Document:

ex10_1.htm

Exhibit 10.1

 

SECOND AMENDED AND RESTATED

AIR METHODS CORPORATION

2006 EQUITY COMPENSATION PLAN

Approved by the Compensation Committee:  September 10, 2012

Approved by the Board:  September 26, 2012

Approved by the Stockholders:  December 3, 2012

I.              Purpose.  This Second Amended and Restated Air Methods Corporation 2006 Equity Compensation Plan (the “Plan”) provides for Equity Compensation Grants (as defined below) to Employees and Consultants (as defined herein, including nonemployee directors) of Air Methods Corporation (the “Company”), and such of its subsidiaries (as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”)), as the Board of Directors of the Company (the “Board”) shall from time to time designate (“Participating Subsidiaries”), in order to advance the interests of the Company and its Participating Subsidiaries through the motivation, attraction and retention of their Employees and Consultants. This document sets forth the second amendment and restatement of the Plan and effectuates an increase in the shares available for issuance under the Plan as well as certain other technical changes to the Plan.

 

II.            Certain Definitions.

 

2.1  Stock Option. A Stock Option is the right granted under the Plan to a Participant to purchase shares of Common Stock, at such time or times, and at such price or prices (“Option Price”), as are determined by the Committee. A Stock Option may be an ISO or a Non-ISO as such terms are defined in Section II.

 

2.2  Stock Appreciation Right. A Stock Appreciation Right is the right to receive payment, in shares of Common Stock, cash, or a combination of shares of Common Stock and cash, of the Redemption Value of a specified number of shares of Common Stock then purchasable under a Stock Option.

 

2.3  Restricted Stock Grant. A Restricted Stock Grant is the right to acquire shares of Common Stock for such consideration, if any, and subject to such restrictions on transfer and other terms and conditions as are provided for in Section VIII and as established by the Committee.

 

2.4      Equity Compensation Grant. An Equity Compensation Grant is a Stock Option, Stock Appreciation Right, or Restricted Stock Grant.

 

2.5  Redemption Value. The Redemption Value of shares of Common Stock purchasable under a Stock Option shall be the amount, if any, by which the Fair Market Value of one share of Common Stock on the date on which the Stock Option is exercised exceeds the Option Price for such share.

 

2.6  Common Stock. A share of Common Stock means a share of authorized but unissued or reacquired Common Stock of the Company.

 

  

  

  

 

2.7      Fair Market Value. For the purpose of the Plan, with respect to any date, (a) if the Common Stock shall be readily tradable on an established securities market, the Fair Market Value of a share of Common Stock shall be the officially-quoted closing price for such date of the shares on the NASDAQ Stock Market or such other stock exchange or securities trading market which is the primary trading market for such shares, or if no closing price is reported on such date, the officially-quoted closing price for the immediately preceding trading day, and, (b) otherwise, the Fair Market Value of a share of Common Stock on any date shall be determined, in good faith, by the Committee after such consultation with outside experts as the Committee may deem advisable, and the Committee shall maintain a written record of its method of determining such value; provided however, that any valuation of a share of Common Stock pursuant to this Section 2.7(b) shall be by the reasonable application of a reasonable method of valuation pursuant to Treasury Regulation Section 1.409A-1(b)(iv)(B).

 

2.8  Employee. An Employee is a common-law employee of the Company or any Participating Subsidiary.

 

2.9  Consultant. A Consultant is a bona fide individual consultant, or a nonemployee director, of the Company or any Participating Subsidiary.

 

2.10    Participant. A Participant is an Employee or Consultant to whom an Equity Compensation Grant is granted.

 

2.11    Disinterested Person. A Disinterested Person is a director of the Company who qualifies as both a “non-employee director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934 and an “outside director” as defined for purposes of Code Section 162(m), and who meets the compensation committee independence requirements of any stock market or other securities exchange on which the Common Stock is then traded.

 

III.   Incentive Stock Options and Non-Incentive Stock Options.  The Stock Options granted under the Plan may be either:

 

(a)  Incentive Stock Options (“ISOs”) which are intended to be “Incentive Stock Options” as that term is defined in Section 422 of the Code; or

 

(b)  Non-Incentive Stock Options (“Non-ISOs”) which are intended to be options that do not qualify as “Incentive Stock Options” under Section 422 of the Code.

 

All Stock Options granted to Employees shall be ISOs unless the Option Agreement clearly designates the Stock Options granted thereunder, or a specified portion thereof, as Non-ISOs. Subject to the other provisions of the Plan, an Employee may receive ISOs and Non-ISOs at the same time, provided that the ISOs and Non-ISOs are clearly designated as such. All Stock Options granted to Consultants shall be Non-ISOs.

 

Except as otherwise expressly provided herein, all of the provisions and requirements of the Plan relating to Stock Options, shall apply to ISOs and Non-ISOs.

 

  

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IV.   Administration.

 

4.1  Committee. The Plan shall be administered by a committee (the “Committee”) composed of two or more directors, all of whom are Disinterested Persons. The Committee shall have full authority to administer the Plan, including authority to interpret and construe any provision of the Plan and to adopt such rules for administering the Plan as it may deem necessary to comply with the requirements of the Code, to assure that Stock Options that are intended to be ISOs will be classified as incentive stock options under the Code, or to conform to any regulation or any change in any law or regulation applicable thereto. The Committee may delegate any of its responsibilities under the Plan, other than its responsibilities to grant Equity Compensation Grants, to determine whether Stock Appreciation Rights, if any, payable to a Participant shall be paid in cash, in shares of Common Stock or a combination thereof, or to interpret and construe the Plan. If the Board is composed entirely of Disinterested Persons, the Board may reserve to itself any of the authority granted to the Committee as set forth herein, and it may perform and discharge all of the functions and responsibilities of the Committee at any time that a duly constituted Committee is not appointed and serving. All references in the Plan to the “Committee” shall be deemed to refer to the Board whenever the Board is discharging the powers and responsibilities of the Committee.

 

4.2  Actions of Committee. All actions taken and all interpretations and determinations made by the Committee in good faith (including determinations of Fair Market Value) shall be final and binding upon all Participants, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, and all members of the Committee shall, in addition to their rights as directors, be fully protected by the Company with respect to any such action, determination or interpretation.

 

V.             Eligibility and Participation.  Equity Compensation Grants may be made to Employees or Consultants of the Company or any Participating Subsidiary, including directors of the Company who are also Employees. The Committee shall from time to time determine the Employees or Consultants to whom Equity Compensation Grants shall be granted, the number of shares of Common Stock subject to each such Equity Compensation Grant and the terms and provisions of each such Equity Compensation Grant, all as provided in this Plan.

 

VI.   Shares of Common Stock Subject to the Plan.

 

6.1  Maximum Number. The maximum aggregate number of shares of Common Stock that may be issued pursuant to Equity Compensation Grants granted under the Plan (including awards granted prior to this amendment and restatement) shall be 1,800,000.  All 1,800,000 shares reserved for issuance may be granted as ISOs, and any single Participant may receive a grant of Stock Options or Stock Appreciation Rights in any calendar year covering up to a maximum of 1,800,000 shares.  If any shares of Common Stock subject to an Equity Compensation Grant are forfeited or expire under the terms of the Grant, such shares may again be made subject to Equity Compensation Grants.

 

  

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6.2  Capital Changes. In the event any changes are made to the Company’s Common Stock (whether by reason of merger, consolidation, reorganization, recapitalization, stock dividend in excess of ten percent (10%) at any single time, stock split, combination of shares, exchange of shares, change in corporate structure or otherwise), appropriate adjustments shall be made in: (i) the number of shares of Common Stock theretofore made subject to Equity Compensation Grants, and in the purchase price of said shares; (ii) the aggregate number of shares which may be made subject to Equity Compensation Grants, (iii) the aggregate number of shares that may be granted as ISOs, and (iv) the maximum number of Stock Options and Stock Appreciation Rights that may be granted to any single Participant in any calendar year. If any of the foregoing adjustments shall result in a fractional share, the fraction shall be disregarded, and the Company shall have no obligation to make any cash or other payment with respect to such a fractional share.

 

VII.          Stock Options.

 

7.1  Grant of Stock Options. The Committee may from time to time, grant Stock Options to a Participant and establish the number of shares of Common Stock subject to each such Stock Option, the Option Price of each option and all other terms and conditions of exercise of the Stock Option, all as provided in the Plan. The Option Price of any ISO shall be not less than the Fair Market Value of a share of Common Stock on the date on which the Stock Option is granted and the aggregate Fair Market Value (determined as of the time the ISO is granted) of the Common Stock as to which all ISOs granted to an Employee may first become exercisable in a particular calendar year may not exceed $100,000. The Option Price of a Non-ISO shall be not less than the Fair Market Value on the date the Non-ISO is granted. If an ISO is granted to an Employee who then owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company, the Option Price of such ISO shall be at least 110% of the Fair Market Value of the Common Stock subject to the ISO at the time such ISO is granted, and such ISO shall not be exercisable after 5 years after the date on which it was granted. Each Stock Option shall be evidenced by a written agreement (“Option Agreement”) containing such terms and provisions as the Committee may determine, subject to the provisions of the Plan.

 

7.2  Time of Exercise. Subject to the provisions of the Plan, including without limitation Section 7.4, the Committee, in its discretion, shall determine the time when a Stock Option, or a portion of a Stock Option, shall become exercisable, and the time when a Stock Option, or a portion of a Stock Option, shall expire, which shall be, to the extent not exercised, no later than the tenth anniversary of the date on which it was granted. Such time or times shall be set forth in the Option Agreement evidencing such Stock Option.

 

7.3  Exchange of Outstanding Stock. The Committee, in its sole discretion, may permit a Participant to surrender to the Company shares of the Common Stock previously acquired by the Participant as part or full payment for the exercise of a Stock Option. Such surrendered shares shall be valued at their Fair Market Value on the date of exercise.

 

7.4  Termination of Employment Before Exercise. With respect to Participants who are Employees, if a Participant’s employment with the Company or a Participating Subsidiary shall terminate for any reason other than the Participant’s death or disability, any Stock Option then held by the Participant, to the extent then exercisable under the applicable Option Agreement(s) and unless otherwise determined by the Committee and set forth in a Participant’s applicable Option Agreement(s), shall remain exercisable after the termination of his employment for a period of three months (but, in the case of an ISO, in no event beyond ten years from the date of grant of the ISO). If such Participant’s employment is terminated because the Participant dies or is disabled within the meaning of Section 22(e)(3) of the Code, any Stock Option then held by the Participant, to the extent then exercisable under the applicable Option Agreement(s) and unless otherwise determined by the Committee and set forth in a Participant’s applicable Option Agreement(s) shall remain exercisable by the Participant or his Personal Representative or successor, in the case of death, after the termination of his employment for a period of twelve months (but, in the case of an ISO, in no event beyond ten years from the date of grant of the ISO). The termination of a Stock Option granted to a Consultant shall be as determined by the Committee, and set forth in the Consultant’s applicable Option Agreement(s). If the Stock Option is not exercised during the applicable period, it shall be deemed to have been forfeited and of no further force or effect.

 

  

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7.5  Disposition of Forfeited Stock Options. Any shares of Common Stock subject to Stock Options forfeited by a Participant may be made subject to Stock Options granted to other Participants.

 

VIII.         Restricted Stock Grants.

 

8.1  Grants of Restricted Stock. The Committee may, from time to time, grant shares of Common Stock (“Restricted Shares” or “Shares”) to any Participant. The Committee shall establish all terms and conditions of the grant, including the number of Restricted Shares subject to the grant, the purchase price, if any to be paid by the Grantee for such shares and restrictions applicable to the Restricted Shares. The restrictions placed on the Restricted Shares may include restrictions on transfer of all or a portion of the Restricted Shares, provisions for the forfeiture of such Shares in specified circumstances, a right of the Company to repurchase the Restricted Shares and the conditions (including price) of such repurchase, and a right of first refusal in the Company to purchase the Shares before the Shares may be transferred to a third party. Each Restricted Stock Grant shall be evidenced by an agreement (“Restricted Stock Agreement”) between the Company and the Participant setting forth the terms of the Restricted Stock Grant.

 

8.2  Rights of Grantee. Shares of Common Stock that are issued as a Restricted Stock Grant shall be issued in the name of the Grantee as soon as reasonably practicable after the grant upon acceptance of the restrictions by the Grantee in a Restricted Stock Agreement. At the sole discretion of the Committee, certificates for the Restricted Stock will be deposited with an escrow agent (which may be the Company) designated by the Committee. Unless the Committee determines otherwise, and as set forth in the Restricted Stock Agreement, upon delivery of the Restricted Stock to the escrow agent, the Participant will have the rights of a stockholder with respect to the Restricted Shares, including the right to vote the Shares and to receive dividends or other distributions as described in Section 8.8.

 

8.3  Non-Transferability. Until all restrictions upon the shares of Restricted Stock awarded to a Participant have lapsed in the manner set forth in Section 8.4, the Shares shall not be sold, transferred or otherwise disposed of by the Participant, nor pledged or otherwise hypothecated, nor will the certificates representing the Restricted Shares be delivered to the Participant.

 

  

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8.4  Lapse of Restrictions. Restrictions upon shares of Restricted Stock awarded hereunder will lapse at such time or times and on such terms and conditions as the Committee may determine. The Restricted Stock Agreement evidencing the Restricted Stock Grant will set forth any such terms and conditions.

 

8.5  Forfeiture of Restricted Stock. All shares of Restricted Stock will be forfeited and returned to the Company and all rights of the Participant with respect to such Restricted Share will terminate unless the Participant continues in the service of the Company until the expiration of a forfeiture period set forth in the Restricted Stock Agreement and satisfies any and all other conditions set forth in said Agreement. The Committee, in its sole discretion, may determine the forfeiture period (which may, but need not, lapse in installments) in any other terms or conditions applicable to any Restricted Stock Grant.

 

8.6  Waiver of Forfeiture. Notwithstanding anything in this Section VIII to the contrary, the Committee may, in its sole discretion, waive the forfeiture period and other conditions set forth in any Restricted Stock Agreement under appropriate circumstances, including, without limitation, the death, disability or retirement of the Participant or a material change in circumstances arising after the date of Grant, and subject to such terms and conditions (including, without limitation, forfeiture of a proportionate number of the Restricted Shares) as the Committee deems appropriate.

 

8.7  Modification or Substitution. Subject to the terms of the Plan, the Committee may modify outstanding awards of Restricted Stock or accept the surrender of outstanding Shares of Restricted Stock (to the extent that the restrictions on such Shares have not yet lapsed) and award new Restricted Stock Grants in substitution for them. Notwithstanding the foregoing, no modification of an award will adversely alter or impair any rights or obligations under the Restricted Stock Agreement without the Participant’s consent.

 

8.8  Treatment of Dividends. At the time a grant of Restricted Stock is awarded, the Committee may, in its sole discretion, determine that the payment to the Participant of dividends, or a specified portion thereof, declared or paid on such Common Stock by the Company will be (i) deferred until the lapsing of the restrictions imposed upon such Common Stock and (ii) held by the Company for the account of Participant until such time. In the event that dividends are to be deferred, the Committee will determine whether such dividends are to be reinvested in additional Shares of Common Stock (which will be held as additional Shares of Restricted Stock) or held in cash. If deferred dividends are to be held in cash, there may be credited at the end of each year (or a portion thereof) interest on the amount of the account at the beginning of the year at a rate per annum as the Committee, in its sole discretion, may determine. Payment of deferred dividends in respect of the Shares of Restricted Stock (whether held in cash or as additional Restricted Shares) together with interest accrued thereon, if any, will be made upon the lapsing of restrictions imposed on the Shares in respect of which the deferred dividends were paid, and any dividends deferred, together with any interest accrued thereon, in any respect of any Restricted Shares, will be forfeited upon the forfeiture of such Shares of Restricted Stock.

 

  

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8.9  Delivery of Common Stock. Upon the lapse of the restrictions on Shares of Restricted Stock, the Committee will cause a stock certificate to be delivered to the Participant with respect to such Shares, free of all restrictions hereunder.

 

IX.   Stock Appreciation Rights.

 

9.1  Grant of Stock Appreciation Rights. The Committee may, from time to time, grant Stock Appreciation Rights to a Participant with respect to not more than the number of shares of Common Stock which are, or may become, purchasable under any Stock Option held by the Participant. The Committee may, in its sole discretion, specify the terms and conditions of such rights, including without limitation the date or dates upon which such rights shall expire and become void and unexercisable; provided, however, that in no event shall such rights expire and become void and unexercisable later than the time when the related Stock Option is exercised, expires or terminates. Each Participant to whom Stock Appreciation Rights are granted shall be given written notice advising him of the grant of such rights and specifying the terms and conditions of the rights, which shall be subject to all the provisions of this Plan.

 

9.2  Exercise of Stock Appreciation Rights. Subject to Section 9.3, and in lieu of purchasing shares of Common Stock upon the exercise of a Stock Option held by him, a Participant may elect to exercise the Stock Appreciation Rights, if any, he has been granted and receive payment of the Redemption Value of all, or any portion, of the number of shares of Common Stock subject to such Stock Option with respect to which he has been granted Stock Appreciation Rights; provided, however, that the Stock Appreciation Rights may be exercised only when the Fair Market Value of the Common Stock subject to such Stock Option exceeds the exercise price of the Stock Option. A Participant shall exercise his Stock Appreciation Rights by delivering a written notice to the Committee specifying the number of shares with respect to which he exercises Stock Appreciation Rights and agreeing to surrender the right to purchase an equivalent number of shares of Common Stock subject to his Stock Option. If a Participant exercises Stock Appreciation Rights, payment of his Stock Appreciation Rights shall be made in accordance with Section 9.3 on or before the 74th day after the date of exercise of the Stock Appreciation Rights.

 

9.3  Form of Payment. If a Participant elects to exercise Stock Appreciation Rights as provided in Section 9.2, the Committee may, in its absolute discretion, elect to pay any part or all of the Redemption Value of the shares with respect to which the Participant has exercised Stock Appreciation Rights in: (i) cash; (ii) shares of Common Stock; or (iii) any combination of cash and shares of Common Stock. The Committee’s election pursuant to this Section 9.3 shall be made by giving written notice to the Participant within said 74-day period, which notice shall specify the portion which the Committee elects to pay in cash, shares of Common Stock or a combination thereof. In the event any portion is to be paid in shares of Common Stock, the number of shares to be delivered shall be determined by dividing the amount which the Committee elects to pay in shares of Common Stock by the Fair Market Value of one share of Common Stock on the date of exercise of the Stock Appreciation Rights. Any fractional share resulting from any such calculation shall be disregarded. Said shares, together with any cash payable to the Participant, shall be delivered within said 74-day period.

 

  

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X.            No Contract of Employment.  Nothing in this Plan shall confer upon the Participant the right to maintain its relationship with the Company or any Participating Subsidiary, whether as an Employee, Consultant or otherwise, nor shall it interfere in any way with any right of the Company, or any such Participating Subsidiary, to terminate its relationship with the Participant at any time for any reason whatsoever, with or without cause.

 

XI.           No Rights as a Stockholder.  A Participant shall have no rights as a stockholder with respect to any shares of Common Stock subject to a Stock Option. Except as provided in Section 6.2, no adjustment shall be made in the number of shares of Common Stock issued to a Participant, or in any other rights of the Participant upon exercise of a Stock Option by reason of any dividend, distribution or other right granted to stockholders for which the record date is prior to the date of exercise of the Participant’s Stock Option.

 

XII.          Assignability.  No Equity Compensation Grants granted under this Plan, nor any other rights acquired by a Participant under this Plan, shall be assignable or transferable by a Participant, other than by will or the laws of descent and distribution or, in the case of a Non-ISO, pursuant to a qualified domestic relations order as defined by the Code, Title I of the Employee Retirement Income Security Act (“ERISA”), or the rules thereunder. Notwithstanding the preceding sentence, the Committee may, in its sole discretion, permit an assignment or transfer of a Non-ISO by a Participant and the exercise thereof by a person other than such Participant, on such terms and conditions as the Committee in its sole discretion may determine. In the event of his death, the Stock Option, any Stock Appreciation Right, or the rights under a Restricted Stock Grant may be exercised by the Personal Representative of the Participant’s estate or, if no Personal Representative has been appointed, by the successor or successors in interest determined under the Participant’s will or under the applicable laws of descent and distribution.

 

XIII.        Merger or Liquidation of the Company.  If the Company or its stockholders enter into an agreement to dispose of all, or substantially all, of the assets or outstanding capital stock of the Company by means of a sale or liquidation, or a merger or reorganization in which the Company is not the surviving corporation, the Committee may, in its discretion, provide that rights under Equity Compensation Grants outstanding under the Plan as of the day before the consummation of such sale, liquidation, merger or reorganization, to the extent not vested or exercised, shall for all purposes under this Plan become vested and exercisable in full as of such date even though the dates of exercise or vesting established pursuant to an applicable Stock Option Agreement or Restricted Stock Agreement have not yet occurred.

 

XIV.        Amendment.  The Board may from time to time alter, amend, suspend or discontinue the Plan, including, where applicable, any modifications or amendments as it shall deem advisable in order that ISOs will be classified as incentive stock options under the Code, or in order to conform to any regulation or to any change in any law or regulation applicable thereto; provided, however, that no such action shall adversely affect the rights and obligations with respect to Stock Options at any time outstanding under the Plan; and provided further that no such action shall, without the approval of the stockholders of the Company, (i) increase the maximum number of shares of Common Stock that may be made subject to Stock Options (unless necessary to effect the adjustments required by Section 6.2), (ii) materially increase the benefits accruing to Participants under the Plan or (iii) materially modify the requirements as to eligibility for participation in the Plan.

 

  

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XV.          Registration of Optioned Shares.  The Stock Options shall not be exercisable unless the purchase of such optioned shares is pursuant to an applicable effective registration statement under the Securities Act of 1933, as amended, or unless in the opinion of counsel to the Company, the proposed purchase of such optioned shares would be exempt from the registration requirements of the Securities Act of 1933, as amended, and from the qualification requirements of any state securities law.

 

XVI.        Withholding Taxes; 409A.

 

16.1    Cash Remittance. Whenever shares of Common Stock are to be issued upon the exercise, grant or vesting of an Equity Compensation Grant, and whenever any amount shall become payable in respect of any Equity Compensation Grant, unless the Participant exercises his or her rights under subsections (b) and (c) of this Article 16, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy federal, state, and local withholding tax requirements, if any, attributable to such exercise, grant, vesting, or payment prior to the delivery of any certificate or certificates for such shares or the effectiveness of the lapse of such restrictions or making of such payment. The Company can delay the delivery to a Participant of any Common Stock or cash payable to such Participant to determine the amount of withholding to be collected and to collect and process such withholding.

 

16.2    Stock Remittance. At the election of the Participant, when shares of Common Stock are to be issued upon the exercise, grant, or vesting of an Equity Compensation Grant, the Participant may tender to the Company, a number of shares of Common Stock that have been owned by the Participant for at least six months having a Fair Market Value at the tender date sufficient to satisfy the federal, state, and local withholding tax requirements, if any, attributable to such exercise, grant, or vesting but not greater than such withholding obligations. The Company can delay the delivery to a Participant of any Common Stock to such Participant to determine the amount of withholding to be collected and to collect and process such withholding.

 

16.3    Stock Withholding. At the election of the Participant, when shares of Common Stock are to be issued upon the exercise, grant, or vesting of an Equity Compensation Grant, the Company shall withhold a number of such shares having a Fair Market Value at the exercise date sufficient to satisfy the federal, state, and local withholding tax requirements, if any, attributable to such exercise, grant, or vesting but not greater than such withholding obligations. The Company can delay the delivery to a Participant of any Common Stock payable to such Participant to determine the amount of withholding to be collected and to collect and process such withholding.

 

16.4    409A.  All Equity Compensation Grants are intended to be exempt from or comply with the requirements of Code Section 409A, and this Plan shall be construed and administered accordingly.  In the event that any Equity Compensation Grant is deemed to be “deferred compensation” that does not comply with the provisions of Code Section 409A, then, notwithstanding anything to the contrary herein, the Committee shall have the right, but not the obligation, to modify or amend such Equity Compensation Grant in its discretion with the intent of making such award comply with or be exempt from Code Section 409A.  However, in no event shall the Company, any Participating Subsidiary, the Board, the Committee, or any director or Committee member be liable to any Participant as a result of the application of Code Section 409A to any Equity Compensation Grant made hereunder.

 

  

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XVII.       Non-Exclusivity of the Plan.  Neither the adoption of the Plan by the Board nor the submission of the Plan to stockholders of the Company for approval shall be construed as creating any limitations on the power or authority of the Board to adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees, consultants and directors generally, or to any class or group of employees, consultants or directors, which the Company or any Participating Subsidiary now has lawfully put into effect, including, without limitation, any retirement, pension, savings and stock purchase plan, insurance, death and disability benefits, and executive short term incentive plans.

 

XVIII.  Effective Date; Prior Plan Not Superseded.

 

18.1    Effective Date of Plan. This Second Amended and Restated 2006 Equity Compensation Plan was adopted by the Board of Directors effective as of September 26, 2012 (the “Effective Date”) and was submitted for approval by the Company’s stockholders at a special meeting of stockholders on December 3, 2012.

 

18.2    1995 Plan Not Superseded. This Second Amended and Restated 2006 Equity Compensation Plan does not supersede or otherwise affect the 1995 Stock Option Plan adopted August 15, 1995, and approved by the Company’s stockholders on May 23, 1996. All options granted under the 1995 Plan remain valid and shall continue to be governed by the provisions of the 1995 Plan.

 

18.3    Term of Plan. No Equity Compensation Grant shall be granted under this 2006 Equity Compensation Plan subsequent to ten (10) years after the Effective Date. Stock options outstanding subsequent to the ten years after the Effective Date shall continue to be governed by the provisions of the Plan.

 

 

10EXB 10.4 - 12.31.2012

Exhibit 10.4

AMENDED AND RESTATED EMPLOYMENT AGREEMENT 
Agreement made and entered into effective as of the 30th day of December, 2008 (the “Effective Date”), amended and restated as of the 24th day of  December, 2012, by and between MasterCard International Incorporated, a Delaware corporation (the “Company”) and Chris A. McWilton (the “Executive”).
W I T N E S S E T H:
WHEREAS, the Executive and the Company wish to continue the employment of the Executive on the terms and conditions specified herein; 
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:
1.Term of Employment.
1.1    The term of the Executive’s employment hereunder which commenced on the Effective Date, and upon the second anniversary of the Effective Date and each anniversary of the Effective Date thereafter has been automatically extended for successive one (1) year terms, shall continue to be automatically extended for one (1) year from each further anniversary of the Effective Date, unless the Company or the Executive provides the other with written notice of termination of this Agreement at least ninety (90) days prior to any date on which this Agreement would otherwise expire (the “Term of Employment”).
2.    Capacities, Duties and Authority.
2.1    The Executive shall continue to serve the Company in the position of President, U.S. Markets.
2.2    During the Term of Employment, the Executive shall be employed and have such titles and authority, perform such duties, discharge such responsibilities and render such services as are assigned to the Executive from time to time by the Company.
2.3    During the Term of Employment, the Executive shall render his services diligently, faithfully and to the best of his ability, devoting thereto substantially all of his business time, energy and skills to the Company; provided, however, that nothing herein shall preclude the Executive from (i) making and managing personal investments, (ii) serving in any capacity with any civic, educational or charitable organization so long as such activities are disclosed, in writing, to the Company’s Global Compliance Officer in accordance with the terms of the Company’s Code of Conduct, as may be amended from 

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time to time, (the “Company’s Code of Conduct”) and do not conflict with the interests of the Company, the terms of the Company’s Code of Conduct or interfere with the performance of the Executive’s duties and obligations hereunder, including, but not limited to the obligations set forth in Paragraph 6 hereof; or (iii) serving as an outside corporate director so long as such service is disclosed, in writing, to and approved, in writing, by the Company’s Global Compliance Officer in accordance with the terms of the Company’s Code of Conduct.
3.    Compensation.
3.1    During the Term of Employment, the Executive shall be paid a base salary, payable in accordance with the regular payroll practices of the Company.  During the Term of Employment, the Human Resources and Compensation Committee of the Board of Directors (the “Compensation Committee”) shall annually review the Executive’s performance and determine, in its sole discretion, whether or not to increase the Executive’s base salary and, if so, the amount of such increase.  Once increased, the Executive’s base salary hereunder may not thereafter be decreased, except if the Compensation Committee determines, in its sole discretion, to reduce the base salary of substantially all members of the Executive Committee of the Company (“EC”), excluding the CEO, provided, however, in no event shall such reduction(s) of base salary by the Compensation Committee exceed, in the aggregate during the Term of Employment, ten (10%) percent of the Executive’s base salary then in effect.  The Executive’s base salary as in effect from time to time is hereinafter referred to as the “Base Salary.”
3.2    During the Term of Employment, the Executive shall be eligible to participate in such annual and/or long-term bonus or incentive plan(s) as is or may be generally made available to other employees of the Company at the Executive’s level, based upon performance goals or other criteria, terms and conditions as may be established by the Company, in its sole discretion.  Such bonus or incentive payment will be payable on terms as may be established by the Company, in accordance with the terms and conditions of such plans as may be in effect from time to time.  
3.3    The Executive shall be eligible, annually during the Term of Employment, for vacation, without loss or diminution of compensation, in accordance with Company policy then in effect.
4.    Employee Benefit Programs.
4.1    During the Term of Employment, the Executive shall be eligible to participate in and shall have the benefit of all the Company’s employee compensation or benefit plans and programs as are or may be generally made available to other employees of the Company at the Executive’s level, subject to the eligibility criteria set forth therein, as such compensation or benefit plans or programs may be amended or terminated in the sole discretion of the Company from time to time.

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4.2    During the Term of Employment, the Executive shall be eligible to participate in the Company’s executive perquisite program as such is or will be generally made available to members of the EC, excluding the CEO, in accordance with the terms and conditions of such program as may be in effect from time to time.
4.3    Nothing in this Paragraph 4 shall be construed to require the Company to establish, maintain or continue any compensation or benefit plan, program or arrangement.  Except as otherwise expressly provided by their terms, such compensation or benefit plans, programs or arrangements are subject to modification or termination by the Company at any time.
5.    Termination of Employment; Change in Control.
5.1    The Executive’s employment hereunder shall terminate:
5.1.1    upon the death of the Executive; 
5.1.2    at the option of the Company, upon the disability of the Executive, which for the purposes of this Agreement shall be defined as set forth under the MasterCard Long-Term Disability Benefits Plan, as it may be amended from time to time (“Disability”).  Any dispute concerning whether the Executive is deemed to have suffered a Disability for purposes of this Agreement shall be resolved in accordance with the dispute resolution procedures set forth in the MasterCard Long-Term Disability Benefits Plan.  
5.1.3    at the option of the Company, and effective upon the giving of written notice by the Company to the Executive of such exercise, for “Cause”, or effective on such other date as may be specified in such written notice (“Notice of Termination for Cause”), which, for purposes of this Agreement, shall mean:
(a)    the willful failure by the Executive to perform his duties or responsibilities (other than due to Disability); 
(b)    the Executive’s engaging in serious misconduct that is injurious to the Company including, but not limited to, damage to its reputation or standing in its industry;
(c)    the Executive’s having been convicted of, or entered a plea of guilty or nolo contendere to, a crime that constitutes a felony, or a crime that constitutes a misdemeanor involving moral turpitude;
(d)    the material breach by the Executive of any written covenant or agreement with the Company not to disclose any information pertaining to the Company; or

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(e)    the breach by the Executive of the Code of Conduct, the Supplemental Code of Conduct, any material provision of this Agreement, or any material provision of the following Company policies: non-discrimination, substance abuse, workplace violence, nepotism, travel and entertainment, corporation information security, antitrust/competition law, enterprise risk management, accounting, contracts, purchasing, communications, investor relations, immigration, privacy, insider trading, financial process and reporting procedures, financial approval authority, whistleblower, anti-corruption and other similar Company policies, whether currently in effect or adopted after the date of this Agreement.
The Company’s Notice of Termination For Cause shall state the date of termination and the basis for the Company’s determination that the Executive’s actions establish Cause hereunder.

5.1.4    at the option of the Company, for a reason other than death, Disability or Cause, effective ninety (90) days after the giving of written notice of such exercise or immediately upon the Company’s tender to the Executive of written notice and ninety (90) days’ Base Salary in lieu of such notice period, which shall be payable in a lump sum on the Date of Termination; 
5.1.5    at the option of the Executive, effective ninety (90) days after the giving of written notice to the Company of the grounds for termination for Good Reason by the Executive, which grounds, as specified by the Executive, have not been cured by the Company during such ninety (90) day period; provided, however, that the Executive gave notice to the Company of the event(s) constituting Good Reason within sixty (60) days after such event(s) (or within sixty (60) days after a Change in Control, which for purposes of this Agreement shall be defined as set forth under the MasterCard Incorporated 2006 Long-Term Incentive Plan as it may be amended from time to time (“LTIP”), if the events giving rise to the Executive’s termination for Good Reason occurred during the six (6) month period preceding a Change in Control), failing which the Executive will be deemed to have waived his rights with respect to such event(s).  The Company may waive all or part of the ninety (90) day notice required to be given by the Executive hereunder by giving written notice to the Executive.  Unless waived by the Company, failure by the Executive to give notice of termination for Good Reason in compliance with this Paragraph, shall render the Executive ineligible to receive the payment and benefits provided under Paragraphs 5.2.5(b)-(f) and 5.2.7(b)-(d).  For purposes of this Agreement “Good Reason” shall mean the occurrence at any time of any of the following without the Executive’s prior written consent:
(a)    the assignment to a position for which the Executive is not qualified or a materially lesser position than the position held by the Executive (although duties may differ without giving rise to a termination by the Executive for Good Reason);

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(b)        a material reduction in the Executive’s annual Base Salary except that a 10 percent reduction, in the aggregate, over the Term of Employment as set forth in Paragraph 3.1 hereof shall not be treated as a material reduction;
(c)    the relocation of the Executive’s principal place of employment to a location more than fifty (50) miles from the Executive’s principal place of employment (unless such relocation does not increase the Executive’s commute by more than twenty (20) miles), except for required travel on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations as of the date of relocation; or
(d)    the failure by the Company to obtain an agreement from any successor to the Company to assume and agree to perform any employment agreement between the Executive and the Company.
5.1.6    at the option of the Executive, effective ninety (90) days after the giving of written notice to the Company of the exercise of such option for a reason other than Good Reason as set forth in Paragraph 5.1.5, above (“Voluntary Resignation”).  The Company may waive all or part of the ninety (90) day notice required to be given by the Executive hereunder by giving written notice to the Executive.  Unless waived by the Company, failure by the Executive to give notice of termination by Voluntary Resignation in compliance with this Paragraph, shall render the Executive ineligible to receive the payment and benefits provided under Paragraphs 5.2.4(c).
5.1.7    if within sixty (60) days subsequent to the termination of the Executive’s employment for death, Disability, Good Reason, Voluntary Resignation or otherwise, it is determined that the Executive could have been terminated for Cause hereunder, such voluntary termination shall be recharacterized and treated as a termination for Cause for all purposes hereunder.  Prior to the implementation of such recharacterization, the Company shall provide the Executive with notice and the reason(s) for the recharacterization and at least five (5) days to provide a written response to the Company.  Thereafter, the Company may take appropriate legal action to seek recompense for any payments or benefits improperly paid to the Executive, his estate or beneficiaries hereunder.  Following a judicial determination, the prevailing party in any action under this Paragraph 5.1.7, shall be entitled to be reimbursed by the non-prevailing party for reasonable legal fees and expenses incurred by the prevailing party  in connection with the judicial proceeding seeking to enforce the provisions of this Paragraph 5.1.7.
5.1.8    on the last day of the calendar year in which the Executive attains the age of sixty-five (65) (“Mandatory Retirement”), at which time the Executive shall be required to retire.

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5.2    Obligations of the Company upon Termination of Employment.
5.2.1    Death.  In the event of the Executive’s death during the Term of Employment, the Term of Employment shall end as of the date of the Executive’s death and his estate and/or beneficiaries, as the case may be, shall be entitled to receive the following lump sum payment (subject to any previously elected deferrals under the MasterCard Incorporated Deferral Plan), as soon as practicable, but in no event later than thirty (30) days following the Date of Termination:
(a)    Base Salary earned but not paid prior to the date of his death; 
(b)    payment for all accrued but unused vacation time up to the date of his death;
(c)    the target annual incentive bonus payable for the year in which the Executive’s death occurs and the prior year, if not already paid; and 
(d)    such additional benefits, if any, to which the Executive is expressly eligible following the termination of the Executive’s employment on account of death, payable or made available under such terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company.
5.2.2    Disability.  If the Executive’s employment is terminated due to Disability during the Term of Employment, either by the Company or by the Executive, the Term of Employment shall end as of the date of the termination of the Executive’s employment (as provided in Paragraph 5.1.2 of this Agreement) and the Executive shall be entitled to receive the following lump sum payment (subject to any previously elected deferrals under the MasterCard Incorporated Deferral Plan), as soon as practicable, but in no event later than thirty (30) days following the Date of Termination:
(a)    Base Salary earned but not paid prior to the Date of Termination;
(b)    payment for all accrued but unused vacation time up to the Date of Termination;
(c)    a pro rata portion (based upon completed calendar months worked prior to the date of disability) of the target annual incentive bonus payable for the year in which the Executive’s termination of employment occurs and the prior year, if not already paid; and
(d)    such additional benefits, if any, to which the Executive is expressly eligible following the termination of the Executive’s employment on account of Disability, payable or made available under such terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company.

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5.2.3    Cause.  If the Company terminates the Executive’s employment for Cause in accordance with the terms set forth in Paragraph 5.1.3 above, the Term of Employment shall end as of the Date of Termination and the Executive shall be entitled to receive the following lump sum payment, as soon as practicable, but in no event later than thirty (30) days following the Date of Termination:
(a)    Base Salary earned but not paid prior to the Date of Termination;
(b)    payment for all accrued but unused vacation time up to the Date of Termination; and
(c)    such additional benefits, if any, to which the Executive is expressly eligible following the termination of the Executive’s employment by the Company for Cause, payable or made available under such terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company.
5.2.4    Voluntary Resignation or Non Renewal by The Executive.  If the Executive terminates his employment by Voluntary Resignation, in accordance with the terms set forth in Paragraph 5.1.6 above or elects not to renew the Term of Employment in accordance with Paragraph 1.1, the Term of Employment shall end as of the Date of Termination; and the Executive shall be entitled to receive the following lump sum payment, as soon as practicable, but in no event later than thirty (30) days following the Date of Termination:
(a)    Base Salary earned but not paid prior to the Date of Termination;
(b)    payment for all accrued but unused vacation time up to the Date of Termination; and
(c)    such additional benefits, if any, to which the Executive is expressly eligible following the termination of the Executive’s employment by Voluntary Resignation, payable or made available under such terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company.
5.2.5    Without Cause, With Good Reason or Upon Non-Renewal by the Company.  If the Executive’s employment is terminated by the Company (other than for Cause or Disability) in accordance with the terms set forth in Paragraph 5.1.4 above, or if the Executive terminates his employment with Good Reason in accordance with the terms set forth in Paragraph 5.1.5 above, or if the Company elects to not renew the Term of Employment in accordance with Paragraph 1.1 (whether before or after a Change in Control), the Term of Employment shall end as of the Date of Termination and the Executive shall be entitled to:

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(a)    the following payments following the Date of Termination: (i) a lump sum payment (subject to any previously elected deferrals under the MasterCard Incorporated Deferral Plan), within thirty (30) days following the Date of Termination of all Base Salary earned but not paid prior to the Date of Termination; (ii) a lump sum payment within thirty (30) days following the Date of Termination equal to all accrued but unused vacation time up to the Date of Termination; and (iii) a pro rata portion (based upon actually completed calendar months worked) of the annual incentive bonus payable for the year in which the Executive’s termination of employment occurs based on the actual performance of the Company for the applicable performance period as determined by the Compensation Committee and payable in accordance with the regular bonus pay practices of the Company, as contemplated in accordance with the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and to the extent not already paid, the annual incentive bonus for the year immediately preceding the year in which the Executive’s Date of Termination occurs, payable in the amount and at the time such bonus would have been paid had he remained employed;
(b)    subject to the Executive’s execution (without revocation) of the Separation Agreement and Release as set forth in Paragraph 5.2.5(h), severance pay, in the form of Base Salary continuation and payment of an amount equivalent to the average annual incentive bonus earned by the Executive with respect to the prior two years of the Executive’s employment by the Company (the “Average Bonus Payment”), payable on a schedule in accordance with the regular payroll practices (but in no event less frequently than monthly) and annual incentive bonus pay practices of the Company (such Base Salary continuation and Average Bonus Payment being collectively referred to herein as “Severance Pay”) for a twenty-four (24) month period following the Executive’s Date of Termination (the “Severance Pay Period”).  Each such installment payment shall be deemed a separate payment for Section 409A of the Code.  Notwithstanding anything to the contrary in this Agreement, to the extent required under Section 409A of the Code, payments of the Severance Pay shall commence no earlier than the first day of the seventh month following the Executive’s Date of Termination (or such earlier date as is permitted under Section 409A of the Code) (with the first such payment being a lump sum equal to the aggregate payments the Executive would have received during such six-month period if no such delay had been imposed) in accordance with Section 409A(a)(2)(B)(i) of the Code; provided that, to the extent such amounts do not exceed two (2) times the lesser of: (i) the Executive’s Base Salary for the year preceding the year in which the Date of Termination occurs; and (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which the Date of Termination occurs, such amounts shall be paid in accordance with the schedule set forth in this Paragraph 5.2.5(b) without regard to such six (6) month delay.  In the event that the Executive dies prior to receipt of all Severance Pay due hereunder, any remaining Severance Pay due to the Executive under this Paragraph 5.2.5(b) shall be paid to the Executive’s estate in a lump sum as soon as practicable following the Executive’s death but in no event later than ninety (90) days following the date of the Executive’s death;  

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(c)    subject to the Executive’s execution (without revocation) of the Separation Agreement and Release, as set forth in Paragraph 5.2.5(h), payment on the Executive’s behalf, for the monthly cost of the premiums for coverage under the Consolidated Omnibus Reconciliation Act of 1985, as amended (“COBRA”), for a period equivalent to the eighteen (18) month COBRA period (twenty-nine (29) month period, if the Executive is disabled under the Social Security Act within the first sixty (60) days of the continuation period) or the Severance Pay Period, whichever is shorter (the “Medical Benefits”), provided, however, such coverage shall not be provided if during such period the Executive is or becomes ineligible under the provisions of COBRA for continuing coverage; and provided, further, that if the Executive is eligible for Retiree Health Coverage under the MasterCard Retiree Health Plan, the Company shall pay the full cost of such Retiree Health or COBRA coverage, as applicable, during the Severance Pay Period and thereafter, retiree contribution levels provided under the provisions of the Retiree Health Plan shall apply; 
(d)    subject to the Executive’s execution (without revocation) of the Separation Agreement and Release, as set forth in Paragraph 5.2.5 (h), reasonable outplacement services, to be provided by a firm selected by the Company, at a level generally made available to executives of the Company for the shorter of the Severance Pay Period or the period he remains unemployed;
(e)    the Executive shall become fully vested in his benefit in the MasterCard International Supplemental Executive Retirement Plan (the “SERP”) upon the earliest of (i) the termination of the Executive’s employment without Cause or with Good Reason as defined herein, subject to the Executive’s execution (without revocation) of the Separation Agreement and Release, as set forth in Paragraph 5.2.5(h), and (ii) a Change in Control.  Such SERP benefit shall be payable in accordance with the terms of the SERP; 
(f)    subject to the Executive’s execution (without revocation) of the Separation Agreement and Release, as set forth in Paragraph 5.2.5(h), in the event the Executive’s Date of Termination is before November 18, 2013, Executive shall be deemed terminated by reason of Retirement solely for purposes of the MasterCard Incorporated 2006 Long-Term Incentive Plan, as it may be amended from time to time, and any grant awards made thereunder. 
(g)    such other benefits, if any, to which the Executive is expressly eligible following the termination of the Executive’s employment by the Company without Cause, by the Executive with Good Reason or by the Company Upon Non-Renewal, payable or made available under such terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company. (other than any severance payments payable under the terms of any benefit plan, including, but not limited to, the MasterCard International Incorporated Severance Plan). 

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(h)    The Company’s obligations to make payments and provide benefits under Paragraphs 5.2.5(b)-(e)(i), and (f) and 5.2.7 (a) and (c) are conditioned on the Executive or his legal representative’s execution (without revocation) of a separation agreement and general release of claims (“Separation Agreement and Release”) in substantially the form annexed hereto, provided that if the Executive should fail to execute such Separation Agreement and Release such that it is legally effective and not subject to revocation within sixty (60) days following the Date of Termination, the Company shall not have any obligation to make the payments and provide the benefits contemplated under Paragraphs 5.2.5(b)-(e)(i) and (f) and 5.2.7 (a) and (c).  Payments otherwise due during the period following the Date of Termination during which the Executive is required to execute a legally effective Separation Agreement and Release shall be aggregated and paid in a lump sum on the first regular payroll occurring after the Executive’s signed release becomes legally effective and not subject to revocation, with subsequent payments following over the time period originally scheduled under this Paragraph 5.2.5.         
5.2.6    Termination Upon Mandatory Retirement.  In the event the Executive’s employment with the Company ends upon Mandatory Retirement, the Executive shall be eligible for the following lump sum payment  (subject to any previously elected deferrals under the MasterCard Incorporated Deferral Plan) as soon as practicable, but in no event later than thirty (30) days following the Date of Termination:
(a)    Base Salary earned but not paid prior to the Date of Termination;
(b)    payment for all accrued but unused vacation time up to the Date of Termination;
(c)    a pro rata portion (based upon actually completed calendar months worked ) of the annual incentive bonus payable for the year in which the Executive’s termination of employment occurs and the prior year, if not already paid, based upon the actual performance of the Company for the applicable performance period (and taking into account the terms of the Plan including but not limited to the discretion of the Compensation Committee to reduce such bonus amount) as contemplated in accordance with the requirements of Section 162(m) of the Code, with such amount payable when the incentive bonus is regularly paid to similarly situated employees for such year; and 
(d)    such additional vested benefits to which the Executive is expressly entitled following the termination of the Executive’s employment, payable or made available under such terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company, provided, however, in no event shall the Executive be entitled to any payment or benefit provided pursuant to Paragraphs 5.2.5(b) and (c) of this Agreement.

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5.2.7    Gross-Up Payments.
(a)    subject to the Executive’s execution (without revocation) of the Separation Agreement and Release, as set forth in Paragraph 5.2.5(h), if any of the payments or benefits received or to be received by the Executive in connection with his employment or termination thereof (whether such payments or benefits are provided pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or its subsidiaries) (such payments or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Code, the Company shall pay to the Executive no later than the time such Excise Tax is required to be paid by the Executive or withheld by the Company, such additional amounts (the “Gross-Up Payment”) such that the net amount retained by the Executive, taking into account the Gross-Up Payment, and after deduction of any federal, state and local income and employment taxes and Excise Taxes, shall be equal to the Excise Tax on such Gross-Up Payment and the Total Payments (calculated on a hypothetical basis by taking into account the provisions of Paragraph 5.2.7(b) hereof).  Notwithstanding the above, if it is determined that the Excise Tax would cause the net after-tax Total Payments to be paid to or on behalf of the Executive to be less than what he would have netted, after federal, state and local income taxes without taking into account any Gross-Up Payment, had the present value of his Total Payments equaled one dollar ($1) less than three times his base amount, as defined under Section 280G(b)(3)(A) of the Code, then the Executive’s Total Payments shall be reduced (but not below the minimum possible amount), so that no portion of the Total Payments is subject to the Excise Tax (the amount of the reduction is hereinafter referred to as the “Cut-Back Amount”).  The Cut-Back Amount shall be achieved in such a manner so that the reduction of amounts payable or benefits to be provided to the Executive is minimized.  In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where two (2) economically 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.  Notwithstanding the foregoing, to the extent required under Section 409A of the Code, Gross-Up Payments shall not be made earlier than the first day of the seventh month following the Executive’s Date of Termination in accordance with Section 409A(a)(2)(B)(i) of the Code.
(b)    for purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” (within the meaning of Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (“Tax Counsel”) selected by the Company and reasonably acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in 

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part) represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such payment, or are otherwise not subject to the Excise Tax, and (iii) the value of any non cash benefits or any deferred payment or benefit shall be determined by Tax Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.  For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence or place of employment under which such amounts are subject to taxation, whichever is greater, in the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(c)    subject to the Executive’s execution (without revocation) of the Separation Agreement and Release, as set forth in Paragraph 5.2.5(h), in the event that the Excise Tax is determined to exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to such excess) within five (5) business days following the time that the amount of such excess is finally determined.  In the event that the Excise Tax is determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive shall repay to the Company within five (5) business days following the time that such difference is finally determined the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to such Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive if such repayment results in a reduction in such Excise Tax or a federal, state and local income tax deduction) plus any interest received by the Executive on the amount of such repayment less any federal, state and local income and employment taxes actually paid by the Executive on such interest.  The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for any Excise Tax with respect to the Total Payments.  
(d)    Notwithstanding any other provision of this Paragraph 5.2.7, any Gross-Up Payments shall be made no later than the last day of the taxable year following the year in which the Executive remits the related tax in accordance with Treas. Reg. Section 1.409A-3(i)(1)(v).  
5.3    Except as expressly provided by Paragraph 5.2, any payment or benefit provided under Paragraph 5.2 hereof shall be in lieu of any other severance, bonus or 

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other payments, perquisites or benefits, including any further accruals or vesting thereof, to which the Executive might then or, in the future, be eligible pursuant to this Agreement or any statutory or common law claim. In order to preserve the parties’ respective legal rights in the event of a dispute, the Executive acknowledges and agrees that in the event the parties dispute whether the Executive shall be eligible to a payment hereunder, such payment shall not be deemed to be earned or otherwise vest hereunder until such time as the dispute is determined by a final judgment of a court of competent jurisdiction or otherwise resolved.  The foregoing shall not be deemed to prohibit a court of competent jurisdiction from awarding prejudgment interest under circumstances in which it may deem it appropriate to do so.
5.4    Notwithstanding anything to the contrary herein, if the Company has reason to believe that there are circumstances which, if substantiated, would constitute Cause as defined herein, the Company may suspend the Executive from employment immediately upon notice for such period of time as shall be reasonably necessary for the Company to ascertain whether such circumstances are substantiated.  During such suspension, the Executive shall continue to be paid the compensation and provided all benefits hereunder in accordance with the regular payroll and benefit practices of the Company; provided, however, that if the Executive has been indicted or otherwise formally charged by governmental authorities with any felony, the Company may, in its sole discretion, and without limiting the Company’s discretion to terminate the Executive’s employment for Cause (provided it has grounds to do so under the terms of Paragraph 5.1.3 hereof), suspend the Executive without continuation of any compensation or benefits hereunder (except health benefits, which shall be continued during the period of suspension), pending final disposition of such criminal charge(s).  Upon receiving notice of any such suspension, the Executive shall promptly leave the premises of the Company and remain off such premises until further notice from the Company. In the event the Executive is suspended as a result of such charges, but is later acquitted or otherwise exonerated from such charges, the Company shall pay to the Executive such compensation, with interest, calculated from the date such compensation was suspended at the prime lending rate in effect on the date the Company receives notice from the Executive of such acquittal or exoneration, and provide benefits withheld from the Executive during the period of the Executive’s suspension, if any, all of which shall be paid and provided within thirty (30) days of the date of the Executive’s acquittal or exoneration from criminal charges that resulted in his suspension shall be limited with respect to the period of up to two (2) years from the date of suspension.
5.5    Notwithstanding anything to the contrary contained herein, the date of termination for purposes of payment of deferred compensation under any Company deferred compensation plans shall be determined in accordance with the terms of such plans.

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6.    Acknowledgements; Confidential Information; Competitive Activities; Non Solicitation.
6.1    The Executive acknowledges and agrees as follows:  
6.1.1    The Company is in the payments industry and provides such services both nationally and internationally without limitation to any geographic area.
6.1.2    Since the Company would suffer irreparable harm if the Executive left the Company’s employ and solicited the business and/or employees of the Company or otherwise interfered with business relationships of the Company, it is reasonable to protect the Company against such activities by the Executive for a limited period of time after the Executive leaves the Company.
6.1.3    The covenants contained in Paragraphs 6.2, 6.3, 6.4 and 6.5 below are reasonably necessary for the protection of the Company and are reasonably limited with respect to the activities they prohibit, their duration, their geographical scope and their effect on the Executive and the public.  The purpose and effect of the covenants simply are to protect the Company for a limited period of time from unfair competition by the Executive.
6.2    Confidentiality.
6.2.1    For the purposes of this Agreement, all confidential or proprietary information concerning the business and affairs of the Company, including, without limitation, all trade secrets, know-how and other information generally retained on a confidential basis by the Company concerning its designs, products, methods, techniques, systems, engineering data, software codes and specifications, formulae, processes, inventions and discoveries, business plans, pricing, product plans and the identities of, and the nature of the Company’s dealings with, its members, suppliers and customers, whether or not such information shall, in whole or in part, be subject to or capable of being protected by patent, copyright or trademark laws, shall constitute “Confidential Information.”  The Executive acknowledges that he has had and, will from time to time have access to and has obtained and will in the future obtain knowledge of certain Confidential Information, and that improper use or revelation thereof by the Executive, during or after the termination of his employment by the Company, could cause serious injury to the business of the Company.  Accordingly, the Executive agrees that, unless otherwise required by law, he will forever keep secret and inviolate all Confidential Information which shall have come or shall hereafter come into his possession, and that he will not use the same for his own private benefit, or directly or indirectly for the benefit of others, and that he will not disclose such Confidential Information to any other person.  If the Executive is legally compelled (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to disclose any of the Confidential Information, he shall provide the Company with prompt prior written notice of such legal requirement, so that the Company may seek a protective order or 

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other appropriate remedy and/or waive compliance with the terms of this paragraph.  In any event, the Executive may furnish only that portion of the Confidential Information which the Executive is advised by legal counsel is required, and he shall exercise his best efforts to obtain an order or assurance that confidential treatment will be accorded such Confidential Information as is disclosed.  Notwithstanding anything contained herein which may be to the contrary, the term “Confidential Information” does not include any information which at the time of disclosure is generally available to and known by the public, other than as a result of a disclosure directly or indirectly by the Executive.
6.2.2    Notwithstanding the foregoing, nothing herein shall preclude the Executive from (i) making any disclosure as required by law or legal process; or (ii) participating, cooperating, or testifying in any action, investigation, or proceeding by or before, or providing information to, any governmental agency or legislative body, any self-regulatory organization, or the Company’s Law Department or the Global Ethics and Compliance Officer in the General Counsel’s Office; provided, however, that upon the Executive’s obtaining notice of a requirement to take any action pursuant to Paragraph 6.2.2(i) or (ii), the Executive shall, to the extent permitted by law, provide the Company with immediate written notice of any required disclosures, subpoenas, or any other legal process, which notice shall include a copy of any such disclosure request, subpoena, or other legal process.
6.3    In addition to the acknowledgments by the Executive set forth in Paragraph 6.1 above, the Executive acknowledges that the services provided by him for the Company are a significant factor in the creation of valuable, special and unique assets which are expected to provide the Company with a competitive advantage.  Accordingly, the Executive agrees that for the Term of Employment through the duration of the Severance Pay Period or in the event the Executive is ineligible for Severance Pay pursuant to Paragraph 5.2.3 or 5.2.4 above, for a period of twelve (12) months, the Executive will not directly or indirectly for himself or any third party invest in, own, become employed by, or render any consulting, advisory or other services to, or for the benefit of, any business or activity that competes with any business or activity (i) engaged in by the Company or, (ii) to the knowledge of the Executive, that the Company has undertaken efforts to engage in and/or plan, without regard to geographic limitation.  This prohibition includes, but is not limited to the Executive becoming an investor in, owner of, employed by, or directly or indirectly performing services for the following, including their subsidiaries, affiliates, and successors:  (i) VISA Inc., VISA Europe, American Express, Discover, China Union Pay, JCB, Diners Club International, PayPal, Revolution, Tempo, Bill Me Later, Inc., First Data Corporation, Metevant, Star Network Inc. or NYCE (ii) any other payment card business or processor; (iii) any company or other entity in the payments business that holds a seat on the Board of Directors of VISA Inc. or Visa Europe; or (iv) any company or other entity that is a party to a brand dedication agreement (the term of which is two years or more) with VISA Inc., VISA Europe or American Express and (x) whose VISA or American Express branded volume, as of the Date of Termination of the Executive’s employment, is equal to or 

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greater than 75% of the total volume generated by cards issued by such company or (y) pursuant to the terms of such brand dedication agreement is contractually obligated to increase its VISA or American Express branded volume up to an amount equal to or greater than 75% of the total volume generated by cards issued by such company during the term of such brand dedication agreement.  Notwithstanding the foregoing, it shall not be a violation of the Agreement for the Executive to have beneficial ownership of less than 1% of the outstanding amount of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on a national securities exchange or quoted on an inter-dealer quotation system.  The Executive acknowledges and agrees that the non-compete provision set forth herein is intended to limit competition by the Executive to the maximum extent permitted by law.  If it shall be finally determined by any court of competent jurisdiction that the scope or duration of any limitation contained herein is too extensive to be legally enforceable, then the Executive agrees that the provisions shall instead be construed to be confined to such lesser scope or duration as shall be legally enforceable, and the Executive hereby consents to the enforcement of such limitation as so modified. 
6.4    During the Term of Employment, and thereafter for the duration of the Severance Pay Period, or in the event that the Executive is ineligible for Severance Pay pursuant to Paragraph 5.2.3 or 5.2.4 for a period of twelve (12) months following the Executive’s Date of Termination, the Executive shall not himself, or by assisting any other person to, directly or indirectly, (a) hire or cause to be hired any level 5 or higher level employee, agent, consultant or representative of the Company, (b) solicit, induce, recruit or encourage any other level 5 or higher level employee, agent, consultant or representative to leave the service of the Company for any reason, or (c) induce any customer, supplier or other person with whom the Company is engaged in business, or to the knowledge of the Executive planned or proposed to engage in business, to terminate any commercial relationship with the Company or cease to accept or issue its products and/or use its services.
6.5    The Executive acknowledges and agrees as follows:
6.5.1    The Executive agrees to promptly disclose to the Company any and all discoveries, developments, inventions, products, services, processes, formulas, and improvements thereof, (“Inventions”) whether or not patentable, relating to the products, services, commercial or other endeavors of the Company, its subsidiaries and affiliates, which the Executive may invent, discover, develop or learn in connection with the Executive’s employment.  The Executive agrees that such inventions are the exclusive and absolute property of the Company and that the Company will be the sole and absolute owner of all intellectual property rights, including patent and any and all other rights in connection therewith.  The Executive agrees to give all reasonable assistance in the preparation and/or execution of any papers the Company may request to reflect such interest and to secure patent or other protection for such Inventions.

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6.5.2    The Executive understands that in the course of employment, the Executive may prepare writings, drawings, diagrams, designs, specifications, manuals, instructions and other materials, and computer code and programs (“Works”).  Such Works are “works made for hire “under United States copyright law and the Company shall be the owner of the Executive’s entire right of authorship in such Works.  If such Works are deemed by operation of law not to be “works made for hire,“ the Executive hereby assigns to the Company the Executive’s entire right of authorship, including copyright ownership in such Works and agrees to execute any document deemed necessary by the Company in connection therewith.
6.6    In the event that the Company determines, in good faith, that the Executive has breached his obligations under Paragraphs 6.2, 6.3, 6.4 or 6.5, the Company shall be under no obligation to provide any further Severance Pay or provide any further payments or benefits otherwise due under Paragraphs 5.2.5(b)–(g) above, during the remainder of the Severance Pay Period.  In the event of a judicial determination that the Executive has breached his obligations under Paragraphs 6.2, 6.3, 6.4 or 6.5, in addition to any damages or other relief otherwise available to the Company, the Executive shall be obligated to reimburse the Company for any Severance Pay previously received from the Company.  In addition, following a judicial determination, the prevailing party shall be entitled to be reimbursed by the non-prevailing party for reasonable legal fees and expenses incurred by the prevailing party in connection with the judicial proceeding seeking to enforce the provisions of Paragraph 6 hereof. 
6.7    For the purposes of this Agreement, the period of restriction of confidentiality or proprietary information and competition is intended to limit disclosure and competition by the Executive to the maximum extent permitted by law.  If it shall be finally determined by any court of competent jurisdiction ruling on this Agreement that the scope or duration of any limitation contained in this Agreement is too extensive to be legally enforceable, then the parties hereby agree that the provisions hereof shall be construed to be confined to such scope or duration (not greater than that provided for herein) as shall be legally enforceable, and the Executive hereby consents to the enforcement of such limitations as so modified.
6.8    The Executive acknowledges that any violation by him of the provisions of this Paragraph 6 would cause serious and irreparable damage to the Company.  He further acknowledges that it might not be possible to measure such damage in money.  Accordingly, the Executive agrees that, in the event of a breach or threatened breach by the Executive of the provisions of this Paragraph, the Company may seek, in addition to any other rights or remedies, including money damages or specific performance, an injunction or restraining order, without the need to post any bond or other security, prohibiting the Executive from doing or continuing to do any acts constituting such breach or threatened breach.

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7.    Reimbursement of Business Expense.
During the Term of Employment, subject to and in accordance with the Company’s policies with regard to such matters, the Executive is authorized to incur reasonable business expenses in carrying out his duties and responsibilities under the Agreement, and the Company shall promptly reimburse him for all such properly documented business expenses incurred in accordance with the Company’s travel and business expense reimbursement policy in connection with carrying out the business of the Company.
8.    Indemnity.
The Company shall indemnify the Executive, to the fullest extent permitted by the General Corporation Law of the State of Delaware, for any acts or omissions taken or made by the Executive during the Term of Employment, within the scope of his authority under this Agreement.
9.    Miscellaneous.
9.1    This Agreement shall be construed and enforced in accordance with the laws of the State of New York without reference to principles of conflict of laws.  Any legal suit, action or proceeding by or against any party hereto arising out of or relating to this Agreement and/or the Separation Agreement and Release shall be instituted in a federal or state court in the State of New York, and each party hereto waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding and each party hereto irrevocably submits to the jurisdiction of any such court in any suit, action or proceeding.
9.2    The Executive acknowledges and agrees that he is and will be bound to the terms of the Company’s Code of Conduct, Supplemental Code of Conduct and any other agreements he has executed or may execute in the future regarding confidentiality, trade secrets, inventions restrictions on competition, solicitation or which create other post-employment obligations, including, but not limited to any agreement executed in connection with the Executive’s past or future participation in the Company’s LTIP.
9.3    This Agreement shall incorporate the complete understanding and agreement between the parties with respect to the subject matter hereof and thereof and supersede any and all other prior or contemporaneous agreements, written or oral, between the Executive and the Company or any predecessor thereof, with respect to such subject matter.  No provision hereof may be modified or waived except by a written instrument duly executed by the Executive and the Company.
9.4    The Executive acknowledges that before entering into this Agreement he has received a reasonable period of time to consider this Agreement and has had sufficient time and an opportunity to consult with any attorney or other advisor of his 

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choice in connection with this Agreement and all matters contained herein, and that he has been advised to do so if he so chooses.  The Executive further acknowledges that this Agreement and all terms hereof are fair, reasonable and are not the result of any fraud, duress, coercion, pressure or undue influence exercised by the Company, that he has approved and entered into this Agreement and all of the terms hereof on his own free will, and that no promises or representations have been made to him by any person to induce him to enter into this Agreement other than the express terms set forth herein.
9.5    The Company shall be eligible to deduct and withhold from all compensation payable to the Executive pursuant to this Agreement all amounts required to be deducted and withheld therefrom pursuant to any present or future law, regulation or ordinance of the United States of America or any state or local jurisdiction therein or any foreign taxing jurisdiction.
9.6    Paragraph headings are included in this Agreement for convenience of reference only and shall not affect the interpretation of the text hereof.
9.7    Any and all notices, demands or other communications to be given or made hereunder shall be in writing and shall be deemed to have been fully given or made when personally delivered, or on the third business day after mailing from within the continental United States by registered mail, postage prepaid, addressed as follows:
If to the Company:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York  10577
Attention:  General Counsel

with a copy to:

MasterCard International Incorporated
2000 Purchase Street
Purchase, New York  10577
Attention:  Chief Human Resources Officer

If to the Executive:
Chris A. McWilton

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Either party may change the address to which any notices to it shall be sent by giving to the other party written notice of such change in conformity with the foregoing.
9.8    This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which together shall constitute one and the same instrument.
9.9    This Agreement may be assigned by the Company to, and shall inure to the benefit of, any successor to substantially all the assets and business of the Company as a going concern, whether by merger, consolidation or purchase of substantially all of the assets of the Company or otherwise, provided that such successor shall assume the Company’s obligations under this Agreement.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 
9.10    Notwithstanding any other provision of this Agreement, if any payment, compensation or other benefit provided to the Executive in connection with his employment termination is determined, in whole or in part, to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Executive is a specified employee as defined in Section 409A(a)(2)(b)(i) of the Code, no part of such payments shall be paid before the first day of the seventh month following the Executive’s Date of Termination (such date, the “New Payment Date”).  The aggregate of any payments that otherwise would have been paid to the Executive during the period between the Date of Termination and the New Payment Date shall be paid to the Executive in a lump sum on such New Payment Date.  Thereafter, any payments that remain outstanding as of the day immediately following the New Payment Date shall be paid without delay over the time period originally scheduled, in accordance with the terms of this Agreement.  If the Executive dies during the period between the Date of Termination and the New Payment Date, the amounts withheld on account of Section 409A of the Code shall be paid to the Executive’s beneficiary within thirty (30) days of the Executive’s death.
9.11    This Agreement is intended to comply with the requirements of Section 409A of the Code, and, specifically, with the separation pay exemption and short term deferral exemption of Section 409A, and shall in all respects be administered in accordance with Section 409A.  Notwithstanding anything in the Agreement to the contrary, distributions may only be made under the Agreement upon an event and in a manner permitted by Section 409A of the Code or an applicable exemption.  All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under Section 409A.  For purposes of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  In no event may the Executive, directly or indirectly, designate the calendar year of a payment that is subject to Code Section 409A.  All reimbursements and in-kind benefits provided under this 

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Agreement and the Separation Agreement and Release shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement or the Separation Agreement and General Release, as applicable), (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
IN WITNESS WHEREOF, each of the Company and the Executive has executed this Agreement effective as of the Effective Date.
	
						
	 
	 
	 
	MASTERCARD INTERNATIONAL
	 

	 
	 
	 
	INCORPORATED
	 

	 
	 
	 
	 
	 
	 

	/s/ Chris A. McWilton
	 
	By: /s/ Ajaypal Banga
	 

	 
	 
	 
	 
	 
	 

	     Chris A. McWilton
	 
	           Ajaypal Banga
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	           President and Chief Executive
	 

	 
	 
	 
	           Officer
	 

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