Exhibit 10.1

 

Invuity, Inc.

 

Restricted Stock unit Deferral Program for Outside Directors

 

The Invuity, Inc. Restricted Stock Unit Deferral Program for Outside Directors
(the “Program”) has been adopted by the Compensation Committee (the “Committee”)
of the Board of Directors (the “Board”) of Invuity, Inc. (the “Company”) in
accordance with the provisions of the Invuity, Inc. 2015 Equity Incentive Plan
(the “Plan”). 

 

In addition to the terms and conditions set forth herein, benefits provided
under this Program are subject to, and governed by, the terms and conditions set
forth in the Plan, which terms are incorporated herein by reference. Unless the
context otherwise requires, capitalized terms not otherwise defined herein shall
have the meanings set forth in the Plan. In the event of any conflict between
the provisions of this Program and the Plan, the Committee shall have full
authority and discretion to resolve such conflict and any such determination
shall be final and binding on the Outside Director and all interested parties. 

 

1. Definitions. In this Program, the following definitions apply:

 

(a) “Deferral Election” means an Outside Director’s written, irrevocable and
timely election meeting the requirements of Section 409A of the Code to defer
his or her Award pursuant to the terms of the Plan and this Program, in such
form and manner as may from time to time be required by the Company.

 

(b) “Deferral Election Date” means the date on which a Deferral Election is
made.

 

(c) “Deferred Restricted Stock Unit” or “Deferred RSU” means a Restricted Stock
Unit granted in accordance with the terms of the Plan and this Program. Each
Deferred RSU is the economic equivalent of one Share.

 

(d) “Deferred RSU Account” means the bookkeeping account established for each
Outside Director who is entitled to a benefit under this Program.

 

(e) “Disability” means a permanent and total disability as described in Section
22(e)(3) of the Code.

 

(f) “Effective Date” means June 1, 2017.

 

(g) “Grant Date” means the date on which an Award of Deferred RSUs is made to an
Outside Director pursuant to the Plan and this Program.

 

(h) “Grantee” means an Outside Director who receives an Award of Deferred RSUs
pursuant to this Program.

 

--------------------------------------------------------------------------------

 

(i) “Separation from Service”  means the Grantee’s “separation from service,” as
such term is defined under Section 409A of the Code and its corresponding
treasury regulations and related guidance.

 

2. Purpose.  This Program is intended to provide a tax-deferred method of
compensation to assist the Company in attracting, retaining, and motivating
Outside Directors of outstanding ability, as well as to further align their
interests with those of the Company’s stockholders.

 

3. Administration. This Program will be administered by the Committee, except as
otherwise required by applicable rules or regulations, or by the Committee Chair
in the exercise of such authority as the Committee may delegate to him or her
from time to time. In addition to any other powers granted to the Committee, it
will have the following powers, subject to the express provisions of this
Program:

 

(a) to determine, consistent with the terms and conditions of the Outside
Director Compensation Policy (the “Policy”) and the Plan,  (i) the Grant Date,
(ii) the number or dollar value of Deferred RSUs to be granted to each Grantee,
 (iii) the terms upon which Deferred RSUs may be acquired or forfeited, and (iv)
the terms and conditions of each grant of Deferred RSUs, which terms and
conditions need not be identical for each Grantee;

 

(b) to construe and interpret this Program;

 

(c) to make all other determinations and take all other actions necessary or
advisable for the administration of this Program; and

 

(d) to delegate to proper officers of the Company the authority to perform
administrative functions under this Program.

 

Any determinations made, or actions taken by, the Committee pursuant to this
Section 3 or any other provision of this Program will be made or taken by the
Committee in its sole discretion and will be final, binding and conclusive for
all purposes on all parties, including, without limitation, Grantees and their
designated beneficiaries.

 

4. Establishment of Deferred RSU Accounts.  The Company will establish and
maintain a Deferred RSU Account in the name of each Grantee as of the date on
which he or she is first granted an Award of Deferred RSUs. Awards of Deferred
RSUs will be credited to the Grantee’s Deferred RSU Account on the Grant Date.

 

5. Eligibility;  Irrevocable Election.  

 

(a)  Eligibility.  Deferred RSUs may be granted to each Outside Director
(including a Committee member) who is serving on the Effective Date of this
Program, or is elected or appointed and duly qualified thereafter, provided that
he or she is serving as an Outside Director on the Grant Date.

2

--------------------------------------------------------------------------------

 

(b) Irrevocable Election for Annual Grants.  Beginning with the annual equity
Awards to be granted on the date of the Company’s 2017 Annual Meeting of
Stockholders (the “Initial Grant Date”),  an Outside Director may make a
Deferral Election indicating that he or she wishes to receive his or her annual
equity Award in the form of Deferred RSUs and, subject to vesting of such
Deferred RSUs, thereby to defer receipt of the corresponding Shares to a future
date in accordance with this Program and the Plan. For the avoidance of doubt, a
Deferral Election will apply to such annual equity Award in its entirety and no
partial elections may be made. An Outside Director who wishes to be granted
Deferred RSUs for a particular year must make a Deferral Election no later than
December 31 of the calendar year prior to the calendar year in which the
Deferred RSUs will be granted pursuant to this Program, except that Deferral
Elections with respect to Awards to be granted as of the Initial Grant Date must
be made no later than (i) the Initial Grant Date or (ii) 30 days following such
Initial Grant Date. All Deferral Elections shall become irrevocable as of such
December 31 or such other Deferral Election Date. Any Deferral Election shall be
effective only for the Deferred RSUs granted in the current or following
calendar year and shall not carry over to any subsequent calendar year. For the
avoidance of doubt, a new, separate Deferral Election must be submitted with
respect to each Award of Deferred RSUs. 

 

(c) Interim Grants to New Outside Directors.  Any interim grant of an equity
Award to a new Outside Director shall be made pursuant to the Policy (each, an
“Initial Award”).  A new Outside Director who wishes to be granted Deferred RSUs
with respect to such Initial Award must make a Deferral Election no later than
(i) the Grant Date for the Initial Award or (ii) 30 days following such Grant
Date.  

 

6. Grant of Deferred RSUs; Vesting.  

 

(a) Grant of Annual Awards.  On the date of each annual meeting of the Company’s
stockholders, each Outside Director who is then serving as a member of the Board
shall be eligible to receive an Award consistent with the provisions of the
Policy and the Plan (the “Annual Award”); provided, however, that if the Outside
Director timely made a Deferral Election pursuant to Section 5(b) above to be
granted Deferred RSUs,  he or she shall be credited with a number of Deferred
RSUs to his or her Deferred RSU Account that either will be (i) the number of
Deferred RSUs specified in the grant or (ii) calculated by dividing the dollar
amount relating to such Annual Award as specified by the Committee, pursuant to
the terms of the Policy, by the Fair Market Value of a Share on the Grant Date,
rounded down to the nearest whole Deferred RSU.

 

(b) Grant of Initial Awards. Any Initial Award granted to a new Outside Director
shall be granted consistent with the provisions of the Policy and the Plan;
 provided, however, that if the new Outside Director timely made a  Deferral
Election pursuant to Section 5(c) above to be granted Deferred RSUs, he or she
shall be credited with a number of Deferred RSUs to his or her Deferred RSU
Account that either will be (i) the number of Deferred RSUs specified in the
Initial Award or (ii) calculated by dividing the dollar amount relating to such
Initial Award specified by the Committee, pursuant to the terms of the Policy,
by the Fair Market Value of a Share on the Grant Date, rounded down to the
nearest whole Deferred RSU.

3

--------------------------------------------------------------------------------

 

(c) Crediting of Deferred RSU Accounts. All Deferred RSUs granted pursuant to
this Program and the Plan, together with any adjustments thereon, will be
credited directly to the Grantee’s Deferred RSU Account, subject to the terms
and conditions of this Program.

 

(d) Vesting of Deferred RSUs.  

 

(i) Vesting of 2017 Deferred RSU Awards and Initial Awards.  The Deferred RSUs,
if any, granted on the Initial Grant Date and Deferred RSUs granted with respect
to an Initial Award shall vest in full on the first anniversary of the Grantee’s
Deferral Election Date, subject to the Grantee’s continued service as a Director
(whether or not in the capacity of an Outside Director) through such date,
subject to the provisions of Section 6(e) below).

 

(ii) Vesting of Annual Awards. Deferred RSUs granted with respect to an Annual
Award shall vest in full on the earlier of (i) the first anniversary of the
Grant Date or (ii) the date of the next annual meeting of the Company’s
stockholders following the Grant Date, subject to the Grantee’s continued
service as a Director (whether or not in the capacity of an Outside Director)
through such date, subject to the provisions of Section 6(e) below). 

 

(e) Separation from Service Prior to Vesting Date.  If a Grantee Separates from
Service prior to the Vesting Date for any reason other than (i) the Grantee’s
death or Disability or (ii) due to a Change in Control, all Deferred RSUs not
vested at the time of such Separation from Service shall be immediately and
automatically forfeited by such Grantee; provided, however, that if a Grantee
Separates from Service prior to the Vesting Date by reason of his or her death
or Disability, or due to a Change in Control, any outstanding and unvested
Deferred RSUs held by the Grantee shall vest in full as of the date of such
Grantee’s death, Disability, or Change in Control, as applicable.

 

(f) Dividend Adjustments.  Deferred RSUs credited to a Grantee’s Account will be
adjusted for dividends as set forth in this Section 6(f) until such time, if
any, as the value of the Grantee’s Deferred RSU Account is fixed pursuant to
this Program. In the event that the Board declares a cash dividend on the
Company’s Common Stock, the Company will credit to each such Grantee’s Account,
on or as soon as practicable after each such dividend payment date, a number of
Deferred RSUs equal in value to the number of Shares that would have been
purchased, rounded down to the nearest whole Share, determined using the average
of the Fair Market Value of the Common Stock for the two trading days
immediately preceding the dividend payment date, on the basis of the cash
dividends that would be paid on a number of Shares equal to the aggregate number
of the Deferred RSUs then in such Deferred RSU Account.

 

7. Settlement and Payment.  

 

(a) Time and Form of Settlement for Deferred RSUs.  A Grantee’s vested Deferred
RSUs shall be settled in accordance with this Section 7 upon the earliest to
occur of the following: (i) the Grantee’s Separation from Service (other than
due to death or Disability), (ii) a Change in Control, or (iii) the Grantee’s
death or Disability. All Deferred RSUs shall be paid out in Shares, each in a
single lump sum, to the Grantee or to his or her designated beneficiary, as the
case may be.

4

--------------------------------------------------------------------------------

 

(b) Separation from Service. If a Grantee’s vested Deferred RSUs become payable
upon a Separation from Service (other than due to death or Disability), then all
outstanding Deferred RSUs credited to such Grantee’s Deferred RSU Account at the
time of such Separation from Service will be paid out in accordance with Section
7(a) as soon as administratively practicable, but in no event later than sixty
(60) days after the Grantee’s Separation from Service.

 

(c) Change in Control.  If a Grantee’s vested Deferred RSUs become payable upon
a Change in Control, then all outstanding Deferred RSUs credited to such
Grantee’s Deferred RSU Account shall be paid out in accordance with Section 7(a)
as soon as administratively practicable, but in no event later than thirty (30)
days after the Change in Control.

 

(d) Death or Disability. If a Grantee’s vested Deferred RSUs become payable upon
the Grantee’s death or Disability, then all outstanding Deferred RSUs credited
to such Grantee’s Deferred RSU Account shall be paid out in accordance with
Section 7(a) as soon as administratively practicable, but no later than one
hundred and eighty (180) days or ninety (90) days after the Grantee’s death or
Disability, respectively. In the event that a designated beneficiary survives
the Grantee but dies before receiving payment of all amounts in the Deferred RSU
Account due to that beneficiary, the beneficiary’s estate will receive such
unpaid amounts, in a single lump sum, as soon as practicable after the
beneficiary’s death. The estate of a beneficiary who has predeceased the Grantee
will have no claim to payments under this Program.

 

(e) Fractional Deferred RSUs. At the time of settlement and payment of a
Deferred RSU Account, any fractional Deferred RSUs then credited to the Deferred
RSU Account shall be paid in cash. In the event that any fractional Deferred
RSUs will be settled for cash, the cash payment will be determined by
multiplying the number of fractional Deferred RSUs in the Deferred RSU Account
by the Fair Market Value per Share on the date of the Separation from Service,
Change in Control, or death or Disability, as applicable.

 

8. Beneficiary Designations. Each Grantee may designate, on a Beneficiary
Designation Form provided by the Company, one or more beneficiaries to receive
any unpaid amounts in his or her Deferred RSU Account, in the event of his or
her death. If the Grantee has not made a valid beneficiary designation at the
time of his or her death, the Deferred RSU Account at the time of such death
will be paid to the Grantee’s surviving spouse, or if none, to the Grantee’s
estate. A Grantee may amend his or her beneficiary designations at any time by
submitting a new, properly completed Beneficiary Designation Form in accordance
with the procedures established by the Company for such purpose. A Grantee’s
beneficiary designation, including any amendments thereto, shall be effective
immediately upon receipt by the Company of such a properly completed Beneficiary
Designation Form.

 

9. Capital Adjustments.  In the event that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination,

5

--------------------------------------------------------------------------------

 

repurchase, or exchange of Shares or other securities of the Company, or other
change in the corporate structure of the Company affecting the Shares occurs,
the Committee shall make adjustments, if any, to the number, class or kind of
Deferred RSUs then outstanding, or shall make such other adjustments, if any, to
the amounts in the Deferred RSU Accounts, in accordance with Section 14 of the
Plan. The Committee shall determine the manner in which any fractional Deferred
RSUs shall be treated. All determinations hereunder shall be made by the
Committee, in its sole discretion, and shall be final, binding and conclusive
for all purposes on all parties, including, without limitation, the Grantee or
his or her designated beneficiaries.

 

10.  Deferred RSU Account Statements.  A statement will be sent or otherwise
made available to each Grantee with a balance in his or her Deferred RSU
Account. Such statement will list the aggregate number of Deferred RSUs in the
Deferred RSU Account, including any adjustments made for dividends pursuant to
Section 6(f) or other adjustments pursuant to Section 9, if applicable. The
Company’s proper officers also may provide such additional statements, if any,
as they may deem appropriate from time to time.

 

11. Effective Date of Program.  This Program is effective as of June 1, 2017.
This Program will continue in effect until terminated by the Board or the
Committee pursuant to Section 13(h).  Notwithstanding anything in this Program
to the contrary, no Deferred RSUs after termination of this Program or after the
occurrence of a Change of Control. The termination of this Program will not
affect the validity of any Deferred RSU, including any features thereof,
credited to a Deferred RSU Account on the date of termination.

 

12. Indemnification of Committee.  In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee will be indemnified by the Company against the
reasonable expenses, including attorneys’ fees, actually and reasonably incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with this
Program or any Deferred RSU granted hereunder, and against all amounts
reasonably paid by them in settlement thereof or paid by them in satisfaction of
a judgment in any such action, suit or proceeding, if such members acted in good
faith and in a manner that they believed to be in, and not opposed to, the best
interests of the Company.

 

13. Miscellaneous Provisions.  

 

(a) No Right or Obligation of Continued Service. Nothing contained herein will
entitle a Grantee to continue to serve as a member of the Board or require a
Grantee to continue to provide services as a member of the Board. The
termination of a Grantee’s service as a member of the Board will have no effect
on his or her rights hereunder, except as otherwise provided herein.

 

(b) No Stockholder Rights.  The sole interest of a Grantee hereunder will be the
right to receive the payments provided for herein as and when the same becomes
due and payable. A Grantee will have no rights as a stockholder of the Company
with respect to Deferred RSUs credited to his or her Deferred RSU Account prior
to any distribution of Shares hereunder.

6

--------------------------------------------------------------------------------

 

(c) Nonalienability.  Except for the withholding of any tax under applicable
law, no Deferred RSUs or other amounts credited to a Deferred RSU Account or any
amount payable at any time hereunder will be subject in any manner to
alienation, sale, transfer, assignment, pledge, attachment or other legal
process, or encumbrance of any kind (including as the result of any domestic
relations order). Any attempt to alienate, sell, transfer, assign, pledge,
attach or otherwise encumber any such Deferred RSUs or amount, whether currently
or hereafter payable, will be void. Except as otherwise specifically provided by
law, no Deferred RSUs or amount payable hereunder will, in any manner, be liable
for or subject to the debts or liabilities of a Grantee or his or her designated
beneficiary.

 

(d) Withholding.  Payments made by the Company hereunder will be subject to any
applicable tax-withholding requirements and to such other deductions as are
required at the time of such payment under any income tax or other law, whether
of the United States or any other jurisdiction.

 

(e) Headings.  Headings used herein are included solely for convenience of
reference and shall not alter the meaning or interpretation of any of the
provisions of this Program.

 

(f) Successors.  The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume the Company’s obligations hereunder in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place. This Program will inure to the benefit of and be enforceable by
each Grantee and each Grantee’s personal or legal representatives, designated
beneficiaries, executors, administrators, successors, heirs, distributees,
devisees and legatees.

 

(g) Status as Unsecured Creditor; Funding of Payments.  All Deferred RSU Account
balances will constitute unsecured contractual obligations of the Company. In
the sole discretion of the Company, the Company or any of its affiliates may
establish or maintain a nonqualified grantor trust and make contributions
thereto for the purpose of providing a source of assets to make payments
hereunder as they become due and payable; provided, however, that no such trust
will result in a Grantee or any designated beneficiary being required to include
in gross income for federal income tax purposes any amounts payable hereunder
prior to the date of actual payment. Notwithstanding the establishment or
maintenance of any such trust, Grantees’ and their designated beneficiaries’
rights hereunder will be solely those of a general unsecured creditor of the
Company.

 

(h) Termination; Amendment.  This Program may be terminated or amended at any
time by the Board upon the recommendation of the Committee, or by the Committee,
without the consent of any Grantee for whom a Deferred RSU Account has been
established, provided that any termination or amendment will be of general
application to all Outside Directors participating in this Program (and their
designated beneficiaries) and will not, without the specific written consent of
any such Director (or designated beneficiary) adversely affect, in a material
manner: (a) any Deferred RSUs or amounts theretofore credited to a Deferred RSU 

7

--------------------------------------------------------------------------------

 

Account; or (b) the right of a Grantee (or designated beneficiary) to receive
all amounts due and payable with respect to an Deferred RSU Account. Any
amendment to this Program pursuant to this Section 13(h) will be effective as of
the date such amendment is so approved or as of such later date as may be
specified by the Board or the Committee when amending this Program. 

 

(i) Severability.  Whenever possible, each provision of this Program will be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Program is held to be prohibited by or invalid
under applicable law, then (a) such provision will be deemed to be amended to,
and to have contained from the outset such language as is necessary to,
accomplish the objectives of the provision as originally written to the fullest
extent permitted by law, and (b) other provisions of this Program will remain in
full force and effect.

 

(j) Limitations on Claims. Any claim or action by any Director or beneficiary to
recover benefits allegedly due under this Program or by reason of any law or
that relates to this Program and/or Plan and seeks a remedy, ruling or judgment
of any kind against this Program and/or the Plan may not be commenced in any
court or forum (a “Judicial Claim”) until after the Director or beneficiary has
made a claim in writing to the Company that raises all arguments and produces
all evidence that the Director or beneficiary believes supports the claim or
action (an “Administrative Claim”). The Director shall be deemed to have waived
every argument and the right to produce any evidence not submitted in the
Administrative Claim. Any Judicial Claim must be commenced in a court of
competent jurisdiction or appropriate forum, no later than twenty-four (24)
months after the earliest of the date that payment was first made, or allegedly
due, under this Program or the first date the Director beneficiary knew or
should have known the principal facts on which such claim or action is based;
provided, however, that, if the Administrative Claim is commenced within the
24-month period, the period for commencing a Judicial Claim shall expire on the
later of the date upon which the 24-month period ends and the date that is three
months after a final notice of denial is sent by the Company. Any claim or
action filed in a court or other forum after the end of the 24-month period (or,
if applicable, after the end of the three-month period following conclusion of
the Administrative Claim) will be time-barred.

 

(k) Governing Law. This Program will be construed in accordance with and
governed by the laws of the State of California, without reference to its
conflicts-of-laws provisions.

 

(l) Compliance with Law.    This Program is intended to comply with applicable
law.  Without limiting the foregoing, this Program is intended to comply with
the applicable requirements of Section 409A of the Code, and will be
administered in accordance with Section 409A of the Code and its corresponding
treasury regulations and related guidance to the extent that Section 409A of the
Code applies to this Program. Notwithstanding anything in this Program to the
contrary, distributions from the Plan may only be made in a manner, and upon an
event, permitted by Section 409A of the Code and its corresponding treasury
regulations and related guidance.  If any payment or benefit cannot be provided
or made at the time specified herein without incurring penalties under Section
409A of the Code, then such payment or benefit will be provided in full at the
earliest time thereafter when such penalties will not be imposed. 

8

--------------------------------------------------------------------------------

 

For purposes of Section 409A of the Code, a series of installment payments shall
be treated as a single payment.  To the extent that any provision of this
Program would cause a conflict with the applicable requirements of Section 409A
of the Code, or would cause the administration of this Program to fail to
satisfy the applicable requirements of Section 409A of the Code, such provision
shall be deemed null and void to the extent permitted by applicable law.

 

9

--------------------------------------------------------------------------------