of the original awards made by the Acquired Company, with such adjustments therein as the Committee considers appropriate to give effect to the relevant provisions of any agreement for the acquisition of the Acquired Company, provided that any such adjustment with respect to Nonqualified Stock Options and Stock Appreciation Rights shall satisfy the requirements of Treas. Reg. § 1.409A-1(b)(5)(v)(D) and otherwise ensure that such awards continue to be exempt from Code Section 409A and provided that any adjustment to Awards that are subject to Code Section 409A is in compliance with Code Section 409A and the regulations and rulings thereunder. Any grant of Incentive Stock Options pursuant to this Section 4.8 will be made in accordance with Section 424 of the Code and any final regulations published thereunder.

 

4.9  Limit on Individual Grants.  Subject to Sections 5.1 and 5.3, no Employee may be granted more than 6 million Shares over any calendar year pursuant to Awards of Stock Options, Stock Appreciation Rights and performance- based Restricted Stock and Restricted Units, except that an incentive Award of no more than 10 million Shares may be made pursuant to Stock Options, Stock Appreciation Rights and performance-based Restricted Stock and Restricted Units to any person who has been hired within the calendar year as a Key Employee. The maximum amount that may be paid in cash or Shares pursuant to Annual Performance Bonuses or Long Term Performance Awards paid in Performance Units to any one Employee is $10 million (U.S.) for any Performance Cycle of 12 months. For any longer Performance Cycle, this maximum will be adjusted proportionally.

 

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4.10  Termination for Cause; Clawback.  (a) Notwithstanding anything to the contrary herein, if a Participant incurs a Termination of Directorship or Termination of Employment for Cause, then all Stock Options, Stock Appreciation Rights, Annual Performance Bonuses, Long Term Performance Awards, Restricted Units, Restricted Stock and other Stock-Based Awards will immediately be cancelled. The exercise of any Stock Option or Stock Appreciation Right or the payment of any Award may be delayed, in the Committee’s discretion, in the event that a potential termination for Cause is pending, subject to ensuring an exemption from or compliance with Code Section 409A and the underlying regulations and rulings. If a Participant incurs a Termination of Employment for Cause, or the Company becomes aware (after the Participant’s Termination of Employment) of conduct on the part of the Participant that would be grounds for a Termination of Employment for Cause, then the Participant will be required to deliver to the Company (i) Shares (or, in the discretion of the Committee, cash) in an amount that is equal in value to the amount of any profit the Participant realized upon the exercise of an Option during the period beginning six (6) months prior to the Participant’s Termination of Employment and ending on the two (2) year anniversary of such Termination of Employment; and (ii) the number of Shares (or, in the discretion of the Committee, the cash value of said shares) the Participant received for Restricted Shares, Restricted Units or other Stock-Based Awards that vested during the period described in (i) above.

 

(b)                                 In addition, the Committee shall have the authority to establish any other terms and conditions applicable to Awards (including the mandatory return of all or any portion of the value previously realized by a Participant upon the vesting or exercise of an Award) as are deemed necessary and/or appropriate to recover amounts mistakenly paid to Participants (as a result of incorrect financial data or otherwise), including provisions intended to comply with applicable rules adopted or to be adopted by the Securities and Exchange Commission, New York Stock Exchange or any other governmental agency or stock exchange having the authority to establish rules affecting the payment of compensation under this Plan.

 

ARTICLE V

SHARES SUBJECT TO THE PLAN; ADJUSTMENTS

 

5.1  Shares Available.  The Shares issuable under the Plan will be authorized but unissued Shares, and, to the extent permissible under applicable law, Shares acquired by the Company, any Subsidiary or any other person or entity designated by the Company. The original number of shares issuable under the Plan on and after the original effective date of the Plan (June 29, 2007) was five percent (5%) of the Shares outstanding as of that date. On March 10, 2010, the shareholders of the Company authorized an additional fifteen million (15,000,000) shares issuable under the Plan. On March 7, 2012, the shareholders of the Company authorized an additional twenty million (20,000,000) shares issuable under the Plan. The total number of Shares with respect to which Awards may be issued under the Plan on and after the Effective Date may equal, but not exceed, the total number of shares remaining from the original number of shares issuable under the Plan, plus the additional fifteen million (15,000,000) shares authorized on March 10, 2010, plus the additional twenty million (20,000,000) shares authorized on March 7, 2012, subject to adjustment in accordance with Section 5.3; provided that when Shares are issued pursuant to a grant of Restricted Stock, Restricted Units, Deferred Stock Units, Performance Units or as payment of an Annual Performance Bonus or other Stock-Based Award, the total number of Shares remaining available for grant will be decreased by a margin of at least 1.8 per Share issued. In addition, in the case of the settlement of any stock-settled Stock Appreciation Right, the total number of Shares available for grant will be decreased by the total number of Shares equal in value to the total value of the Stock Appreciation Right on the day of settlement. No more than 10 million Shares of the total Shares issuable under the Plan may be available for grant in the form of Incentive Stock Options.

 

5.2  Counting Rules.  The following Shares related to Awards under this Plan may again be available for issuance under the Plan, in addition to the Shares described in Section 5.1:

 

(a)                                 Shares related to Awards paid in cash;

 

(b)                                 Shares related to Awards that expire, are forfeited or cancelled or terminate for any other reason without issuance of Shares, and provided that each such forfeited, cancelled or terminated Share that was originally issued pursuant to a grant of Restricted Stock, Restricted Units, Deferred Stock Units, Performance Units or as payment of an Annual Performance Bonus or other Stock- Based Award shall be counted as 1.8 Share;

 

(c)                                  Any Shares issued in connection with Awards that are assumed, converted or substituted as a result of the acquisition of an Acquired Company by the Company or a combination of the Company with another company; and

 

(d)                                 Any Shares of Restricted Stock that are returned to the Company upon a Participant’s Termination of Employment.

 

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5.3  Adjustments.  In the event of a change in the outstanding Shares by reason of a stock split, reverse stock split, dividend or other distribution (whether in the form of cash, Shares, other securities or other property), extraordinary cash dividend, recapitalization, merger, consolidation, split-up, spin-off, reorganization, combination, repurchase or exchange of Shares or other securities or similar corporate transaction or event, the Committee shall make an appropriate adjustment to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. Any such adjustment with respect to Nonqualified Stock Options and Stock Appreciation Rights shall satisfy the requirements of Treas. Reg. § 1.409A-1(b)(5)(v)(D) and otherwise ensure that such awards continue to be exempt from Code Section 409A, and any adjustment to Awards that are subject to Code Section 409A shall comply with Code Section 409A and the regulations and rulings thereunder. Any adjustment made by the Committee under this Section 5.3 will be conclusive and binding for all purposes under the Plan.

 

5.4  Change in Control.

 

(a)                                 Unless otherwise provided under the terms of an applicable Award Certificate, (i) all outstanding Stock Options and Stock Appreciation Rights will become exercisable as of the effective date of a Participant’s Change in Control Termination if the Awards are not otherwise vested, and all conditions will be waived with respect to outstanding Restricted Stock, Restricted Units and other Stock-Based Awards (other than Long Term Performance Awards) and Deferred Stock Units, and (ii) each Participant who has been granted an Annual Performance Bonus or Long Term Performance Award that is outstanding as of the date of such Participant’s Change in Control Termination will be deemed to have achieved a level of performance, as of the Change in Control Termination, that would cause all (100%) of the Participant’s Target Amounts to become payable and all restrictions on the Participant’s Restricted Units and Shares of Restricted Stock to lapse. Unless the Committee determines otherwise in its discretion (either when the award is granted or any time thereafter), in the event that Awards outstanding as of the date of a Change in Control that are payable in shares of Company Common Stock will not be substituted with comparable awards payable or redeemable in shares of publicly-traded stock after the Change in Control, each such outstanding Award (i) will become fully vested (at target, where applicable) immediately prior to the Change in Control and (ii) each such Award that is a Stock Option will be settled in cash, without the Participant’s consent, for an amount equal to the amount that could have been attained upon the exercise of such Award immediately prior to the Change in Control had such Award been exercisable or payable at such time.

 

(b)                                 In addition to the other actions described in Section 5.4(a), in the event of a Change in Control the Committee may take any one or more of the following actions with respect to any or all outstanding Awards, without the consent of the Participant: (i) the Committee may determine that outstanding Stock Options and Stock Appreciation Rights shall be fully exercisable, and restrictions on Restricted Stock, Restricted Units, Deferred Stock Units and other Stock-Based Awards shall lapse, as of the date of the Change in Control or such other time (prior to a Participant’s Change in Control Termination) as the Committee determines, (ii) the Committee may require that a Participant surrender their outstanding Stock Options and Stock Appreciation Rights in exchange for one or more payments by the Company, in cash or Common Stock as determined by the Committee, in an amount equal to the amount by which the then Fair Market Value of the shares of Common Stock subject to the Participant’s unexercised Stock Options and Stock Appreciation Rights exceeds the exercise price, if any, and on such terms as the Committee determines, (iii) after giving Participants an opportunity to exercise their outstanding Stock Options and Stock Appreciation Rights, the Committee may terminate any or all unexercised Stock Options and Stock Appreciation Rights at such time as the Committee deems appropriate, (iv) the Committee may determine that Annual Performance Bonuses and/or Long Term Performance Awards will be paid out at their target level, in cash or Common Stock as determined by the Committee, or (v) the Committee may determine that Awards that remain outstanding after the Change in Control shall be converted to similar grants of, or assumed by, the surviving corporation (or a parent or subsidiary of the surviving corporation or successor). Such acceleration, surrender, termination, settlement or conversion shall take place as of the date of the Change in Control or such other date as the Committee may specify. The Committee may specify how an Award will be treated in the event of a Change in Control either when the Award is granted or at any time thereafter, except as otherwise provided herein.

 

5.5  Fractional Shares.  No fractional Shares will be issued under the Plan. Except as otherwise provided in Section 4.5(e), if a Participant acquires the right to receive a fractional Share under the Plan, the Participant will receive, in lieu of the fractional Share, a full Share as of the date of settlement, unless otherwise provided by the Committee.

 

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ARTICLE VI

AMENDMENT AND TERMINATION

 

6.1  Amendment.  The Plan may be amended at any time and from time to time by the Board without the approval of stockholders of the Company, except that no material revision to the terms of the Plan will be effective until the amendment is approved by the stockholders of the Company. A revision is “material” for this purpose if, among other changes, it materially increases the number of Shares that may be issued under the Plan (other than an increase pursuant to Section 5.3 of the Plan), expands the types of Awards available under the Plan, materially expands the class of persons eligible to receive Awards under the Plan, materially extends the term of the Plan, materially decreases the Exercise Price at which Stock Options or Stock Appreciation Rights may be granted, reduces the Exercise Price of outstanding Stock Options or Stock Appreciation Rights, or results in the replacement of outstanding Stock Options and Stock Appreciation Rights with new Awards that have an Exercise Price that is lower than the Exercise Price of the replaced Stock Options and Stock Appreciation Rights. No amendment of the Plan or any outstanding Award made without the Participant’s written consent may adversely affect any right of a Participant with respect to an outstanding Award.

 

6.2  Termination.  The Plan will terminate upon the earlier of the following dates or events to occur:

 

(a)                                 the adoption of a resolution of the Board terminating the Plan; or

 

(b)                                 the day before the 10th anniversary of the adoption of the Plan by the Company’s shareholder as described in Section 1.2.

 

No Awards will be granted under this Plan after it has terminated. The termination of the Plan, however, will not alter or impair any of the rights or obligations of any person under any Award previously granted under the Plan without such person’s consent. After the termination of the Plan, any previously granted Awards will remain in effect and will continue to be governed by the terms of the Plan and the applicable Award Certificate.

 

ARTICLE VII

GENERAL PROVISIONS

 

7.1  Nontransferability of Awards.  No Award under the Plan will be subject in any manner to alienation, anticipation, sale, assignment, pledge, encumbrance or transfer, and no other persons will otherwise acquire any rights therein, except as provided below.

 

(a)                                 Any Award may be transferred by (i) will or by the laws of descent or distribution or (ii) under rules to be established by the Company, to a Participant’s spouse or former spouse in accordance with a domestic relations order or domestic settlement agreement associated with the dissolution of the Participant’s marriage.

 

(b)                                 The Committee may provide in the applicable Award Certificate that all or any part of a Nonqualified Option or Shares of Restricted Stock may, subject to the prior written consent of the Committee, be transferred to a family member. For purposes of this subsection (b), “family member” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the Participant, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons have more than 50 percent of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than 50 percent of the voting interests.

 

Any transferred Award will be subject to all of the same terms and conditions as provided in the Plan and the applicable Award Certificate. The Participant or the Participant’s estate will remain liable for any withholding tax that may be imposed by any federal, state or local tax authority. The Committee may, in its discretion, disallow all or a part of any transfer of an Award pursuant to this subsection (b) unless and until the Participant makes arrangements satisfactory to the Committee for the payment of any withholding tax. The Participant must immediately notify the Committee, in the form and manner required by the Committee, of any proposed transfer of an Award pursuant to this subsection (b). No transfer will be effective until the Committee consents to the transfer in writing.

 

(c)                                  Except as otherwise provided in the applicable Award Certificate, any Nonqualified Stock Option transferred by a Participant pursuant to this subsection (c) may be exercised by the transferee only to the extent that the Award would have been exercisable by the Participant had no transfer occurred. The transfer of Shares upon exercise of the Award will be conditioned on the payment of any withholding tax.

 

17

 

(d)                                 Restricted Stock may be freely transferred after the restrictions lapse or are satisfied and the Shares are delivered, provided, however, that Restricted Stock awarded to an affiliate of the Company may be transferred only pursuant to Rule 144 under the Securities Act, or pursuant to an effective registration for resale under the Securities Act. For purposes of this subsection (d), “affiliate” will have the meaning assigned to that term under Rule 144.

 

(e)                                  In no event may a Participant transfer an Incentive Stock Option other than by will or the laws of descent and distribution.

 

7.2  Withholding of Taxes.  The Committee, in its discretion, may satisfy a Participant’s tax withholding obligations by any of the following methods or any method as it determines to be in accordance with the laws of the jurisdiction in which the Participant resides, has domicile or performs services.

 

(a)  Stock Options and Stock Appreciation Rights.  As a condition to the delivery of Shares pursuant to the exercise of a Stock Option or Stock Appreciation Right, the Committee may require that the Participant, at the time of exercise, pay to the Company by cash, certified check, bank draft, wire transfer or postal or express money order an amount sufficient to satisfy any applicable tax withholding obligations. The Committee may also, in its discretion, accept payment of tax withholding obligations through any of the Exercise Price payment methods described in Section 4.3(d).

 

(b)  Other Awards Payable in Shares.  The Participant shall satisfy the Participant’s tax withholding obligations arising in connection with the release of restrictions on Restricted Units, Restricted Stock and other Stock- Based Awards by payment to the Company in cash or by certified check, bank draft, wire transfer or postal or express money order, provided that the format is approved by the Company or a designated third-party administrator. However, subject to any requirements of applicable law, the Company may also satisfy the Participant’s tax withholding obligations by other methods, including selling or withholding Shares that would otherwise be available for delivery, provided that the Board or the Committee has specifically approved such payment method in advance.

 

(c)  Cash Awards.  The Company may satisfy a Participant’s tax withholding obligation arising in connection with the payment of any Award in cash by withholding cash from such payment.

 

7.3  Special Forfeiture Provision.  The Committee may, in its discretion, provide in an Award Certificate that the Participant may not, within two years of the Participant’s Termination of Employment with the Company, enter into any employment or consultation arrangement (including service as an agent, partner, stockholder, consultant, officer or director) with any entity or person engaged in any business in which the Company or any Subsidiary is engaged without prior written approval of the Committee if, in the sole judgment of the Committee, the business is competitive with the Company or any Subsidiary or business unit or such employment or consultation arrangement would present a risk that the Participant would likely disclose Company proprietary information (as determined by the Committee). If the Committee makes a determination that this prohibition has been violated, the Participant (i) will forfeit all rights under any outstanding Stock Option or Stock Appreciation Right that was granted subject to the Award Certificate and will return to the Company the amount of any profit realized upon an exercise of all Awards during the period, as the Committee determines and sets forth in the Award Certificate, beginning no earlier than six months prior to the Participant’s Termination of Employment, and (ii) will forfeit and return to the Company any Annual Performance Bonuses, Performance Units, Shares of Restricted Stock, Restricted Units (including any credited Dividend Equivalents), Deferred Stock Units, and other Stock-Based Awards that are outstanding on the date of the Participant’s Termination of Employment, subject to the Award Certificate, and have not vested or that had vested and remain subject to this Section 7.3 during a period, as the Committee determines and sets forth in the Award Certificate, beginning no earlier than six months prior to the Participant’s Termination of Employment.

 

7.4  No Implied Rights.  The establishment and operation of the Plan, including the eligibility of a Participant to participate in the Plan, will not be construed as conferring any legal or other right upon any Director for any continuation of directorship or any Employee for the continuation of employment through the end of any Performance Cycle or other period. The Company expressly reserves the right, which may be exercised at any time and in the Company’s sole discretion, to discharge any individual or treat him or her without regard to the effect such discharge might have upon him or her as a Participant in the Plan.

 

7.5  No Obligation to Exercise Awards.  The grant of a Stock Option or Stock Appreciation Right will impose no obligation upon the Participant to exercise the Award.

 

7.6  No Rights as Stockholders.  A Participant who is granted an Award under the Plan will have no rights as a stockholder of the Company with respect to the Award unless and until certificates for the Shares underlying the Award are registered in the Participant’s name and (other than in the case of Restricted Stock) delivered to the Participant. The right of any Participant to receive an Award by virtue of participation in the Plan will be no greater than the right of any unsecured general creditor of the Company.

 

18

 

7.7  Indemnification of Committee.  The Company will indemnify, to the fullest extent permitted by law, each person made or threatened to be made a party to any civil or criminal action or proceeding by reason of the fact that the person, or the executor or administrator of the person’s estate, is or was a member of the Committee or a delegate of the Committee.

 

7.8  No Required Segregation of Assets.  Neither the Company nor any Subsidiary will be required to segregate any assets that may at any time be represented by Awards granted pursuant to the Plan.

 

7.9  Nature of Payments.  All Awards made pursuant to the Plan are in consideration of services for the Company or a Subsidiary. Any gain realized pursuant to Awards under the Plan constitutes a special incentive payment to the Participant and will not be taken into account as compensation for purposes of any other employee benefit plan of the Company or a Subsidiary, except as the Committee otherwise provides. The adoption of the Plan will have no effect on Awards made or to be made under any other benefit plan covering an employee of the Company or a Subsidiary or any predecessor or successor of the Company or a Subsidiary.

 

7.10  Securities Law Compliance.  Awards under the Plan are intended to satisfy the requirements of Rule 16b-3 under the Exchange Act. If any provision of this Plan or any grant of an Award would otherwise frustrate or conflict with this intent, that provision will be interpreted and deemed amended so as to avoid conflict. No Participant will be entitled to a grant, exercise, transfer or payment of any Award if the grant, exercise, transfer or payment would violate the provisions of the Sarbanes-Oxley Act of 2002 or any other applicable law.

 

7.11  Section 409A Compliance.  To the extent the Committee determines that any Award granted under the Plan is subject to Section 409A of the Code, the Award Certificate evidencing such Award will incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan and the Award Certificate will be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan, in the event that the Committee determines that any Award may be subject to Section 409A of the Code, the Committee may adopt such amendments to the Plan and/or the applicable Award Certificate or adopt policies and procedures or take any other action or actions, including an action or amendment with retroactive effect, that the Committee determines is necessary or appropriate to (i) exempt the Award from the application of Section 409A of the Code or (ii) comply with the requirements of Section 409A of the Code. Any Award that provides for a payment to any Participant who is a “specified employee” of deferred compensation that is subject to Code Section 409A(a)(2) and that becomes payable upon, or that is accelerated upon, such Participant’s Termination of Employment, shall also provide that no such payment shall be made on or before the date which is six months following such Participant’s Termination of Employment (or, if earlier, such Participant’s death). A specified employee for this purpose shall be determined by the Committee or its delegate in accordance with the provisions of Code Section 409A and the regulations and rulings thereunder.

 

7.12  Governing Law, Severability.  The Plan and all determinations made and actions taken under the Plan will be governed by the law of Switzerland and construed accordingly. If any provision of the Plan is held unlawful or otherwise invalid or unenforceable in whole or in part, the unlawfulness, invalidity or unenforceability will not affect any other parts of the Plan, which parts will remain in full force and effect.

 

19Exhibit 10.10

 

TE CONNECTIVITY

CHANGE IN CONTROL SEVERANCE PLAN FOR CERTAIN

U.S. EXECUTIVES

 

Amended and Restated Effective March 5, 2014

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I                                BACKGROUND,   PURPOSE AND TERM OF PLAN
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Purpose   of the Plan
    	
1
    
	
Section 1.02
    	
Term   of the Plan
    	
1
    
	
Section 1.03
    	
Compliance   with Code Section 409A
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II                           DEFINITIONS
    	
2
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
“Annual   Bonus”
    	
2
    
	
Section 2.02
    	
“Base   Salary”
    	
2
    
	
Section 2.03
    	
“Board”
    	
2
    
	
Section 2.04
    	
“Cause”
    	
2
    
	
Section 2.05
    	
“Change   in Control”
    	
2
    
	
Section 2.06
    	
“Change   in Control Termination”
    	
3
    
	
Section 2.07
    	
“COBRA”
    	
3
    
	
Section 2.08
    	
“Code”
    	
3
    
	
Section 2.09
    	
“Committee”
    	
3
    
	
Section 2.10
    	
“Company”
    	
3
    
	
Section 2.11
    	
“Effective   Date”
    	
3
    
	
Section 2.12
    	
“Eligible   Employee”
    	
3
    
	
Section 2.13
    	
“Employee”
    	
3
    
	
Section 2.14
    	
“Employer”
    	
4
    
	
Section 2.15
    	
“ERISA”
    	
4
    
	
Section 2.16
    	
“Exchange   Act”
    	
4
    
	
Section 2.17
    	
“Executive   Severance Plan”
    	
4
    
	
Section 2.18
    	
“Good   Reason Resignation”
    	
4
    
	
Section 2.19
    	
“Involuntary   Termination”
    	
5
    
	
Section 2.20
    	
“Key   Employee”
    	
5
    
	
Section 2.21
    	
“Notice   Pay”
    	
5
    
	
Section 2.22
    	
“Participant”
    	
5
    
	
Section 2.23
    	
“Permanent   Disability”
    	
5
    
	
Section 2.24
    	
“Plan”
    	
5
    
	
Section 2.25
    	
“Plan   Administrator”
    	
5
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 2.26
    	
“Postponement   Period”
    	
6
    
	
Section 2.27
    	
“Potential   Change in Control”
    	
6
    
	
Section 2.28
    	
“Release”
    	
7
    
	
Section 2.29
    	
“Separation   from Service”
    	
7
    
	
Section 2.30
    	
“Separation   from Service Date”
    	
7
    
	
Section 2.31
    	
“Severance   Benefit”
    	
7
    
	
Section 2.32
    	
“Severance   Period”
    	
7
    
	
Section 2.33
    	
“Subsidiary”
    	
7
    
	
Section 2.34
    	
“Successor”
    	
7
    
	
Section 2.35
    	
“Voluntary   Resignation”
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE III                      PARTICIPATION   AND ELIGIBILITY FOR BENEFITS
    	
8
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Participation
    	
8
    
	
Section 3.02
    	
Conditions
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE IV                       DETERMINATION   OF SEVERANCE BENEFITS
    	
10
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Amount   of Severance Benefits Upon Involuntary Termination and Good Reason   Resignation
    	
10
    
	
Section 4.02
    	
Voluntary   Resignation; Termination Due to Death or Permanent Disability
    	
12
    
	
Section 4.03
    	
Termination   for Cause
    	
12
    
	
Section 4.04
    	
Reduction   of Severance Benefits
    	
12
    
	
Section 4.05
    	
Non-Duplication   of Benefits
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE V                            METHOD,   DURATION AND LIMITATION OF SEVERANCE BENEFIT PAYMENTS
    	
14
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Method   of Payment
    	
14
    
	
Section 5.02
    	
Other   Arrangements
    	
14
    
	
Section 5.03
    	
Code   Section 409A
    	
14
    
	
Section 5.04
    	
Termination   of Eligibility for Benefits
    	
15
    
	
Section 5.05
    	
Limitation   on Benefits
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE VI                       CONFIDENTIALITY   and non-disparagement
    	
17
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
Confidential   Information
    	
17
    
	
Section 6.02
    	
Non-Disparagement
    	
17
    
	
Section 6.03
    	
Reasonableness
    	
17
    

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 6.04
    	
Equitable   Relief
    	
17
    
	
Section 6.05
    	
Survival   of Provisions
    	
18
    
	
 
    	
 
    	
 
    
	
ARTICLE  VII      THE   PLAN ADMINISTRATOR
    	
19
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
Authority   and Duties
    	
19
    
	
Section 7.02
    	
Compensation   of the Plan Administrator
    	
19
    
	
Section 7.03
    	
Records,   Reporting and Disclosure
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII             AMENDMENT,   TERMINATION AND DURATION
    	
20
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
Amendment,   Suspension and Termination
    	
20
    
	
Section 8.02
    	
Duration
    	
20
    
	
 
    	
 
    	
 
    
	
ARTICLE IX                       DUTIES OF THE   COMPANY AND THE COMMITTEE
    	
21
    
	
 
    	
 
    	
 
    
	
Section 9.01
    	
Records
    	
21
    
	
Section 9.02
    	
Payment
    	
21
    
	
Section 9.03
    	
Discretion
    	
21
    
	
 
    	
 
    	
 
    
	
ARTICLE X                            CLAIMS   PROCEDURES
    	
22
    
	
 
    	
 
    	
 
    
	
Section 10.01
    	
Claim
    	
22
    
	
Section 10.02
    	
Initial   Claim
    	
22
    
	
Section 10.03
    	
Appeals   of Denied Administrative Claims
    	
22
    
	
Section 10.04
    	
Appointment   of the Named Appeals Fiduciary
    	
23
    
	
Section 10.05
    	
Arbitration;   Expenses
    	
23
    
	
 
    	
 
    	
 
    
	
ARTICLE XI                       MISCELLANEOUS
    	
25
    
	
 
    	
 
    	
 
    
	
Section 11.01
    	
Nonalienation   of Benefits
    	
25
    
	
Section 11.02
    	
Notices
    	
25
    
	
Section 11.03
    	
Successors
    	
25
    
	
Section 11.04
    	
Other   Payments
    	
25
    
	
Section 11.05
    	
No   Mitigation
    	
25
    
	
Section 11.06
    	
No   Contract of Employment
    	
25
    
	
Section 11.07
    	
Severability   of Provisions
    	
25
    
	
Section 11.08
    	
Heirs,   Assigns, and Personal Representatives
    	
26
    
	
Section 11.09
    	
Headings   and Captions
    	
26
    
	
Section 11.10
    	
Gender   and Number
    	
26
    

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 11.11
    	
Unfunded   Plan
    	
26
    
	
Section 11.12
    	
Compliance   with Code Section 409A
    	
26
    
	
Section 11.13
    	
Payments   to Incompetent Persons
    	
26
    
	
Section 11.14
    	
Lost   Payees
    	
26
    
	
Section 11.15
    	
Controlling   Law
    	
26
    
	
 
    	
 
    	
 
    
	
SALARY REPLACEMENT AND ANNUAL BONUS
    	
A-1
    

 

iv

 

ARTICLE I

 

BACKGROUND, PURPOSE AND TERM OF PLAN

 

Section 1.01                            Purpose of the Plan.  The purpose of the Plan is to provide Eligible Employees with certain compensation and benefits as set forth in the Plan in the event the Eligible Employee’s employment with the Company or a Subsidiary is terminated due to a Change in Control Termination.  The Plan is not intended to be an “employee pension benefit plan” or “pension plan” within the meaning of Section 3(2) of ERISA.  Rather, this Plan is intended to be a “welfare benefit plan” within the meaning of Section 3(1) of ERISA and to meet the descriptive requirements of a plan constituting a “severance pay plan” within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, section 2510.3-2(b).  Accordingly, the benefits paid by the Plan are not deferred compensation and no employee shall have a vested right to such benefits.

 

Section 1.02                            Term of the Plan.  The Plan shall generally be effective as of the Effective Date, but subject to amendment from time to time in accordance with Section 8.01.  The Plan shall continue until terminated pursuant to Article VIII of the Plan.

 

Section 1.03                            Compliance with Code Section 409A.  The terms of this Plan are intended to, and shall be interpreted so as to, comply in all respects with the provisions of Code Section 409A and the regulations and rulings promulgated thereunder.

 

 

ARTICLE II

 

DEFINITIONS

 

Section 2.01                            “Annual Bonus” shall mean 100% of the Participant’s target annual bonus.

 

Section 2.02                            “Base Salary” shall mean the annual base salary in effect as of the Participant’s Separation from Service Date.

 

Section 2.03                            “Board” shall mean the Board of Directors of the Company or any successor thereto, or a committee thereof specifically designated for purposes of making determinations hereunder.

 

Section 2.04                            “Cause” shall mean (i) a material violation of any fiduciary duty owed to the Company, (ii) conviction of, or entry of a plea of nolo contendere with respect to, a felony or misdemeanor, (iii) dishonesty, (iv) theft, or (v) other egregious conduct, that is likely to have a materially detrimental impact on the Company and its employees.  Whether an Eligible Employee’s termination is as a result of Cause shall be determined in the discretion of the Plan Administrator.

 

Section 2.05                            “Change in Control”  shall mean any of the following events:

 

(i)                                     any “person” (as defined in Section 13(d) and 14(d) of the Exchange Act, excluding for this purpose, (i) TE Connectivity Ltd. or any Subsidiary company (wherever incorporated) of TE Connectivity Ltd.  as defined by Section 86 of the Companies Act 1981 of Bermuda, as amended or (ii) any employee benefit plan of TE Connectivity Ltd.  or any such Subsidiary company (or any person or entity organized, appointed or established by TE Connectivity Ltd.  for or pursuant to the terms of any such plan that acquires beneficial ownership of voting securities of TE Connectivity Ltd. ), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of securities of TE Connectivity Ltd.  representing more than 30 percent of the combined voting power of TE Connectivity Ltd.’s then outstanding securities; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by TE Connectivity Ltd. ;

 

(ii)                                  persons who, as of the Effective Date, constitute the Board of Directors of TE Connectivity Ltd. (the “Incumbent Directors”) cease for any reason (including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction) to constitute at least a majority thereof, provided that any person becoming a Director of TE Connectivity Ltd.  subsequent to the Effective Date shall be considered an Incumbent Director if such person’s election or nomination for election was approved by a vote of at least 50 percent of the Incumbent Directors; but provided further, that any such person whose initial assumption of office is in connection with an actual or threatened proxy contest relating to the election of members of the Board of Directors of TE Connectivity Ltd. or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as defined in Section 13(d) and 14(d) of the Exchange Act) other than the Board of Directors of TE Connectivity Ltd., including by reason of agreement intended to avoid or settle any such actual or threatened contest or

 

2

 

solicitation, shall not be considered an Incumbent Director;

 

(iii)                               consummation of a reorganization, merger or consolidation or sale or other disposition of at least 80 percent of the assets of TE Connectivity Ltd.  (a “Business Combination”), in each case, unless, following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners of outstanding voting securities of TE Connectivity Ltd.  immediately prior to such Business Combination beneficially own directly or indirectly more than 50 percent of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the company resulting from such Business Combination (including, without limitation, a company which, as a result of such transaction, owns TE Connectivity Ltd.  or all or substantially all of the assets of TE Connectivity Ltd. either directly or through one or more Subsidiary companies (wherever incorporated) of TE Connectivity Ltd.  as defined by Section 86 of the Companies Act 1981 of Bermuda, as amended) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding voting securities of TE Connectivity Ltd. ; or

 

(iv)                              approval by the stockholders of TE Connectivity Ltd.  of a complete liquidation or dissolution of TE Connectivity Ltd.

 

Section 2.06                            “Change in Control Termination”  shall mean a Participant’s Involuntary Termination or Good Reason Resignation that occurs during the period beginning 60 days prior to the date of a Change in Control and ending two years after the date of such Change in Control.

 

Section 2.07                            “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and the regulations promulgated thereunder.

 

Section 2.08                            “Code” shall mean the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

 

Section 2.09                            “Committee” shall mean the Management Development and Compensation Committee of the Board of Directors of TE Connectivity Ltd. or such other committee appointed by the Board of Directors of TE Connectivity Ltd. to assist the Company in making determinations required under the Plan in accordance with its terms.  The “Committee” may delegate its authority under the Plan to an individual or another committee.

 

Section 2.10                            “Company” shall mean Tyco Electronics Corporation.  Unless it is otherwise clear from the context, Company shall generally include participating Subsidiaries.

 

Section 2.11                            “Effective Date” shall mean March, 2014, the effective date of this amended and restated Plan.

 

Section 2.12                            “Eligible Employee” shall mean an Employee who is in the Band level 0 or 1 classification. If there is any question as to whether an Employee is deemed an Eligible Employee for purposes of the Plan, the Plan Administrator shall make the determination.

 

Section 2.13                            “Employee” shall mean an individual employed by an Employer as a common law employee on the United States payroll of the Company or a Subsidiary, and shall

 

3

 

not include any person working for the Company through a temporary service or on a leased basis or who is hired by the Company as an independent contractor, consultant, or otherwise as a person who is not an employee for purposes of withholding federal employment taxes, as evidenced by payroll records or a written agreement with the individual, regardless of any contrary governmental or judicial determination or holding relating to such status or tax withholding.

 

Section 2.14                            “Employer” shall mean the Company or any Subsidiary with respect to which this Plan has been adopted.

 

Section 2.15                            “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and regulations promulgated thereunder.

 

Section 2.16                            “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended and the regulations promulgated thereunder.

 

Section 2.17                            “Executive Severance Plan” shall mean the TE Connectivity Severance Plan for U.S. Officers and Executives, which plan is superseded by this Plan in the event of any Participant’s Change in Control Termination.

 

Section 2.18                            “Good Reason Resignation” shall mean any retirement or termination of employment by a Participant that is not initiated by the Company or any Subsidiary and that is caused by any one or more of the following events which occurs during the period beginning 60 days prior to the date of a Change in Control and ending two years after the date of such Change in Control:

 

(1)  Without the Participant’s written consent, assignment to the Participant of any duties inconsistent in any material respect with the Participant’s authority, duties or responsibilities as in effect immediately prior to the Change in Control;

 

(2) Without the Participant’s written consent, a material diminution in the authority, duties or responsibilities of the supervisor to whom the Participant is required to report as in effect immediately prior to the Change in Control;

 

(3)  Without the Participant’s written consent, a material change in the geographic location at which the Participant must perform services to a location which is more than 60 miles from the Participant’s principal place of business immediately preceding the Change in Control);

 

(4)  Without the Participant’s written consent, the Company materially reduces the Participant’s compensation and benefits, taken as a whole, as in effect immediately prior to the Change in Control;

 

(5)  The Company fails to obtain a satisfactory agreement from any Successor to assume and agree to perform the Company’s obligations to the Participant under this Plan, as contemplated in Section 11.03 herein; or

 

(6)  Without the Participant’s written consent, a material diminution in the budget over which the Participant retains authority;

 

4

 

Notwithstanding the foregoing, the Participant shall be considered to have a Good Reason Resignation only if the Participant provides written notice to the Company specifying in reasonable detail the events or conditions upon which the Participant is basing such Good Reason Resignation and the Participant provides such notice within 90 days after the event that gives rise to the Good Reason Resignation.  Within 30 days after notice has been received, the Company shall have the opportunity, but shall have no obligation, to cure such events or conditions that give rise to the Good Reason Resignation.  If the Company does not cure such events or conditions within the 30-day period, the Participant may terminate employment with the Company based on Good Reason Resignation within 30 days after the expiration of the cure period.

 

Section 2.19                            “Involuntary Termination” shall mean the date that a Participant experiences a Company-initiated Separation from Service for any reason other than Cause, Permanent Disability or death, as provided under and subject to the conditions of Article III.

 

Section 2.20                            “Key Employee” shall mean an Employee who, at any time during the 12-month period ending on the identification date, is a “specified employee” under Code Section 409A, as determined by the Committee or its delegate.  The determination of Key Employees, including the number and identity of persons considered specific employees and the identification date, shall be made by the Committee or its delegate in accordance with the provisions of Code Section 409A and the regulations promulgated thereunder.

 

Section 2.21                            “Notice Pay” shall mean the amounts that a Participant is eligible to receive pursuant to Article IV of the Plan.

 

Section 2.22                            “Participant” shall mean any Eligible Employee who meets the requirements of Article III and thereby becomes eligible for Severance Benefits under the Plan.

 

Section 2.23                            “Permanent Disability” shall mean that an Employee has a permanent and total incapacity from engaging in any employment for the Employer for physical or mental reasons.  A “Permanent Disability” shall be deemed to exist if the Employee meets the requirements for disability benefits under the Employer’s long-term disability plan or under the requirements for disability benefits under the Social Security law (or similar law outside the United States, if the Employee is employed in that jurisdiction) then in effect, or if the Employee is designated with an inactive employment status at the end of a disability or medical leave.

 

Section 2.24                            “Plan” means the TE Connectivity Change in Control Severance Plan for Certain U.S. Officers and Executives as set forth herein, and as the same may from time to time be amended.

 

Section 2.25                            “Plan Administrator” shall mean, for the period prior to a Potential Change in Control, the individual(s) appointed by the Committee to administer the terms of the Plan as set forth herein and if no individual is appointed by the Committee to serve as the Plan Administrator for the Plan, the Plan Administrator shall be the Senior Vice President, Global Human Resources for TE Connectivity (or the equivalent).  In the event of the occurrence of a Potential Change in Control, the Senior Vice-President, Global Human Resources for TE Connectivity (or the equivalent) shall appoint a person or entity independent of the Company and

 

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any person operating under the Company’s control or on its behalf to serve as Plan Administrator (and such person or entity shall be the Plan Administrator for all purposes after such appointment), and such appointment shall take effect and become irrevocable as of the date of said appointment (provided that such appointment shall be revocable if a Change in Control does not occur and the Potential Change in Control expires in accordance with Section 2.26(y)).  For periods prior to a Potential Change in Control, the Plan Administrator may delegate all or any portion of its authority under the Plan to any other person(s).

 

Section 2.26                            “Postponement Period” shall mean, for a Key Employee, the period of six months after the Key Employee’s Separation from Service Date (or such other period as may be required by Code Section 409A) during which deferred compensation may not be paid to the Key Employee under Code Section 409A.

 

Section 2.27                            “Potential Change in Control” shall mean the occurrence and continuation of any of the following: (a) any “person” (as defined in Section 13(d) and 14(d) of the Exchange Act), excluding for this purpose, (i) TE Connectivity Ltd. or any Subsidiary company (wherever incorporated) of TE Connectivity Ltd. as defined by Section 86 of the Companies Act 1981 of Bermuda, as amended or (ii) any employee benefit plan of TE Connectivity Ltd. or any such Subsidiary company (or any person or entity organized, appointed or established by TE Connectivity Ltd. for or pursuant to the terms of any such plan that acquires beneficial ownership of voting securities of TE Connectivity Ltd.), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of securities of TE Connectivity Ltd. representing more than 5 percent of the combined voting power of TE Connectivity Ltd.’s then outstanding securities unless such Person has reported or is required to report such ownership on Schedule 13G under the Exchange Act (or any comparable or successor report) or on Schedule 13D under the Exchange Act (or any comparable or successor report), which Schedule 13D does not state any intention to or reserve the right to control or influence the management or policies of TE Connectivity Ltd. or engage in any of the actions specified in Item 4 of such Schedule (other than the disposition of the common stock) so long as such Person neither reports nor is required to report such ownership other than as described in this paragraph; provided, however, that a Potential Change in Control will not be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by TE Connectivity Ltd., (b) TE Connectivity Ltd. enters into an agreement, the consummation of which would result in the occurrence of a Change in Control, (c) any “person” (as defined in subsection(a)) publicly announces an intention to take or to consider taking actions which, if consummated, would constitute or result in a Change in Control, (d) any person ( as defined in subsection (a)) commences a solicitation (as defined in Rule 14a-1 of the Exchange Act) of proxies or consents that has the purpose of effecting or would (if successful) result in a Change in Control, (e) a tender or exchange offer for at least 30% of the outstanding voting securities of TE Connectivity Ltd., made by a “person” (as defined in subsection (a)), is first published or sent or given (within the meaning of Rule 14d-2(a) of the Exchange Act), or (f) the Board of Directors of TE Connectivity Ltd. adopts a resolution to the effect that, for purposes of the Plan, a Potential Change in Control has occurred.  The Potential Change in Control shall be deemed in effect until the earlier of (x) the occurrence of a Change in Control, or (y) the adoption by the Board of Directors of TE Connectivity Ltd. of a resolution stating that, for purposes of the Plan, the Potential Change in Control has expired.

 

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Section 2.28                            “Release” shall mean the Separation of Employment Agreement and General Release, as provided by the Company.

 

Section 2.29                            “Separation from Service” shall mean a “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i) and applicable regulations and rulings promulgated thereunder.

 

Section 2.30                            “Separation from Service Date” shall mean the date on which the active employment of the Participant by the Company or a Subsidiary experiences a separation from service by reason of an Involuntary Termination or a Good Reason Resignation within the meaning of Code Section 409A and the regulations promulgated thereunder.

 

Section 2.31                            “Severance Benefits” shall mean the salary and bonus replacement amounts and other benefits that a Participant is eligible to receive pursuant to Article IV of the Plan.

 

Section 2.32                            “Severance Period” shall mean the period for which a Participant is entitled to receive Severance Benefits under this Plan, as follows:  Chief Executive Officer — 36 months; Employees in the Band level 0 or direct reports to the Chief Executive Officer — 24 months; and other Band level 1 employees — 18 months.

 

Section 2.33                            “Subsidiary” shall mean (i) a subsidiary company of TE Connectivity Ltd. (wherever incorporated) as defined under applicable Swiss corporation law, (ii) any separately organized business unit, whether or not incorporated, of TE Connectivity Ltd., (iii) any employer that is required to be aggregated with TE Connectivity Ltd. pursuant to Code Section 414 and the regulations issued thereunder, and (iv) any service recipient or employer that is within a controlled group of corporations with TE Connectivity Ltd. as defined in Code Sections 1563(a)(1), (2) and (3) where the phrase “at least 50%” is substituted in each place “at least 80%” appears or is with TE Connectivity Ltd. as part of a group of trades or businesses under common control as defined in Code Section 414(c) and Treas. Reg. § 1.414(c)-2 where the phrase “at least 50%” is substituted in each place “at least 80%” appears, provided, however, that when the relevant determination is to be based upon legitimate business criteria (as described in Treas. Reg. § 1.409A-1(b)(5)(iii)(E) and § 1.409A-1(h)(3)), the phrase “at least 20%” shall be substituted in each place “at least 80%” appears as described above with respect to both a controlled group of corporations and trades or business under common control.

 

Section 2.34                            “Successor” shall mean any other corporation or unincorporated entity or group of corporations or unincorporated entities which acquires ownership, directly or indirectly, through merger, consolidation, purchase or otherwise, of all or substantially all of the assets of the Company.

 

Section 2.35                            “Voluntary Resignation” shall mean any Separation from Service that is not initiated by the Company or any Subsidiary other than a Good Reason Resignation.

 

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ARTICLE III

 

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

 

Section 3.01                            Participation.  Each Eligible Employee in the Plan who incurs a Change in Control Termination and who satisfies all of the conditions of Section 3.02 shall be eligible to receive the Severance Benefits described in the Plan, subject however, to the application of the non-duplication provisions of Section 4.05.

 

Section 3.02                            Conditions.

 

(a)                                 Eligibility for any Severance Benefits is expressly conditioned on the execution or agreement to the following: (i) execution by the Participant of a Release in the form provided by the Company no later than 21 days following delivery of the Release to the Participant (or such longer period as may be agreed between the Participant and the Company); and (ii) compliance by the Participant with all the terms and conditions of such Release. If the Plan Administrator determines that the Participant has not fully complied with any of the terms of the Release, the Plan Administrator may withhold Severance Benefits not yet in pay status or discontinue the payment of the Participant’s Severance Benefit and may require the Participant, by providing written notice of such repayment obligation to the Participant, to repay any portion of the Severance Benefit already received under the Plan.  If the Plan Administrator notifies a Participant that repayment of all or any portion of the Severance Benefit received under the Plan is required, such amounts shall be repaid within thirty (30) calendar days after the date the written notice is sent, provided, however, that if the Participant files an appeal of such determination under the claims procedures described in Article X, then such repayment obligation shall be suspended pending the outcome of the appeals procedure.  Any remedy under this subsection (a) shall be in addition to, and not in place of, any other remedy, including injunctive relief, that the Company may have.

 

(b)                                 An Eligible Employee will not be eligible to receive Severance Benefits under any of the following circumstances:

 

(i)                                     The Eligible Employee’s Voluntary Resignation;

 

(ii)                                  The Eligible Employee resigns employment (other than a Good Reason Resignation) before the job-end date mutually agreed to in writing between the Participant and the Employer, including any extension thereto as is mutually agreed to in writing between the parties;

 

(iii)                               The Eligible Employee’s employment is terminated for Cause;

 

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(iv)                              The Eligible Employee’s employment is terminated due to the Eligible Employee’s death or Permanent Disability;

 

(v)                                 The Eligible Employee does not return to work within the period prescribed by law (or if there is no such period prescribed by law, then within a reasonable period as is determined by the Plan Administrator) following an approved leave of absence, unless such period is extended by mutual written agreement of the parties;

 

(vi)                              The Eligible Employee does not satisfy the Conditions for Severance in Section 3.02; or

 

(vii)                           The Eligible Employee’s employment with the Employer terminates as a result of a Change in Control and the Eligible Employee accepts employment, or has the opportunity to continue employment, with a Successor (other than under terms and conditions which would permit a Good Reason Resignation).

 

(c)                                  The Plan Administrator has the discretion to make initial determinations regarding an Eligible Employee’s eligibility to receive Severance Benefits hereunder.

 

(d)                                 An Eligible Employee returning from approved military leave during the period beginning 60 days before a Change in Control and ending two years after a Change in Control will be eligible for Severance Benefits if: (i) he/she is eligible for reemployment under the provisions of the Uniformed Services Employment and Reemployment Rights Act (USERRA); (ii) his/her pre-military leave job is eliminated; and (iii) the Employer’s circumstances are changed so as to make reemployment in another position impossible or unreasonable, or reemployment would create an undue hardship for the Employer.  If the Eligible Employee returning from military leave qualifies for Severance Benefits, his/her severance benefits will be calculated as if he/she had remained continuously employed from the date he/she began his/her military leave.  The Eligible Employee must also satisfy any other relevant conditions for payment set forth in this Section, including execution of a Release.

 

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ARTICLE IV

 

DETERMINATION OF SEVERANCE BENEFITS

 

Section 4.01                            Amount of Severance Benefits Upon Involuntary Termination and Good Reason Resignation. The Severance Benefits to be provided to an Eligible Employee who incurs a Change in Control Termination and is determined to be eligible for Severance Benefits shall be as follows:

 

(a)                                 Notice Pay.  Each Eligible Employee who meets the eligibility requirements for a Severance Benefit under Section 3.01 shall receive 30 calendar days notice as a Notice Period.  In the event that the Company determines that a Participant’s last day of work shall be prior to the end of his or her Notice Period, such Employee shall be entitled to pay in lieu of notice for the balance of such Notice Period.  Notice Pay paid to an Eligible Employee shall be in addition to, and not offset against, the Severance Benefits the Participant may be entitled to receive under this Article IV.  An Eligible Employee who does not sign, or who revokes his or her signature on, a Release shall only be eligible for Notice Pay.  Unless otherwise permitted by the applicable plan documents or laws, an Eligible Employee will not be eligible to apply for short-term disability, long-term disability and/or workers’ compensation anytime after the Eligible Employee’s last active day at work.  Notice pay shall be paid in accordance with Article V.

 

(b)                                 Severance Benefits.

 

(i)                                     Severance Benefits shall be provided to the Participant in an amount as set forth in Schedule A appended to the Plan.

 

(ii)                                  The Participant shall also receive a cash payment equal to his or her Annual Bonus in an amount as set forth in Schedule A appended to the Plan.

 

(c)                                  Bonus.  The Participant shall receive a cash payment equal to his or her pro rated annual bonus (based on the number of full months completed from the beginning of the fiscal year through the Separation from Service Date) for the year in which Participant’s Separation from Service Date occurs, pursuant to the terms set forth in the applicable incentive plans; provided, however, that to the extent that a bonus payment for such period is paid as a result of a Change in Control under the terms of such other incentive plan, then the amount otherwise payable under this Section 4(c) will be offset by the payment made under such other incentive plan .

 

(d)                                 Medical, Dental and Health Care Reimbursement Account Benefits.  The Participant shall continue to be eligible to participate in the medical, dental and Health Care Reimbursement Account coverage in effect at the date of his or her termination (or generally comparable coverage) for himself or herself and, where applicable, his or her spouse and dependents, as the same may be changed from time to time for employees of the Company generally, as if Participant had continued in employment during the twelve-month period following the participant’s Separation from Service Date (the “Coverage Period”).  The Participant shall be responsible for the payment of the employee portion of the medical, dental

 

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and Health Care Reimbursement Account contributions that are required during the Coverage Period and such contributions shall be made within the time period and in the amounts that other employees are required to pay to the Company for similar coverage.  The Participant’s failure to pay the applicable contributions shall result in the cessation of the applicable medical and dental coverage for the Participant and his or her spouse or domestic partner and dependents.  Such payment shall be made within sixty (60) days following the end of the Coverage Period.  Notwithstanding any other provision of this Plan to the contrary, in the event that a Participant commences employment with another company at any time during the Severance Period, the Participant may cease receiving coverage under the Company’s medical and dental plans.  Within thirty (30) days of Participant’s commencement of employment with another company, Participant shall provide the Company written notice of such employment and provide information to the Company regarding the medical and dental benefits provided to Participant by his or her new employer.  The COBRA continuation coverage period under section 4980B of the Code shall run concurrently with the Severance Period.

 

(e)                                  Stock Options.  All stock options held by the Participant as of his or her Separation from Service Date that were granted prior to the Change in Control and that are not already vested and exercisable as of such date shall become vested and exercisable on the Separation from Service Date.  All outstanding stock options held by Participant that were granted prior to the Change in Control and that are vested and exercisable as of the Separation from Service Date and all stock options held by the Participant that become vested and exercisable under the preceding sentence shall be exercisable for the greater of (i) the period set forth in Participant’s option agreement covering such options, or (ii) twelve (12) months from the Participant’s Separation from Service Date.  In no event, however, shall an option be exercisable beyond its original expiration date.

 

(f)                                   Restricted Stock and Restricted Stock Units.  All unvested restricted stock and restricted stock units held by the Participant as of his or her Separation from Service Date that were granted prior to the Change in Control and that are subject solely to time-vesting requirements shall accelerate and become immediately vested as of the Separation from Service Date.  All unvested restricted stock and restricted stock units held by the Participant as of his or her Separation from Service Date that were granted prior to the Change in Control and that are subject to performance-based vesting provisions shall accelerate and become vested if and to the extent that the plan administrator responsible for the administration of such awards determines in its sole discretion that the applicable performance vesting requirements have been or will be attained, or would have been attained during the Severance Period in the ordinary course but for the Change in Control and the Participant’s Change in Control Termination.

 

(g)                                  Outplacement Services.  The Company will pay the cost (which shall not exceed $20,000) of outplacement services for the Participant for a period of twelve (12) months from Participant’s Separation from Service Date.  The Company shall pay the cost of outplacement services at either (i) the outplacement agency that the Company regularly uses for such purpose, or (ii)  the outplacement agency selected by the Participant, provided that the Company will be responsible to pay no more than the cost that would have been incurred had the Participant used the outplacement agency that the Company regularly uses for such purpose.

 

(h)                                 Application of Other Plan Provisions.  If any applicable equity compensation or incentive plan or grant instrument, without regard to (c), (e) or (f) above,

 

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provides the Participant the right to accelerated vesting or payment of cash incentive awards,  stock options, restricted stock, restricted stock units or incentive awards, and/or an extension of the otherwise applicable option exercise period, in the case of termination of employment following a Change in Control, then the Participant’s right to accelerated payment, vesting or extension of the option exercise period shall be determined by whichever of the plan, grant instrument or the provisions of (c), (e) or (f) above provides the most favorable vesting or exercise rights for the Participant in such event.

 

Section 4.02                            Voluntary Resignation; Termination Due to Death or Permanent Disability.  If the Eligible Employee’s employment terminates on account of (i) the Eligible Employee’s Voluntary Resignation, (ii) death, or (iii) Permanent Disability, then the Eligible Employee shall not be entitled to receive Severance Benefits under this Plan and shall be entitled only to those benefits (if any) as may be available under the Company’s then-existing benefit plans and policies at the time of such termination.

 

Section 4.03                            Termination for Cause.  (a)  If any Eligible Employee’s employment terminates on account of termination by the Company for Cause, the Eligible Employee shall not be entitled to receive Severance Benefits under this Plan and shall be entitled only to those benefits that are legally required to be provided to the Eligible Employee.  Notwithstanding any other provision of the Plan to the contrary, if the Committee or the Plan Administrator determines that an Eligible Employee has engaged in conduct that constitutes Cause at any time prior to the Eligible Employee’s Separation from Service Date, any Severance Benefit payable to the Eligible Employee under Section 4.01 of the Plan shall immediately cease, and the Eligible Employee shall be required to return any Severance Benefits paid to the Eligible Employee prior to such determination.  The Company may withhold paying Severance Benefits under the Plan pending resolution of any good faith inquiry that is likely to lead to a finding resulting in Cause and any such payment that was withheld and which is subsequently determined to be payable shall be paid to the Participant within ninety (90) days after the date of the final and binding resolution of the inquiry.

 

(b)                                 Any dispute regarding a termination for Cause will be resolved by the Plan Administrator.  Such determination will be based on all of the facts and circumstances presented to the Plan Administrator by the Company.  If the Plan Administrator determines that the Eligible Employee’s termination of employment is for Cause, then the Plan Administrator will notify the Eligible Employee in writing of such determination, describing in detail the reason for such determination, including without limitation the specific conduct that constituted the basis for the determination.  The Eligible Employee shall have the right to contest the determination of the Plan Administrator in accordance with the Appeals Procedure described in Section 10.03.

 

Section 4.04                            Reduction of Severance Benefits.  With respect to amounts paid under the Plan that are not subject to Code Section 409A and the regulations promulgated thereunder, the Plan Administrator reserves the right to make deductions in accordance with applicable law for any monies owed to the Company by the Participant or the value of Company property that the Participant has retained in his/her possession.  With respect to amounts paid under the Plan that are subject to Code Section 409A and the regulations promulgated thereunder, the Plan Administrator reserves the right to make deductions in accordance with applicable law for any monies owed to the Company by the Participant or the value of the Company property that the

 

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Participant has retained in his/her possession; provided, however, that such deductions cannot exceed $5,000 in the aggregate.

 

Section 4.05                            Non-Duplication of Benefits.  The Plan is intended to supersede, and not to duplicate, the provisions of the TE Connectivity Severance Plan for U.S. Officers and Executives (“Executive Severance Plan”) in any case in which an Eligible Employee would otherwise be entitled to severance or related benefits under both this Plan and the Executive Severance Plan arising out of the Eligible Employee’s Change in Control Termination. However, the Plan is not intended to supersede any other plan, program, arrangement or agreement providing an Eligible Employee with severance or related benefits in the case of an Eligible Employee’s Change in Control Termination.  In the event that an Eligible Employee becomes entitled to receive benefits under this Plan and any such benefit duplicates a benefit that would otherwise be provided under any other plan, program, arrangement or agreement as a result of the Eligible Employee’s Change in Control Termination, then the Eligible Employee shall be entitled to receive the greater of the benefit available under the Plan, on the one hand, and the benefit available under such other plan, program, arrangement or agreement, on the other.

 

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ARTICLE V

 

METHOD, DURATION AND LIMITATION OF SEVERANCE BENEFIT PAYMENTS

 

Section 5.01                            Method of Payment.  The cash Severance Benefits to which a Participant is entitled, as determined pursuant to Section 4.01(a) and (b), shall be paid in a single lump sum payment within sixty (60) days following the Participant’s Severance from Service Date, subject to the fulfillment of all conditions for payment set forth in Section 3.02 and subject to the expiration of the Release revocation period specified in the Release; provided, however, that the annual bonus payable pursuant to Section 4.01(c) shall be paid at the time set forth in the TE Connectivity Annual Incentive Plan.  All payments of Severance Benefits are subject to applicable federal, state and local taxes and withholdings.  Notwithstanding the foregoing, if the Participant’s Separation from Service is either (i) prior to the date of a Change in Control, or (ii) following a Change in Control that does not qualify as a “change in control” under Code Section 409A and the regulations promulgated thereunder, then any portion of the Severance Benefit payable under this Plan that equals the amount of Severance Benefit the Participant could be eligible to receive under the Executive Severance Plan (if the Participant were to satisfy the eligibility requirements in order to receive a benefit under that plan), shall be paid at the same time and in the same form as the Executive Severance Plan.  In no event will interest be credited on the unpaid balance for which a Participant may become eligible.  Payment shall be made by mailing to the last address provided by the Participant to the Company or such other reasonable method as determined by the Plan Administrator.  All payments of Severance Benefits are subject to applicable federal, state and local taxes and withholdings.  In the event of the Participant’s death prior to payment being made to the Participant’s estate in a single lump sum payment within sixty (60) days following the Participant’s death.

 

Section 5.02                            Other Arrangements.  The provisions of this Plan may provide for payments to the Eligible Employee under certain compensation or bonus plans under circumstances where such plans would not otherwise provide for payment thereof.  It is the specific intention of the Company that the provisions of this Plan shall supersede any provisions to the contrary in such plans, to the extent permitted by applicable law, and such plans shall be deemed to be have been amended to correspond with this Plan without further action by the Company or the Board.

 

Section 5.03                            Code Section 409A.

 

(a)                                 Notwithstanding any provision of the Plan to the contrary, if required by Code Section 409A and if a Participant is a Key Employee, no Benefits shall be paid to the Participant during the Postponement Period.  If a Participant is a Key Employee and payment of Benefits is required to be delayed for the Postponement Period under Code Section 409A, the accumulated amounts withheld on account of Code Section 409A shall be paid in a lump sum payment within 30 days after the end of the Postponement Period.  If the Participant dies during the Postponement Period prior to the payment of Benefits, the amounts withheld on account of Code Section 409A shall be paid to the Participant’s estate within 60 days after the Participant’s death.

 

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(b)                                 This Agreement is intended to meet the requirements of the “short-term deferral” exception, the “separation pay” exception and other exceptions under Code Section 409A and the regulations promulgated thereunder. Notwithstanding anything in this Plan to the contrary, if required by Code Section 409A, payments may only be made under this Plan upon an event and in a manner permitted by Code Section 409A, to the extent applicable.  For purposes of Code Section 409A, the right to a series of payments under the Plan shall be treated as a right to a series of separate payments.  All reimbursements and in-kind benefits provided under the Plan shall be made or provided in accordance with the requirements of section 409A of the Code.  In no event may a Participant designate the year of payment for any amounts payable under the Plan.

 

Section 5.04                            Termination of Eligibility for Benefits.

 

(a)                                 All Eligible Employees shall cease to be eligible to participate in the Plan, and all Severance Benefit payments payable to a Participant shall cease upon the occurrence of the earlier of:

 

(i)                                     Subject to Article VIII, termination or modification of the Plan; or

 

(ii)                                  Completion of payment to the Participant of the Severance Benefit for which the Participant is eligible under Article IV.

 

(b)                                 Notwithstanding anything herein to the contrary, the Company shall have the right to cease all Severance Benefit (except as otherwise required by law) and to recover any payments previously made to the Participant should the Participant at any time breach the Participant’s undertakings under the terms of the Plan, the Release the Participant executed to obtain the Severance Benefits under the Plan or the confidentiality and non-disparagement provisions of Article VI.

 

Section 5.05                            Limitation on Benefits

 

(a)                                 Notwithstanding anything in the Plan to the contrary, in the event it shall be determined that any payment or distribution by the Company or its Subsidiaries to or for the benefit of a Participant (whether paid or provided pursuant to the terms of this Plan or otherwise) (a “Payment”) would be nondeductible by the Company for Federal income tax purposes because of Section 280G of the Code, then the aggregate present value of the benefits provided to the Participant pursuant to the rights granted under this Plan (such benefits are hereinafter referred to as “Plan Payments”) shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Plan Payments without causing any Payment to be nondeductible by the Company because of Section 280G of the Code.  For purposes of this Section 5.04, present value shall be determined in accordance with Section 280G(d)(4) of the Code.  To the extent necessary to eliminate an excess parachute amount that would not be deductible by the Company for Federal income tax purposes because of Section 280G of the Code, the amounts payable or benefits to be provided to the Participant shall be reduced such that the economic loss to the executive as a result of the excess parachute amount elimination is minimized.  In applying this principle, the reduction shall be made in a manner consistent with the requirements of section 409A and where two economically

 

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equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.

 

(b)                                 If the Firm (as defined in Section 5.04(c)) determines that the payments to the Participant (before any reductions as described in Section 5.04(a)) on an after-tax basis (i.e., after federal, state and local income and excise taxes and federal employment taxes) would exceed the Reduced Amount on an after-tax basis (i.e., after federal, state and local income and federal employment taxes) then such payments will not be reduced as is described in Section 5.04(a).

 

(c)                                  All determinations required to be made under this Section 5.04 shall be made by a nationally recognized accounting or consulting firm selected by the Senior Vice-President, Global Human Resources of TE Connectivity (or the equivalent)  upon the occurrence of a Potential Change in Control (the “ Firm”), which shall provide detailed supporting calculations both to the Company and the Participant within fifteen (15) business days of the Separation from Service Date or such earlier time as is requested by the Company.  Any such determination by the Firm shall be binding upon the Company, its successors and the Participant (subject to (e) below).  Within five (5) business days of the determination by the Firm as to the Reduced Amount, the Company shall provide to the Participant such Payments as are then due to the Participant in accordance with the rights afforded under this Plan or any other applicable plan.  If Plan Payments are to be reduced, the Participant shall determine which Plan Payments shall be reduced to comply with this Section 5.04.

 

(d)                                 The Company shall reimburse the Participant for any costs or expenses of tax counsel incurred by the Participant in connection with any audit or investigation by the Internal Revenue Service, or any state or local tax authorities, concerning the application of Code Section 280G to any Payments (provided, that the Participant retains tax counsel acceptable to the Company).  In the event that as a result of any such audit or investigation, the reduction in Plan Payments under (a) above is finally determined not to be sufficient in amount to permit the deduction by the Company of all Payments under Code Section 280G, then the Company shall pay the Participant an additional amount which shall be sufficient to put the Participant, after payment of any additional income, employment and excise taxes, interest and penalties, in substantially the same economic position as if the reduction had been sufficient.

 

(e)                                  In the event that the Firm determines that a reduction effected pursuant to (a) above was excessive in amount due to changes in relevant data or information following its original determination under (c) above (including, without limitation, any recalculation regarding the value of stock options as contemplated under Rev. Proc. 2003-68, Section 3.04), and that additional Plan Payments could have been made thereunder, the Company shall promptly make such additional payments to the Participant.

 

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ARTICLE VI

 

CONFIDENTIALITY AND NON-DISPARAGEMENT

 

Section 6.01                            Confidential Information.  The Participant agrees that he or she shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of the Participant’s assigned duties and for the benefit of the Company, either during the period of the Participant’s employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, TE Connectivity Ltd., any of its Subsidiaries, affiliated companies or businesses, which shall have been obtained by the Participant during the Participant’s employment by the Company or a Subsidiary.  The foregoing shall not apply to information that (i) was known to the public prior to its disclosure to the Participant; (ii) becomes known to the public subsequent to disclosure to the Participant through no wrongful act of the Participant or any representative of the Participant; or (iii) the Participant is required to disclose by applicable law, regulation or legal process (provided that the Participant provides the Company with prior notice of the contemplated disclosure and reasonably cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).  Notwithstanding clauses (i) and (ii) of the preceding sentence, the Participant’s obligation to maintain such disclosed information in confidence shall not terminate where only portions of the information are in the public domain.

 

Section 6.02                            Non-Disparagement.  Each of the Participant and the Company (for purposes hereof, the Company shall mean only the executive officers and directors thereof and not any other employees) agrees not to make any statements that disparage the other party, or in the case of the Company, TE Connectivity Ltd.  or its Subsidiaries, their respective affiliates, employees, officers, directors, products or services.  Notwithstanding the foregoing, statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this Section 6.02.

 

Section 6.03                            Reasonableness.  In the event the provisions of this Article VI shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws.

 

Section 6.04                            Equitable Relief.

 

(a)                                 By participating in the Plan, the Participant acknowledges that the restrictions contained in this Article VI are reasonable and necessary to protect the legitimate interests of the Company, its Subsidiaries and its affiliates, that the Company would not have established this Plan in the absence of such restrictions, and that any violation of any provision of this Article will result in irreparable injury to the Company.  By agreeing to participate in the Plan, the Participant represents that his or her experience and capabilities are such that the restrictions contained in this Article VI will not prevent the Participant from obtaining employment or otherwise earning a living at the same general level of economic benefit as is currently the case.  The Participant further represents and acknowledges that (i) he or she has been advised by the Company to consult his or her own legal counsel in respect of this Plan, and

 

17

 

(ii) that he or she has had full opportunity, prior to agreeing to participate in this Plan, to review thoroughly this Plan with his or her counsel.  The Company likewise acknowledges that the restrictions contained in Section 6.02 are necessary to protect the legitimate interests of the Participant, and that any violation of Section 6.02 by the Company will result in irreparable injury to the Participant.

 

(b)                                 Each party agrees that the other party shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of this Article VI, which rights shall be cumulative and in addition to any other rights or remedies to which such aggrieved party may be entitled.  In the event that any of the provisions of this Article VI should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, service, or other limitations permitted by applicable law.

 

(c)                                  The Participant irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of this Article VI, including without limitation, any action commenced by the Company for preliminary and permanent injunctive relief or other equitable relief, may be brought in the United States District Court for the District of New York, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in New York, (ii) consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waives any objection which Participant may have to the laying of venue of any such suit, action or proceeding in any such court.  Participant also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers in a manner permitted by the notice provisions of Section 11.02.

 

Section 6.05                            Survival of Provisions.  The obligations contained in this Article VI shall survive the termination of Participant’s employment with the Company or a Subsidiary and shall be fully enforceable thereafter.

 

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ARTICLE VII

 

THE PLAN ADMINISTRATOR

 

Section 7.01                            Authority and Duties.  It shall be the duty of the Plan Administrator, on the basis of information supplied to it by the Company and the Committee, to properly administer the Plan.  The Plan Administrator shall have the full power, authority and discretion to construe, interpret and administer the Plan, to make factual determinations, to correct deficiencies therein, and to supply omissions.  All decisions, actions and interpretations of the Plan Administrator shall be final, binding and conclusive upon the parties with respect to denied claims for Severance Benefits, except in those cases where such determination is subject to review by the Named Appeals Fiduciary (as defined in Section 10.04).  The Plan Administrator may adopt such rules and regulations and may make such decisions as it deems necessary or desirable for the proper administration of the Plan.

 

Section 7.02                            Compensation of the Plan Administrator.  The Plan Administrator appointed for periods prior to a Potential Change in Control shall receive no compensation for services as such .  The Plan Administrator appointed for periods on and after a Potential Change in Control will be entitled to receive reasonable compensation as is mutually agreed upon between the parties.  All reasonable expenses of the Plan Administrator shall be paid or reimbursed by the Company upon proper documentation.  The Plan Administrator shall be indemnified by the Company against personal liability for actions taken in good faith in the discharge of the Plan Administrator’s duties.

 

Section 7.03                            Records, Reporting and Disclosure.  The Plan Administrator shall keep a copy of all records relating to the payment of Severance Benefits to Participants and former Participants and all other records necessary for the proper operation of the Plan.  All Plan records shall be made available to the Committee, the Company and to each Participant for examination during business hours except that a Participant shall examine only such records as pertain exclusively to the examining Participant and to the Plan.  The Plan Administrator shall prepare and shall file as required by law or regulation all reports, forms, documents and other items required by ERISA, the Code, and every other relevant statute, each as amended, and all regulations thereunder (except that the Company, as payor of the Severance Benefits, shall prepare and distribute to the proper recipients all forms relating to withholding of income or wage taxes, Social Security taxes, and other amounts that may be similarly reportable).

 

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ARTICLE VIII

 

AMENDMENT, TERMINATION AND DURATION

 

Section 8.01                            Amendment, Suspension and Termination.  Except as otherwise provided in this Section 8.01, upon direction of the Committee or Board of Directors of TE Connectivity Ltd., the Board or its delegate shall have the right, at any time and from time to time prior to the occurrence of a Potential Change in Control (and after the Potential Change in Control has expired in accordance with Section 2.26(y)), to amend, suspend or terminate the Plan in whole or in part, for any reason or without reason, and without either the consent of or the prior notification to any Participant, by a formal written action.  After the occurrence of a Potential Change in Control, the Board or its delegate, upon recommendation of the Committee or Board of Directors of TE Connectivity Ltd., shall have the right to amend the Plan, provided however, that (a) in no event shall any amendment give the Company the right to recover any amount paid to a Participant prior to the date of such amendment or to cause the cessation of Severance Benefits already approved for a Participant who has executed a Release as required under Section 3.02 and (b) the Plan may not be amended in any manner that adversely affects any right of a Participant or Eligible Employee without the written consent of such Participant or Eligible Employee.  Any amendment or termination of the Plan must comply with all applicable legal requirements including, without limitation, compliance with Code Section 409A and the regulations and ruling promulgated thereunder, securities, tax, or other laws, rules, regulations or regulatory interpretations thereof, applicable to the Plan.

 

Section 8.02                            Duration.  The Plan shall continue in full force and effect until termination of the Plan pursuant to Section 8.01; provided, however, that after the termination of the Plan, if any Participants terminated employment on account of an Involuntary Termination prior to the termination of the Plan and are still receiving Severance Benefits under the Plan, the Plan shall remain in effect until all of the obligations of the Company are satisfied with respect to such Participants.

 

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ARTICLE IX

 

DUTIES OF THE COMPANY AND THE COMMITTEE

 

Section 9.01                            Records.  The Company or a Subsidiary thereof shall supply to the Committee all records and information necessary to the performance of the Committee’s duties.

 

Section 9.02                            Payment. Payments of Severance Benefits to Participants shall be made in such amount as determined by the Committee under Article IV, from the Company’s general assets.

 

Section 9.03                            Discretion.  Any decisions, actions or interpretations to be made under the Plan by the Board, the Committee and the Plan Administrator, acting on behalf of either, shall be made in each of their respective sole discretion, not in any fiduciary capacity and need not be uniformly applied to similarly situated individuals and such decisions, actions or interpretations shall be final, binding and conclusive upon all parties.  As a condition of participating in the Plan, the Eligible Employee acknowledges that all decisions and determinations of the Board, the Committee and the Plan Administrator taken in good faith shall be final and binding on the Eligible Employee, his or her beneficiaries and any other person having or claiming an interest under the Plan on his or her behalf.

 

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ARTICLE X

 

CLAIMS PROCEDURES

 

Section 10.01                     Claim.  Each Participant under this Plan may contest any action taken or determination made by the Company, the Board, the Committee or the Plan Administrator that affects the rights of such Participant hereunder by completing and filing with the Plan Administrator a written request for review in the manner specified by the Plan Administrator.  No person may bring an action for any alleged wrongful denial of Plan benefits in a court of law unless the claims procedures described in this Article X are exhausted and a final determination is made by the Plan Administrator and/or the Named Appeals Fiduciary, except in circumstances where the Participant has a reasonable basis to conclude that the pursuit of his/her claim through the claims procedure would be futile.  If an Eligible Employee or Participant or other interested party challenges a decision by the Plan Administrator and/or Named Appeals Fiduciary, a review by the court of law will be limited to the facts, evidence and issues presented to the Plan Administrator during the claims procedure set forth in this Article X.  Facts and evidence that become known to the terminated Eligible Employee or Participant or other interested person after having exhausted the claims procedure must be brought to the attention of the Plan Administrator for reconsideration of the claims administrator.  Issues not raised with the Plan Administrator and/or Named Appeals Fiduciary will be deemed waived.

 

Section 10.02                     Initial Claim.  Before the date on which payment of a Severance Benefit commences, each application for benefits must be supported by such information as the Plan Administrator deems relevant and appropriate.  In the event that any claim relating to the administration of Severance Benefits is denied in whole or in part, the terminated Participant or his or her beneficiary (“claimant”) whose claim has been so denied shall be notified of such denial in writing by the Plan Administrator within thirty (30) days after the receipt of the claim for benefits.  This period may be extended an additional thirty (30) days if the Plan Administrator determines such extension is necessary and the Plan Administrator provides notice of extension to the claimant prior to the end of the initial thirty (30) day period.  The notice advising of the denial shall specify the following: (i) the reason or reasons for denial, (ii) make specific reference to the Plan provisions on which the determination was based, (iii) describe any additional material or information necessary for the claimant to perfect the claim (explaining why such material or information is needed), and (iv) describe the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination on review.  If it is determined that payment is to be made, any such payment shall be made within ninety (90) days after the date by which notification is received.

 

Section 10.03                     Appeals of Denied Administrative Claims.  All appeals shall be made by the following procedure:

 

(a)                                 A claimant whose claim has been denied shall file with the Plan Administrator a notice of appeal of the denial.  Such notice shall be filed within sixty (60) calendar days of notification by the Plan Administrator of the denial of a claim, shall be made in writing, and shall set forth all of the facts upon which the appeal is based.

 

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(b)                                 The Named Appeals Fiduciary shall consider the merits of the claimant’s written presentations, the merits of any facts or evidence in support of the denial of benefits, and such other facts and circumstances as the Named Appeals Fiduciary shall deem relevant.

 

(c)                                  The Named Appeals Fiduciary shall render a determination upon the appealed claim which determination shall be accompanied by a written statement as to the reasons therefor.  The determination shall be made to the claimant within thirty (30) days of the claimant’s request for review, unless the Names Appeals Fiduciary determines that special circumstances requires an extension of time for processing the claim.  In such case, the Named Appeals Fiduciary shall notify the claimant of the need for an extension of time to render its decision prior to the end of the initial thirty (30) day period, and the Named Appeals Fiduciary shall have an additional thirty (30) day period to make its determination.  The determination so rendered shall be binding upon all parties as long as it is made in good faith.  If the determination is adverse to the claimant, the notice shall provide (i) the reason or reasons for denial, (ii) make specific reference to the Plan provisions on which the determination was based, (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to a the claimant’s claim for benefits, and (iv) state that the claimant has the right to bring an action under section 502(a) of ERISA.  If the final determination is that payments shall be made, then any such payment shall be made within ninety (90) days after the date by which notification of the final determination is made.

 

Section 10.04                     Appointment of the Named Appeals Fiduciary.  The Named Appeals Fiduciary shall be the person or persons named as such by the Board or Committee, or, if no such person or persons be named, then the person or persons named by the Plan Administrator as the Named Appeals Fiduciary, provided however, that effective on the date of a Change in Control, the Plan Administrator shall also serve as the Named Appeals Fiduciary.  For periods before the date of a Change in Control, Named Appeals Fiduciaries may at any time be removed by the Board or Committee, and any Named Appeals Fiduciary named by the Plan Administrator may be removed by the Plan Administrator.  All such removals may be with or without cause and shall be effective on the date stated in the notice of removal.  The Named Appeals Fiduciary shall be a “Named Fiduciary” within the meaning of ERISA, and unless appointed to other fiduciary responsibilities, shall have no authority, responsibility, or liability with respect to any matter other than the proper discharge of the functions of the Named Appeals Fiduciary as set forth herein.

 

Section 10.05                     Arbitration; Expenses.  In the event of any dispute under the provisions of this Plan, other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, the parties shall have the dispute, controversy or claim settled by arbitration in Philadelphia, Pennsylvania (or such other location as may be mutually agreed upon by the Employer and the Participant) in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Participant, respectively, and the third of whom shall be selected by the other two arbitrators.  Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction.  This arbitration provision shall be specifically enforceable.  The arbitrators shall have no authority to modify any provision of this Plan or to award a remedy for a dispute involving this

 

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Plan other than a benefit specifically provided under or by virtue of the Plan.  If the Participant substantially prevails on any material issue, which is the subject of such arbitration or lawsuit, the Company shall be responsible for all of the fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration (including the Company’s and Participant’s reasonable attorneys’ fees and expenses).  Otherwise, each party shall be responsible for its own expenses relating to the conduct of the arbitration (including reasonable attorneys’ fees and expenses) and shall share the fees of the American Arbitration Association.

 

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ARTICLE XI

 

MISCELLANEOUS

 

Section 11.01                     Nonalienation of Benefits.  None of the payments, benefits or rights of any Participant shall be subject to any claim of any creditor of any Participant, and, in particular, to the fullest extent permitted by law, all such payments, benefits and rights shall be free from attachment, garnishment (if permitted under applicable law), trustee’s process, or any other legal or equitable process available to any creditor of such Participant.  No Participant shall have the right to alienate, anticipate, commute, plead, encumber or assign any of the benefits or payments that he may expect to receive, continently or otherwise, under this Plan, except for the designation of a beneficiary as set forth in Section 5.01.

 

Section 11.02                     Notices.  All notices and other communications required hereunder shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service.  In the case of the Participant, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing.  In the case of the Company, mailed notices shall be addressed to the Plan Administrator.

 

Section 11.03                     Successors.  Any Successor shall assume the obligations under this Plan and expressly agree to perform the obligations under this Plan.

 

Section 11.04                     Other Payments.  Except as otherwise provided in this Plan, no Participant shall be entitled to any cash payments or other severance benefits under any of the Company’s then current severance pay policies for a termination that is covered by this Plan for the Participant, including, without limitation, the Executive Severance Plan.

 

Section 11.05                     No Mitigation.  Except as otherwise provided in Section 4.01(d) and Section 4.04, Participants shall not be required to mitigate the amount of any Severance Benefit provided for in this Plan by seeking other employment or otherwise, nor shall the amount of any Severance Benefit provided for herein be reduced by any compensation earned by other employment or otherwise, except if the Participant is reemployed by the Company as an Employee, in which case Severance Benefits shall cease on the date of the Participant’s reemployment.

 

Section 11.06                     No Contract of Employment.  Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any benefits shall be construed as giving any Eligible Employee or any person whosoever, the right to be retained in the service of the Company, and all Eligible Employees shall remain subject to discharge to the same extent as if the Plan had never been adopted.

 

Section 11.07                     Severability of Provisions.  If any provision of this Plan shall be held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.

 

25

 

Section 11.08                     Heirs, Assigns, and Personal Representatives.  This Plan shall be binding upon the heirs, executors, administrators, successors and assigns of the parties, including each Participant, present and future.

 

Section 11.09                     Headings and Captions.  The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

 

Section 11.10                     Gender and Number.  Where the context admits: words in any gender shall include any other gender, and, except where otherwise clearly indicated by context, the singular shall include the plural, and vice-versa.

 

Section 11.11                     Unfunded Plan.  The Plan shall not be funded.  No Participant shall have any right to, or interest in, any assets of the Company that may be applied by the Company to the payment of Severance Benefits.

 

Section 11.12                     Compliance with Code Section 409A.  The terms of this Plan are intended to, and shall be interpreted and applied so as to, comply in all respects with the provisions of Code Section 409A and regulations and rulings thereunder.  Any provision of this Plan governing the timing or form of payment of benefits hereunder may be modified by the Plan Administrator if and to the extent required in order to ensure such compliance (by way of example and not limitation, to delay commencement of any benefits payable hereunder that are subject to Code Section 409A until at least six months following a Participant’s termination of employment).  Nothing in this provision shall be construed as an admission that any of the benefits payable hereunder constitute “deferred compensation” subject to the provisions of Code Section 409A.

 

Section 11.13                     Payments to Incompetent Persons.  Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Company, the Committee and all other parties with respect thereto.

 

Section 11.14                     Lost Payees.  A benefit shall be deemed forfeited if the Committee is unable to locate a Participant to whom a Severance Benefit is due.  Such Severance Benefit shall be reinstated if application is made by the Participant for the forfeited Severance Benefit while this Plan is in operation.

 

Section 11.15                     Controlling Law.  This Plan shall be construed and enforced according to the laws of the Commonwealth of Pennsylvania to the extent not superseded by Federal law.

 

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SCHEDULE A

 

SEVERANCE BENEFITS

SALARY REPLACEMENT AND ANNUAL BONUS

 

	
Chief   Executive Officer
    	
 
    	
3   times annual Base Salary and Annual Bonus
    
	
 
    	
 
    	
 
    
	
Band   level 0 employees and CEO Direct Reports
    	
 
    	
2   times annual Base Salary and Annual Bonus
    
	
 
    	
 
    	
 
    
	
Other   Band level 1 employees
    	
 
    	
1.5   times annual Base Salary and Annual Bonus
    

 

A-1

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